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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): June 29, 2023
Adhera
Therapeutics, Inc.
(Exact
name of registrant as specified in its charter)
Delaware |
|
000-13789 |
|
11-2658569 |
(State
or Other Jurisdiction |
|
(Commission |
|
(I.R.S.
Employer |
of
Incorporation) |
|
File
Number) |
|
Identification
No.) |
8000
Innovation Parkway, Baton Rouge, LA 70820
(Address
of Principal Executive Office) (Zip Code)
919-518-3748
(Registrant’s
telephone number, including area code)
N/A
(Former
name or 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:
☐ |
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|
|
☐ |
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
|
|
☐ |
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
|
|
☐ |
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities
registered pursuant to Section 12(b) of the Act: Not Applicable
Indicate
by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405)
or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging
growth company ☐
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item
1.01 Entry into a Material Definitive Agreement.
On
June 22, 2023, Adhera Therapeutics, Inc. (the “Company”) entered into a Securities Purchase Agreement (“SPA”)
with four accredited investors pursuant to which the Company issued and sold the investor a non-convertible Original Issue Discount Senior
Secured Promissory Note (a “Note”) in the principal amount of $150,000 and 3,000,000 Common Stock Purchase Warrants (“Warrants”)
for total gross proceeds of $105,000. The proceeds from these financings were used for working capital purposes.
In
connection with the April financing, the Company also agreed to increase the principal amount of prior Original Issue Discount Promissory
Notes issued to the investors in May 2022 and January 2023 (the “Prior Notes”) by 30%, from a total of $1,000,000 in principal
to $1,250,000 in principal (not including accrued and unpaid interest). The Prior Notes rank pro rata with the new Notes with respect
to interest payments. The terms of the Prior Notes are summarized in the Company’s Quarterly Report on Form 10-Q for the fiscal
quarter ended March 31, 2022 under “Part II. - Item 5. – Other Information,” and a form of the Prior Notes is filed
as Exhibit 10.4 thereto.
The
terms of the Notes and Warrants are summarized below.
The
Notes are due on the earlier of (i) the 12 month anniversary of the issuance date, and (ii) the date on which the Company completes a
public offering for cash of common stock and/or common stock equivalents which results in the listing of the Company’s common stock
on a “national securities exchange” as defined in the Securities Exchange Act of 1934 (a “Qualified Financing”),
provided that unless there is an event of default, the Company may extend the maturity date by six months in its discretion. The Notes
bear interest at 8% per annum, payable monthly, subject to an increase to 15% in case of an event of default as provided for therein.
Furthermore, at any time before the 12 month anniversary of the date of issuance of a Note, the Company may, after providing written
notice to the holder, prepay all of the then outstanding principal amount of the Note for cash in an amount equal to the sum of 105%
of the then outstanding principal amount of the Note, accrued but unpaid interest and all liquidated damages and other amounts due in
respect of the Note (if any).
The
Notes may, at the discretion of the Company, be converted into shares of a new class of convertible preferred stock of the Company (the
“Convertible Preferred Stock”) on the closing date of the Qualified Financing. In the event of the conversion, the holder
will receive a number of shares of Convertible Preferred Stock equal to the quotient obtained by dividing (i) the unpaid principal amount
of this Note (together with any interest accrued but unpaid thereon) by (ii) the closing price of the securities issued in the Qualified
Financing on the closing date of the Qualified Financing. Upon issuance, the conversion price of the Convertible Preferred Stock (the
“Preferred Conversion Price”) will be equal to the closing price of the securities issued in the Qualified Financing, subject
to adjustment.
The
Notes provide for certain customary events of default which include failure to maintain the required reserve of shares for the Warrants,
a restatement of the financial statements of the Company resulting in a reduction to the stock price by an enumerated threshold, and
certain other customary events of default, subject to certain exceptions and limitations. Upon an event of default, the Notes will become
immediately due and payable at a 125% premium, which will be reduced to 100% if the event of default occurs while the Company’s
common stock is listed on a national securities exchange.
The
Notes contain customary restrictive covenants which apply for as long as at least 75% of the Notes remain outstanding, including covenants
against incurring new indebtedness or liens, repurchasing shares of common stock or common stock equivalents, paying dividends or distributions
on equity securities, and transactions with affiliates, subject to certain exceptions and limitations. In addition, the SPA imposes certain
additional negative covenants and obligations on the Company, including a prohibition on filing a registration statement (other than
on Form S-8) unless at least 30% of the Notes have been repaid as of such filing, a prohibition on incurring new indebtedness at any
time while any Notes are outstanding, and a 90-day restriction against issuing shares of common stock or common stock equivalents, subject
to certain exceptions and limitations.
Under
the SPA, the Company also granted each investor the right to participate in future financings that are exempt from registration under
the Securities Act of 1933 (the “Securities Act”) in an amount equal to 15% of such financings, which right has a term equal
to the earlier of (i) the 24 month anniversary of the SPA, and (ii) the date the Notes are no longer outstanding. The SPA also provides
the investors with most-favored nations treatment, giving them the right to amend their securities if the Company issues securities with
more favorable terms while the investor’s securities are outstanding, subject to certain exceptions and limitations.
The
Warrants are exercisable for a period of five-years and six months from issuance at an exercise price of $0.05 per share, subject to
certain limitations including beneficial ownership limitations, and subject to adjustment including downward adjustment upon a dilutive
issuance of securities at a per-share price that is below the exercise price. Unless the holder’s sale of shares of common stock
issuable upon exercise of the Warrants at prevailing market prices (not at a fixed price) is registered on an effective registration
statement under the Securities Act, the Warrants may be exercised cashlessly.
The
Company’s obligations under the Notes are secured by a lien on all assets of the Company and its subsidiaries pursuant to Security
Agreements each dated the date of the respective SPA (the “Security Agreement”).
The
SPA requires a reserve of authorized but unissued shares equal to four times the number of shares issuable to the investors upon exercise
of the Warrants, subject to reduction as the Warrants are exercised.
Aegis
Capital Corp. (the “Placement Agent”) served as placement agent in the financings and received a cash commission in the amount
of 10% of the gross proceeds, or $30,000.
Under
the SPA the Company reimbursed the investors a total of $15,000 out of the proceeds from the offerings for fees and expenses incurred
in connection therewith.
Item
3.02 Unregistered Sale of Equity Securities.
The
information contained above in Item 1.01 is hereby incorporated by reference into this Item 3.02.
The
issuances of the Notes and the Warrants described above are exempt from registration under Section 4(a)(2) and/or Rule 506(b) of Regulation
D as promulgated by the Securities and Exchange Commission under of the Securities Act, as transactions by an issuer not involving any
public offering.
Item
9.01 Financial Statements and Exhibits.
(d)
Exhibits.
*
Certain schedules and other attachments have been omitted. The Company undertakes to furnish the omitted schedules and attachments to
the Securities and Exchange Commission upon request.
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.
|
ADHERA
THERAPEUTICS, INC. |
|
|
|
Date:
June 29, 2023 |
By: |
/s/
Zahed Subhan |
|
Name: |
Zahed
Subhan |
|
Title: |
Chief
Executive Officer |
Exhibit
4.1
THIS
SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON
AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY
NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION
FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE TO THE COMPANY. THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITY.
Original
Issue Date: June 22, 2023
$
Principal
$
Purchase Price
$
Original Issue Discount
original
issue discount
SENIOR
SECURED
PROMISSORY
NOTE
THIS
ORIGINAL ISSUE DISCOUNT SENIOR SECURED PROMISSORY NOTE is duly authorized and validly issued at an original issue discount by ADHERA
THERAPEUTICS, INC., a Delaware corporation (the “Company”) (the “Note”).
FOR
VALUE RECEIVED, the Company promises to pay to or its permitted assigns (the “Holder”), the principal sum of $ on the date
that is the earlier of (i) 12 month anniversary of the Original Issue Date, or June 22, 2024, and (ii) the date of the
Qualified Financing (the “Maturity Date”) or such earlier date as this Note is required or permitted to be repaid as provided
hereunder, and to pay interest to the Holder on the aggregate and then outstanding principal amount of this Note in accordance with the
provisions hereof. Provided that there is no Event of Default, the Maturity Date may be extended six months at the discretion of the
Company. This Note is subject to the following additional provisions:
Section
1. Definitions. For the purposes hereof, (a) capitalized terms not otherwise defined herein shall have the meanings set forth
in the Purchase Agreement and (b) the following words and phrases shall have the following meanings:
“Bankruptcy
Event” means any of the following events: (a) the Company or any Subsidiary thereof commences a case or other proceeding under
any bankruptcy, reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar
law of any jurisdiction relating to the Company or any Subsidiary thereof, (b) there is commenced against the Company or any Subsidiary
thereof any such case or proceeding that is not dismissed within 30 days after commencement, (c) the Company or any Subsidiary thereof
is adjudicated insolvent or bankrupt or any order of relief or other order approving any such case or proceeding is entered, (d) the
Company or any Subsidiary thereof suffers any appointment of any custodian or the like for it or any substantial part of its property
that is not discharged or stayed within 30 calendar days after such appointment, (e) the Company or any Subsidiary thereof makes a general
assignment for the benefit of creditors, (f) the Company or any Subsidiary thereof calls a meeting of its creditors with a view to arranging
a composition, adjustment or restructuring of its debts or (g) the Company or any Subsidiary thereof, by any act or failure to act, expressly
indicates its consent to, approval of or acquiescence in any of the foregoing or takes any corporate or other action for the purpose
of effecting any of the foregoing.
“Change
of Control Transaction” means the occurrence after the date hereof of any of (a) an acquisition after the date hereof by an individual
or legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of effective control (whether
through legal or beneficial ownership of capital stock of the Company, by contract or otherwise) of in excess of 50% of the voting securities
of the Company (other than by means of conversion, exercise or exchange of this Note or the Warrants issued together with this Note),
(b) the Company merges into or consolidates with any other Person, or any Person merges into or consolidates with the Company and, after
giving effect to such transaction, the shareholders of the Company immediately prior to such transaction own less than 50% of the aggregate
voting power of the Company or the successor entity of such transaction, (c) the Company sells or transfers all or substantially all
of its assets to another Person, (d) a replacement at one time or within a three year period of more than one-half of the members of
the Board of Directors which is not approved by a majority of those individuals who are members of the Board of Directors on the Original
Issue Date (or by those individuals who are serving as members of the Board of Directors on any date whose nomination to the Board of
Directors was approved by a majority of the members of the Board of Directors who are members on the date hereof), or (d) the execution
by the Company of an agreement to which the Company is a party or by which it is bound, providing for any of the events set forth in
clauses (a) through (d) above.
“Common
Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at
any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is at
any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.
“Default
Interest Rate” shall have the meaning set forth in Section 2(a).
“DWAC”
means the Deposit or Withdrawal at Custodian system at The Depository Trust Company.
“Event
of Default” shall have the meaning set forth in Section 7(a).
“Exchange
Act” means the Securities Exchange Act of 1934, and the rules and regulations promulgated thereunder.
“Exempt
Issuance” shall have the meaning set forth in the Purchase Agreement.
“Indebtedness”
shall have the meaning set forth in the Purchase Agreement.
“Liens”
shall have the meaning set forth in the Purchase Agreement.
“Mandatory
Default Amount” means the sum of 125% of the aggregate of (i) the outstanding principal amount of this Note and the
accrued and unpaid interest thereon, including default interest, and (b) all other amounts, costs, expenses and liquidated damages due
in respect of this Note.
“Note
Register” shall have the meaning set forth in Section 3(c).
“Option
Value” means the value of a Common Stock Equivalent based on the Black Scholes Option Pricing model obtained from the “OV”
function on Bloomberg determined as of (A) the Trading Day prior to the public announcement of the issuance of the applicable Common
Stock Equivalent, if the issuance of such Common Stock Equivalent is publicly announced or (B) the Trading Day immediately following
the issuance of the applicable Common Stock Equivalent if the issuance of such Common Stock Equivalent is not publicly announced, for
pricing purposes and reflecting (i) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the remaining
term of the applicable Common Stock Equivalent as of the applicable date of determination, (ii) an expected volatility equal to the greater
of 100% and the 100 day volatility obtained from the HVT function on Bloomberg as of (A) the Trading Day immediately following the public
announcement of the applicable Common Stock Equivalent if the issuance of such Common Stock Equivalent is publicly announced or (B) the
Trading Day immediately following the issuance of the applicable Common Stock Equivalent if the issuance of such Common Stock Equivalent
is not publicly announced, (iii) the underlying price per share used in such calculation shall be the highest VWAP of the Common Stock
during the period beginning on the Trading Day prior to the execution of definitive documentation relating to the issuance of the applicable
Common Stock Equivalent and ending on (A) the Trading Day immediately following the public announcement of such issuance, if the issuance
of such Common Stock Equivalent is publicly announced or (B) the Trading Day immediately following the issuance of the applicable Common
Stock Equivalent if the issuance of such Common Stock Equivalent is not publicly announced, (iv) a zero cost of borrow and (v) a 360
day annualization factor.
“Original
Issue Date” means the date of the first issuance of this Note, regardless of any transfers of this Note and regardless of the number
of instruments which may be issued to evidence this Note.
“Permitted
Indebtedness” means (a) the indebtedness evidenced by this Note and the other Original Issue Discount Promissory Notes sold to
purchasers on the date hereof, (b) capital lease obligations and purchase money indebtedness incurred in connection with the acquisition
of machinery and equipment as long as such capital leases and indebtedness and (c) the Indebtedness set forth on Schedule 3.1(aa) to
the Purchase Agreement).
“Permitted
Lien” means the individual and collective reference to the following: (a) Liens for taxes, assessments and other governmental charges
or levies not yet due or Liens for taxes, assessments and other governmental charges or levies being contested in good faith and by appropriate
proceedings for which adequate reserves (in the good faith judgment of the management of the Company) have been established in accordance
with GAAP, (b) Liens imposed by law which were incurred in the ordinary course of the Company’s business, such as carriers’,
warehousemen’s and mechanics’ Liens, statutory landlords’ Liens, and other similar Liens arising in the ordinary course
of the Company’s business, and which (x) do not individually or in the aggregate materially detract from the value of such property
or assets or materially impair the use thereof in the operation of the business of the Company and its consolidated Subsidiaries or (y)
are being contested in good faith by appropriate proceedings, which proceedings have the effect of preventing for the foreseeable future
the forfeiture or sale of the property or asset subject to such Lien, (c) Liens incurred in connection with Permitted Indebtedness under
clauses (a) through (d) thereunder, and Liens set forth on Schedule 3.1(aa) to the Purchase Agreement.
“Person”
means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
“Purchase
Agreement” means the Securities Purchase Agreement, dated as of the date hereof, among the Company and the original Holders, as
amended, modified or supplemented from time to time in accordance with its terms.
“SEC”
means the Securities and Exchange Commission.
“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Share
Delivery Date” shall have the meaning set forth in Section 4(c)(ii).
“Successor
Entity” shall have the meaning set forth in Section 5(e).
“Trading
Day” means a day on which the principal Trading Market is open for trading.
“Trading
Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in
question: the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange, the NYSE
American, or any market of the OTC Markets, Inc. (or any successors to any of the foregoing).
“Transaction
Documents” has the meaning ascribed to it in the Purchase Agreement.
“VWAP”
has the meaning ascribed to it in the Purchase Agreement.
Section
2. Interest/Repayment.
(a)
Interest. Interest shall accrue to the Holder on the aggregate then outstanding principal amount of this Note at the rate of 8%
per annum, calculated on the basis of a 360-day year and shall accrue daily commencing on the Original Issue Date until payment
in full of the outstanding principal, together with all accrued and unpaid interest, liquidated damages and other amounts which may become
due hereunder, has been made. During the existence of an Event of Default, interest shall accrue at the lesser of (i) the rate of 15%
per annum, or (ii) the maximum amount permitted by law (the lesser of clause (i) or (ii), the “Default Interest Rate”).
Interest shall be due on the first Trading Day of each calendar month during the existence of an Event of Default. Once an Event of Default
is cured, the interest rate shall return to 8%.
(b)
Prepayment. Before the first anniversary of this Note, all amounts due and owing hereunder, including all accrued and unpaid interest,
may be repaid by the Company upon five (5) days’ prior written notice to the Holder in an amount equal to 105% of all amounts due
and owing hereunder, including all accrued and unpaid interest, on such repayment date.
Section
3. Registration of Transfers and Exchanges.
(a)
Different Denominations. This Note is exchangeable for an equal aggregate principal amount of Notes of different authorized denominations,
as requested by the Holder surrendering the same. No service charge or other fees will be payable for such registration of transfer or
exchange.
(b)
Investor Representations. This Note has been issued subject to certain investment representations of the original Holder set forth
in the Purchase Agreement and may be transferred or exchanged only in compliance with the Purchase Agreement and applicable federal and
state securities laws and regulations.
(c)
Reliance on Note Register. Prior to due presentment for transfer to the Company of this Note, the Company and any agent of the
Company may treat the Person in whose name this Note is duly registered on the Note Register as the owner hereof for the purpose of receiving
payment as herein provided and for all other purposes, whether or not this Note is overdue, and neither the Company nor any such agent
shall be affected by notice to the contrary.
Section
4. Conversion. The unpaid principal amount of this Note, together with any interest accrued but unpaid thereon, may,
at the sole discretion of the Company, be converted into shares of a new class of convertible preferred stock of the Company (the “Convertible
Preferred Stock”) on the closing date of the Qualified Financing. In the event of the conversion of this Note pursuant to this
Section 4, the Holder shall be entitled to receive such number and amount of such shares of preferred stock of the Company to be issued
upon such conversion equal to the quotient obtained by dividing (i) the unpaid principal amount of this Note (together with any interest
accrued but unpaid thereon) by (ii) the closing price of the securities issued in the Qualified Financing on the closing date of the
Qualified Financing. Upon issuance, the conversion price of the Convertible Preferred Stock (the “Preferred Conversion Price”)
issued shall be equal to the closing price of the securities issued in the Qualified Financing on the closing date of the Qualified Financing.
If, on the day that is 181 days after the closing date of the Qualified Financing, the closing price of the securities issued in the
Qualified Financing is less than the closing price of such securities on closing date of the Qualified Financing (the “New Conversion
Price”), the Preferred Conversion Price then in effect shall be reduced to an amount equal to the New Conversion Price. The issuance
of securities pursuant to the conversion of this Note will be on, and subject to, the same terms and conditions applicable to the securities
issued in the Qualified Financing.
Section
5. Intentionally Omitted.
Section
6. Negative Covenants. As long as any portion of this Note remains outstanding, unless the holders of at least 75% in principal
amount of the then outstanding Notes shall have otherwise given prior written consent, the Company shall not, and shall not permit any
of the Subsidiaries to, directly or indirectly:
(a)
other than Permitted Indebtedness, enter into, create, incur, assume, guarantee or suffer to exist any indebtedness for borrowed money
of any kind, including, but not limited to, a guarantee, on or with respect to any of its property or assets now owned or hereafter acquired
or any interest therein or any income or profits therefrom;
(b)
other than Permitted Liens, enter into, create, incur, assume or suffer to exist any Liens of any kind, on or with respect to any of
its property or assets now owned or hereafter acquired or any interest therein or any income or profits therefrom;
(c)
amend its charter documents, including, without limitation, its articles of incorporation and bylaws, in any manner or issue equity securities
of the Company that materially and adversely affects any rights of the Holder. Stock splits shall not be deemed to materially and adversely
affects any rights of the Holder;
(d)
purchase or otherwise acquire more than a de minimis number of shares of its Common Stock or Common Stock Equivalents;
(e)
repay, or offer to repay, any Indebtedness other than the Note as provided in Section 2(b) or Permitted Indebtedness, as such terms Indebtedness
and Permitted Indebtedness are in effect as of the Original Issue Date, provided that such payments other than on the Notes shall not
be permitted if, at such time, or after giving effect to such payment, any Event of Default exists or occurs or the Company is not able
to satisfy obligations owing to the Noteholders;
(f)
pay cash dividends or distributions on any equity securities of the Company;
(g)
enter into any transaction with any Affiliate of the Company which would be required to be disclosed in any public filing with the SEC
assuming that the Company is subject to the Securities Act or the Exchange Act, unless such transaction is made on an arm’s-length
basis and expressly approved by a majority of the disinterested directors of the Company (even if less than a quorum otherwise required
for board approval); or
(h)
enter into any agreement with respect to any of the foregoing.
Section
7. Events of Default.
(a)
“Event of Default” means, wherever used herein, any of the following events (whatever the reason for such event and
whether such event shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of
any court, or any order, rule or regulation of any administrative or governmental body):
(i)
any default in the payment of (A) principal and interest payment under this Note or any other Indebtedness, or (B) late fees, liquidated
damages and other amounts owing to the Holder of this Note, as and when the same shall become due and payable (whether on the Maturity
Date, or by acceleration or otherwise), which default, solely in the case of a default under clause (B) above, is not cured within five
Trading Days;
(ii)
the Company shall fail to observe or perform any other covenant or agreement contained in this Note or any Transaction Document which
failure is not cured, if possible to cure, within the earlier to occur of 10 Trading Days after notice of such failure is sent by the
Holder or by any other Holder to the Company and (B) the Company has become aware of such failure;
(iii)
except for payment defaults covered under Section 7(a)(i), the Company shall breach, or a default or event of default (subject to any
grace or cure period provided in the applicable agreement, document or instrument) shall occur under, (A) any of the Transaction Documents
or (B) any other material agreement, lease, document or instrument to which the Company or any Subsidiary is obligated (and not covered
by any other clause of this Section 7) which default or event of default if not cured, if possible to cure, within the earlier to occur
of (i) five Trading Days after notice of such default sent by the Holder or by any other holder to the Company and (ii) the Company has
become aware of such default;
(iv)
any representation or warranty made in this Note, any other Transaction Document, any written statement pursuant hereto or thereto or
any other report, financial statement or certificate made or delivered to the Holder or any other Holder shall be untrue or incorrect
in any material respect as of the date when made or deemed made, which failure is not cured, if possible to cure, within the earlier
to occur of 10 Trading Days after (A) notice of such failure is sent by the Holder or (B) by any other Holder to the Company;
(v)
the Company or any Subsidiary shall be subject to a Bankruptcy Event;
(vi)
the Company or any Subsidiary shall: (A) apply for or consent to the appointment of a receiver, trustee, custodian or liquidator of it
or any of its properties; (B) admit in writing its inability to pay its debts as they mature; (C) make a general assignment for the benefit
of creditors; (D) be adjudicated as bankrupt or insolvent or be the subject of an order for relief under Title 11 of the United States
Code or any bankruptcy, reorganization, insolvency, readjustment of debt, dissolution or liquidation law or statute of any other jurisdiction
or foreign country; or (E) file a voluntary petition in bankruptcy, or a petition or an answer seeking reorganization or an arrangement
with creditors or to take advantage or any bankruptcy, reorganization, insolvency, readjustment of debt, dissolution or liquidation law
or statute, or an answer admitting the material allegations of a petition filed against it in any proceeding under any such law, or (F)
take or permit to be taken any action in furtherance of or for the purpose of effecting any of the foregoing including a composition
with creditors or similar action;
(vii)
if any order, judgment or decree shall be entered, without the application, approval or consent of the Company or any Subsidiary, by
any court of competent jurisdiction, approving a petition seeking liquidation or reorganization of the Company or any Subsidiary, or
appointing a receiver, trustee, custodian or liquidator of the Company or any Subsidiary, or of all or any substantial part of its assets,
and such order, judgment or decree shall continue unstayed and in effect for any period of 10 days;
(viii)
the occurrence of any levy upon or seizure or attachment of, or any uninsured loss of or damage to, any property of the Company or any
Subsidiary having an aggregate fair value or repair cost (as the case may be) in excess of $100,000 individually or in the aggregate,
and any such levy, seizure or attachment shall not be set aside, bonded or discharged within 10 days after the date thereof;
(ix)
any monetary judgment, writ or similar final process shall be entered or filed against the Company, any Subsidiary or any of their respective
property or other assets for more than $100,000, and such judgment, writ or similar final process shall remain unvacated, unbonded or
unstayed for a period of 10 days;
(x)
any Material Adverse Effect on the Company or any Subsidiary occurs or any other circumstance or event that could, with or without the
passage of time or the giving of notice, result in a default or event of default under any agreement binding upon the Company or any
Subsidiary, which default or event of default could or is reasonably likely to have a Material Adverse Effect on the Company or any Subsidiary;
(xi)
any provision of any Transaction Document shall at any time for any reason (other than pursuant to the express terms thereof) cease to
be valid and binding on or enforceable against the parties thereto, or the validity or enforceability thereof shall be contested by any
party thereto, or a proceeding shall be commenced by the Company or any Subsidiary or any governmental authority having jurisdiction
over any of them, seeking to establish the invalidity or unenforceability thereof, or the Company or any Subsidiary shall deny in writing
that it has any liability or obligation purported to be created under any Transaction Document;
(xii)
the Company fails to use the proceeds in the manner as described in Section 4.7 of the Purchase Agreement;
(xiii)
the SEC suspends the Common Stock from trading or the Company’s Common Stock is not listed or quoted for trading on a Trading Market
which failure is not cured, if possible to cure, within the earlier to occur of 10 Trading Days after notice of such failure is sent
by the Holder or by any other Holder to the Company or the transfer of shares of Common Stock through the Depository Trust Company System
is no longer available or is subject to a “chill” by the Depository Trust Company or any successor;
(xiv)
the Company shall be a party to any Change of Control Transaction or shall agree to sell or dispose of all or in excess of 50% of its
assets in one transaction or a series of related transactions (whether or not such sale would constitute a Change of Control Transaction);
(xv)
the Company fails to have authorized and reserved the amount of shares designated in Section 4.9 of the Purchase Agreement (without regard
to any limitations on conversion hereof, including without limitation, the Beneficial Ownership Limitation);
(xvi)
the Company shall fail for any reason, except if caused by the action or inaction of the Holder to deliver the Warrant Shares to the
Holder by the second Trading Day after receipt of an exercise notice, or the Company shall provide at any time notice to the Holder,
including by way of public announcement, of the Company’s intention to not honor requests for conversions of exercise of Warrants
in accordance with the terms thereof;
(xvii)
the Company fails to comply in any material respect with the reporting requirements of the Exchange Act (including but not limited to
becoming delinquent in the filing of any report required to be filed under the Exchange Act including any extension permitted by Rule
12b-25 under the Exchange Act) or ceases to be subject to the reporting requirements of the Exchange Act. For avoidance of doubt, a failure
to file an Exchange Act report within such time shall be deemed to be a failure to comply in a material respect;
(xviii)
the Company replaces the Transfer Agent without prior approval and acceptance by the Holder pursuant to the form transfer agent letter
substantially in the form attached as Exhibit A. ;
(xix)
the Company incurs any Indebtedness other than Permitted Indebtedness;
(xxx)
a false or inaccurate certification (including a false or inaccurate deemed certification) by the Company as to whether any Event of
Default has occurred;
(xxi)
the Company fails to deliver Common Stock issued to the Holder upon exercise of the Warrants by second Trading Day after the Company
receives the notice of exercise;
(xxii)
a Lien other than a Permitted Lien is imposed on the assets of the Company or any subsidiary and such Lien is not dissolved within 10
calendar days;
(xxiii)
the Company fails to deliver the original Note and Warrants to the Purchasers within five Trading Days as of each Closing;
(xxiv)
the Company provides the Holder with material non-public information concerning the Company without the Holder’s prior written
consent;
(xxv)
the Company restates any financial statements included in its reports or registration statements filed pursuant to the Securities Act
or the Exchange Act for any date or period from two years prior to the Original Issue Date of this Note and until this Note is or the
Warrants issued to the Holder are no longer outstanding, if following first public announcement or disclosure that a restatement will
occur the VWAP on the next Trading Day is 20% less than the VWAP on the prior Trading Day. For the purposes of this clause (xxv) the
next Trading Day if an announcement is made before 4:00 pm New York, NY time is either the day of the announcement or the following Trading
Day; or
(xxvi)
the Company or a Subsidiary enters into a Variable Rate Transaction or a similar transaction prohibited under the Purchase Agreement,
without the prior written consent of the Holder.
(b)
Remedies Upon Event of Default. If any Event of Default occurs, the outstanding principal amount of this Note, plus liquidated
damages and other amounts owing in respect thereof through the date of acceleration, shall become, at the Holder’s election, immediately
due and payable in cash at the Mandatory Default Amount. Provided, however, if the Event of Default originally occurs at such time as
the Company’s Common Stock is listed on a national securities exchange, the Mandatory Default Amount shall be reduced to 100%.
Upon the payment in full of the Mandatory Default Amount, the Holder shall promptly surrender this Note to or as directed by the Company.
In connection with such acceleration described herein, the Holder need not provide, and the Company hereby waives, any presentment, demand,
protest or other notice of any kind, and the Holder may immediately and without expiration of any grace period enforce any and all of
its rights and remedies hereunder and all other remedies available to it under applicable law. Such acceleration may be rescinded and
annulled by Holder at any time prior to payment hereunder and the Holder shall have all rights as a holder of the Note until such time,
if any, as the Holder receives full payment pursuant to this Section 7(b). No such rescission or annulment shall affect any subsequent
Event of Default or impair any right consequent thereon.
(c)
Interest Rate Upon Event of Default. Commencing on the occurrence of any Event of Default and until such Event of Default is cured,
this Note shall accrue interest at an interest rate equal to the Default Interest Rate.
(d)
Notice of an Event of Default. Upon learning of an Event of Default with respect to this Note, the Company shall within two Trading
Days deliver written notice thereof via facsimile or electronic mail and overnight courier (with next day delivery specified) to the
Holder
Section
8. Miscellaneous.
(a)
Intentionally Omitted.
(b)
Notices. All notices, offers, acceptance and any other acts under this Agreement (except payment) shall be in writing, and shall
be sufficiently given if delivered to the addressees in person, email, followed by FedEx or similar receipted next day delivery, as follows:
If to the Company: |
Adhera Therapeutics, Inc. |
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8000 Innovation Pkwy |
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Baton Rouge, La 70820 |
Attention: |
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Email: akucharchuk@adherathera.com |
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with a copy to: |
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(which shall not constitute notice) |
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If to the Purchaser: |
To
the address listed on the Purchaser Signature Page to
the
Securities Purchase Agreement. |
or
to such other address as any of them, by notice to the other may designate from time to time. Time shall be counted to, or from, as the
case may be, the date of delivery.
(c)
Absolute Obligation. Except as expressly provided herein, no provision of this Note shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of, liquidated damages and accrued interest and late fees, as applicable,
on this Note at the time, place, and rate, and in the coin or currency, herein prescribed. This Note is a direct debt obligation of the
Company.
(d)
Lost or Mutilated Note. If this Note shall be mutilated, lost, stolen or destroyed, the Company shall execute and deliver, in
exchange and substitution for and upon cancellation of a mutilated Note, or in lieu of or in substitution for a lost, stolen or destroyed
Note, a new Note for the principal amount of this Note so mutilated, lost, stolen or destroyed, but only upon receipt of evidence of
such loss, theft or destruction of this Note, and of the ownership hereof, reasonably satisfactory to the Company.
(e)
Exclusive Jurisdiction; Governing Law; Prevailing Party Attorneys’ Fees. All questions concerning the construction, validity,
enforcement and interpretation of this Note and venue shall be governed by and construed and enforced in accordance with Section 5.8
of the Purchase Agreement. If any party shall commence an Action or Proceeding to enforce or otherwise relating to this Note, then, in
addition to the other obligations of the Company elsewhere in this Note, the prevailing party in such action or proceeding shall be reimbursed
by the non-prevailing party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation
and prosecution of such Action or Proceeding.
(f)
Waiver. Any waiver by the Company or the Holder of a breach of any provision of this Note shall not operate as or be construed
to be a waiver of any other breach of such provision or of any breach of any other provision of this Note. The failure of the Company
or the Holder to insist upon strict adherence to any term of this Note on one or more occasions shall not be considered a waiver or deprive
that party of the right thereafter to insist upon strict adherence to that term or any other term of this Note on any other occasion.
Any waiver by the Company or the Holder must be in writing.
(g)
Severability. If any provision of this Note is invalid, illegal or unenforceable, the balance of this Note shall remain in effect,
and if any provision is inapplicable to any Person or circumstance, it shall nevertheless remain applicable to all other Persons and
circumstances. If it shall be found that any interest or other amount deemed interest due hereunder violates the applicable law governing
usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum rate of interest permitted under
applicable law. The Company covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or
in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit
or forgive the Company from paying all or any portion of the principal of or interest on this Note as contemplated herein, wherever enacted,
now or at any time hereafter in force, or which may affect the covenants or the performance of this Note, and the Company (to the extent
it may lawfully do so) hereby expressly waives all benefits or advantage of any such law, and covenants that it will not, by resort to
any such law, hinder, delay or impede the execution of any power herein granted to the Holder, but will suffer and permit the execution
of every such as though no such law has been enacted.
(h)
Remedies, Characterizations, Other Obligations, Breaches and Injunctive Relief. The remedies provided in this Note shall be cumulative
and in addition to all other remedies available under this Note and any of the other Transaction Documents at law or in equity (including
a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the Holder’s right to pursue actual
and consequential damages for any failure by the Company to comply with the terms of this Note. The Company covenants to the Holder that
there shall be no characterization concerning this instrument other than as expressly provided herein. Amounts set forth or provided
for herein with respect to payments and the like (and the computation thereof) shall be the amounts to be received by the Holder and
shall not, except as expressly provided herein, be subject to any other obligation of the Company (or the performance thereof). The Company
acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder and that the remedy at law for
any such breach would be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach, the Holder
shall be entitled, in addition to all other available remedies, to an injunction restraining any such breach or any such threatened breach,
without the necessity of showing economic loss and without any bond or other security being required. The Company shall provide all information
and documentation to the Holder that is requested by the Holder to enable the Holder to confirm the Company’s compliance with the
terms and conditions of this Note.
(i)
Secured Obligation. The obligations of the Company under this Note are secured by all assets of the Company and each Subsidiary
pursuant to the previous Security Agreement between the Company, the Subsidiaries of the Company and the Secured Parties (as defined
therein).
(i)
Next Trading Day. Whenever any payment or other obligation hereunder shall be due on a day other than a Trading Day, such payment
shall be made on the next succeeding Trading Day.
(j)
Headings. The headings contained herein are for convenience only, do not constitute a part of this Note and shall not be deemed
to limit or affect any of the provisions hereof.
IN
WITNESS WHEREOF, the Company has caused this Note to be duly executed by a duly authorized officer as of the date first above indicated.
|
ADHERA THERAPEUTICS, INC. |
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By: |
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Name: |
Andrew Kucharchuk |
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Title: |
Chief Operating Officer |
Exhibit
4.2
NEITHER
THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933 (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT,
THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS
SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.
COMMON
STOCK PURCHASE WARRANT
Warrant
Shares: |
Initial
Exercise Date: June 22, 2023 |
THIS
COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received, , or its assigns (the
“Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set
forth, at any time on or after the date hereof (the “Initial Exercise Date”) and on or prior to the close of business on
the fifth year six month anniversary (December 22, 2028) of the Initial Exercise Date (the “Termination Date”) but not
thereafter, to subscribe for and purchase from Adhera Therapeutics, Inc., a Delaware corporation (the “Company”),
up to 500,000 shares of Common Stock (subject to adjustment hereunder, the “Warrant Shares”). The purchase price of one
Warrant Share under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b). This Warrant issued pursuant to a
Securities Purchase Agreement (the “Purchase Agreement”) entered into as of the Initial Exercise Date between the
Company and the initial Holder.
Section
1. Definitions. Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain
Securities Purchase Agreement (the “Purchase Agreement”), dated April 28, 2023 between the Company and the Purchaser.
Section
2. Exercise.
(a)
Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial
Exercise Date and on or before the Termination Date by delivery to the Company (or such other office or agency of the Company as it may
designate by notice in writing to the registered Holder at the address of the Holder appearing on the books of the Company) of a duly
executed copy of the Notice of Exercise Form annexed hereto. Within the earlier of (i) two Trading Days following the date of exercise
as aforesaid or (ii) the Standard Settlement Period, the Holder shall deliver the aggregate Exercise Price for the shares specified in
the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United States bank, unless the cashless exercise
procedure specified in Section 2(c) below is specified in the applicable Notice of Exercise. If the Holder is required to make any payments
to the Company’s stock transfer agent in connection with its exercise of this Warrant resulting from any failure or alleged failure
of the Company to pay the transfer agent, the Holder may deduct such sums it pays the transfer agent from the total Exercise Price due.
Notwithstanding anything herein to the contrary (although the Holder may surrender the Warrant to, and receive a replacement Warrant
from, the Company), the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased
all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this
Warrant to the Company for cancellation within two Trading Days of the date the final Notice of Exercise is delivered to the Company.
Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall
have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number
of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the
date of such purchases. The Company shall deliver any objection to any Notice of Exercise Form within one Trading Day of delivery of
such notice. The Holder by acceptance of this Warrant or any transferee, acknowledges and agrees that, by reason of the provisions of
this Section 2(a), following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase
hereunder at any given time may be less than the amount stated on the face hereof.
(b)
Exercise Price. The initial exercise price per share of the Common Stock under this Warrant shall be equal to $0.05 per
share, subject to adjustment under Section 3 (the “Exercise Price”).
(c)
Cashless Exercise. Other than as restricted under Section 2(e), if at any time there is no effective Registration Statement covering
the resale of the Warrant Shares at prevailing market prices (not a fixed price) by the Holder, then this Warrant may also be exercised
at the Holder’s election, in whole or in part and in lieu of making the cash payment otherwise contemplated to be made to the Company
upon such exercise, at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a number
of Warrant Shares equal to the number obtained by dividing [(A - B) times (C)] by (A), where:
|
(A) |
= |
the
greater of (i) the arithmetic average of the VWAPs for the five consecutive Trading Days ending on the date immediately preceding
the date on which the Holder elects to exercise this Warrant by means of a “cashless exercise,” as set forth in the applicable
Notice of Exercise or (ii) the VWAP for the Trading Day immediately prior to the date on which the Holder makes such “cashless
exercise” election; |
|
(B) |
= |
the
Exercise Price of this Warrant, as adjusted hereunder, at the time of such exercise; and |
|
(C) |
= |
the
number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such
exercise were by means of a cash exercise rather than a cashless exercise; |
If
Warrant Shares are issued in such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the
Securities Act, the Warrant Shares shall take on the characteristics of the Warrants being exercised, and the holding period of the Warrants
being exercised may be tacked on to the holding period of the Warrant Shares. The Company agrees not to take any position contrary to
this Section 2(c).
For
avoidance of doubt, the phrase “effective Registration Statement” in this Warrant means (i) a Registration Statement covering
the sale of the Warrant Shares has been declared effective by the SEC, has not been withdrawn and is not subject to a stop order issued
by the SEC, and (ii) the Prospectus contained in the Registration Statement complies with Sections 5(b) and 10 of the Securities Act.
Notwithstanding
anything herein to the contrary, if on the Termination Date (unless the Holder notifies the Company otherwise) if there is no effective
Registration Statement covering the resale of the Warrant Shares by the Holder, then this Warrant shall be automatically exercised via
cashless exercise pursuant to this Section 2(c).
(d)
Mechanics of Exercise.
(i)
Delivery of Certificates Upon Exercise. Certificates for the shares of Common Stock purchased hereunder shall be transmitted to
the Holder by the Transfer Agent by crediting the account of the Holder’s prime broker with The Depository Trust Company through
its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system and either (A)
there is an effective Registration Statement covering the sale of the Warrant Shares by the Holder or (B) this Warrant is being exercised
via cashless exercise and Rule 144 is available under the Securities Act, or otherwise by physical delivery to the address specified
by the Holder in the Notice of Exercise by the date that is two Trading Days after the latest of (A) the delivery to the Company of the
Notice of Exercise and (B) payment of the aggregate Exercise Price as set forth above (unless by cashless exercise, if permitted) (such
date, the “Warrant Share Delivery Date”). The Warrant Shares shall be deemed to have been issued, and Holder or any other
person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the
date the Warrant has been exercised, with payment to the Company of the Exercise Price (or by cashless exercise, if permitted). The Company
understands that a delay in the delivery of the Warrant Shares after the Warrant Share Delivery Date could result in economic loss to
the Holder. As compensation to the Holder for such loss, the Company agrees to pay (as liquidated damages and not as a penalty) to the
Holder for late issuance of Warrant Shares upon exercise of this Warrant the proportionate amount of $10 per Trading Day (increasing
to $20 per Trading Day after the fifth Trading Day) after the Warrant Share Delivery Date for each $1,000 of the value of the Warrant
Shares for which this Warrant is exercised (based on the Exercise Price) which are not timely delivered. The Company shall pay any payment
incurred under this Section 2(d)(i) in immediately available funds upon demand. In no event shall liquidated damages for any one transaction
exceed $1,000 for the first 10 Trading Days. Furthermore, in addition to any other remedies which may be available to the Holder, in
the event that the Company fails for any reason to effect delivery of the Warrant Shares by the Warrant Share Delivery Date, the Holder
may revoke all or part of the relevant Warrant exercise by delivery of a notice to such effect to the Company, whereupon the Company
and the Holder shall each be restored to their respective positions immediately prior to the exercise of the relevant portion of this
Warrant, except that the liquidated damages described above shall be payable through the date notice of revocation or rescission is given
to the Company or the date the Warrant Shares are delivered to the Holder, whichever date is earlier.
(ii)
Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of
a Holder and upon surrender of this Warrant, at the time of delivery of the certificate or certificates representing Warrant Shares,
deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this
Warrant, which new Warrant shall in all other respects be identical to this Warrant. Unless the Warrant has been fully exercised, the
Holders shall not be required to surrender this Warrant as a condition of exercise.
(iii)
Rescission Rights. If the Company fails to deliver the Warrant Shares or cause the Transfer Agent to transmit to the Holder a
certificate or the certificates representing the Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share Delivery Date, then
the Holder will have the right, at any time prior to issuance of such Warrant Shares, to rescind such exercise.
(iv)
Compensation for Buy-In on Failure to Timely Deliver Certificates Upon Exercise. In addition to any other rights available to
the Holder, if the Company fails to deliver the Warrant Shares, or cause the Transfer Agent to transmit to the Holder the certificate
or certificates representing the Warrant Shares pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such
date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm
otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder
anticipated receiving upon such exercise (a “Buy-In”), then the Company shall pay in cash to the Holder the amount
as provided under Section 4.1(e) of the Purchase Agreement. Nothing herein shall limit a Holder’s right to pursue any other remedies
available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief
with respect to the Company’s failure to timely deliver certificates representing shares of Common Stock upon exercise of the Warrant
as required pursuant to the terms hereof.
(v)
No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise
of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company
shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied
by the Exercise Price or round up the fraction to the next whole share.
(vi)
Charges, Taxes and Expenses. Issuance of certificates for Warrant Shares shall be made without charge to the Holder for any issue
or transfer tax or other incidental expense in respect of the issuance of such certificate including any charges of any clearing firm,
all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such
name or names as may be directed by the Holder. The Company shall pay all Transfer Agent fees required for same-day processing of any
Notice of Exercise. The Company shall (A) pay the reasonable legal fees of the Holder’s choice (in an amount not to exceed $500
per opinion, and not more often than once per week) in connection with the exercise of the Warrants, (B) cause its attorneys to promptly
provide any reliance opinion to the Transfer Agent, and (C) pay the Holder the sums required under Section 2(d)(iv).
(vii)
Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise
of this Warrant, pursuant to the terms hereof.
(e)
Holder’s Exercise Limitations. The Company shall not effect any exercise of this Warrant, and a Holder shall not have the
right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance
after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other
Persons acting as a group together with the Holder or any of the Holder’s Affiliates), would beneficially own in excess of the
Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially
owned by the Holder and its Affiliates shall include the number of shares of Common Stock issuable upon exercise of this Warrant with
respect to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon
(i) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates and (ii)
exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation,
any other Common Stock Equivalents) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially
owned by the Holder or any of its Affiliates. Except as set forth in the preceding sentence, for purposes of this Section 2(e), beneficial
ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder,
it being acknowledged by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section
13(d) of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith. To the
extent that the limitation contained in this Section 2(e) applies, the determination of whether this Warrant is exercisable (in relation
to other securities owned by the Holder together with any Affiliates) and of which portion of this Warrant is exercisable shall be in
the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination
of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates) and of which
portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation
to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall
be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes
of this Section 2(e), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding
shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the Commission, as the
case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Transfer
Agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall
within one Trading Day confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case,
the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities
of the Company, including this Warrant, by the Holder or its Affiliates since the date as of which such number of outstanding shares
of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 4.99% of the number of shares
of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this
Warrant. The Holder, upon not less than 61 days’ prior notice to the Company, may increase the Beneficial Ownership Limitation
provisions of this Section 2(e) solely with respect to the Holder’s Warrant, provided that the Beneficial Ownership Limitation
in no event exceeds 9.99% of the number of shares of Common Stock outstanding immediately after giving effect to the issuance of shares
of Common Stock upon exercise of this Warrant held by the Holder and the provisions of this Section 2(e) shall continue to apply. Any
such increase will not be effective until the 61st day after such notice is delivered to the Company. The Holder may also decrease the
Beneficial Ownership Limitation provisions of this Section 2(e) solely with respect to the Holder’s Warrant at any time, which
decrease shall be effectively immediately upon delivery of notice to the Company. The provisions of this paragraph shall be construed
and implemented in a manner otherwise than in strict conformity with the terms of this Section 2(e) to correct this paragraph (or any
portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make
changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph
shall apply to a successor holder of this Warrant.
Section
3. Certain Adjustments.
(a)
Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise
makes 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 Company upon exercise of this
Warrant or pursuant to any of the other Transaction Documents), (ii) subdivides outstanding shares of Common Stock into a larger number
of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares,
or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise
Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares,
if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding
immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such
that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become
effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and
shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.
(b)
Subsequent Equity Transactions. On or prior to the date that is two years after the Qualified Financing, if and whenever the Company
issues or sells, or in accordance with this Section 3 is deemed to have issued or sold, any shares of Common Stock (including any equity
financings, or equivalents, warrants, convertible debt, or the issuance or sale of shares of Common Stock owned or held by or for the
account of the Company, issued or sold or deemed to have been issued or sold), which in the aggregate equal at least $1 million, for
a consideration per share (the “Base Share Price”) less than a price equal to the Exercise Price in effect immediately
prior to such issuance or sale or deemed issuance or sale (such Exercise Price then in effect is referred to herein as the “Applicable
Price”) (the foregoing a “Dilutive Issuance”), then immediately after such Dilutive Issuance, the Exercise
Price then in effect shall be reduced to an amount equal to the Base Share Price. For all purposes of the foregoing (including, without
limitation, determining the adjusted Exercise Price and the Base Share Price under this Section 3(b)), the following shall be applicable:
(i)
Issuance of Options. If the Company in any manner grants or sells any Options and the lowest price per share for which one share
of Common Stock is at any time issuable upon the exercise of any such Option or upon conversion, exercise or exchange of any Convertible
Securities issuable upon exercise of any such Option or otherwise pursuant to the terms thereof is less than the Applicable Price, then
such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the granting
or sale of such Option for such price per share. For purposes of this Section 3(b)(i), the “lowest price per share for which one
share of Common Stock is issuable upon the exercise of any such Options or upon conversion, exercise or exchange of any Convertible Securities
issuable upon exercise of any such Option or otherwise pursuant to the terms thereof” shall be equal to (1) the lower of (x) the
sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one share of Common Stock
upon the granting or sale of such Option, upon exercise of such Option and upon conversion, exercise or exchange of any Convertible Security
issuable upon exercise of such Option or otherwise pursuant to the terms thereof and (y) the lowest exercise price set forth in such
Option for which one share of Common Stock is issuable upon the exercise of any such Options or upon conversion, exercise or exchange
of any Convertible Securities issuable upon exercise of any such Option or otherwise pursuant to the terms thereof minus (2) the sum
of all amounts paid or payable to the holder of such Option (or any other Person) upon the granting or sale of such Option, upon exercise
of such Option and upon conversion, exercise or exchange of any Convertible Security issuable upon exercise of such Option or otherwise
pursuant to the terms thereof plus the value of any other consideration received or receivable by, or benefit conferred on, the holder
of such Option (or any other Person). Except as contemplated below, no further adjustment of the Exercise Price shall be made upon the
actual issuance of such shares of Common Stock or of such Convertible Securities upon the exercise of such Options or otherwise pursuant
to the terms of or upon the actual issuance of such shares of Common Stock upon conversion, exercise or exchange of such Convertible
Securities.
(ii)
Issuance of Convertible Securities. If the Company in any manner issues or sells any Convertible Securities and the lowest price
per share for which one share of Common Stock is at any time issuable upon the conversion, exercise or exchange thereof or otherwise
pursuant to the terms thereof is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and
to have been issued and sold by the Company at the time of the issuance or sale of such Convertible Securities for such price per share.
For the purposes of this Section 3(b)(ii), the “lowest price per share for which one share of Common Stock is issuable upon the
conversion, exercise or exchange thereof or otherwise pursuant to the terms thereof” shall be equal to (1) the lower of (x) the
sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to one share of Common Stock upon
the issuance or sale of the Convertible Security and upon conversion, exercise or exchange of such Convertible Security or otherwise
pursuant to the terms thereof and (y) the lowest conversion price set forth in such Convertible Security for which one share of Common
Stock is issuable upon conversion, exercise or exchange thereof or otherwise pursuant to the terms thereof minus (2) the sum of all amounts
paid or payable to the holder of such Convertible Security (or any other Person) upon the issuance or sale of such Convertible Security
plus the value of any other consideration received or receivable by, or benefit conferred on, the holder of such Convertible Security
(or any other Person). Except as contemplated below, no further adjustment of the Exercise Price shall be made upon the actual issuance
of such shares of Common Stock upon conversion, exercise or exchange of such Convertible Securities or otherwise pursuant to the terms
thereof, and if any such issuance or sale of such Convertible Securities is made upon exercise of any Options for which adjustment of
this Warrant has been or is to be made pursuant to other provisions of this Section 3(b), except as contemplated below, no further adjustment
of the Exercise Price shall be made by reason of such issuance or sale.
(iii)
Change in Option Price or Rate of Conversion. “Convertible Securities” means any stock or other security (other than
Options) that is at any time and under any circumstances, directly or indirectly, convertible into, exercisable or exchangeable for,
or which otherwise entitles the holder thereof to acquire, any shares of Common Stock. If the purchase or exercise price provided for
in any Options, the additional consideration, if any, payable upon the issue, conversion, exercise or exchange of any Convertible Securities,
or the rate at which any Convertible Securities are convertible into or exercisable or exchangeable for shares of Common Stock increases
or decreases at any time (other than proportional changes in exercise prices, as applicable, in connection with an event referred to
in Section 3(a)), the Exercise Price in effect at the time of such increase or decrease shall be adjusted to the Exercise Price which
would have been in effect at such time had such Options or Convertible Securities provided for such increased or decreased purchase price,
additional consideration or increased or decreased conversion rate, as the case may be, at the time initially granted, issued or sold.
For purposes of this Section 3(b)(iii), if the terms of any Option or Convertible Security that was outstanding as of the Closing Date
are increased or decreased in the manner described in the immediately preceding sentence, then such Option or Convertible Security and
the shares of Common Stock deemed issuable upon exercise, conversion or exchange thereof shall be deemed to have been issued as of the
date of such increase or decrease. No adjustment pursuant to this Section 3(b) shall be made if such adjustment would result in an increase
of the Exercise Price then in effect.
(iv)
Calculation of Consideration Received. If any Option is issued in connection with the issuance or sale of any other securities
of the Company together comprising one integrated transaction in which no specific consideration is allocated to such Option by the parties
thereto, the Options will be deemed to have been issued for a consideration of par value of the Company’s Common Stock. If any
shares of Common Stock, Options or Convertible Securities are issued or sold or deemed to have been issued or sold for cash, the consideration
received therefor will be deemed to be the net amount of consideration received by the Company therefor. If any shares of Common Stock,
Options or Convertible Securities are issued or sold for a consideration other than cash, the amount of such consideration received by
the Company will be the fair value of such consideration, except where such consideration consists of publicly traded securities, in
which case the amount of consideration received by the Company for such securities will be the arithmetic average of the VWAPs of such
security for each of the five Trading Days immediately preceding the date of receipt. If any shares of Common Stock, Options or Convertible
Securities are issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving entity,
the amount of consideration therefor will be deemed to be the fair value of such portion of the net assets and business of the non-surviving
entity as is attributable to such shares of Common Stock, Options or Convertible Securities. The fair value of any consideration other
than cash or publicly traded securities will be determined jointly by the Company and the Holder. If such parties are unable to reach
agreement within 10 days after the occurrence of an event requiring valuation (the “Valuation Event”), the fair value
of such consideration will be determined within five Trading Days after the 10th day following such Valuation Event by an
independent, reputable appraiser jointly selected by the Company and the Holder. The determination of such appraiser shall be final and
binding upon all parties absent manifest error. If such appraiser’s valuation differs by less than 5% from the Company’s
proposed valuation, the fees and expenses of such appraiser shall be borne by the Holder, and if such appraiser’s valuation differs
by more than 5% from the Company’s proposed valuation, the fees and expenses of such appraiser shall be borne by the Company.
(v)
Record Date. If the Company takes a record of the holders of shares of Common Stock for the purpose of entitling them (A) to receive
a dividend or other distribution payable in shares of Common Stock, Options or in Convertible Securities or (B) to subscribe for or purchase
shares of Common Stock, Options or Convertible Securities, then such record date will be deemed to be the date of the issuance or sale
of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution
or the date of the granting of such right of subscription or purchase (as the case may be).
(vi)
Notwithstanding the foregoing, this Section 3(b) shall not apply to any Exempt Issuances.
(c)
Intentionally Omitted
(d)
Subsequent Rights Offerings. In addition to any adjustments pursuant to Section 3 above, if at any time the Company grants, issues
or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record holders
of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon
the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held
the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise
hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for
the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares
of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, to the extent
that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership
Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such
shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance
for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).
Notwithstanding the foregoing, no Purchase Rights will be made under this Section 3(d) in respect of an Exempt Issuance.
(e)
Pro Rata Distributions. If the Company, at any time while this Warrant is outstanding, shall distribute to all holders of Common
Stock (and not to the Holder) evidences of its indebtedness or assets (including cash and cash dividends) or rights or warrants to subscribe
for or purchase any security other than the Common Stock (which shall be subject to Section 3(d)), then in each such case the Exercise
Price shall be adjusted by multiplying the Exercise Price in effect immediately prior to the record date fixed for determination of stockholders
entitled to receive such distribution by a fraction of which the denominator shall be the VWAP determined as of the record date mentioned
above, and of which the numerator shall be such VWAP on such record date less the then per share fair market value at such record date
of the portion of such assets or evidence of indebtedness so distributed applicable to one outstanding share of the Common Stock as determined
by the Board of Directors in good faith. In either case the adjustments shall be described in a statement provided to the Holder of the
portion of assets or evidences of indebtedness so distributed or such subscription rights applicable to one share of Common Stock. Such
adjustment shall be made whenever any such distribution is made and shall become effective immediately after the record date mentioned
above.
(f)
Fundamental Transaction.
(i)
If, at any time while this Warrant is outstanding, the Company, directly or indirectly, in one or more related transactions engages in
any Fundamental Transaction, as defined in the Purchase Agreement, then, upon any subsequent exercise of this Warrant, the Holder shall
have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence
of such Fundamental Transaction (without regard to any limitation on the exercise of this Warrant), the number of shares of Common Stock
of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the
“Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of
Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction (without regard to any limitation
on the exercise of this Warrant). For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted
to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock
in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable
manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given
any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same
choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. The Company
shall not effect a Fundamental Transaction unless it gives the Holder at least 10 Trading Days prior notice together with sufficient
details so the Holder can make an informed decision as to whether it elects to accept the Alternative Consideration. If a public announcement
of the Fundamental Transaction has not been made, the notice to the Holder may not be given until the Company files a Form 8-K or other
report disclosing the Fundamental Transaction.
(ii)
Notwithstanding anything to the contrary, in the event of a Fundamental Transaction, the Company or any Successor Entity (as defined
below) shall, at the Holder’s option, exercisable at any time concurrently with, or within 30 days after, the consummation of the
Fundamental Transaction, purchase this Warrant from the Holder by paying to the Holder an amount of cash equal to the greater of (i)
the Black Scholes Value of the remaining unexercised portion of this Warrant on the date of the consummation of such Fundamental Transaction
or (ii) the positive difference between the cash per share paid in such Fundamental Transaction minus the then in effect Exercise Price.
“Black Scholes Value” means the value of the unexercised portion of this Warrant based on the Black and Scholes Option Pricing
Model obtained from the “OV” function on Bloomberg L.P. determined as of the day of consummation of the applicable Fundamental
Transaction for pricing purposes and reflecting (A) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal
to the time between the date of the public announcement of the applicable Fundamental Transaction and the Termination Date, (B) an expected
volatility equal to the greater of 100% and the 100 day volatility obtained from the HVT function on Bloomberg L.P. as of the Trading
Day immediately following the public announcement of the applicable Fundamental Transaction, (C) the underlying price per share used
in such calculation shall be the sum of the price per share being offered in cash, if any, plus the value of any non-cash consideration,
if any, being offered in such Fundamental Transaction and (D) a remaining option time equal to the time between the date of the public
announcement of the applicable Fundamental Transaction and the Termination Date. The payment of the Black Scholes Value will be made
by wire transfer of immediately available funds (or such other consideration) within the later of (i) five Trading Days of the Holder’s
election and (ii) the date of consummation of the Fundamental Transaction.
(iii)
The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor
Entity”) to assume in writing all of the obligations of the Company under this Warrant and the other Transaction Documents in accordance
with the provisions of this Section 3(f)(iii) pursuant to written agreements in form and substance reasonably satisfactory to the Holder
and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the Holder,
deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially
similar in form and substance to this Warrant which is exercisable for a corresponding number of shares of capital stock of such Successor
Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant prior
to such Fundamental Transaction (without regard to any limitation on the exercise of this Warrant), and with an exercise price which
applies the exercise price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common
Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock
and such exercise price being for the purpose of protecting the economic value of this Warrant immediately prior to the consummation
of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any
such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such
Fundamental Transaction, the provisions of this Warrant and the other Transaction Documents referring to the “Company” shall
refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations
of the Company under this Warrant and the other Transaction Documents with the same effect as if such Successor Entity had been named
as the Company herein.
(g)
Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the
case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date
shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.
(h)
Notice to Holder.
(i)
Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company
shall promptly email to the Holder a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the
number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment. The Holder may supply an email address
to the Company and change such address.
(ii)
Notice to Allow Exercise by the Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form)
on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the
Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of
capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with
any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or
substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities,
or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company,
then, in each case, the Company shall deliver to the Holder at its last address as it shall appear upon the Warrant Register of the Company,
at least 5 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which
a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken,
the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or
warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange
is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be
entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer or share exchange; provided that the failure to email such notice or any defect therein or in the
emailing thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any
notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries
(as determined in good faith by the Company), the Company shall simultaneously file such notice with the Commission pursuant to a Current
Report on Form 8-K. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice
to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.
Section
4. Transfer of Warrant.
(a)
Transferability. Subject to compliance with any applicable securities laws and the provisions of the Purchase Agreement, this
Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon
surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this
Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney. Upon such surrender, the Company
shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination
or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of
this Warrant not so assigned, and this Warrant shall promptly be cancelled. The Warrant, if properly assigned in accordance herewith,
may be exercised by a new Holder for the purchase of Warrant Shares without having a new Warrant issued.
(b)
New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of
the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by
the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division
or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided
or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the initial issuance date of
this Warrant and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.
(c)
Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the
“Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered
Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for
all other purposes, absent actual notice to the contrary.
Section
5. Miscellaneous.
(a)
No Rights as Stockholder Until Exercise. This Warrant does not entitle the Holder to any voting rights, dividends or other rights
as a stockholder of the Company prior to the exercise hereof other than as explicitly set forth in Section 3.
(b)
Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares,
and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant
or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate. In no event shall
the Holder be required to deliver a bond or other security.
(c)
Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required
or granted herein shall not be a Trading Day, then, such action may be taken or such right may be exercised on the next succeeding Trading
Day.
(d)
Authorized Shares.
Except
and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending
its Articles of Incorporation or through any reorganization, transfer of assets, consolidation, merger, 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, but
will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary
or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the
foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise
immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company
may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use best efforts
to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary
to enable the Company to perform its obligations under this Warrant.
Before
taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the
Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from
any public regulatory body or bodies having jurisdiction thereof.
(e)
Governing Law/Jurisdiction. The Company and the Holder agree that any Action or Proceeding involving the construction, validity,
enforcement and interpretation of this Warrant shall be determined exclusively in accordance with the provisions of the Purchase Agreement.
(f)
Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered or
if not exercised on a cashless basis when Rule 144 (or any successor law or rule) is available, may have restrictions upon resale imposed
by state and federal securities laws.
(g)
Non-waiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of the Holder
shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies. Without limiting any other
provision of this Warrant or the Purchase Agreement, if the Company willfully and knowingly fails to comply with any provision of this
Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient
to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings,
incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies
hereunder.
(h)
Notices. Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall
be delivered in accordance with the notice provisions of the Purchase Agreement.
(i)
Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant
to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of
the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company
or by creditors of the Company.
(j)
Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will
be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to
assert the defense in any action for specific performance that a remedy at law would be adequate or that there is no irreparable harm
and not to require the posting of a bond or other security.
(k)
Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall
inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns
of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall
be enforceable by the Holder of Warrant Shares.
(l)
Amendment. This Warrant may only be modified or amended or the provisions hereof waived with the written consent of the Company
and the Holder of this Warrant.
(m)
Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall
be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining
provisions of this Warrant.
(n)
Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed
a part of this Warrant.
IN
WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above
indicated.
|
ADHERA
THERAPEUTICS, INC. |
|
|
|
|
By: |
|
|
Name: |
Andrew KucharchuK |
|
Title: |
Chief
OPERATING Officer |
NOTICE
OF EXERCISE
To:
ADHERA THERAPEUTICS, INC.
(1)
The undersigned hereby elects to purchase ___________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only
if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.
(2)
Payment shall take the form of (check applicable box):
[ ] in lawful money of the United States; or
[ ]
if permitted the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection
2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure
set forth in subsection 2(c).
(3)
Please issue a certificate or certificates representing said Warrant Shares in the name of the undersigned or in such other name as is
specified below:
_______________________________
(4)
After giving effect to this Notice of Exercise, the undersigned will not have exceeded the Beneficial Ownership Limitation.
The
Warrant Shares shall be delivered to the following DWAC Account Number or by physical delivery of a certificate to:
_______________________________
_______________________________
_______________________________
SIGNATURE
OF HOLDER
Name
of Investing Entity: ___________________________________________________________________
Signature
of Authorized Signatory of Investing Entity: _____________________________________________
Name
of Authorized Signatory: _______________________________________________________________
Title
of Authorized Signatory: ________________________________________________________________
Date:
____________________________________________________________________________________
ASSIGNMENT
FORM
(To
assign the foregoing warrant, execute
this
form and supply required information.
Do
not use this form to exercise the warrant.)
ADHERA
THERAPEUTICS, INC.
FOR
VALUE RECEIVED, ____ all of or _______ shares of the foregoing Warrant and all rights evidenced thereby are hereby assigned to
_______________________________________________
whose address is
_______________________________________________________________
_______________________________________________________________
Dated:
______________, _______
Holder’s
Signature: _____________________________
Holder’s
Address: _____________________________
_____________________________
Signature
Guaranteed: ___________________________________________
NOTE:
The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement
or any change whatsoever, and must be guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary
or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.
Exhibit
10.1
SECURITIES
PURCHASE AGREEMENT
This
Securities Purchase Agreement (this “Agreement”) is dated as of ______________, by and between Adhera Therapeutics, Inc.,
a Delaware corporation (the “Company”), and each lender party that executes the signature page hereto as a purchaser (each,
a “Purchaser” and collectively, the “Purchasers”).
WHEREAS,
subject to the terms and conditions set forth in this Agreement and pursuant to an exemption from the registration requirements of Section
5 of the Securities Act, as defined, contained in Section 4(a)(2) thereof and/or Rule 506(b) thereunder, the Company desires to issue
and sell to the Purchasers, and the Purchasers, severally and not jointly, desires to purchase from the Company, Securities of the Company
as more fully described in this Agreement.
NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt
and adequacy of which are hereby acknowledged, the Company and the Purchasers agree as follows:
Article
I
DEFINITIONS
1.1 Definitions.
In addition to the words and terms defined elsewhere in this Agreement, for all purposes of this Agreement, the following terms have
the meanings set forth in this Section 1.1:
“Acquiring
Person” shall have the meaning ascribed to such term in Section 4.5.
“Action”
shall have the meaning ascribed to such term in Section 3.1(j).
“Affiliate”
means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control
with a Person as such terms are used in and construed under Rule 405 under the Securities Act.
“Board
of Directors” means the board of directors of the Company.
“Closing”
means the closing of the purchase and sale of the Securities pursuant to Section 2.1.
“Closing
Date” means the Trading Day on which all of the applicable Transaction Documents have been executed and delivered by the applicable
parties thereto, and all conditions precedent to (i) the Purchaser’s obligations to pay the applicable Subscription Amount and
(ii) the Company’s obligations to deliver the Securities to be issued and sold, in each case, have been satisfied or waived, but
in no event later than the second Trading Day following the date hereof.
“Collateral
Agent” means the party appointed agent on behalf of all Purchasers in the Security Agreement dated the same date as this Agreement
by and between the Company and the Collateral Agent.
“Common
Stock” means the common stock of the Company, par value $0.006 per share, and any other class of securities into which such securities
may hereafter be reclassified or changed.
“Common
Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at
any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is at
any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.
“Company
Counsel” means Nason, Yeager, Gerson, Harris & Fumero, P.A.
“Evaluation
Date” shall have the meaning ascribed to such term in Section 3.1(s).
“Exchange
Act” means the Securities Exchange Act of 1934, and the rules and regulations promulgated thereunder.
“Exempt
Issuance” means the issuance of (a) shares of Common Stock, restricted stock units or options, and the underlying shares of Common
Stock to consultants, employees, officers or directors of the Company pursuant to any stock or option plan duly adopted for such purpose
(in an amount not to exceed 5% of the Company’s outstanding shares as of the Closing Date), (b) securities issued upon the exercise
or exchange of or conversion of any Securities issued hereunder and/or other securities issuable pursuant to existing agreements, exercisable
or exchangeable for or convertible into shares of Common Stock issued and outstanding on the date of this Agreement, provided that such
securities have not been amended since the date of this Agreement to increase the number of such securities or to decrease the exercise
price, exchange price or conversion price of such securities (other than in connection with stock dividends, stock splits or combinations)
or to extend the term of such securities, (c) securities issued pursuant to a Qualified Financing, (d) securities issued pursuant, acquisitions
or strategic transactions approved by a majority of the directors of the Company, provided that any such issuance shall only be to a
Person (or to the equity holders of a Person) which is, itself or through its subsidiaries, an operating company or an owner of an asset
in a business synergistic with the business of the Company and which shall reasonably be expected to provide to the Company additional
benefits, but shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital
or to an entity whose primary business is investing in securities, (e) securities issued pursuant to any purchase money equipment loan
or capital leasing arrangement with or from a commercial bank, and (f) securities upon a stock split, stock dividend or subdivision of
the Common Stock; provided, however, in each case, that such securities are issued as “restricted securities” (as defined
in Rule 144) and carry no registration rights that require or permit the filing of any registration statement in connection therewith
within one hundred and twenty (120) days following the Effective Date.
“FCPA”
means the Foreign Corrupt Practices Act of 1977, as amended.
“GAAP”
shall have the meaning ascribed to such term in Section 3.1(h).
“Indebtedness”
means (x) any liabilities for borrowed money or amounts owed in excess of $50,000 (other than trade accounts payable incurred in the
ordinary course of business), (y) all guaranties, endorsements and other contingent obligations in respect of indebtedness of others,
whether or not the same are or should be reflected in the Company’s consolidated balance sheet (or the notes thereto), except guaranties
by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business; and (z)
the present value of any lease payments in excess of $50,000 due under leases required to be capitalized in accordance with GAAP.
“Intellectual
Property” means all of the following in any jurisdiction throughout the world: (a) all inventions (whether patentable or unpatentable
and whether or not reduced to practice), all improvements thereto, and all U.S. and foreign patents, patent applications, and patent
disclosures, together with all reissuances, continuations, continuations-in-part, revisions, extensions, and reexaminations thereof,
(b) all trademarks, service marks, brand names, certification marks, trade dress, logos, trade names, domain names, assumed names and
corporate names, together with all colorable imitations thereof, and including all goodwill associated therewith, and all applications,
registrations, and renewals in connection therewith, (c) all copyrights, and all applications, registrations, and renewals in connection
therewith, (d) all trade secrets under applicable state laws and the common law and know-how (including formulas, techniques, technical
data, designs, drawings, specifications, customer and supplier lists, pricing and cost information, and business and marketing plans
and proposals), (e) all computer software (including source code, object code, diagrams, data and related documentation), and (f) all
copies and tangible embodiments of the foregoing (in whatever form or medium).
“Lead
Investor” means [●].
“Licensed
Intellectual Property Agreement” means all licenses, sublicenses, agreements and permissions (each as amended to date) that any
third party owns and that the Company uses, including off-the-shelf software purchased or licensed by the Company.
“Liens”
means a lien, charge, pledge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.
“Material
Adverse Effect” shall have the meaning assigned to such term in Section 3.1(b).
“Misconduct”
shall have the meaning in Section 3.1(k)(i)(A)
“Notes”
means original issue discount senior secured promissory notes issued to the Purchasers, in the form of Exhibit A attached
hereto.
“Original
Issue Date” means the date of the first issuance of the Notes, regardless of any transfers of any Note and regardless of the number
of instruments which may be issued to evidence such Notes.
“Person”
means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
“Pledged
Securities” means any and all certificates and other instruments representing or evidencing all of the capital stock and other
equity interests of the Subsidiaries.
“Proceeding”
means an action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial proceeding,
such as a deposition), whether commenced or threatened.
“Purchaser”
has the meaning contained on the first paragraph of this Agreement, and each Purchaser is identified on its respective signature page.
“Purchaser
Party” shall have the meaning ascribed to such term in Section 4.8.
“Qualified
Financing” means a single public offering for cash of Common Stock and/or Common Stock Equivalents which results in the listing
of the Company’s Common Stock on a “national securities exchange” as defined in the Exchange Act.
“Registrable
Shares” means the Warrant Shares, provided that any particular securities of such Registrable Shares shall cease to be Registrable
Shares when (i) any registration statement of the Company that covers the sale of such securities shall have become effective under the
Securities Act and such securities shall have been disposed of in accordance with such registration statement, (ii) such securities shall
have become eligible to be sold to the public by the Purchaser pursuant to Rule 144 under the Securities Act without any limitations
on volume or manner of sale, or (iii) subsequent disposition of such securities shall not require registration or qualification of them
under the Securities Act or of any similar state law then in force.
“Regulation
FD” means Regulation FD promulgated by the SEC pursuant to the Exchange Act, as such Regulation may be amended or interpreted from
time to time, or any similar rule or regulation hereafter adopted by the SEC having substantially the same purpose and effect as such
Regulation
“Required
Approvals” shall have the meaning ascribed to such term in Section 3.1(e).
“Reserve”
shall have the meaning ascribed to such term in Section 4.9.
“Rule
144” means Rule 144 promulgated by the SEC 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 SEC having substantially the same purpose and effect as such Rule.
“SEC”
means the United States Securities and Exchange Commission.
“SEC
Reports” shall have the meaning ascribed to such term in Section 3.1(h).
“Securities”
means the Notes, the Warrants, the Pre-Funded Warrant Shares, and the Warrant Shares.
“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Security
Agreement” means the Security Agreement, dated the date hereof, among the Company and the Purchasers, in the form of Exhibit
F attached hereto.
“Security
Documents” shall mean the Security Agreement, and any other documents and filing required thereunder in order to grant the Purchasers
a priority security interest in the assets of the Company and the Subsidiaries, if any, as provided in the Security Agreement.
“Short
Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall not be deemed
to include the location and/or reservation of borrowable shares of Common Stock).
“Subscription
Amount” means for each Purchaser, the aggregate amount to be paid for the Notes and Warrants purchased hereunder as specified below
such Purchaser’s name on the signature page of this Agreement.
“Subsidiary”
means with respect to any entity at any date, any direct or indirect corporation, limited or general partnership, limited liability company,
trust, estate, association, joint venture or other business entity of which (A) more than 50% of (i) the outstanding capital stock having
(in the absence of contingencies) ordinary voting power to elect a majority of the Board of Directors or other managing body of such
entity, (ii) in the case of a partnership or limited liability company, the interest in the capital or profits of such partnership or
limited liability company or (iii) in the case of a trust, estate, association, joint venture or other entity, the beneficial interest
in such trust, estate, association or other entity business is, at the time of determination, owned or controlled directly or indirectly
through one or more intermediaries, by such entity, or (B) is under the actual control of the Company.
“Trading
Day” means a day on which the principal Trading Market is open for trading.
“Trading
Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in
question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock
Exchange, the OTCQB, the OTCQX, or the OTC Pink Marketplace (or any successors to any of the foregoing).
“Transaction
Documents” means this Agreement, the Notes, Security Documents, the Warrants, and any other documents or agreements executed in
connection with the transactions contemplated hereunder.
“Transfer
Agent” means American Stock Transfer & Trust Company, and any successor transfer agent of the Company.
“Variable
Rate Transaction” means any Equity Line of Credit or agreement to issue or agree to issue any Common Stock, floating or Variable
Priced Equity Linked Instruments or any of the foregoing or equity with price reset rights (subject to adjustment for stock splits, distributions,
dividends, recapitalizations and the like) (collectively, the “Variable Rate Transaction”). For purposes of this Agreement,
“Equity Line of Credit” shall include any transaction involving a written agreement between the Company and an investor or
underwriter whereby the Company has the right to issue its securities to the investor or underwriter over an agreed period of time and
at an agreed price or price formula, and “Variable Priced Equity Linked Instruments” shall include: (A) any debt or equity
securities which are convertible into, exercisable or exchangeable for, or carry the right to receive additional shares of Common Stock
either (1) at any conversion, exercise or exchange rate or other price that is based upon and/or varies with the trading prices of or
quotations for Common Stock at any time after the initial issuance of such debt or equity security, or (2) with a fixed conversion, exercise
or exchange price that is subject to being reset at some future date at any time after the initial issuance of such debt or equity security
due to a change in the market price of the Company’s Common Stock since date of initial issuance, and (B) any amortizing convertible
security which amortizes prior to its maturity date, where the Company is required to or has the option to (or any investor in such transaction
has the option to require the Company to) make such amortization payments in shares of Common Stock which are valued at a price that
is based upon and/or varies with the trading prices of or quotations for Common Stock at any time after the initial issuance of such
debt or equity security (whether or not such payments in stock are subject to certain equity conditions). For purposes of determining
the total consideration for a convertible instrument (including a right to purchase equity of the Company) issued, subject to an original
issue or similar discount or which principal amount is directly or indirectly increased after issuance, the consideration will be deemed
to be the actual cash amount received by the Company in consideration of the original issuance of such convertible instrument.
“VWAP”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then
listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding
date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day
from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted
average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock
is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported on the Pink Open Market
(or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common
Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser
selected in good faith by the Purchasers of a majority in interest of the Securities then outstanding and reasonably acceptable to the
Company, the fees and expenses of which shall be paid by the Company.
“Warrant
Exercise Price” means $0.82 per share, subject to adjustment as provided in the applicable Warrant.
“Warrant
Shares” means the Common Stock issuable upon exercise of the Warrants.
“Warrants”
means the warrants delivered to the Purchaser at the Closing in accordance with Section 2.2(a)
hereof, which warrants shall be exercisable immediately and have a term of exercise equal to 5.5 years, in the form of Exhibit
B attached hereto.
Article
II
PURCHASE AND SALE
2.1
Purchase and Sale. On the Closing Date, upon the terms and subject to the conditions and the performance of the obligations set
forth herein, substantially concurrent with the execution and delivery of this Agreement by the parties hereto, the Company agrees to
sell, and each Purchaser, severally and not jointly, agrees to purchase an aggregate of (i) up to $1,666,666.67 face value of original
issue discount Notes for a total purchase price of up to $1,500,000.00 and (ii) Warrants to purchase up to [●] shares of Common
Stock, in the form of Exhibit B hereto. On each Closing Date, each Purchaser shall deliver to the Company, via wire transfer
immediately available funds equal to the Purchaser’s Subscription Amount, and the Company shall deliver to the Purchaser a Note
and the number of Warrants as determined herein, and the Company and each Purchaser shall deliver the other items set forth herein deliverable
at the Closing. Upon satisfaction of the covenants and conditions set forth herein, the Closing shall occur at the offices of Company
Counsel or such other location as the parties shall mutually agree.
2.2
Deliveries.
(a)
On or prior to the Closing Date, the Company shall deliver
or cause to be delivered to each Purchaser the following:
(i)
this Agreement (and the other Transaction Documents)
duly executed by the Company;
(ii)
a Note in the principal amount set forth on such Purchaser’s
signature page, registered in the name of each Purchaser;
(iii)
an executed Warrant in the form of Exhibit B
hereto, to purchase up to a number of shares of Common Stock as set forth on such Purchaser’s signature page, exercisable at the
Warrant Exercise Price, registered in the name of such Purchaser;
(iv)
the Security Documents, duly executed by the Company;
(v)
a legal opinion of Company Counsel, in form and substance,
reasonably satisfactory to the Purchasers;
(vi)
a reservation letter from the Transfer Agent in the
form attached as Exhibit D;
(vii)
a Board Consent approving the issuance of the Notes
and Warrants and the execution of the Transaction Documents (including the reservation letter) on behalf of the Company in the form attached
as Exhibit E; and
(viii)
the Company’s wire instructions, on Company letterhead
and executed by the Chief Executive Officer or Chief Financial Officer of the Company.
(b)
On or prior to the Closing Date, each Purchaser shall
deliver or cause to be delivered to the Company the following:
(i)
this Agreement (and the other Transaction Documents,
as applicable) duly executed by each Purchaser; and
(ii)
the Purchaser’s Subscription Amount by wire transfer
to the Company.
2.3
Closing Conditions.
(a)
The obligations of the Company hereunder in connection
with the Closing are subject to the following conditions being met:
(i)
the accuracy in all material respects (or, to the extent
representations or warranties are qualified by materiality or Material Adverse Effect, in all respects) on the Closing Date of the representations
and warranties of the Purchasers contained herein (unless as of a specific date therein in which case they shall be accurate as of such
date);
(ii)
all obligations, covenants and agreements of each Purchaser
required to be performed at or prior to the Closing Date shall have been performed; and
(iii)
the delivery by each Purchaser of the items set forth
in Section 2.2(b) of this Agreement.
(b)
The respective obligations of the Purchasers hereunder
in connection with the Closing are subject to the following conditions being met:
(i)
the accuracy in all material respects (or, to the extent
representations or warranties are qualified by materiality or Material Adverse Effect, in all respects) when made and on the Closing
Date of the representations and warranties of the Company contained herein (unless as of a specific date therein, in which case they
shall be accurate as of such date);
(ii)
all obligations, covenants and agreements of the Company
required to be performed at or prior to the Closing Date shall have been performed;
(iii)
the delivery by the Company of the items set forth in
Section 2.2(a) of this Agreement;
(iv)
there shall have been no Material Adverse Effect with
respect to the Company since the date hereof; and
(v)
from the date hereof to the Closing Date trading in
the Common Stock shall not have been suspended by the SEC or the Company’s principal Trading Market, and, at any time prior to
the Closing Date, trading in securities generally as reported by Bloomberg L.P. shall not have been suspended or limited, or minimum
prices shall not have been established on securities whose trades are reported by such service, or on any Trading Market, nor shall a
banking moratorium have been declared either by the United States or New York State authorities nor shall there have occurred any material
outbreak or escalation of hostilities or other national or international calamity of such magnitude in its effect on, or any material
adverse change in, any financial market which, in each case, in the reasonable judgment of such Purchaser, makes it impracticable or
inadvisable to purchase the Securities at the Closing.
2.4
Post- Closing Conditions. No later than the fifth
(5th) day following the Closing Date, the Company shall cause the conversion of all of its issued and outstanding shares of
its Series E and Series F stock into shares of Common Stock.
Article
III
REPRESENTATIONS AND WARRANTIES
3.1
Representations and Warranties of the Company. The Company hereby makes the following representations and warranties to
each Purchaser as of the date hereof:
(a)
Subsidiaries. All of the direct and indirect
Subsidiaries of the Company are set forth on Schedule 3.1(a). The Company owns, directly or indirectly, all of the
capital stock or other equity interests of each Subsidiary free and clear of any Liens, and all of the issued and outstanding shares
of capital stock of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights to
subscribe for or purchase securities.
(b)
Organization and Qualification. The Company and
each of the Subsidiaries is an entity duly incorporated or otherwise organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation or organization, with the requisite power and authority to own and use its properties and assets
and to carry on its business as currently conducted. Neither the Company nor any Subsidiary is in violation nor default of any of the
provisions of its respective Certificate or Articles of Incorporation, Bylaws or other organizational or charter documents. Each of the
Company and the Subsidiaries is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in
each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where
the failure to be so qualified or in good standing, as the case may be, could not have or reasonably be expected to result in: (i) a
material adverse effect on the legality, validity or enforceability of any Transaction Document, (ii) a material adverse effect on the
results of operations, assets, business, prospects or condition (financial or otherwise) of the Company and the Subsidiaries, taken as
a whole, or (iii) a material adverse effect on the Company’s ability to perform in any material respect on a timely basis its obligations
under any Transaction Document (any of (i), (ii) or (iii), a “Material Adverse Effect”), except for general changes or developments
in the industry in which the Company operates, and no Proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing
or seeking to revoke, limit or curtail such power and authority or qualification.
(c)
Authorization; Enforcement. Other than failure
to have the Reserve, the Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated
by this Agreement and each of the other Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The
execution and delivery of this Agreement and each of the other Transaction Documents by the Company and the consummation by it of the
transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company and no further
action is required by the Company, the Board of Directors or the Company’s stockholders in connection herewith or therewith other
than in connection with the Required Approvals. Subject to obtaining the Required Approvals, this Agreement and each other Transaction
Document to which it is a party has been (or upon delivery will have been) duly executed by the Company and, when delivered in accordance
with the terms hereof and thereof, will constitute the valid and binding obligation of the Company enforceable against the Company in
accordance with its terms, except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws
relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification
and contribution provisions may be limited by applicable law.
(d)
No Conflicts. The execution, delivery and performance
by the Company of this Agreement and the other Transaction Documents to which it is a party, the issuance and sale of the Securities
and the consummation by it of the transactions contemplated hereby and thereby do not and will not (i) conflict with or violate any provision
of the Company’s or any Subsidiary’s Certificate or Articles of Incorporation, Bylaws or other organizational or charter
documents, or (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default)
under, result in the creation of any Lien upon any of the properties or assets of the Company or any Subsidiary, or give to others any
rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit
facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company
or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected, or (iii) subject
to the Required Approvals, conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or
other restriction of any court or governmental authority to which the Company or a Subsidiary is subject (including federal and state
securities laws and regulations), or by which any property or asset of the Company or a Subsidiary is bound or affected; except in the
case of each of clauses (ii) and (iii), such as could not have or reasonably be expected to result in a Material Adverse Effect.
(e)
Filings, Consents and Approvals. The Company
is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with,
any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and
performance by the Company of the Transaction Documents, other than: (i) the filings required pursuant to Section 4.4 of
this Agreement, (ii) application(s) to each applicable Trading Market for the listing of the Warrant Shares for trading thereon in the
time and manner required thereby, (iii) the filing of Form D with the SEC, and (iv) such filings as are required to be made under applicable
state securities laws (the “Required Approvals”).
(f)
Issuance of the Securities. The Securities are
duly authorized and, when issued and paid for in accordance with the applicable Transaction Documents, will be duly and validly issued,
fully paid and nonassessable, free and clear of all Liens imposed by the Company. The Warrant Shares, when issued in accordance with
the terms of the Warrants, will be validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company.
The Company shall reserve from its duly authorized capital stock a number of shares of Common Stock issuable pursuant to the Warrants
equal to the amount set forth in Section 4.9.
(g)
Capitalization. The capitalization of the Company
is as set forth on Schedule 3.1(g). The Company has not issued any capital stock since its most recently filed periodic
report under the Exchange Act, other than pursuant to the issuance of or the exercise of employee stock awards under the Company’s
equity incentive plans, and pursuant to the conversion and/or exercise of Common Stock Equivalents outstanding as of the date of the
most recently filed periodic report under the Exchange Act. No Person has any right of first refusal, preemptive right, right of participation,
or any similar right to participate in the transactions contemplated by the Transaction Documents. As a result of the purchase and sale
of the Securities, there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any right
to subscribe for or acquire, any shares of Common Stock or the capital stock of any Subsidiary, 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 or capital stock of any Subsidiary. The issuance and sale of the Securities will not obligate the Company or any Subsidiary
to issue shares of Common Stock or other securities to any Person (other than the Purchaser) 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. There are no outstanding
securities or instruments of the Company or any Subsidiary with any provision that adjusts the exercise, conversion, exchange or reset
price of such security or instrument upon an issuance of securities by the Company or any Subsidiary. There are no outstanding securities
or instruments of the Company or any Subsidiary that contain any redemption or similar provisions, and there are no contracts, commitments,
understandings or arrangements by which the Company or any Subsidiary is or may become bound to redeem a security of the Company or such
Subsidiary. The Company does not have any stock appreciation rights or “phantom stock” plans or agreements or any similar
plan or agreement. All of the outstanding shares of capital stock of the Company are duly authorized, validly issued, fully paid and
nonassessable, have been issued in compliance with all federal and state securities laws, and none of such outstanding shares was issued
in violation of any preemptive rights or similar rights to subscribe for or purchase securities. No further approval or authorization
of any stockholder, the Board of Directors or others is required for the issuance and sale of the Securities. There are no stockholders
agreements, voting agreements or other similar agreements with respect to the Company’s capital stock to which the Company is a
party or, to the knowledge of the Company, between or among any of the Company’s stockholders.
(h)
SEC Reports; Financial Statements. The Company
has filed all reports, schedules, forms, statements and other documents required to be filed by the Company under the Securities Act
and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (or such shorter
period as the Company was required by law or regulation to file such material) (the foregoing materials, including the exhibits thereto
and documents incorporated by reference therein, being collectively referred to herein as the “SEC Reports”). For so long
as any of the Warrants are outstanding, the Company shall not file Form 15 (or successor form) with the SEC or otherwise suspend or terminate
its obligation to file any SEC Reports under the Exchange Act. As of their respective dates, the SEC Reports complied in all material
respects with the requirements of the Securities Act and the Exchange Act, as applicable, and none of the SEC Reports, when filed, contained
any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make
the statements therein, in the light of the circumstances under which they were made, not misleading. The financial statements of the
Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations
of the SEC with respect thereto as in effect at the time of filing. Such financial statements have been prepared in accordance with United
States generally accepted accounting principles applied on a consistent basis during the periods involved (“GAAP”), except
as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not
contain all footnotes required by GAAP, and fairly present in all respects the financial position of the Company and its consolidated
Subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the
case of unaudited statements, to normal, immaterial, year-end audit adjustments. The financial statements do not reflect any transactions
which are not bona fide transactions. There are no financial statements (historical or pro forma) that are required to be included in
the SEC Reports that are not included as required; the Company and its Subsidiaries do not have any material liabilities or obligations,
direct or contingent (including any off-balance sheet obligations), not described in the SEC Reports; and all disclosures contained in
the SEC Reports, if any, regarding “non-GAAP financial measures” (as such term is defined by the rules and regulations of
the SEC) comply with Regulation G of the Exchange Act and Item 10 of Regulation S-K under the Securities Act, to the extent applicable.
The interactive data in eXtensible Business Reporting Language included or incorporated by reference in the SEC Reports fairly presents
the information called for in all material respects and has been prepared in accordance with the SEC’s rules and guidelines applicable
thereto.
(i)
Material Changes; Undisclosed Events, Liabilities
or Developments. Since the date of the latest financial statements included within the SEC Reports (i) there has been no event, occurrence
or development that has had or that could reasonably be expected to result in a Material Adverse Effect, (ii) the Company has not incurred
any liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course of business
consistent with past practice and (B) liabilities not required to be reflected in the Company’s financial statements pursuant to
GAAP or disclosed in filings made with the 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) the Company has not issued any equity securities to any officer, director
or Affiliate, except pursuant to existing Company equity incentive plans. 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, 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, prospects, properties, operations, assets or financial condition that would
be required to be disclosed by the Company under applicable securities laws at the time this representation is made or deemed made that
has not been publicly disclosed at least one Trading Day prior to the date that this representation is made.
(j)
Litigation. There is no action, suit, notice
of violation, proceeding or investigation, inquiry or other similar proceeding of any federal or state government unit pending or, to
the knowledge of the Company, threatened against or affecting the Company, any Subsidiary or any of their respective properties before
or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign)
(collectively, an “Action”) which (i) adversely affects or challenges the legality, validity or enforceability of any of
the Transaction Documents or the issuance of the Securities or (ii) could, if there were an unfavorable decision, have or reasonably
be expected to result in a Material Adverse Effect. The Company has no reason to believe that an Action will be filed against it in the
future. Neither the Company nor any Subsidiary, nor any director or officer thereof, is or has been the subject of any Action involving
a claim of violation of or liability under federal or state securities laws or a claim for fraud or breach of fiduciary duty. There has
not been, and to the knowledge of the Company, there is not pending or contemplated, any investigation or inquiry by the SEC involving
the Company or any current or former director or officer of the Company. The SEC has not issued any stop order or other order suspending
the effectiveness of any registration statement filed by the Company or any Subsidiary under the Securities Act, and the Company has
no reason to believe it will do so in the future.
(k)
Labor Relations. No labor dispute exists or,
to the knowledge of the Company, is imminent with respect to any of the employees of the Company, which could reasonably be expected
to result in a Material Adverse Effect. None of the Company’s or its Subsidiaries’ employees is a member of a union that
relates to such employee’s relationship with the Company or such Subsidiary, and neither the Company nor any of its Subsidiaries
is a party to a collective bargaining agreement, and the Company and its Subsidiaries believe that their relationships with their employees
are good. To the knowledge of the Company, no effort is underway to unionize or organize the employees of the Company or any Subsidiary.
To the knowledge of the Company, no executive officer of the Company or any Subsidiary, is, or is now expected to be, in violation of
any material term of any employment contract, confidentiality, disclosure or proprietary information agreement or non-competition agreement,
or any other contract or agreement or any restrictive covenant in favor of any third party, and the continued employment of each such
executive officer does not subject the Company or any of its Subsidiaries to any liability with respect to any of the foregoing matters.
There is no employment-related charge, complaint, grievance, investigation, inquiry or obligation of any kind including workers’
compensation liability matters, pending, or to the Company’s knowledge, threatened, relating to an alleged violation or breach
by the Company or its Subsidiaries of any law, regulation or contract that could, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect.
(i)
To the Company’s knowledge
(A)
no allegations of sexual harassment, sexual misconduct
or discrimination, whether such discrimination arises from race, ethnic background, sex, gender status, age or otherwise (“Misconduct”)
have been made involving any current or former director, officer, or independent contractor of the Company or any of its Subsidiaries,
(B)
neither the Company nor any of its Subsidiaries have
entered into any settlement agreements related to allegations of Misconduct by any current/current or former director, officer, employee,
or independent contractor of the Company or any of its Subsidiaries.
(l)
Compliance. Except as set forth on Schedule 3.1(l),
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 Indebtedness, 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 food and drugs, unfair or deceptive trade practices,
taxes, environmental protection, occupational health and safety, COVID-19, product quality and safety and employment and labor matters,
except in each case as could not have resulted in or reasonably be expected to result in a Material Adverse Effect.
(m)
Environmental Laws. The Company and its Subsidiaries
(i) are in compliance with all federal, state, local and foreign laws relating to pollution or protection of human health or the environment
(including ambient air, surface water, groundwater, land surface or subsurface strata), including laws relating to emissions, discharges,
releases or threatened releases of chemicals, pollutants, contaminants, or toxic or hazardous substances or wastes (collectively, “Hazardous
Materials”) into the environment, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials, as well as all authorizations, codes, decrees, demands, or demand letters, injunctions,
judgments, licenses, notices or notice letters, orders, permits, plans or regulations, issued, entered, promulgated or approved thereunder
(“Environmental Laws”); (ii) have received all permits licenses or other approvals required of them under applicable Environmental
Laws to conduct their respective businesses; and (iii) are in compliance with all terms and conditions of any such permit, license or
approval where in each clause (i), (ii) and (iii), the failure to so comply could be reasonably expected to have, individually or in
the aggregate, a Material Adverse Effect.
(n)
Regulatory Permits. The Company and each of its
Subsidiaries possess all certificates, authorizations and permits issued by the appropriate regulatory authorities necessary to conduct
their respective businesses, except where the failure to possess such certificates, authorizations or permits could or would not reasonably
be expected to result in have, individually or in the aggregate, a Material Adverse Effect, and neither the Company nor any Subsidiary
has received any notice of proceedings relating to the revocation or modification of any Material Permit. There is no agreement, commitment,
judgment, injunction, order or decree binding upon the Company or any of its Subsidiaries or to which the Company or any of its Subsidiaries
is a party which has or would reasonably be expected to have the effect of prohibiting or materially impairing any business practice
of the Company or any of its Subsidiaries, any acquisition of property by the Company or any of its Subsidiaries or the conduct of business
by the Company or any of its Subsidiaries as currently conducted other than such effects, individually or in the aggregate, which have
not had and would not reasonably be expected to have a Material Adverse Effect on the Company or any of its Subsidiaries.
(o)
Title to Assets. The Company and the Subsidiaries
have good and marketable title in fee simple to all real property owned by them and good and marketable title in all personal property
owned by them that is material to the business of the Company and the Subsidiaries, in each case free and clear of all Liens, except
for (i) Liens as do not materially affect the value of such property and do not materially interfere with the use made and proposed to
be made of such property by the Company and the Subsidiaries, and (ii) Liens for the payment of federal, state or other taxes, for which
appropriate reserves have been made therefor in accordance with GAAP and, the payment of which is neither delinquent nor subject to penalties..
Any real property and facilities held under lease by the Company and the Subsidiaries are held by them under valid, subsisting and enforceable
leases with which the Company and the Subsidiaries are in compliance.
(p)
Intellectual Property.
(i)
To the Company’s knowledge, the Company owns or
possesses or has the right to use pursuant to a valid and enforceable written license, sublicense, agreement, or permission all Intellectual
Property necessary for the operation of the business of the Company as presently conducted.
(ii)
To the Company’s knowledge, the Intellectual Property
does not interfere with, infringe upon, misappropriate, or otherwise come into conflict with, any Intellectual Property rights of third
parties, and the Company has no knowledge that facts exist which indicate a likelihood of the foregoing. The Company has not received
any charge, complaint, claim, demand, or notice alleging any such interference, infringement, misappropriation, or conflict (including
any claim that the Company must license or refrain from using any Intellectual Property rights of any third party). To the knowledge
of the Company, no third party has interfered with, infringed upon, misappropriated, or otherwise come into conflict with, any Intellectual
Property rights of the Company.
(iii)
With respect to each Licensed Intellectual Property
Agreement:
(A)
The Licensed Intellectual Property Agreement is legal,
valid, binding, enforceable, and in full force and effect;
(B)
To the Company’s knowledge, no party to the Licensed
Intellectual Property Agreement is in breach or default, and no event has occurred that with notice or lapse of time would constitute
a breach or default or permit termination, modification, or acceleration thereunder, which as to any such breach, default or event could
have a Material Adverse Effect on the Company;
(C)
No party to such Licensed Intellectual Property Agreement
has repudiated any provision thereof;
(D)
Except as set forth in such Licensed Intellectual Property
Agreement, the Company has not received written or verbal notice or otherwise has knowledge that the underlying item of Intellectual
Property is subject to any outstanding injunction, judgment, order, decree, ruling, or charge; and
(E)
Except as set forth on Schedule 3.1(p)(iii),
the Company has not granted any sublicense or similar right with respect to the license, sublicense, agreement, or permission.
(iv)
The Company has complied with and is presently in compliance
with all foreign, federal, state, local, governmental (including, but not limited to, the Federal Trade Commission and State Attorneys
General), administrative, or regulatory laws, regulations, guidelines, and rules applicable to any personal identifiable information.
(v)
Each Person who participated in the creation, conception,
invention or development of the Intellectual Property currently used in the business of the Company (each, a “Developer”)
which is not licensed from third parties has executed one or more agreements containing industry standard confidentiality, work for hire
and assignment provisions, whereby the Developer has assigned to the Company all copyrights, patent rights, Intellectual Property rights
and other rights in the Intellectual Property, including all rights in the Intellectual Property that existed prior to the assignment
of rights by such Person to the Company.
(vi)
Each Developer has signed a perpetual non-disclosure
agreement with the Company.
(q)
Insurance. The Company and the Subsidiaries are
insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary
for companies of the Company’s size and in the businesses in which the Company and the Subsidiaries are engaged. 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.
(r)
Transactions With Affiliates and Employees. Except
as disclosed on Schedule 3.1(r), none of the officers or directors of the Company or any Subsidiary and, to the knowledge
of the Company, none of the employees of the Company or any Subsidiary is presently a party to any transaction with the Company or any
Subsidiary (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing
for the furnishing of services to or by, providing for rental of real or personal property to or from, providing for the borrowing of
money from or lending of money to or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge
of the Company, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director,
trustee, stockholder, member or partner, in each case in excess of $120,000 other than for (i) payment of salary or consulting fees for
services rendered, (ii) reimbursement for expenses incurred on behalf of the Company and (iii) other employee benefits, including equity
award agreements under any equity incentive plan of the Company.
(s)
Sarbanes-Oxley; Internal Accounting Controls.
Except as disclosed on Schedule 3.1(s), the Company and the Subsidiaries are in compliance with any and all applicable
requirements of the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and any and all applicable rules and regulations
promulgated by the SEC thereunder that are effective as of the date hereof and as of the Closing Date. Except as disclosed on Schedule
3.1(s), the Company and the Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable
assurance that: (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions
are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability,
(iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to
any differences. The Company and the Subsidiaries have established disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) for the Company and the Subsidiaries and designed such disclosure controls and procedures to ensure that information
required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized
and reported, within the time periods specified in the Commission’s rules and forms. The Company’s certifying officers have
evaluated the effectiveness of the disclosure controls and procedures of the Company and the Subsidiaries as of the end of the period
covered by the most recently filed periodic report under the Exchange Act (such date, the “Evaluation Date”). The Company
presented in its most recently filed periodic report under the Exchange Act the conclusions of the certifying officers about the effectiveness
of the disclosure controls and procedures based on their evaluations as of the Evaluation Date. Since the Evaluation Date, there have
been no changes in the internal control over financial reporting (as such term is defined in the Exchange Act) of the Company and its
Subsidiaries that have materially affected, or is reasonably likely to materially affect, the internal control over financial reporting
of the Company and its Subsidiaries.
(t)
Certain Fees. Except as set forth on Schedule
3.1(t), no brokerage or finder’s fees or commissions are or will be payable by the Company or any Subsidiary to
any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions
contemplated by the Transaction Documents. The Purchaser shall have no obligation with respect to any fees or with respect to any claims
made by or on behalf of other Persons for fees of a type contemplated in this Section 3.1(t) that may be due by the Company
in connection with the transactions contemplated by the Transaction Documents.
(u)
Investment Company. The Company is not, and is
not an Affiliate of, and immediately after receipt of payment for the Securities, will not be or be an Affiliate of, an “investment
company” within the meaning of the Investment Company Act of 1940, as amended. The Company shall conduct its business in a manner
so that it will not become an “investment company” subject to registration under the Investment Company Act of 1940, as amended.
(v)
Registration Rights. Except as disclosed on Schedule
3.1(v), no Person has any right to cause the Company or any Subsidiary to effect the registration under the Securities
Act of any securities of the Company or any Subsidiary.
(w)
Listing and Maintenance Requirements. The Common
Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and the Company has taken no action designed to, or which
to its knowledge is likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act nor has the
Company received any notification that the SEC is contemplating terminating such registration. The Company has not, in the 12 months
preceding the date hereof, received notice from any Trading Market on which the Common Stock is or has been listed or quoted to the effect
that the Company is not in compliance with the listing or maintenance requirements of such Trading Market. The Company is and has no
reason to believe that it will not in the foreseeable future continue to be, in compliance with all such listing and maintenance requirements.
The Common Stock is currently eligible for electronic transfer through the Depository Trust Company or another established clearing corporation
and the Company is current in payment of the fees to the Depository Trust Company (or such other established clearing corporation) in
connection with such electronic transfer.
(x)
Application of Takeover Protections. The Company
and the Board of Directors have taken all necessary action, if any, in order to render inapplicable any control share acquisition, business
combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Company’s
certificate of incorporation (or similar charter documents) or the laws of its state of incorporation that is or could become applicable
to the Purchaser as a result of the Purchaser 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 Purchaser’s ownership
of the Securities.
(y)
Disclosure. Except with respect to the material
terms and conditions of the transactions contemplated by the Transaction Documents, the Company confirms that neither it nor any other
Person acting on its behalf has provided any Purchaser or its agents or counsel with any information that it believes constitutes or
might constitute material, non-public information which is not otherwise disclosed on Schedule 3.1(y). The Company
understands and confirms that the Purchasers will rely on the foregoing representation in effecting transactions in securities of the
Company. All of the disclosure furnished by or on behalf of the Company to the Purchasers regarding the Company and its Subsidiaries,
their respective businesses and the transactions contemplated hereby, including the Disclosure Schedules to this Agreement, is true and
correct and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the
statements made therein, in light of the circumstances under which they were made not misleading. The press releases disseminated by
the Company during the 12 months preceding the date of this Agreement do not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances
under which they were made and when made, not misleading. The Company acknowledges and agrees that the Purchasers have not made any representations
or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section 3.2
hereof.
(z)
No Integrated Offering. Assuming the accuracy
of the Purchasers’ representations and warranties set forth in Section 3.2, neither the Company, nor any of its Affiliates,
nor any Person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers
to buy any security, under circumstances that would cause this offering of the Securities to be integrated with prior offerings by the
Company for purposes of any applicable stockholder approval provisions of any Trading Market on which any of the securities of the Company
are listed or designated.
(aa)
Solvency. Based on the consolidated financial
condition of the Company as of the Closing Date, after giving effect to the receipt by the Company of the proceeds from the sale of the
Securities hereunder, (i) the fair saleable value of the Company’s assets exceeds the amount that will be required to be paid on
or in respect of the Company’s existing debts and other liabilities (including known contingent liabilities) as they mature, (ii)
the Company’s assets do not constitute unreasonably small capital to carry on its business as now conducted and as proposed to
be conducted including its capital needs taking into account the particular capital requirements of the business conducted by the Company,
consolidated and projected capital requirements and capital availability thereof, and (iii) the current cash flow of the Company, together
with the proceeds the Company would receive, were it to liquidate all of its assets, after taking into account all anticipated uses of
the cash, would be sufficient to pay all amounts on or in respect of its liabilities when such amounts are required to be paid. The Company
does not intend to incur debts beyond its ability to pay such debts as they mature (taking into account the timing and amounts of cash
to be payable on or in respect of its debt). The Company has no knowledge of any facts or circumstances which lead it to believe that
it will file for reorganization or liquidation under the bankruptcy or reorganization laws of any jurisdiction within one year from the
Closing Date. Schedule 3.1(aa) sets forth as of the date hereof all outstanding secured and unsecured Indebtedness
of the Company or any Subsidiary, or for which the Company or any Subsidiary has commitments. Except as set forth on Schedule 3.1(aa),
neither the Company nor any Subsidiary is in default with respect to any Indebtedness.
(bb)
Tax Status. The Company and each of its Subsidiaries
have filed all federal, state, local and foreign tax returns which have been required to be filed and paid all taxes shown thereon through
the date hereof, to the extent that such taxes have become due and are not being contested in good faith, except where the failure to
so file or pay would not have a Material Adverse Effect. Except as otherwise disclosed in Schedule 3.1(bb), no tax
deficiency has been determined adversely to the Company or any of its Subsidiaries which has had, or would have, individually or in the
aggregate, a Material Adverse Effect. The Company has no knowledge of any federal, state or other governmental tax deficiency, penalty
or assessment which has been or might be asserted or threatened against it which would have a Material Adverse Effect
(cc)
Foreign Corrupt Practices. Neither the Company
nor any Subsidiary, nor to the knowledge of the Company or any Subsidiary, any agent or other person acting on behalf of the Company
or any Subsidiary, has (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment or other unlawful
expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government officials
or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully any contribution
made by the Company or any Subsidiary (or made by any person acting on its behalf of which the Company is aware) which is in violation
of law, or (iv) violated any provision of FCPA.
(dd)
Accountants. The Company’s accounting firm
is set forth in the SEC Reports. To the knowledge and belief of the Company, such accounting firm (i) is a registered public accounting
firm registered with the Public Company Accounting Oversight Board as required by the Exchange Act and (ii) will express its opinion
with respect to the financial statements included in the Company’s Annual Report for the fiscal year ending December 31, 2021.
(ee)
Acknowledgment Regarding each Purchaser’s Purchase
of Securities. The Company acknowledges and agrees that each Purchaser is acting solely in the capacity of an arm’s length
purchaser with respect to the Transaction Documents and the transactions contemplated thereby. The Company further acknowledges that
no Purchaser is acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to the Transaction
Documents and the transactions contemplated thereby and any advice given by any Purchaser or any of their respective representatives
or agents in connection with the Transaction Documents and the transactions contemplated thereby is merely incidental to the Purchaser’s
purchase of the Securities. The Company further represents to each Purchaser that the Company’s decision to enter into this Agreement
and the other Transaction Documents has been based solely on the independent evaluation of the transactions contemplated hereby by the
Company and its representatives.
(ff)
Acknowledgement Regarding Purchaser’s Trading
Activity. Notwithstanding anything in this Agreement or elsewhere to the contrary (except for Sections 3.2(f) and 4.12
hereof), it is understood and acknowledged by the Company that: (i) no Purchaser has not been asked by the Company to agree, nor has
any Purchaser agreed, to desist from purchasing or selling, long and/or short, securities of the Company, or “derivative”
securities based on securities issued by the Company or to hold the Securities for any specified term; (ii) past or future open market
or other transactions by any Purchaser, specifically including, without limitation, Short Sales or “derivative” transactions,
before or after the closing of this or future private placement transactions, may negatively impact the market price of the Company’s
publicly-traded securities; (iii) any Purchaser, and counter-parties in “derivative” transactions to which the Purchaser
is a party, directly or indirectly, presently may have a “short” position in the Common Stock, and (iv) no Purchaser shall
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) any Purchaser 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 Warrant 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.
(gg)
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.
(hh)
Private Placement. Assuming the accuracy of each
Purchaser’s representations and warranties set forth in Section 3.2, no registration under the Securities Act is required
for the offer and sale of the Notes by the Company to the Purchasers as contemplated hereby.
(ii)
No General Solicitation. Neither the Company
nor any person acting on behalf of the Company has offered or sold any of the Securities by any form of general solicitation or general
advertising. The Company offered the Securities for sale only to the Purchaser and certain other “accredited investors” within
the meaning of Rule 501 under the Securities Act.
(jj)
No Disqualification Events. With respect to the
Securities to be offered and sold hereunder in reliance on Rule 506(b) under the Securities Act, none of the Company, any of its predecessors,
any affiliated issuer, any director, executive officer, other officer of the Company participating in the offering hereunder, any beneficial
owner of 20% or more of the Company’s outstanding voting equity securities, calculated on the basis of voting power, nor any promoter
(as that term is defined in Rule 405 under the Securities Act) connected with the Company in any capacity at the time of sale, nor any
Person, including a placement agent, who will receive a commission or fees for soliciting purchasers (each, an “Issuer Covered
Person” and, together, “Issuer Covered Persons”) is subject to any of the “Bad Actor” disqualifications
described in Rule 506(d)(1)(i) to (viii) under the Securities Act (a “Disqualification Event”), except for a Disqualification
Event covered by Rule 506(d)(2) or (d)(3). The Company has exercised reasonable care to determine whether any Issuer Covered Person is
subject to a Disqualification Event. The Company has complied, to the extent applicable, with its disclosure obligations under Rule 506(e),
and has furnished to the Purchaser a copy of any disclosures provided thereunder.
(kk)
Notice of Disqualification Events. The Company
will notify the Purchaser in writing, prior to the Closing Date of (i) any Disqualification Event relating to any Issuer Covered Person
and (ii) any event that would, with the passage of time, reasonably be expected to become a Disqualification Event relating to any Issuer
Covered Person, in each case of which it is aware.
(ll)
Office of Foreign Assets Control. Neither the
Company nor any Subsidiary nor, to the Company’s knowledge, any director, officer, agent, employee or affiliate of the Company
or any Subsidiary is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury
Department (“OFAC”).
(mm)
U.S. Real Property Holding Corporation. The Company
is not and has never been a U.S. real property holding corporation within the meaning of Section 897 of the Internal Revenue Code of
1986, as amended, and the Company shall so certify upon Purchaser’s request.
(nn)
Bank Holding Company Act. Neither the Company
nor any of its Subsidiaries or Affiliates is subject to the Bank Holding Company Act of 1956, as amended (the “BHCA”) and
to regulation by the Board of Governors of the Federal Reserve System (the “Federal Reserve”). Neither the Company nor any
of its Subsidiaries or Affiliates owns or controls, directly or indirectly, five percent (5%) or more of the outstanding shares of any
class of voting securities or twenty-five percent (25%) or more of the total equity of a bank or any entity that is subject to the BHCA
and to regulation by the Federal Reserve. Neither the Company nor any of its Subsidiaries or Affiliates exercises a controlling influence
over the management or policies of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve.
(oo)
Money Laundering. The operations of the Company
and its Subsidiaries are and have been conducted at all times in compliance with applicable financial record-keeping and reporting requirements
of the Currency and Foreign Transactions Reporting Act of 1970, as amended, applicable money laundering statutes and applicable rules
and regulations thereunder (collectively, the “Money Laundering Laws”), and no Action 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.
(pp)
Shell Company. For over one-year, the Company
has not been a former shell company as that phrase is defined by Rule 405 under the Securities Act and Rule 12b-2 under the Exchange
Act.
(qq)
No Disagreements with Accountants and Lawyers.
There are no disagreements of any kind presently existing, or reasonably anticipated by the Company to arise, between the Company and
the accountants and lawyers formerly or presently employed by the Company and the Company is current with respect to any fees owed to
its accountants which could affect the Company’s ability to perform any of its obligations under any of the Transaction Documents.
(rr)
Absence of Schedules. In the event that the Company
does not deliver any disclosure schedule contemplated by this Agreement, the Company hereby acknowledges and agrees that (i) to the extent
the Company has (x) previously delivered to the Purchaser such disclosure schedule, the information therein has not changed as of such
date, and (y) not previously delivered to the Investor such disclosure schedule, each such undelivered disclosure schedule shall be deemed
to read as follows: “Nothing to Disclose”, and (ii) the Purchaser has not otherwise waived delivery of such disclosure schedule.
(ss)
Acknowledgment of Dilution. This Agreement and
the Transaction Documents have been negotiated on an arms-length basis, and each party has retained counsel selected by it. The Company
acknowledges that the issuance of the Securities may result in dilution of the outstanding shares of Common Stock, which dilution may
be substantial under certain market conditions. The Company further acknowledges that its obligations under the Transaction Documents,
including, without limitation, its obligations to issue the underlying Warrant Shares pursuant to the Transaction Documents, are unconditional
and absolute and not subject to any right of set off, counterclaim, delay or reduction, regardless of the effect of any such dilution
or any claim the Company may have against the Purchaser and regardless of the dilutive effect that such issuance may have on the ownership
of the other stockholders of the Company.
The
Company acknowledges and agrees that the representations contained in this Article III shall not modify, amend or affect
the Purchaser’s right to rely on the Company’s representations and warranties contained in this Agreement or any representations
and warranties contained in any other Transaction Document or any other document or instrument executed and/or delivered in connection
with this Agreement or the consummation of the transaction contemplated hereby.
3.2 Representations
and Warranties of the Purchaser. Each Purchaser, for itself and for no other Purchaser, hereby represents and warrants as of the
date hereof and as of the Closing Date to the Company as follows (unless as of a specific date therein):
(a)
Organization; Authority. The Purchaser is either
an individual or an entity duly incorporated or formed, validly existing and in good standing under the laws of the jurisdiction of its
incorporation or formation with full right, corporate, partnership, limited liability company or similar power and authority to enter
into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder and thereunder.
The execution and delivery of this Agreement and performance by the Purchaser of the transactions contemplated by this Agreement have
been duly authorized by all necessary corporate, partnership, limited liability company or similar action, as applicable, on the part
of the Purchaser. Each Transaction Document to which it is a party has been duly executed by the Purchaser, and when delivered by the
Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of the Purchaser, enforceable
against it in accordance with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as
limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar
as indemnification and contribution provisions may be limited by applicable law.
(b)
Understandings or Arrangements. The Purchaser
is acquiring the Securities as principal for its own account and has no direct or indirect arrangement or understandings with any other
persons to distribute or regarding the distribution of such Securities (this representation and warranty not limiting the Purchaser’s
right to sell the Securities in compliance with applicable federal and state securities laws). The Purchaser is acquiring the Securities
hereunder in the ordinary course of its business. The Purchaser understands that the Securities are “restricted securities”
and have not been registered under the Securities Act or any applicable state securities law and is acquiring such Securities as principal
for its own account and not with a view to or for distributing or reselling such Securities or any part thereof in violation of the Securities
Act or any applicable state securities law, has no present intention of distributing any of such Securities in violation of the Securities
Act or any applicable state securities law and has no direct or indirect arrangement or understandings with any other persons to distribute
or regarding the distribution of such Securities in violation of the Securities Act or any applicable state securities law (this representation
and warranty not limiting the Purchaser’s right to sell such Securities in compliance with applicable federal and state securities
laws).
(c)
Purchaser Status. At the time the Purchaser was
offered the Securities, it was, and as of the date hereof it is, an accredited investor within the meaning of Rule 501 under the Securities
Act. The Purchaser is not 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).
(d)
Experience of the Purchaser. The Purchaser, either
alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as
to be capable of evaluating the merits and risks of the prospective investment in the Securities, and has so evaluated the merits and
risks of such investment. The Purchaser is able to bear the economic risk of an investment in the Securities and, at the present time,
is able to afford a complete loss of such investment.
(e)
Access to Information. The Purchaser acknowledges
that it has had the opportunity to review the Transaction Documents (including all exhibits and schedules thereto) and has been afforded,
subject to Regulation FD, (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives
of the Company concerning the terms and conditions of the offering of the Securities and the merits and risks of investing in the Securities;
(ii) access to information about the Company and its financial condition, results of operations, business, properties, management and
prospects sufficient to enable it to evaluate its investment; and (iii) the opportunity to obtain such additional information that the
Company possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with
respect to the investment; provided, however, that the Purchaser has not requested nor been provided by the Company with any non-public
information regarding the Company, its financial condition, results of operations, business, properties, management and prospects. The
Purchaser acknowledges and agrees that neither the Company nor anyone else has provided the Purchaser with any information or advice
with respect to the Securities nor is such information or advice necessary or desired.
(f)
Certain Transactions and Confidentiality. Other
than consummating the transactions contemplated hereunder, the Purchaser has not, nor has any Person acting on behalf of or pursuant
to any understanding with the Purchaser, directly or indirectly executed any purchases or sales, including Short Sales, of the securities
of the Company during the period commencing as of the time that the Purchaser first received a term sheet (written or oral) from the
Company or any other Person representing the Company setting forth the material terms of the transactions contemplated hereunder and
ending immediately prior to the execution hereof. Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managed investment
vehicle whereby separate portfolio managers manage separate portions of the Purchaser’s assets and the portfolio managers have
no direct knowledge of the investment decisions made by the portfolio managers managing other portions of the Purchaser’s assets,
the representation set forth above shall only apply with respect to the portion of assets managed by the portfolio manager that made
the investment decision to purchase the Securities covered by this Agreement. Other than to other Persons party to this Agreement or
to the Purchaser’s representatives, including, without limitation, its officers, directors, partners, legal and other advisors,
employees, agents and Affiliates, the Purchaser has maintained the confidentiality of all disclosures made to it in connection with this
transaction (including the existence and terms of this transaction). Notwithstanding the foregoing, for avoidance of doubt, nothing contained
herein shall constitute a representation or warranty, or preclude any actions, with respect to the identification of the availability
of, or securing of, available shares to borrow in order to effect Short Sales or similar transactions in the future.
Article
IV
OTHER AGREEMENTS OF THE PARTIES
4.1
Removal of Legends.
(a)
The Warrants and Warrant Shares may only be disposed
of in compliance with state and federal securities laws. In connection with any transfer of the Warrants or Warrant Shares other than
pursuant to an effective registration statement or Rule 144, to the Company or to an Affiliate of a Purchaser or in connection with a
pledge as contemplated in Section 4.1(c), the Company may require the transferor to provide to the Company an opinion of
counsel selected by the transferor and reasonably acceptable to the Company at the cost of the Company, the form and substance of which
opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred
Warrants or Warrant Shares under the Securities Act.
(b)
Each Purchaser agrees to the imprinting, so long as
is required by this Section 4.1, of a legend on any of the Warrants or Warrant Shares in the following form:
NEITHER
THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE
OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL
INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY
SUCH SECURITIES.
(c)
The Company acknowledges and agrees that a Purchaser
may from time to time pledge pursuant to a bona fide margin agreement with a registered broker-dealer or grant a security interest in
some or all of Warrant Shares to a financial institution that is an “accredited investor” as defined in Rule 501(a) under
the Securities Act and who agrees to be bound by the provisions of this Agreement and, if required under the terms of such arrangement,
such Purchaser may transfer pledged or secured Warrant Shares to the pledgees or secured parties. Such a pledge or transfer would not
be subject to approval of the Company and no legal opinion of legal counsel of the pledgee, secured party or pledgor shall be required
in connection therewith. Further, no notice shall be required of such pledge. At the appropriate Purchaser’s expense, the Company
will execute and deliver such reasonable documentation as a pledgee or secured party of Warrant Shares may reasonably request in connection
with a pledge or transfer of the Warrant Shares.
(d)
The Company shall cause to be removed any restrictive
legend from the certificates evidencing the Warrant Shares (or the Transfer Agent’s records if held in book entry form) (including
the legend set forth in Section 4.1(b) hereof): (i) while a registration statement covering the resale of such Securities
is effective under the Securities Act (the “Effective Date”), (ii) following any sale of such shares in compliance with Rule
144 (assuming cashless exercise of the Warrants), (iii) if such Warrant Shares are eligible for sale under Rule 144, without the requirement
for the Company to be in compliance with the current public information required under Rule 144 as to such Warrant Shares and without
volume or manner-of-sale restrictions or (iv) if such legend is not required under applicable requirements of the Securities Act (including
Sections 4(a)(1) and 4(a)(7), judicial interpretations and pronouncements issued by the staff of the SEC). The Company shall, if any
of the provisions in clause (i) – (iv) above are applicable, at its expense, cause its counsel, or at the option of any Purchaser,
counsel determined by such Purchaser to issue a legal opinion to the Transfer Agent if required by the Transfer Agent to effect the removal
of the legend hereunder, subject to compliance with the Securities Act and/or Rule 144. The Company shall pay all costs associated with
such opinions. For avoidance of doubt, the Company agrees that after a two-year holding period (including periods where tacking permitted
by Rule 144) following issuance of the Warrant Shares, the legend may be removed under Section 4(a)(1) of the Securities Act. The Company
agrees that following the Effective Date or at such time as such legend is no longer required under this Section 4.1(d),
it will, no later than the earlier of (i) two Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period
(as defined below) following the delivery by a Purchaser to the Company or the Transfer Agent of a certificate representing Warrant Shares
issued with a restrictive legend (such date, the “Legend Removal Date”), deliver or cause to be delivered to such Purchaser
a certificate representing such Warrant Shares that is free from all restrictive and other legends (or provide evidence of issuance in
book entry form). The Company may not make any notation on its records or give instructions to the Transfer Agent that enlarge the restrictions
on transfer set forth in this Section 4.1. Certificates for the underlying Warrant Shares subject to legend removal hereunder
shall be transmitted by the Transfer Agent to such Purchaser by crediting the account of the Purchaser’s prime broker with the
Depository Trust Company System as directed by the Purchaser. As used herein, “Standard Settlement Period” means the standard
settlement period, expressed in a number of Trading Days, on the Company’s primary Trading Market with respect to the Common Stock
as in effect on the date of delivery of a certificate representing the Warrant Shares. Certificates for such Warrant Shares subject to
legend removal hereunder shall be transmitted by the Transfer Agent to such system as directed by each Purchaser.
(e)
In addition to such Purchaser’s other available
remedies, (i) the Company shall pay to a Purchaser, in cash, as partial liquidated damages and not as a penalty, for each $1,000 of the
principal amount of the Notes or $1,000 of the Warrant Shares for which a Warrant is being exercised (based on the Warrant Exercise Price),
$10 per Trading Day for each Trading Day after the Legend Removal Date (increasing to $20 per Trading Day after the fifth Trading Day)
until such certificate is delivered without a legend. Nothing herein shall limit such Purchaser’s right to pursue actual damages
for the Company’s failure to deliver certificates representing any Securities as required by the Transaction Documents, and such
Purchaser shall have the right to pursue all remedies available to it at law or in equity including, without limitation, a decree of
specific performance and/or injunctive relief, and (ii) if after the Legend Removal Date such Purchaser purchases (in an open market
transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by such Purchaser of all or any portion of the
number of shares of Common Stock, or a sale of a number of shares of Common Stock equal to all or any portion of the number of shares
of Common Stock that such Purchaser anticipated receiving from the Company without any restrictive legend, then, the Company shall pay
to such Purchaser, in cash, an amount equal to the excess of such Purchaser’s total purchase price (including brokerage commissions
and other out-of-pocket expenses, if any) for the shares of Common Stock so purchased (including brokerage commissions and other out-of-pocket
expenses, if any) (the “Buy-In Price”) over the product of (A) such number of Warrant Shares that the Company was required
to deliver to such Purchaser by the Legend Removal Date multiplied by (B) the highest closing sale price of the Common Stock on any Trading
Day during the period commencing on the date of the delivery by such Purchaser to the Company of the Warrant Shares and ending on the
date of such delivery and payment under this Section 4.1(e).
(f)
In the event a Purchaser shall request delivery of unlegended
shares as described in this Section 4.1 and the Company is required to deliver such unlegended shares, (i) the Company shall
pay all fees and expenses associated with or required by the legend removal and/or transfer including but not limited to legal fees,
Transfer Agent fees and overnight delivery charges and taxes, if any, imposed by any applicable government upon the issuance of Common
Stock; and (ii) the Company may not refuse to deliver unlegended shares based on any claim that such Purchaser or anyone associated or
affiliated with such Purchaser has not complied with Purchaser’s obligations under the Transaction Documents, or for any other
reason, unless, an injunction or temporary restraining order from a court, on notice, restraining and or enjoining delivery of such unlegended
shares shall have been sought and obtained by the Company and the Company has posted a surety bond for the benefit of such Purchaser
in the amount of the greater of (i) 150% of the amount of the aggregate purchase price of the Warrant Shares (based on exercise price
in effect upon exercise) which is subject to the injunction or temporary restraining order, or (ii) the VWAP of the Common Stock on the
Trading Day before the issue date of the injunction multiplied by the number of unlegended shares to be subject to the injunction, which
bond shall remain in effect until the completion of the litigation of the dispute and the proceeds of which shall be payable to such
Purchaser to the extent Purchaser obtains judgment in Purchaser’s favor.
4.2
Furnishing of Information.
(a)
Until the earliest of the time that no Purchaser owns
Notes or Warrant Shares, the Company shall 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 if it were subject to Section
13(a), and provide notice to its stockholders required by applicable state law even if the Company is not then subject to the reporting
requirements of the Exchange Act.
(b)
At any time during the period commencing from the six
month anniversary of the date hereof and ending at such time on the earlier to occur of: (i) the Warrants are not outstanding, or (ii)
that all of the Warrant Shares (assuming cashless exercise) may be sold without the requirement for the Company to be in compliance with
Rule 144(c)(1) and otherwise without restriction or limitation pursuant to Rule 144 or under an effective registration statement, if
the Company (i) shall fail for any reason to satisfy the current public information requirement under Rule 144(c) for a period of more
than 30 consecutive days or (ii) has ever been an issuer described in Rule 144(i)(1)(i) or becomes such an issuer in the future, and
the Company shall fail to satisfy any condition set forth in Rule 144(i)(2) for a period of more than 30 consecutive days (a “Public
Information Failure”) then, in addition to such Purchaser’s other available remedies, the Company shall pay to each Purchaser,
in cash, as partial liquidated damages and not as a penalty, by reason of any such delay in or reduction of its ability to sell the Warrant
Shares, an amount in cash equal to two percent (2.0%) of the outstanding aggregate principal amount of such Purchaser’s Note(s)
and/or Warrant Exercise Price of such Purchaser’s Warrants on the day of a Public Information Failure and on every 30th
day (pro-rated for periods totaling less than 30 days) thereafter until the earlier of (1) the date such Public Information Failure is
cured and (2) such time that such public information is no longer required for the Purchasers to transfer the Warrant Shares pursuant
to Rule 144. The payments to which each Purchaser shall be entitled pursuant to this Section 4.2(b) are referred to herein as “Public
Information Failure Payments.” Public Information Failure Payments shall be paid on the earlier of (y) the last day of the calendar
month during which such Public Information Failure Payments are incurred and (z) the second Trading Day after the event or failure giving
rise to the Public Information Failure Payments is cured. In the event the Company fails to make Public Information Failure Payments
in a timely manner, such Public Information Failure Payments shall bear interest at the rate of one and one-half percent (1.5%) per month
(prorated for partial months) until paid in full. Nothing herein shall limit such Purchaser’s right to pursue actual damages for
the Public Information Failure, and such Purchaser shall have the right to pursue all remedies available to it at law or in equity including,
without limitation, a decree of specific performance and/or injunctive relief.
4.3 Integration.
The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as
defined in Section 2(a)(1) of the Securities Act) that would be integrated with the offer or sale of the Securities for purposes of
the rules and regulations of any Trading Market such that it would require stockholder approval prior to the closing of such other
transaction unless stockholder approval is obtained before the closing of such subsequent transaction.
4.4 Securities
Laws Disclosure; Publicity. The Company shall, by 5:30 p.m. (New York City time) on the first Trading Day following the
date of execution hereof, file a Current Report on Form 8-K disclosing the material terms of this Agreement, including the
Transaction Documents as exhibits thereto, with the SEC. From and after the filing of the Form 8-K as provided in the preceding
sentence, the Company represents to each Purchaser that it shall have publicly disclosed all material, non-public information
delivered to such Purchaser by the Company or any of its Subsidiaries, or any of their respective officers, directors, employees or
agents in connection with the transactions contemplated by the Transaction Documents. In addition, effective upon the filing of such
Form 8-K, the Company acknowledges and agrees that any and all confidentiality or similar obligations under any agreement, whether
written or oral, between the Company, any of its Subsidiaries or any of their respective officers, directors, agents, employees or
Affiliates on the one hand, and each Purchaser or any of its Affiliates on the other hand, shall terminate. The Company and each
Purchaser shall consult with each other in issuing any press releases with respect to the transactions contemplated hereby, and
neither the Company nor any Purchaser shall issue any such press release nor otherwise make any such public statement without the
prior consent of the Company, with respect to any press release of any Purchaser, or without the prior consent of such Purchaser,
with respect to any press release of the Company, which consent shall not unreasonably be withheld or delayed, except if such
disclosure is required by law, in which case the disclosing party shall promptly provide the other party with prior notice of such
public statement or communication. Notwithstanding the foregoing, the Company shall not publicly disclose the name of any Purchaser,
or include the name of any Purchaser in any filing with the SEC or any regulatory agency or Trading Market, without the prior
written consent of such Purchaser, except (a) as required by federal securities law in connection with the filing of final
Transaction Documents with the SEC and (b) to the extent such disclosure is required by law or Trading Market regulations, in which
case the Company shall provide each Purchaser with prior notice of such disclosure permitted under this clause (b).
4.5 Stockholder
Rights Plan. No claim will be made or enforced by the Company or, with the consent of the Company, any other Person, that
any Purchaser is an “Acquiring Person” under any control share acquisition, business combination, poison pill (including
any distribution under a rights agreement) or similar anti-takeover plan or arrangement in effect or hereafter adopted by the Company,
or that any Purchaser could be deemed to trigger the provisions of any such plan or arrangement, by virtue of receiving Securities under
the Transaction Documents or under any other agreement between the Company and the Purchaser.
4.6 Non-Public
Information. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction
Documents, which shall be disclosed pursuant to this Section 4.6 and except as permitted under Section 4.12,
the Company covenants and agrees that neither it, nor any other Person acting on its behalf will provide any Purchaser or its agents
or counsel with any information that constitutes, or the Company reasonably believes constitutes, material non-public information, unless
prior thereto such Purchaser shall have consented to the receipt of such information and agreed with the Company to keep such information
confidential. Prior to providing a Purchaser with any material non-public information, the Company shall provide the Purchaser with a
consent substantially in the form attached as Exhibit C (“Consent”) which shall not include any material non-public
information. The Company shall not provide the Purchaser with the material non-public information if the Purchaser does not execute and
return the Consent to the Company. The Company understands and confirms that each Purchaser shall be relying on the foregoing covenant
in effecting transactions in securities of the Company. To the extent that the Company, any of its Subsidiaries, or any of their respective
officers, directors, agents, employees or Affiliates, delivers any material, non-public information to a Purchaser without such Purchaser’s
consent, the Company hereby covenants and agrees that such Purchaser shall not have any duty of confidentiality to the Company, any of
its Subsidiaries, or any of their respective officers, directors, agents, employees or Affiliates, or a duty not to trade on the basis
of, such material, non-public information, provided that the Purchaser shall remain subject to applicable law. To the extent that any
notice provided pursuant to any Transaction Document or any other communications made by the Company, or information provided, to the
Purchaser constitutes, or contains, material non-public information regarding the Company or any Subsidiaries, the Company shall simultaneously
file such notice or other material information with the SEC pursuant to a Current Report on Form 8-K. The Company understands and confirms
that each Purchaser shall be relying on the foregoing covenant in effecting transactions in securities of the Company. In addition to
any other remedies provided by this Agreement or other Transaction Documents, if the Company knowingly provides any material non-public
information to any Purchaser without its prior written consent, and it fails to immediately (no later than that Trading Day or by 9:00
am New York City time the next Trading Day) file a Form 8-K disclosing this material non-public information, it shall pay the Purchasers
as partial liquidated damages and not as a penalty a sum equal to $1,000 per day for each $100,000 of each Purchaser’s Subscription
Amount beginning with the day the information is disclosed to a Purchaser and ending and including the day the Form 8-K disclosing this
information is filed.
4.7 Use
of Proceeds. The Company shall use the net
proceeds from the sale of the Securities hereunder for working capital purposes as set forth on Schedule 4.7 hereof
and shall not use such proceeds: (a) for the redemption of any Common Stock or Common Stock Equivalents, (b) in violation of FCPA or
OFAC regulations, or (c) to lend money, give credit, or make advances to any officers, directors, employees or affiliates of the Company,
except for routine travel advances.
4.8
Indemnification of Purchaser.
(a)
Subject to the provisions of this Section 4.8,
the Company will indemnify and hold each Purchaser and its directors, officers, stockholders, members, managers, partners, employees
and agents (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such
title or any other title), each Person who controls the Purchaser (within the meaning of Section 15 of the Securities Act and Section
20 of the Exchange Act), and the directors, officers, stockholders, members, managers, partners or employees and agents (and any other
Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title)
of such controlling persons (each, a “Purchaser Party”) harmless from any and all losses, liabilities, obligations, claims,
contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’
fees and costs of investigation (including local counsel, if retained) that any such Purchaser Party may suffer or incur as a result
of or relating to (i) any breach of any of the representations, warranties, covenants or agreements made by the Company in this Agreement
or in the other Transaction Documents, or (ii) any action instituted against the Purchaser Parties in any capacity, or any of them or
their respective Affiliates, by any stockholder of the Company who is not an Affiliate of such Purchaser Party, with respect to any of
the transactions contemplated by the Transaction Documents (unless such action is solely based upon a breach of such Purchaser Party’s
representations, warranties or covenants under the Transaction Documents or any agreements or understandings such Purchaser Party may
have with any such stockholder or any violations by such Purchaser Party of state or federal securities laws or any conduct by such Purchaser
Party which constitutes intentional fraud, gross negligence, or willful misconduct) or (iii) any untrue or alleged untrue statement of
a material fact contained in any 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. If any action shall be brought against any Purchaser Party in respect of which indemnity
may be sought pursuant to this Agreement, such Purchaser Party shall promptly notify the Company in writing, and the Company shall have
the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to the Purchaser Party. Any Purchaser
Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Purchaser Party except to the extent that (i) the employment thereof has been specifically
authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time to assume such defense and to employ
counsel or (iii) in such action there is, in the reasonable opinion of the Purchaser Party, a material conflict on any material issue
between the position of the Company and the position of such Purchaser Party, in which case the Company shall be responsible for the
reasonable fees and expenses of no more than one such separate counsel (in addition to local counsel, if retained). The Company will
not be liable to any Purchaser Party under this Agreement (y) for any settlement by a Purchaser Party effected without the Company’s
prior written consent, which shall not be unreasonably withheld or delayed; or (z) to the extent, but only to the extent that a loss,
claim, damage or liability is attributable to any Purchaser Party’s breach of any of the representations, warranties, covenants
or agreements made by such Purchaser Party in this Agreement or in the other Transaction Documents. The Purchaser Parties shall have
the right to settle any action against any of them by the payment of money provided that they cannot agree to any equitable relief and
the Company, its officers, directors and Affiliates receive unconditional releases in customary form. The indemnification required by
this Section 4.8 shall be made by periodic payments of the amount thereof during the investigation or defense, as and when
bills are received or are incurred. The indemnity agreements contained herein shall be in addition to any cause of action or similar
right of any Purchaser Party against the Company or others and any liabilities the Company may be subject to pursuant to law.
(b)
Settlement Without Consent if Failure to Reimburse.
If an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for reasonable fees and expenses
of counsel, such indemnifying party agrees that it shall be liable for any settlement of the nature contemplated by Section 4.8
effected without its written consent if (i) such settlement is entered into more than 45 days after receipt by such indemnifying party
of the aforesaid request, (ii) such indemnifying party shall have received notice of the terms of such settlement at least 30 days prior
to such settlement being entered into and (iii) such indemnifying party shall not have reimbursed such indemnified party in accordance
with such request prior to the date of such settlement.
4.9 Reservation
of Common Stock. Until no portion of the Notes remain
outstanding and all Warrants have been exercised, the Company shall reserve and keep available at all times in favor of the Purchasers,
on a pro rata basis based on the Purchasers’ Subscription Amount, free of preemptive rights, four times the number
of shares issuable to the Purchasers upon exercise of the Warrants or the conversion of the Notes (subject to adjustment for stock splits
and dividends, combinations and similar events) (the “Reserve” or the “Required Minimum”). The
Reserve amount shall thereafter be increased, on a first-priority basis, as and when new shares of Common Stock or preferred stock become
available for reserve. If, on any date, 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 use its best efforts to amend the Company’s
Articles of Incorporation to increase the number of authorized but unissued shares of Common Stock or preferred stock to at least the
Required Minimum at such time, as soon as possible and in any event not later than the 60th day after such date.
4.10 Listing
of Common Stock. The Company hereby agrees to use
best efforts to maintain the listing or quotation of the Common Stock on the Trading Market on which it is currently listed. The Company
further agrees, if the Company applies to have the Common Stock traded on any other Trading Market, it will then include in such application
all of the Warrant Shares and will take such other action as is necessary to cause all of the Warrant Shares to be listed or quoted on
such other Trading Market as promptly as possible. The Company will then take all action necessary to continue the listing and trading
of its Common Stock on a Trading Market and will comply in all respects with the Company’s reporting, filing and other obligations
under the bylaws or rules of the Trading Market. The Company agrees to maintain the eligibility of the Common Stock for electronic transfer
through the Depository Trust Company or another established clearing corporation, including, without limitation, by timely payment of
fees to the Depository Trust Company or such other established clearing corporation in connection with such electronic transfer. The
Company shall provide to the Purchasers evidence of such listing or quotation and maintain the listing or quotation of such Common Stock
on any date at least equal to the Reserve on such date on such Trading Market or another Trading Market. The Company shall not enter
into any agreement or file any amendment to its Certificate or Articles of Incorporation (including the filing of a Certificate of Designation)
which conflicts with this Section 4.10 while the Notes and Warrants remain outstanding.
4.11
Participation in Future Financing.
(a)
Until the later of: (i) 24 months from the date of this
Agreement and (ii) the date that the Notes are no longer outstanding, upon any issuance by the Company or any of its Subsidiaries of
Common Stock or Common Stock Equivalents for cash consideration, Indebtedness or a combination of the foregoing in a transaction exempt
from registration under the Securities Act (a “Subsequent Financing”), the Purchasers (as a group) shall have the right to
participate in up to an amount of the Subsequent Financing equal to 15% of the Subsequent Financing (the “Participation
Maximum”) on the same terms, conditions and price provided for in the Subsequent Financing. At least five Trading Days prior to
the closing of the Subsequent Financing, the Company shall deliver to each Purchaser a written notice of its intention to effect a Subsequent
Financing (“Pre-Notice”), which Pre-Notice shall ask such Purchaser if it wants to review the details of such financing (such
additional notice, a “Subsequent Financing Notice”). Upon the request of a Purchaser, and only upon a request by such Purchaser,
for a Subsequent Financing Notice, the Company shall promptly, but no later than one Trading Day after such request, deliver a Subsequent
Financing Notice to such Purchaser. The Subsequent Financing Notice shall describe in reasonable detail the proposed terms of such Subsequent
Financing, the amount of proceeds intended to be raised thereunder and the Person or Persons through or with whom such Subsequent Financing
is proposed to be effected and shall include a term sheet or similar document relating thereto as an attachment.
(b)
Any Purchaser desiring to participate in such Subsequent
Financing must provide written notice to the Company by not later than 5:30 p.m. (New York City time) on the fifth Trading Day after
all of the Purchasers have received the Pre-Notice that such Purchaser is willing to participate in the Subsequent Financing, the amount
of such Purchaser’s participation, and representing and warranting that such Purchaser has such funds ready, willing, and available
for investment on the terms set forth in the Subsequent Financing Notice. If the Company receives no such notice from a Purchaser as
of such fifth Trading Day, such Purchaser shall be deemed to have notified the Company that it does not elect to participate.
(c)
If by 5:30 p.m. (New York City time) on the fifth Trading
Day after all of the Purchasers have received the Pre-Notice, notifications by the Purchasers of their willingness to participate in
the Subsequent Financing is, in the aggregate, less than the total amount of the Participation Maximum, then the Company may effect the
remaining portion of such Subsequent Financing on the terms and with the Persons set forth in the Subsequent Financing Notice.
(d)
If by 5:30 p.m. (New York City time) on the fifth Trading
Day after all of the Purchasers have received the Pre-Notice, the Company receives responses to a Subsequent Financing Notice from Purchasers
seeking to purchase more than the aggregate amount of the Participation Maximum, each such Purchaser shall have the right to purchase
its Pro Rata Portion (as defined below) of the Participation Maximum. “Pro Rata Portion” means the ratio of (x) the Subscription
Amount of Securities purchased on the Closing Date by a Purchaser participating under this Section 4.11 and (y) the sum of
the aggregate Subscription Amounts of Securities purchased on the Closing Date by all Purchasers participating under this Section 4.11.
(e)
The Company must provide the Purchasers with a second
Subsequent Financing Notice, and the Purchasers will again have the right of participation set forth above in this Section 4.11,
if the Subsequent Financing subject to the initial Subsequent Financing Notice is not consummated for any reason on the terms set forth
in such Subsequent Financing Notice within 30 Trading Days after the date of the initial Subsequent Financing Notice.
(f)
The Company and each Purchaser agree that if any Purchaser
elects to participate in the Subsequent Financing, the transaction documents related to the Subsequent Financing shall not include any
term or provision whereby such Purchaser shall be required to agree to any restrictions on trading as to any of the Securities purchased
hereunder or be required to consent to any amendment to or termination of, or grant any waiver, release or the like under or in connection
with, this Agreement, without the prior written consent of such Purchaser.
(g)
Notwithstanding anything to the contrary in this Section
4.11 and unless otherwise agreed to by such Purchaser, the Company shall either confirm in writing to such Purchaser that
the transaction with respect to the Subsequent Financing has been abandoned or shall publicly disclose its intention to issue the securities
in the Subsequent Financing, in either case in such a manner such that such Purchaser will not be in possession of any material, non-public
information, by 30 Trading Days following delivery of the Subsequent Financing Notice. If by such 30th Trading Day, no public disclosure
regarding a transaction with respect to the Subsequent Financing has been made, and no notice regarding the abandonment of such transaction
has been received by such Purchaser, such transaction shall be deemed to have been abandoned and such Purchaser shall not be deemed to
be in possession of any material, non-public information with respect to the Company or any of its Subsidiaries.
(h)
Notwithstanding the foregoing, this Section 4.11
shall not apply in respect of an Exempt Issuance.
4.12 Certain
Transactions and Confidentiality. The Purchaser
covenants that neither it nor any Affiliate acting on its behalf or pursuant to any understanding with it will execute any purchases
or sales, including Short Sales of any of the Company’s securities during the period commencing with the execution of this Agreement
and ending at such time that the transactions contemplated by this Agreement are first publicly announced pursuant to the initial press
release as described in Section 4.4. Each Purchaser, severally and not jointly with the other Purchasers, covenants that
until such time as the transactions contemplated by this Agreement are publicly disclosed by the Company pursuant to the initial press
release as described in Section 4.4, the Purchaser will maintain the confidentiality of the existence and terms of this transaction
and the information included in the Disclosure Schedules. Notwithstanding the foregoing and notwithstanding anything contained in this
Agreement to the contrary, the Company expressly acknowledges and agrees that (i) no Purchaser makes any representation, warranty or
covenant hereby that it will not engage in effecting transactions in any securities of the Company after the time that the transactions
contemplated by this Agreement are first publicly announced pursuant to the initial press release as described in Section 4.4,
(ii) no Purchaser shall be restricted or prohibited from effecting any transactions in any securities of the Company in accordance with
applicable securities laws from and after the time that the transactions contemplated by this Agreement are first publicly announced
pursuant to the initial press release as described in Section 4.4 and (iii) no Purchaser shall have any duty of confidentiality
or duty not to trade in the securities of the Company to the Company or its Subsidiaries after the issuance of the initial press release
as described in Section 4.4. Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managed investment
vehicle whereby separate portfolio managers manage separate portions of the Purchaser’s assets and the portfolio managers have
no direct knowledge of the investment decisions made by the portfolio managers managing other portions of the Purchaser’s assets,
the covenant set forth above shall only apply with respect to the portion of assets managed by the portfolio manager that made the investment
decision to purchase the Securities covered by this Agreement.
4.13 Market
Stand Off Agreement. In the event of the
consummation of a Qualified Offering, on the request of the Company’s lead underwriter, each Purchaser will execute and
deliver a customary market stand off agreement for a period of six months following the Qualified Offering in form satisfactory to
each Purchaser and its counsel.
4.14 DTC
Program. For so long as any of the Notes or Warrants
are outstanding, the Company will employ as the Transfer Agent for the Common Stock and Warrant Shares a participant in the Depository
Trust Company Automated Securities Transfer Program and cause the Common Stock to be transferable pursuant to such program.
4.15 Maintenance
of Property. The Company shall keep all of its property
necessary for the operations of its business, which is necessary or useful to the conduct of its business, in good working order and
condition, ordinary wear and tear excepted.
4.16 Preservation
of Corporate Existence. The Company shall preserve
and maintain its corporate existence, rights, privileges and franchises in the jurisdiction of its incorporation, and qualify and remain
qualified, as a foreign corporation in each jurisdiction in which such qualification is necessary in view of its business or operations
and where the failure to qualify or remain qualified might reasonably have a Material Adverse Effect upon the financial condition, business
or operations of the Company taken as a whole.
4.17 No
Registration of Securities. While the Notes are
outstanding, unless at least 30% of the aggregate principal amount of the Notes has been repaid or at least 30% of the proceeds from
the sale of the shares under Form S-1 or Form S-3 is used to pay off the principal of the Notes, the Company will not file any new registration
statements on Form S-1 or Form S-3. For the avoidance of doubt, the foregoing shall not prevent the Company from filing a Registration
Statement on Form S-8 with respect to equity compensation plans or a Form S-1 or Form S-3 for a Qualified Financing.
4.18 Variable
Rate Transactions. While any of the Notes are outstanding,
the Company shall be prohibited from entering a Variable Rate Transaction, other than with the Lead Investor.
4.19 No
Repurchase of Common Stock. Prior to purchasing
or otherwise acquiring any shares of Common Stock, the Company shall give each Purchaser at least 20 Trading Days prior written notice
of its intent to do so. If during the 20 Trading Day period any Purchaser gives the Company notice that it will violate the beneficial
ownership limitation contained in the Note or Warrants by virtue of such purchase or acquisition by the Company, the Company shall not
complete the purchase or acquisition except to the extent that it does not cause any Purchaser to exceed the beneficial ownership limitation.
For avoidance of doubt, in no event shall any Purchaser own more than 9.99% of the Company’s outstanding Common Stock by virtue
of such purchase or acquisition.
4.20 Prohibition
on certain Debt. Until such time as the Notes are
no longer outstanding, the Company shall be prohibited from incurring Indebtedness.
4.21 Most
Favored Nation Provision. Notwithstanding anything
contained herein to the contrary, if at any time from and after the Closing Date until the Notes are no longer outstanding, the Company
proposes to offer and sell additional securities in a Subsequent Financing, each Purchaser may elect, in its sole discretion, to exchange
all or a portion of such Purchaser’s Securities then held by such Purchaser for securities of the same type issued in such Subsequent
Financing (such exchange to be made at the same time as the closing of such Subsequent Financing), on the same terms and conditions as
the Subsequent Financing, based on the principal aggregate amount of such Purchaser’s Note, and accrued and unpaid interest and
late charges on the principal and interest of the Note. By way of example, if the Company undertakes a Subsequent Financing of notes,
each Purchaser shall have the right to participate in such Subsequent Financing and use the exchange of its Notes as consideration, on
a dollar for dollar basis, in lieu of cash consideration. The procedural and notice requirements under Section 4.11 are incorporated
in this Section 4.21, as applicable.
4.22 Registration.
If the SEC amends or proposes to amend Rule 144 which would
prohibit or limit any Purchaser’s ability to tack the holding period of the Warrant Shares to the Warrants (in a cashless exercise),
the Company shall file a registration statement within 30 days of any Purchaser’s written request registering all of such Purchaser’s
Warrant Shares.
4.23 Subsequent
Equity Sales. From the date hereof until 90 days
after the Closing Date except for Exempt Issuances, neither the Company nor any Subsidiary shall issue, enter into any agreement to issue
or announce the issuance or proposed issuance of any shares of Common Stock or Common Stock Equivalents.
4.24 Collateral
Agent. Each Purchaser (i) hereby appoints Lead Investor
as Collateral Agent under the Security Agreement and (ii) acknowledges that Lead Investor, as the Collateral Agent, owes no fiduciary
duties to the Purchasers as a result its appointment as Collateral Agent.
4.25
Reserved.
4.26 Capital
Changes. Until the date that is 18 months following
the Closing Date, except for changes in the Company’s capital in order to maintain the Required Minimum as required under this
Agreement, the Company shall not undertake a reverse or forward stock split or reclassification of the Common Stock without the prior
written consent of the Purchasers holding a majority in Principal Amount outstanding of the Notes; provided however, such written consent
of the Purchasers shall not be unreasonably withheld if such reverse or forward stock split or reclassification of the Common Stock is
required for the Company to list its Common Stock on a national securities exchange, and shall be deemed given if a reverse stock split
is effected in connection with a Qualified Financing at the recommendation of the underwriter or placement agent.
Article
V
MISCELLANEOUS
5.1 Fees
and Expenses. Except as expressly set forth below
and in the Transaction Documents to the contrary, each party shall pay the fees and expenses of its advisers, counsel, accountants and
other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and
performance of this Agreement. The Company shall pay all Transfer Agent fees (including, without limitation, any fees required for same-day
processing of any instruction letter delivered by the Company and any exercise notice delivered by a Purchaser), stamp taxes and other
taxes and duties levied in connection with the delivery of any Securities to the Purchaser. For the avoidance of doubt, the Company shall
also pay all fees and expenses related to any Purchaser sales pursuant to Rule 144. Upon the Closing, the Company agrees to pay legal
fees of the Lead Investor in an amount not to exceed $30,000 (which may be withheld from the Subscription Amount).
5.2 Entire
Agreement. The Transaction Documents, together with
the exhibits and schedules thereto, contain the entire understanding of the parties with respect to the subject matter hereof and thereof
and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have
been merged into such documents, exhibits and schedules.
5.3 Notices.
Any and all notices or other communications or deliveries required
or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of: (a) the date of
transmission, if such notice or communication is delivered by email attachment at the email address as set forth on the signature pages
attached hereto at or prior to 5:30 p.m. (Eastern Standard or Daylight Savings Time, as applicable) on a Trading Day, (b) the next Trading
Day after the date of transmission, if such notice or communication is delivered via email attachment at the email address as set forth
on the signature pages attached hereto on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading
Day, (c) the second Trading Day following the date of transmission, if sent by U.S. nationally recognized overnight delivery service
or (d) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications
shall be as set forth on the signature pages attached hereto unless changed by a party. To the extent that any notice provided pursuant
to any Transaction Document constitutes, or contains, material, non-public information regarding the Company or any Subsidiaries, the
Company shall simultaneously file a Current Report with the SEC on Form 8-K, or which failure to do so will subject the Company to the
liquidated damages provided for in Section 4.6.
5.4 Amendments;
Waivers. No provision of this Agreement may be waived,
modified, supplemented or amended except in a written instrument signed, in the case of an amendment, by the Company and a majority in
interest of the outstanding balance of the Notes (including the Lead Investor) or, in the case of a waiver, by the party against whom
enforcement of any such waived provision is sought. No waiver of any default with respect to any provision, condition or requirement
of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other
provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner
impair the exercise of any such right. Any amendment effected in accordance with accordance with this Section 5.4 shall be
binding upon the Purchasers and any holder of Securities and the Company.
5.5 Headings.
The headings herein are for convenience only, do not constitute
a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.
5.6 Successors
and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties and their successors and permitted assigns. The Company may not assign this Agreement or any
rights or obligations hereunder without the prior written consent of each Purchaser. Each Purchaser may assign any or all of its rights
under this Agreement to any Person to whom such Purchaser assigns or transfers any Securities, provided that such transferee agrees in
writing to be bound, with respect to the transferred Securities, by the provisions of the Transaction Documents that apply to the Purchaser.
5.7 No
Third-Party Beneficiaries. This Agreement is intended
for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any
provision hereof be enforced by, any other Person, except as otherwise set forth in Section 4.8 and this Section 5.7.
5.8 Governing
Law; Exclusive Jurisdiction; Attorneys’ Fees. All
questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall be governed by and
construed and enforced in accordance with the internal Laws of the State of Illinois without regard to the principles of conflicts of
law thereof. Any disputes, claims, or controversies arising out of or relating to the Transaction Documents, or the transactions, contemplated
thereby, or the breach, termination, enforcement, interpretation or validity thereof, including the determination of the scope or applicability
of this Agreement to arbitrate, shall be referred to and resolved solely and exclusively by binding arbitration to be conducted before
the Judicial Arbitration and Mediation Service (“JAMS”), or its successor pursuant the expedited procedures set forth in
the JAMS Comprehensive Arbitration Rules and Procedures (the “Rules”), including Rules 16.1 and 16.2 of those Rules. The
arbitration shall be held in New York, New York, before a tribunal consisting of three arbitrators each of whom will be selected in accordance
with the “strike and rank” methodology set forth in Rule 15. Either party to this Agreement may, without waiving any remedy
under this Agreement, seek from any federal or state court sitting in the State of New York any interim or provisional relief that is
necessary to protect the rights or property of that party, pending the establishment of the arbitral tribunal. The costs and expenses
of such arbitration shall be paid by and be the sole responsibility of the Company, including but not limited to the Purchasers attorneys’
fees and each arbitrator’s fees. The arbitrators’ decision must set forth a reasoned basis for any award of damages or finding
of liability. The arbitrators’ decision and award will be made and delivered as soon as reasonably possibly and in any case within
60 days’ following the conclusion of the arbitration hearing and shall be final and binding on the parties and may be entered by
any court having jurisdiction thereof. If any party shall commence an Action to enforce any provisions of the Transaction Documents,
then, in addition to the obligations of the Company elsewhere in this Agreement, the prevailing party in such Action shall be reimbursed
by the non-prevailing party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation
and prosecution of such Action.
5.9 Survival.
The representations and warranties contained herein shall survive
the Closing and the delivery of the Securities.
5.10 Execution.
This Agreement may be executed in two or more counterparts,
all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been
signed by each party and delivered to each other party, it being understood that the parties need not sign the same counterpart. In the
event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf’ format data file, such
signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the
same force and effect as if such facsimile or “.pdf’ signature page were an original thereof.
5.11 Severability.
If any term, provision, covenant or restriction of this Agreement
is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants
and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and
the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially
the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including
any of such that may be hereafter declared invalid, illegal, void or unenforceable.
5.12 Rescission
and Withdrawal Right. Notwithstanding anything to
the contrary contained in (and without limiting any similar provisions of) any of the other Transaction Documents, whenever any Purchaser
exercises a right, election, demand or option under a Transaction Document and the Company does not timely perform its related obligations
within the periods therein provided, then that Purchaser may rescind or withdraw, in its sole discretion from time to time upon written
notice to the Company, any relevant notice, demand or election in whole or in part without prejudice to its future actions and rights;
provided, however, that in the case of a rescission of an exercise of a Warrant, the Purchaser shall be required to return any Warrant
Shares subject to any such rescinded Exercise Notice concurrently with the restoration of such Purchaser’s right to acquire such
Warrant Shares pursuant to the Warrant.
5.13 Replacement
of Securities. If any certificate or instrument
evidencing any Securities is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution
for and upon cancellation thereof (in the case of mutilation), or in lieu of and substitution therefor, a new certificate or instrument,
but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction without requiring the posting
of any bond.
5.14 Remedies.
In addition to being entitled to exercise all rights provided
herein or granted by law, including recovery of damages, each Purchaser and the Company will be entitled to specific performance under
the Transaction Documents. The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of
any breach of obligations contained in the Transaction Documents and hereby agree to waive and not to assert the defense that a remedy
at law would be adequate in any Action for specific performance of any such obligation.
5.15 Payment
Set Aside. To the extent that the Company makes
a payment or payments to any Purchaser pursuant to any Transaction Document or a Purchaser enforces or exercises its rights thereunder,
and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared
to be fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored
to the Company, a trustee, receiver or any other Person under any law (including, without limitation, any bankruptcy law, state or federal
law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended
to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff
had not occurred.
5.16 Independent
Nature of Purchasers’ Obligations and Rights; Equal Treatment of Purchasers. The
obligations of each Purchaser under any Transaction Document are several and not joint with the obligations of any other Purchaser, and
no Purchaser shall be responsible in any way for the performance or non-performance of the obligations of any other Purchaser under any
Transaction Document. Nothing contained herein or in any other Transaction Document, and no action taken by any Purchaser pursuant hereto
or thereto, shall be deemed to constitute the Purchasers as a partnership, an association, a joint venture or any other kind of entity,
or create a presumption that the Purchasers are in any way acting in concert or as a group with respect to such obligations or the transactions
contemplated by the Transaction Documents. Each Purchaser shall be entitled to independently protect and enforce its rights including,
without limitation, the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary
for any other Purchaser to be joined as an additional party in any Proceeding for such purpose. Each Purchaser has been represented by
its own separate legal counsel in its review and negotiation of the Transaction Documents. The Company has elected to provide all Purchasers
with the same terms and Transaction Documents for the convenience of the Company and not because it was required or requested to do so
by any of the Purchasers. It is expressly understood and agreed that each provision contained in this Agreement and in each other Transaction
Document is between the Company and a Purchaser, solely, and not between the Company and the Purchasers collectively and not between
and among the Purchasers. No consideration (including any modification of any Transaction Document) shall be offered or paid to any Person
to amend or consent to a waiver or modification of any provision of the Transaction Documents unless the same consideration is also offered
to all of the parties to the Transaction Documents. For clarification purposes, this provision constitutes a separate right granted to
each Purchaser by the Company and negotiated separately by each Purchaser, and is intended for the Company to treat the Purchasers as
a class and shall not in any way be construed as the Purchasers acting in concert or as a group with respect to the purchase, disposition
or voting of Securities or otherwise.
5.17 Liquidated
Damages. The Company’s obligations to pay
any partial liquidated damages or other amounts owing under the Transaction Documents is a continuing obligation of the Company and shall
not terminate until all unpaid partial liquidated damages and other amounts have been paid notwithstanding the fact that the instrument
or security pursuant to which such partial liquidated damages or other amounts are due and payable shall have been canceled.
5.18 Saturdays,
Sundays, Holidays, etc. If the last or appointed
day for the taking of any action or the expiration of any right required or granted herein shall not be a Trading Day, then such action
may be taken or such right may be exercised on the next succeeding Trading Day.
5.19 Construction.
The parties agree that each of them and/or their respective
counsel have reviewed and had an opportunity to revise the Transaction Documents and, therefore, the normal rule of construction to the
effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of the Transaction
Documents or any amendments thereto. In addition, each and every reference to share prices and shares of Common Stock in any Transaction
Document shall be subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions
of the Common Stock that occur after the date of this Agreement.
5.20 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 waive forever trial by jury.
5.21 Non-Circumvention.
The Company hereby covenants and agrees that the Company will
not, by amendment of its Articles of Incorporation, including any Certificates of Designation, or 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 Agreement, and will at all times in good faith carry
out all of the provision of this Agreement and take all action as may be required to protect the rights of all holders of the Securities.
Without limiting the generality of the foregoing or any other provision of this Agreement or the other Transaction Documents, the Company
(a) shall not increase the par value of any Warrant Shares issuable upon exercise of the Warrants above the Warrant Exercise Price then
in effect and (b) shall take all such action as may be necessary or appropriate in order that the Company may validly and legally issue
fully paid and nonassessable Warrant Shares upon the exercise of the Warrants. Notwithstanding anything herein to the contrary, if after
six months from the Original Issue Date, the Purchasers are not permitted to exercise their Warrants, in full, for any reason, subject
to the Purchaser’s compliance with Rule 144 the Company shall use its best efforts to promptly remedy such failure, including,
without limitation, obtaining such consent or approvals as necessary to permit such exercise.
5.22 Entire
Agreement; No Third Party Beneficiaries. This Agreement,
taken together with the Disclosure Schedules and the Transaction Documents, (a) constitutes the entire agreement, and supersede all prior
agreements and understandings, both written and oral, among the Parties with respect to the Transactions and (b) are not intended to
confer upon any person other than the Parties any rights or remedies.
5.23 Usury.
To the extent it may lawfully do so, the Company hereby agrees
not to insist upon or plead or in any manner whatsoever claim, and will resist any and all efforts to be compelled to take the benefit
or advantage of, usury laws wherever enacted, now or at any time hereafter in force, in connection with any Action or Proceeding that
may be brought by any Purchaser in order to enforce any right or remedy under any Transaction Document. Notwithstanding any provision
to the contrary contained in any Transaction Document, it is expressly agreed and provided that the total liability of the Company under
the Transaction Documents for payments in the nature of interest shall not exceed the maximum lawful rate authorized under applicable
law (the “Maximum Rate”), and, without limiting the foregoing, in no event shall any rate of interest or default interest,
or both of them, when aggregated with any other sums in the nature of interest that the Company may be obligated to pay under the Transaction
Documents exceed such Maximum Rate. It is agreed that if the maximum contract rate of interest allowed by law and applicable to the Transaction
Documents is increased or decreased by statute or any official governmental action subsequent to the date hereof, the new maximum contract
rate of interest allowed by law will be the Maximum Rate applicable to the Transaction Documents from the effective date thereof forward,
unless such application is precluded by applicable law. If under any circumstances whatsoever, interest in excess of the Maximum Rate
is paid by the Company to any Purchaser with respect to indebtedness evidenced by the Transaction Documents, such excess shall be applied
by such Purchaser to the unpaid principal balance of any such indebtedness or be refunded to the Company, the manner of handling such
excess to be at such Purchaser’s election.
(Signature
Pages Follow)
IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.
ADHERA
THERAPEUTICS, INC. |
|
Address
for Notice: |
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[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE
PAGE FOR PURCHASER FOLLOWS]
Signature
Page to Securities Purchase Agreement
PURCHASER
SIGNATURE PAGE TO
SECURITIES
PURCHASE AGREEMENT
IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories
as of the date first indicated above.
Name
of Purchaser:
Signature
of Authorized Signatory of Purchaser: ______________________________________
Name
of Authorized Signatory:
Title
of Authorized Signatory: Authorized Representative
Email
Address of Authorized Signatory:
Address
for Notice to Purchaser:
____________________________________
____________________________________
Subscription
(Purchase) Amount: $___________
Principal
of Note: $______________
Number
of Warrants: _______________
EIN
Number: ___________________
Exhibit
10.2
SECURITY
AGREEMENT
This
SECURITY AGREEMENT, dated as of _______________ (this “Agreement”), is among Adhera Therapeutics, Inc., a Delaware
corporation (the “Company”), all of the subsidiaries of the Company (such subsidiaries, the “Guarantors”
and together with the Company, the “Debtors”) and the holders of the Company’s Original Issue Discount Senior
Secured Promissory Notes (collectively, the “Notes”) signatory hereto, their endorsees, transferees and assigns (collectively,
the “Secured Parties”).
W
I T N E S S E T H:
WHEREAS,
pursuant to the Purchase Agreement (as defined in the Notes), the Secured Parties have severally agreed to extend the loans to the Company
evidenced by the Notes;
WHEREAS,
pursuant to a certain Subsidiary Guaranty, dated as of the date hereof (the “Guaranty”), the Guarantors have jointly
and severally agreed to guarantee and act as surety for payment of such Notes; and
WHEREAS,
in order to induce the Secured Parties to extend the loans evidenced by the Notes, each Debtor has agreed to execute and deliver to the
Secured Parties this Agreement and to grant the Secured Parties, pari passu with each other Secured Party and through the Agent
(as defined in Section 18 hereof), a security interest in certain property of such Debtor to secure the prompt payment, performance
and discharge in full of all of the Company’s obligations under the Notes and the Guarantors’ obligations under the Guaranty.
NOW,
THEREFORE, in consideration of the agreements herein contained and for other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto hereby agree as follows:
1. Certain
Definitions. As used in this Agreement, the following terms shall have the meanings set forth in this Section 1. Terms used but not
otherwise defined in this Agreement that are defined in Article 9 of the UCC (such as “account,” “chattel
paper,” “commercial tort claim,” “deposit account,” “document,” “equipment,”
“fixtures,” “general intangibles,” “goods,” “instruments,”
“inventory,” “investment property,” “letter-of-credit rights,” “proceeds”
and “supporting obligations”) shall have the respective meanings given such terms in Article 9 of the UCC.
(a)
“Collateral” means the collateral in which the Secured Parties are granted a security interest by this Agreement and
which shall include the following personal property of the Debtors, whether presently owned or existing or hereafter acquired or coming
into existence, wherever situated, and all additions and accessions thereto and all substitutions and replacements thereof, and all proceeds,
products and accounts thereof, including, without limitation, all proceeds from the sale or transfer of the Collateral and of insurance
covering the same and of any tort claims in connection therewith, and all dividends, interest, cash, notes, securities, equity interest
or other property at any time and from time to time acquired, receivable or otherwise distributed in respect of, or in exchange for,
any or all of the Pledged Securities (as defined below):
(i) all
goods, including, without limitation, (A) all machinery, equipment, computers, motor vehicles, trucks, tanks, boats, ships, appliances,
furniture, special and general tools, fixtures, test and quality control devices and other equipment of every kind and nature and wherever
situated, together with all documents of title and documents representing the same, all additions and accessions thereto, replacements
therefor, all parts therefor, and all substitutes for any of the foregoing and all other items used and useful in connection with any
Debtor’s businesses and all improvements thereto; and (B) all inventory;
(ii) all
contract rights and other general intangibles, including, without limitation, all partnership interests, membership interests, stock
or other securities, rights under any of the Organizational Documents, agreements related to the Pledged Securities, licenses, distribution
and other agreements, computer software (whether “off-the-shelf,” licensed from any third party or developed by any
Debtor), computer software development rights, leases, franchises, customer lists, quality control procedures, grants and rights, goodwill,
Intellectual Property and income tax refunds;
(iii) all
accounts, together with all instruments, all documents of title representing any of the foregoing, all rights in any merchandising, goods,
equipment, motor vehicles and trucks which any of the same may represent, and all right, title, security and guaranties with respect
to each account, including any right of stoppage in transit;
(iv) all documents, letter-of-credit rights, instruments and chattel paper;
(v) all commercial tort claims;
(vi) all
deposit accounts and all cash (whether or not deposited in such deposit accounts);
(vii) all investment property;
(viii) all supporting obligations;
(ix) all
files, records, books of account, business papers, and computer programs; and
(x) the
products and proceeds of all of the foregoing Collateral set forth in clauses (i)-(ix) above.
Without
limiting the generality of the foregoing, the “Collateral” shall include all investment property and general intangibles
respecting ownership and/or other equity interests in each Guarantor, including, without limitation, the shares of capital stock and
the other equity interests listed on Schedule H hereto (as the same may be modified from time to time pursuant to the terms hereof),
and any other shares of capital stock and/or other equity interests of any other direct or indirect subsidiary of any Debtor obtained
in the future, and, in each case, all certificates representing such shares and/or equity interests and, in each case, all rights, options,
warrants, stock, other securities and/or equity interests that may hereafter be received, receivable or distributed in respect of, or
exchanged for, any of the foregoing and all rights arising under or in connection with the Pledged Securities, including, but not limited
to, all dividends, interest and cash.
Notwithstanding
the foregoing, nothing herein shall be deemed to constitute an assignment of any asset which, in the event of an assignment, becomes
void by operation of applicable law or the assignment of which is otherwise prohibited by applicable law (in each case to the extent
that such applicable law is not overridden by Sections 9-406, 9-407 and/or 9-408 of the UCC or other similar applicable law); provided
however, that to the extent permitted by applicable law, this Agreement shall create a valid security interest in such asset and, to
the extent permitted by applicable law, this Agreement shall create a valid security interest in the proceeds of such asset.
(b) “Intellectual
Property” means the collective reference to all rights, priorities and privileges relating to intellectual property, whether
arising under United States, multinational or foreign laws or otherwise, including, without limitation, (i) all copyrights arising under
the laws of the United States, any other country or any political subdivision thereof, whether registered or unregistered and whether
published or unpublished, all registrations and recordings thereof, and all applications in connection therewith, including, without
limitation, all registrations, recordings and applications in the United States Copyright Office, (ii) all letters patent of the United
States, any other country or any political subdivision thereof, all reissues and extensions thereof, and all applications for letters
patent of the United States or any other country and all divisions, continuations and continuations-in-part thereof, (iii) all trademarks,
trade names, corporate names, company names, business names, fictitious business names, trade dress, service marks, logos, domain names
and other source or business identifiers, and all goodwill associated therewith, now existing or hereafter adopted or acquired, all registrations
and recordings thereof, and all applications in connection therewith, whether in the United States Patent and Trademark Office or in
any similar office or agency of the United States, any State thereof or any other country or any political subdivision thereof, or otherwise,
and all common law rights related thereto, (iv) all trade secrets arising under the laws of the United States, any other country or any
political subdivision thereof, (v) all rights to obtain any reissues, renewals or extensions of the foregoing, (vi) all licenses for
any of the foregoing, and (vii) all causes of action for infringement of the foregoing.
(c) “Majority
in Interest” means, at any time of determination, the majority in interest (based on then-outstanding principal amounts of
Notes at the time of such determination) of the Secured Parties.
(d) “Necessary
Endorsement” means undated stock powers endorsed in blank or other proper instruments of assignment duly executed and such
other instruments or documents as the Agent (as that term is defined below) may reasonably request.
(e) “Obligations”
means all of the liabilities and obligations (primary, secondary, direct, contingent, sole, joint or several) due or to become due, or
that are now or may be hereafter contracted or acquired, or owing to, of any Debtor to the Secured Parties, arising under this Agreement,
the Notes, the Guaranty and any other instruments, agreements or other documents executed and/or delivered in connection herewith or
therewith, in each case, whether now or hereafter existing, voluntary or involuntary, direct or indirect, absolute or contingent, liquidated
or unliquidated, whether or not jointly owed with others, and whether or not from time to time decreased or extinguished and later increased,
created or incurred, and all or any portion of such obligations or liabilities that are paid, to the extent all or any part of such payment
is avoided or recovered directly or indirectly from any of the Secured Parties as a preference, fraudulent transfer or otherwise as such
obligations may be amended, supplemented, converted, extended or modified from time to time. Without limiting the generality of the foregoing,
the term “Obligations” shall include, without limitation: (i) principal of, and interest on the Notes and the loans
extended pursuant thereto; (ii) any and all other fees, indemnities, costs, obligations and liabilities of the Debtors from time to time
under or in connection with this Agreement, the Notes, the Guaranty and any other instruments, agreements or other documents executed
and/or delivered in connection herewith or therewith; and (iii) all amounts (including but not limited to post-petition interest) in
respect of the foregoing that would be payable but for the fact that the obligations to pay such amounts are unenforceable or not allowable
due to the existence of a bankruptcy, reorganization or similar proceeding involving any Debtor.
(f) “Organizational
Documents” means with respect to any Debtor, the documents by which such Debtor was organized (such as a certificate of incorporation,
certificate of limited partnership or articles of organization, and including, without limitation, any certificates of designation for
preferred stock or other forms of preferred equity) and which relate to the internal governance of such Debtor (such as bylaws, a partnership
agreement or an operating, limited liability or members agreement).
(g) “Pledged
Interests” shall have the meaning ascribed to such term in Section 4(j).
(h) “Pledged
Securities” shall have the meaning ascribed to such term in Section 4(i).
(i) “UCC”
means the Uniform Commercial Code of the State of New York and or any other applicable law of any state or states which has jurisdiction
with respect to all, or any portion of, the Collateral or this Agreement, from time to time. It is the intent of the parties that defined
terms in the UCC should be construed in their broadest sense so that the term “Collateral” will be construed in its
broadest sense. Accordingly, if there are, from time to time, changes to defined terms in the UCC that broaden the definitions, they
are incorporated herein and if existing definitions in the UCC are broader than the amended definitions, the existing ones shall be controlling.
2. Grant
of Security Interest in Collateral. As an inducement for the Secured Parties to extend the loans as evidenced by the Notes and to
secure the complete and timely payment, performance and discharge in full, as the case may be, of all of the Obligations, each Debtor
hereby unconditionally and irrevocably pledges, grants and hypothecates to the Secured Parties a lien on and security interest in and
to, and a right of set-off against all of their respective right, title and interest of whatsoever kind and nature in and to, the Collateral
(a “Security Interest” and, collectively, the “Security Interests”).
3. Delivery
of Certain Collateral. Contemporaneously or prior to the execution of this Agreement, each Debtor shall deliver or cause to be delivered
to the Agent: (a) any and all certificates and other instruments representing or evidencing the Pledged Securities, and (b) any and all
certificates and other instruments or documents representing any of the other Collateral, in each case, together with all Necessary Endorsements.
The Debtors are, contemporaneously with the execution hereof, delivering to Agent, or have previously delivered to Agent, a true and
correct copy of each Organizational Document governing any of the Pledged Securities.
4. Representations,
Warranties, Covenants and Agreements of the Debtors. Except as set forth under the corresponding section of the disclosure schedules
delivered to the Secured Parties concurrently herewith (the “Disclosure Schedules”), which Disclosure Schedules shall
be deemed a part hereof, each Debtor represents and warrants to, and covenants and agrees with, the Secured Parties as follows:
(a) Each
Debtor has the requisite corporate, partnership, limited liability company or other power and authority to enter into this Agreement
and otherwise to carry out its obligations hereunder. The execution, delivery and performance by each Debtor of this Agreement and the
filings contemplated therein have been duly authorized by all necessary action on the part of such Debtor and no further action is required
by such Debtor. This Agreement has been duly executed by each Debtor. This Agreement constitutes the legal, valid and binding obligation
of each Debtor, enforceable against each Debtor in accordance with its terms except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization and similar laws of general application relating to or affecting the rights and remedies of creditors
and by general principles of equity.
(b) The
Debtors have no place of business or offices where their respective books of account and records are kept (other than temporarily at
the offices of its attorneys or accountants) or places where Collateral is stored or located, except as set forth on Schedule A
attached hereto. Except as specifically set forth on Schedule A, each Debtor is the record owner of the real property where such
Collateral is located, and there exist no mortgages or other liens on any such real property except for Permitted Liens (as defined in
the Notes). Except as disclosed on Schedule A, none of such Collateral is in the possession of any consignee, bailee, warehouseman,
agent or processor.
(c) Except
for Permitted Liens and except as set forth on Schedule B attached hereto, the Debtors are the sole owner of the Collateral (except
for non-exclusive licenses granted by any Debtor in the ordinary course of business), free and clear of any liens, security interests,
encumbrances, rights or claims, and are fully authorized to grant the Security Interests. Except as set forth on Schedule C attached
hereto, there is not on file in any governmental or regulatory authority, agency or recording office an effective financing statement,
security agreement, license or transfer or any notice of any of the foregoing (other than those that will be filed in favor of the Secured
Parties pursuant to this Agreement) covering or affecting any of the Collateral. Except as set forth on Schedule C attached hereto,
and except pursuant to this Agreement, as long as this Agreement shall be in effect, the Debtors shall not execute and shall not knowingly
permit to be on file in any such office or agency any other financing statement or other document or instrument (except to the extent
filed or recorded in favor of the Secured Parties pursuant to the terms of this Agreement).
(d) No
written claim has been received that any Collateral or any Debtor’s use of any Collateral violates the rights of any third party.
There has been no adverse decision to any Debtor’s claim of ownership rights in or exclusive rights to use the Collateral in any
jurisdiction or to any Debtor’s right to keep and maintain such Collateral in full force and effect, and there is no proceeding
involving said rights pending or, to the best knowledge of any Debtor, threatened before any court, judicial body, administrative or
regulatory agency, arbitrator or other governmental authority.
(e) Each
Debtor shall at all times maintain its books of account and records relating to the Collateral at its principal place of business and
its Collateral at the locations set forth on Schedule A attached hereto and may not relocate such books of account and records
or tangible Collateral unless it delivers to the Secured Parties at least 30 days prior to such relocation: (i) written notice of such
relocation and the new location thereof (which must be within the United States), and (ii) evidence that appropriate financing statements
under the UCC and other necessary documents have been filed and recorded and other steps have been taken to perfect the Security Interests
to create in favor of the Secured Parties a valid, perfected and continuing perfected lien in the Collateral.
(f) This
Agreement creates in favor of the Secured Parties a valid security interest in the Collateral, subject only to Permitted Liens securing
the payment and performance of the Obligations. Upon making the filings described in the immediately following paragraph (g), all security
interests created hereunder in any Collateral which may be perfected by filing UCC financing statements shall have been duly perfected.
Except for the filing of the UCC financing statements referred to in the immediately following paragraph (g), the recordation of the
Intellectual Property Security Agreement (as defined in Section 4(p) hereof) with respect to copyrights and copyright applications
in the United States Copyright Office referred to in paragraph (m), the execution and delivery of deposit account control agreements
satisfying the requirements of Section 9-104(a)(2) of the UCC with respect to each deposit account of the Debtors, and the delivery of
the certificates and other instruments provided in Section 3, no action is necessary to create, perfect or protect the security
interests created hereunder. Without limiting the generality of the foregoing, except for the filing of said financing statements, the
recordation of said Intellectual Property Security Agreement, and the execution and delivery of said deposit account control agreements,
no consent of any third parties and no authorization, approval or other action by, and no notice to or filing with, any governmental
authority or regulatory body is required for: (i) the execution, delivery and performance of this Agreement, (ii) the creation or perfection
of the Security Interests created hereunder in the Collateral, or (iii) the enforcement of the rights of the Agent and the Secured Parties
hereunder.
(g) Each
Debtor hereby authorizes the Agent to file one or more financing statements under the UCC, with respect to the Security Interests, with
the proper filing and recording agencies in any jurisdiction deemed proper by it.
(h) The
execution, delivery and performance of this Agreement by the Debtors does not: (i) violate any of the provisions of any Organizational
Documents of any Debtor or any judgment, decree, order or award of any court, governmental body or arbitrator or any applicable law,
rule or regulation applicable to any Debtor, or (ii) except as set forth on Schedule B, conflict with, or constitute a default
(or an event that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment,
acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument
(evidencing any Debtor’s debt or otherwise) or other understanding to which any Debtor is a party or by which any property or asset
of any Debtor is bound or affected. If any, all required consents (including, without limitation, from stockholders or creditors of any
Debtor) necessary for any Debtor to enter into and perform its obligations hereunder have been obtained.
(i) The
capital stock and other equity interests listed on Schedule H hereto (the “Pledged Securities”) represent all
of the capital stock and other equity interests of the Guarantors and represent all capital stock and other equity interests owned, directly
or indirectly, by the Company. All of the Pledged Securities are validly issued, fully paid and nonassessable, and the Company is the
legal and beneficial owner of the Pledged Securities, free and clear of any lien, security interest or other encumbrance except for the
security interests created by this Agreement and other Permitted Liens.
(j) The
ownership and other equity interests in partnerships and limited liability companies (if any) included in the Collateral (the “Pledged
Interests”) by their express terms do not provide that they are securities governed by Article 8 of the UCC and are not held
in a securities account or by any financial intermediary.
(k) Except
for Permitted Liens, each Debtor shall at all times maintain the liens and Security Interests provided for hereunder as valid and perfected
priority liens and security interests in the Collateral in favor of the Secured Parties until this Agreement and the Security Interest
hereunder shall be terminated pursuant to Section 14 hereof. Each Debtor hereby agrees to defend the same against the claims of
any and all persons and entities. Each Debtor shall safeguard and protect all Collateral for the account of the Secured Parties. At the
request of the Agent, each Debtor will sign and deliver to the Agent on behalf of the Secured Parties at any time or from time to time
one or more financing statements pursuant to the UCC in form reasonably satisfactory to the Agent and will pay the cost of filing the
same in all public offices wherever filing is, or is deemed by the Agent to be, necessary or desirable to effect the rights and obligations
provided for herein. Without limiting the generality of the foregoing, each Debtor shall pay all fees, taxes and other amounts necessary
to maintain the Collateral and the Security Interests hereunder, and each Debtor shall obtain and furnish to the Agent from time to time,
upon demand, such releases and/or subordinations of claims and liens which may be required to maintain the priority of the Security Interests
hereunder.
(l)
Except as set forth on Schedule B, no Debtor will transfer, pledge, hypothecate, encumber, license, sell or otherwise dispose
of any of the Collateral (except for (i) non-exclusive licenses granted by a Debtor in its ordinary course of business, (ii) sales
of inventory by a Debtor in its ordinary course of business, (iii) Permitted Liens and (iv) the sale or other disposal of obsolete
inventory, equipment, goods, supplies or materials in the ordinary course of business) without the prior written consent of a
Majority in Interest.
(m) Each
Debtor shall keep and preserve its equipment, inventory and other tangible Collateral in good condition, repair and order, ordinary wear,
tear and casualty excepted, and shall not operate or locate any such Collateral (or cause to be operated or located) in any area excluded
from insurance coverage.
(n) Each
Debtor shall maintain with financially sound and reputable insurers, insurance with respect to the Collateral, including Collateral hereafter
acquired, against loss or damage of the kinds and in the amounts customarily insured against by entities of established reputation having
similar properties similarly situated and in such amounts as are customarily carried under similar circumstances by other such entities
and otherwise as is prudent for entities engaged in similar businesses but in any event sufficient to cover the full replacement cost
thereof. Each Debtor shall use reasonable commercial efforts to cause each insurance policy issued in connection herewith to provide,
and the insurer issuing such policy to certify to the Agent, that (a) the Agent will be named as lender loss payee and additional insured
under each such insurance policy other than workers compensation insurance; (b) if such insurance be proposed to be cancelled or materially
changed for any reason whatsoever, such insurer will promptly notify the Agent and such cancellation or change shall not be effective
as to the Agent for at least thirty (30) days after receipt by the Agent of such notice, unless the effect of such change is to extend
or increase coverage under the policy; and (c) the Agent will have the right (but no obligation) at its election to remedy any default
in the payment of premiums within thirty (30) days of notice from the insurer of such default. If no Event of Default (as defined in
the Notes) exists and if the proceeds arising out of any claim or series of related claims do not exceed $250,000, loss payments in each
instance will be applied by the applicable Debtor to the repair and/or replacement of property with respect to which the loss was incurred
to the extent reasonably feasible, and any loss payments or the balance thereof remaining, to the extent not so applied, shall be payable
to the applicable Debtor; provided however, that payments received by any Debtor after an Event of Default occurs and is continuing or
in excess of $250,000 for any occurrence or series of related occurrences shall be paid to the Agent on behalf of the Secured Parties
and, if received by such Debtor, shall be held in trust for the Secured Parties and immediately paid over to the Agent unless otherwise
directed in writing by the Agent. Each Debtor shall use reasonable commercial efforts to cause copies of such policies or the related
certificates, in each case, naming the Agent as lender loss payee and additional insured to be delivered to the Agent at least annually
and at the time any new policy of insurance is issued.
(o) Each
Debtor shall, within ten (10) days of obtaining knowledge thereof, advise the Secured Parties promptly, in sufficient detail, of any
material adverse change in the Collateral other than any portion of the Collateral constituting cryptocurrency or otherwise tokenized
digital assets, and of the occurrence of any event which would have a Material Adverse Effect (as defined in the Purchase Agreement)
on the value of the Collateral or on the Secured Parties’ security interest, through the Agent, therein.
(p) Each
Debtor shall promptly execute and deliver to the Agent such further deeds, mortgages, assignments, security agreements, financing statements
or other instruments, documents, certificates and assurances and take such further action as the Agent may from time to time reasonably
request to perfect, protect or enforce the Secured Parties’ security interest in the Collateral including, without limitation,
if applicable, the execution and delivery of a separate security agreement with respect to each Debtor’s Intellectual Property
(“Intellectual Property Security Agreement”) in which the Secured Parties have been granted a security interest hereunder,
substantially in a form reasonably acceptable to the Agent, which Intellectual Property Security Agreement, other than as stated therein,
shall be subject to all of the terms and conditions hereof.
(q) Each
Debtor shall permit the Agent and its representatives and agents to inspect the Collateral during normal business hours and upon reasonable
prior notice, and to make copies of records pertaining to the Collateral as may be reasonably requested by the Agent from time to time.
(r) Each
Debtor shall take all steps reasonably necessary to diligently pursue and seek to preserve, enforce and collect any rights, claims, causes
of action and accounts receivable in respect of the Collateral consistent with past practices of such Debtor.
(s) Each
Debtor shall promptly notify the Secured Parties in sufficient detail upon becoming aware of any attachment, garnishment, execution or
other legal process levied against any Collateral and of any other information received by such Debtor that may materially affect the
value of the Collateral, the Security Interest or the rights and remedies of the Secured Parties hereunder.
(t) All
information heretofore, herein or hereafter supplied to the Secured Parties by or on behalf of any Debtor with respect to the Collateral
is accurate and complete in all material respects as of the date furnished.
(u) The
Debtors shall at all times preserve and keep in full force and effect their respective valid existence and good standing and any rights
and franchises material to its business.
(v) No
Debtor will change its name, type of organization, jurisdiction of organization, organizational identification number (if it has one),
legal or corporate structure, or identity, or add any new fictitious name unless it provides at least fifteen (15) days prior written
notice to the Agent of such change and, at the time of such written notification, such Debtor provides any financing statements or fixture
filings necessary to perfect and continue the perfection of the Security Interests granted and evidenced by this Agreement.
(w) Except
in the ordinary course of business, no Debtor may consign any of its inventory or sell any of its inventory on bill and hold, sale or
return, sale on approval, or other conditional terms of sale without the consent of the Agent which shall not be unreasonably withheld.
(x) No
Debtor may relocate its chief executive office to a new location without providing thirty (30) days prior written notification thereof
to the Agent and so long as, at the time of such written notification, such Debtor provides any financing statements or fixture filings
necessary to perfect and continue the perfection of the Security Interests granted and evidenced by this Agreement.
(y) Each
Debtor was organized and remains organized solely under the laws of the state set forth next to such Debtor’s name in Schedule
D attached hereto, which Schedule D sets forth each Debtor’s organizational identification number or, if any Debtor
does not have one, states that one does not exist.
(z) (i)
The actual name of each Debtor is the name set forth in Schedule D attached hereto; (ii) no Debtor has any trade names except
as set forth on Schedule E attached hereto; (iii) no Debtor has used any name other than that stated in the preamble hereto or
as set forth on Schedule E for the preceding five (5) years; and (iv) no entity has merged into any Debtor or been acquired by
any Debtor within the past five years except as set forth on Schedule E.
(aa)
At any time and from time to time that any Collateral consists of instruments, certificated securities or other items that require
or permit possession by the Secured Party to perfect the security interest created hereby, the applicable Debtor shall deliver such Collateral
to the Agent.
(bb)
Each Debtor, in its capacity as issuer, hereby agrees to comply with any and all orders and instructions of Agent regarding the Pledged
Interests consistent with the terms of this Agreement without the further consent of any Debtor as contemplated by Section 8-106 (or
any successor section) of the UCC. Further, each Debtor agrees that it shall not enter into a similar agreement (or one that would confer
“control” within the meaning of Article 8 of the UCC) with any other person or entity.
(cc)
If there is any investment property or deposit account included as Collateral that can be perfected by “control”
through an account control agreement, the applicable Debtor shall cause such an account control agreement, in form and substance in each
case reasonably satisfactory to the Agent, to be entered into and delivered to the Agent for the benefit of the Secured Parties.
(dd)
To the extent that any Collateral consists of letter-of-credit rights, the applicable Debtor shall cause the issuer of each underlying
letter of credit to consent to an assignment of the proceeds thereof to the Secured Parties.
(ee)
To the extent that any Collateral is in the possession of any third party, the applicable Debtor shall join with the Agent in notifying
such third party of the Secured Parties’ security interest in such Collateral and shall use its best efforts to obtain an acknowledgement
and agreement from such third party with respect to the Collateral, in form and substance reasonably satisfactory to the Agent.
(ff)
If any Debtor shall at any time hold or acquire a commercial tort claim, such Debtor shall promptly notify the Agent in a writing
signed by such Debtor of the particulars thereof and grant to the Secured Parties in such writing a security interest therein and in
the proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance satisfactory to the Agent.
(gg)
Each Debtor shall immediately provide written notice to the Agent of any and all accounts which arise out of contracts with any governmental
authority and, to the extent necessary to perfect or continue the perfected status of the Security Interests in such accounts and proceeds
thereof, shall execute and deliver to the Agent an assignment of claims for such accounts and cooperate with the Agent in taking any
other steps required, in its judgment, under the Federal Assignment of Claims Act or any similar federal, state or local statute or rule
to perfect or continue the perfected status of the Security Interests in such accounts and proceeds thereof.
(hh)
Each Debtor shall cause each subsidiary of such Debtor to immediately become a party hereto (an “Additional Debtor”),
by executing and delivering to the Agent an Additional Debtor Joinder in substantially the form of Annex A attached hereto and
comply with the provisions hereof applicable to the Debtors. Concurrent therewith, the Additional Debtor shall deliver replacement schedules
for, or supplements to all other Schedules to (or referred to in) this Agreement, as applicable, which replacement schedules shall supersede,
or supplements shall modify, the Schedules then in effect. The Additional Debtor shall also deliver to the Agent such opinions of counsel,
authorizing resolutions, good standing certificates, incumbency certificates, organizational documents, financing statements and other
information and documentation as the Agent may reasonably request. Upon delivery of the foregoing to the Agent, the Additional Debtor
shall be and become a party to this Agreement with the same rights and obligations as the Debtors, for all purposes hereof as fully and
to the same extent as if it were an original signatory hereto and shall be deemed to have made the representations, warranties and covenants
set forth herein as of the date of execution and delivery of such Additional Debtor Joinder, and all references herein to the “Debtors”
shall be deemed to include each Additional Debtor.
(ii) Each Debtor shall vote the Pledged Securities to comply with the covenants and agreements set
forth herein and in the Notes.
(jj) Each
Debtor shall register the pledge of the applicable Pledged Securities on the books of such Debtor. Each Debtor shall notify each issuer
of Pledged Securities to register the pledge of the applicable Pledged Securities in the name of the Secured Parties on the books of
such issuer. Further, except with respect to certificated securities delivered to the Agent, the applicable Debtor shall deliver to Agent
an acknowledgement of pledge (which, where appropriate, shall comply with the requirements of the relevant UCC with respect to perfection
by registration) signed by the issuer of the applicable Pledged Securities, which acknowledgement shall confirm that: (a) it has registered
the pledge on its books and records, and (b) at any time directed by Agent during the continuation of an Event of Default such issuer
will (i) transfer the record ownership of such Pledged Securities into the name of any designee of Agent, (ii) will take such steps as
may be necessary to effect the transfer, and (iii) will comply with all other instructions of Agent regarding such Pledged Securities
without the further consent of the applicable Debtor.
(kk) In
the event that, during the continuance of an Event of Default, Agent shall sell all or any of the Pledged Securities to another party
or parties (herein called the “Transferee”) or shall purchase or retain all or any of the Pledged Securities, each
Debtor shall, to the extent applicable: (i) deliver to Agent or the Transferee, as the case may be, the articles of incorporation, bylaws,
minute books, stock certificate books, corporate seals, deeds, leases, indentures, agreements, evidences of indebtedness, books of account,
financial records and all other Organizational Documents and records of the Debtors and their direct and indirect subsidiaries; (ii)
use its best efforts to obtain resignations of the persons then serving as officers and directors of the Debtors and their direct and
indirect subsidiaries, if so requested; and (iii) use its best efforts to obtain any approvals that are required by any governmental
or regulatory body in order to permit the sale of the Pledged Securities to the Transferee or the purchase or retention of the Pledged
Securities by Agent and allow the Transferee or Agent to continue the business of the Debtors and their direct and indirect subsidiaries.
(ll) Without
limiting the generality of the other obligations of the Debtors hereunder, each Debtor shall take reasonable efforts to protect its rights
to Intellectual Property in the manner consistent with such Debtors’ business practices prior to the date of this Agreement.
(mm) Each
Debtor will from time to time, at the joint and several expense of the Debtors, promptly execute and deliver all such further instruments
and documents, and take all such further action as may be reasonably necessary or desirable, or as the Agent may reasonably request,
in order to perfect and protect any security interest granted or purported to be granted hereby or to enable the Secured Parties to exercise
and enforce their rights and remedies hereunder and with respect to any Collateral or to otherwise carry out the purposes of this Agreement.
(nn) Schedule
F attached hereto lists all of the patents, patent applications, trademarks, trademark applications, registered copyrights, and domain
names owned by any of the Debtors as of the date hereof. Schedule F lists all material licenses in favor of any Debtor for the
use of any patents, trademarks, copyrights and domain names as of the date hereof. All material patents and trademarks of the Debtors
have been duly recorded at the United States Patent and Trademark Office and all material copyrights of the Debtors have been duly recorded
at the United States Copyright Office.
(oo) Except
as set forth on Schedule G attached hereto, none of the account debtors or other persons or entities obligated on any of the Collateral
is a governmental authority covered by the Federal Assignment of Claims Act or any similar federal, state or local statute or rule in
respect of such Collateral.
(pp) Until
the Obligations shall have been paid and performed in full, the Company covenants that it shall promptly direct any direct or indirect
subsidiary of the Company formed or acquired after the date hereof to enter into a Subsidiary Guaranty in favor of the Secured Party,
in the form of Exhibit C to the Purchase Agreement.
5. Effect
of Pledge on Certain Rights. If any of the Collateral subject to this Agreement consists of non-voting equity or ownership interests
(regardless of class, designation, preference or rights) that may be converted into voting equity or ownership interests upon the occurrence
of certain events (including, without limitation, upon the transfer of all or any of the other stock or assets of the issuer), it is
agreed that the pledge of such equity or ownership interests pursuant to this Agreement or the enforcement of any of Agent’s rights
hereunder shall not be deemed to be the type of event which would trigger such conversion rights notwithstanding any provisions in the
Organizational Documents or agreements to which any Debtor is subject or to which any Debtor is party.
6. Defaults. The following events shall be “Events of Default:”
(a) The
occurrence of an Event of Default (as defined in the Notes) under the Notes;
(b) Any
representation or warranty of any Debtor in this Agreement shall prove to have been incorrect in any material respect when made, and
is not cured to Secured Party’s satisfaction within a period of five (5) days after written notice to Debtor;
(c) The
failure by any Debtor to observe or perform any of its obligations hereunder for five (5) days after delivery to such Debtor of notice
of such failure by or on behalf of a Secured Party unless such default is capable of cure but cannot be cured within such time frame
and such Debtor is using best efforts to cure same in a timely fashion; or
(d) If
any provision of this Agreement shall at any time for any reason be declared to be null and void, or the validity or enforceability thereof
shall be contested by any Debtor, or a proceeding shall be commenced by any Debtor, or by any governmental authority having jurisdiction
over any Debtor, seeking to establish the invalidity or unenforceability thereof, or any Debtor shall deny that any Debtor has any liability
or obligation purported to be created under this Agreement.
7. Duty
to Hold in Trust.
(a) Upon
the occurrence and during the continuance of any Event of Default, and at any time thereafter, each Debtor shall, upon receipt of any
revenue, income, dividend, interest or other sums subject to the Security Interests, whether payable pursuant to the Notes or otherwise,
or of any check, draft, note, trade acceptance or other instrument evidencing an obligation to pay any such sum, hold the same in trust
for the Secured Parties and shall forthwith endorse and transfer any such sums or instruments, or both, to the Secured Parties, pro-rata
in proportion to their respective then-currently outstanding principal amount of Notes for application to the satisfaction of the Obligations
(and if any Note is not outstanding, pro-rata in proportion to the initial purchases of the remaining Notes).
(b) During
the continuance of any Event of Default, if any Debtor shall become entitled to receive or shall receive any securities or other property
(including, without limitation, shares of Pledged Securities or instruments representing Pledged Securities acquired after the date hereof,
or any options, warrants, rights or other similar property or certificates representing a dividend, or any distribution in connection
with any recapitalization, reclassification or increase or reduction of capital, or issued in connection with any reorganization of such
Debtor or any of its direct or indirect subsidiaries) in respect of the Pledged Securities (whether as an addition to, in substitution
of, or in exchange for, such Pledged Securities or otherwise), such Debtor agrees to: (i) accept the same as the agent of the Secured
Parties, (ii) hold the same in trust on behalf of and for the benefit of the Secured Parties, and (iii) to deliver any and all certificates
or instruments evidencing the same to Agent on or before the close of business on the fifth (5th) Business Day (as defined
in the Purchase Agreement) following the receipt thereof by such Debtor, in the exact form received together with the Necessary Endorsements,
to be held by Agent subject to the terms of this Agreement as Collateral.
8. Rights
and Remedies upon Default.
(a) Upon
the occurrence of any Event of Default and at any time thereafter during the continuance of such Event of Default, the Secured Parties,
acting through the Agent, shall have the right to exercise all of the remedies conferred hereunder and under the Notes, and the Secured
Parties shall have all the rights and remedies of a secured party under the UCC. Without limitation, the Agent, for the benefit of the
Secured Parties, shall have the following rights and powers:
(i) The
Agent shall have the right to take possession of the Collateral and, for that purpose, enter, with the aid and assistance of any person,
any premises where the Collateral, or any part thereof, is or may be placed and remove the same, and each Debtor shall assemble the Collateral
and make it available to the Agent at places which the Agent shall reasonably select, whether at such Debtor’s premises or elsewhere,
and make available to the Agent, without rent, all of such Debtor’s respective premises and facilities for the purpose of the Agent
taking possession of, removing or putting the Collateral in saleable or disposable form;
(ii) Upon
notice to the Debtors by Agent, all rights of each Debtor to exercise the voting and other consensual rights which it would otherwise
be entitled to exercise and all rights of each Debtor to receive the dividends and interest which it would otherwise be authorized to
receive and retain, shall cease. Upon such notice, Agent shall have the right to receive, for the benefit of the Secured Parties, any
interest, cash dividends or other payments on the Collateral and, at the option of Agent, to exercise in such Agent’s discretion
all voting rights pertaining thereto. Without limiting the generality of the foregoing, Agent shall have the right (but not the obligation)
to exercise all rights with respect to the Collateral as it were the sole and absolute owner thereof, including, without limitation,
to vote and/or to exchange, at its sole discretion, any or all of the Collateral in connection with a merger, reorganization, consolidation,
recapitalization or other readjustment concerning or involving the Collateral or any Debtor or any of its direct or indirect subsidiaries;
(iii) The
Agent shall have the right to operate the business of each Debtor using the Collateral and shall have the right to assign, sell, lease
or otherwise dispose of and deliver all or any part of the Collateral, at public or private sale or otherwise, either with or without
special conditions or stipulations, for cash or on credit or for future delivery, in such parcel or parcels and at such time or times
and at such place or places, and upon such terms and conditions as the Agent may deem commercially reasonable, all without (except as
shall be required by applicable statute and cannot be waived) advertisement or demand upon or notice to any Debtor or right of redemption
of a Debtor, which are hereby expressly waived. Upon each such sale, lease, assignment or other transfer of Collateral, the Agent, for
the benefit of the Secured Parties, may, unless prohibited by applicable law which cannot be waived, purchase all or any part of the
Collateral being sold, free from and discharged of all trusts, claims, right of redemption and equities of any Debtor, which are hereby
waived and released;
(iv) The
Agent shall have the right (but not the obligation) to notify any account debtors and any obligors under instruments or accounts to make
payments directly to the Agent, on behalf of the Secured Parties, and to enforce the Debtors’ rights against such account debtors
and obligors;
(v) The
Agent, for the benefit of the Secured Parties, may (but is not obligated to) direct any financial intermediary or any other person or
entity holding any investment property to transfer the same to the Agent, on behalf of the Secured Parties, or its designee; and
(vi) The
Agent may (but is not obligated to) transfer any or all Intellectual Property registered in the name of any Debtor at the United States
Patent and Trademark Office and/or Copyright Office into the name of the Secured Parties or any designee or any purchaser of any Collateral.
(b) The
Agent shall comply with any applicable law in connection with a disposition of Collateral and such compliance will not be considered
adversely to affect the commercial reasonableness of any sale of the Collateral. The Agent may sell the Collateral without giving any
warranties and may specifically disclaim such warranties. If the Agent sells any of the Collateral on credit, the Debtors will only be
credited with payments actually made by the purchaser. In addition, each Debtor waives any and all rights that it may have to a judicial
hearing in advance of the enforcement of any of the Agent’s rights and remedies hereunder, including, without limitation, its right
following an Event of Default to take immediate possession of the Collateral and to exercise its rights and remedies with respect thereto.
(c) For
the purpose of enabling the Agent to further exercise rights and remedies under this Section 8 or elsewhere provided by agreement
or applicable law, each Debtor hereby grants to the Agent, for the benefit of the Agent and the Secured Parties, an irrevocable, non-exclusive
license (exercisable without payment of royalty or other compensation to such Debtor) to use, license or sublicense following an Event
of Default and during the continuance thereof, any Intellectual Property now owned or hereafter acquired by such Debtor, and wherever
the same may be located, and including in such license access to all media in which any of the licensed items may be recorded or stored
and to all computer software and programs used for the compilation or printout thereof.
9. Applications
of Proceeds. The proceeds of any such sale, lease or other disposition of the Collateral hereunder or from payments made on account
of any insurance policy insuring any portion of the Collateral shall be applied first, to the expenses of retaking, holding, storing,
processing and preparing for sale, selling, and the like (including, without limitation, any taxes, fees and other costs incurred in
connection therewith) of the Collateral, to the reasonable attorneys’ fees and expenses incurred by the Agent in enforcing the
Secured Parties’ rights hereunder and in connection with collecting, storing and disposing of the Collateral, and then to satisfaction
of the Obligations pro rata among the Secured Parties (based on then-outstanding principal amounts of Notes at the time of any such determination),
and to the payment of any other amounts required by applicable law, after which the Secured Parties shall pay to the applicable Debtor
any surplus proceeds. If, upon the sale, license or other disposition of the Collateral, the proceeds thereof are insufficient to pay
all amounts to which the Secured Parties are legally entitled, the Debtors will be liable for the deficiency, together with interest
thereon, at the rate of 18% per annum or the lesser amount permitted by applicable law (the “Default Rate”), and the
reasonable fees of any attorneys employed by the Secured Parties to collect such deficiency. To the extent permitted by applicable law,
each Debtor waives all claims, damages and demands against the Secured Parties arising out of the repossession, removal, retention or
sale of the Collateral, unless due solely to the gross negligence or willful misconduct of the Secured Parties as determined by a final
judgment (not subject to further appeal) of a court of competent jurisdiction.
10. Securities
Law Provision. Each Debtor recognizes that Agent may be limited in its ability to effect a sale to the public of all or part of the
Pledged Securities by reason of certain prohibitions in the Securities Act of 1933, as amended, or other federal or state securities
laws (collectively, the “Securities Laws”), and may be compelled to resort to one or more sales to a restricted group
of purchasers who may be required to agree to acquire the Pledged Securities for their own account, for investment and not with a view
to the distribution or resale thereof. Each Debtor agrees that sales so made may be at prices and on terms less favorable than if the
Pledged Securities were sold to the public, and that Agent has no obligation to delay the sale of any Pledged Securities for the period
of time necessary to register the Pledged Securities for sale to the public under the Securities Laws. Each Debtor shall cooperate with
Agent in its attempt to satisfy any requirements under the Securities Laws (including, without limitation, registration thereunder if
requested by Agent) applicable to the sale of the Pledged Securities by Agent.
11. Costs
and Expenses. Each Debtor agrees to pay all reasonable out-of-pocket fees, costs and expenses incurred in connection with any filing
required hereunder, including without limitation, any financing statements pursuant to the UCC, continuation statements, partial releases
and/or termination statements related thereto or any expenses of any searches reasonably required by the Agent. The Debtors shall also
pay all other claims and charges which in the reasonable opinion of the Agent is reasonably likely to prejudice, imperil or otherwise
affect the Collateral or the Security Interests therein. The Debtors will also, upon demand, pay to the Agent the amount of any and all
reasonable expenses, including the reasonable fees and expenses of its counsel and of any experts and agents, which the Agent, for the
benefit of the Secured Parties, may incur in connection with the creation, perfection, protection, satisfaction, foreclosure, collection
or enforcement of the Security Interest and the preparation, administration, continuance, amendment or enforcement of this Agreement
and pay to the Agent the amount of any and all reasonable expenses, including the reasonable fees and expenses of its counsel and of
any experts and agents, which the Agent, for the benefit of the Secured Parties, and the Secured Parties may incur in connection with:
(i) the enforcement of this Agreement, (ii) the custody or preservation of, or the sale of, collection from, or other realization upon,
any of the Collateral, or (iii) the exercise or enforcement of any of the rights of the Secured Parties under the Notes. Until so paid,
any fees payable hereunder shall be added to the principal amount of the Notes and shall bear interest at the Default Rate.
12. Responsibility
for Collateral. The Debtors assume all liabilities and responsibility in connection with all Collateral, and the Obligations shall
in no way be affected or diminished by reason of the loss, destruction, damage or theft of any of the Collateral or its unavailability
for any reason. Without limiting the generality of the foregoing, (a) neither the Agent nor any Secured Party: (i) has any duty (either
before or after an Event of Default) to collect any amounts in respect of the Collateral or to preserve any rights relating to the Collateral,
or (ii) has any obligation to clean-up or otherwise prepare the Collateral for sale, and (b) each Debtor shall remain obligated and liable
under each contract or agreement included in the Collateral to be observed or performed by such Debtor thereunder. Neither the Agent
nor any Secured Party shall have any obligation or liability under any such contract or agreement by reason of or arising out of this
Agreement or the receipt by the Agent or any Secured Party of any payment relating to any of the Collateral, nor shall the Agent or any
Secured Party be obligated in any manner to perform any of the obligations of any Debtor under or pursuant to any such contract or agreement,
to make inquiry as to the nature or sufficiency of any payment received by the Agent or any Secured Party in respect of the Collateral
or as to the sufficiency of any performance by any party under any such contract or agreement, to present or file any claim, to take
any action to enforce any performance or to collect the payment of any amounts which may have been assigned to the Agent or to which
the Agent or any Secured Party may be entitled at any time or times.
13. Security
Interests Absolute. All rights of the Secured Parties and all obligations of the Debtors hereunder, shall be absolute and unconditional,
irrespective of: (a) any lack of validity or enforceability of this Agreement, the Notes or any agreement entered into in connection
with the foregoing, or any portion hereof or thereof, (b) any change in the time, manner or place of payment or performance of, or in
any other term of, all or any of the Obligations, or any other amendment or waiver of or any consent to any departure from the Notes
or any other agreement entered into in connection with the foregoing, (c) any exchange, release or non- perfection of any of the Collateral,
or any release or amendment or waiver of or consent to departure from any other collateral for, or any guarantee, or any other security,
for all or any of the Obligations, (d) any action by the Secured Parties to obtain, adjust, settle and cancel in its sole discretion
any insurance claims or matters made or arising in connection with the Collateral, or (e) any other circumstance which might otherwise
constitute any legal or equitable defense available to a Debtor, or a discharge of all or any part of the Security Interests granted
hereby. Until the Obligations shall have been paid and performed in full, the rights of the Secured Parties shall continue even if the
Obligations are barred for any reason, including, without limitation, the running of the statute of limitations or bankruptcy. Each Debtor
expressly waives presentment, protest, notice of protest, demand, notice of nonpayment and demand for performance. In the event that
at any time any transfer of any Collateral or any payment received by the Secured Parties hereunder shall be deemed by final order of
a court of competent jurisdiction to have been a voidable preference or fraudulent conveyance under the bankruptcy or insolvency laws
of the United States, or shall be deemed to be otherwise due to any party other than the Secured Parties, then, in any such event, each
Debtor’s obligations hereunder shall survive cancellation of this Agreement, and shall not be discharged or satisfied by any prior
payment thereof and/or cancellation of this Agreement, but shall remain a valid and binding obligation enforceable in accordance with
the terms and provisions hereof. Each Debtor waives all right to require the Secured Parties to proceed against any other person or entity
or to apply any Collateral which the Secured Parties may hold at any time, or to marshal assets, or to pursue any other remedy. Each
Debtor waives any defense arising by reason of the application of the statute of limitations to any obligation secured hereby.
14. Term
of Agreement. This Agreement and the Security Interests shall terminate on the date on which all payments under the Notes have been
indefeasibly paid in full and all other Obligations have been paid or discharged; provided however, that all indemnities of the Debtors
contained in this Agreement (including, without limitation, Annex B hereto) shall survive and remain operative and in full force
and effect regardless of the termination of this Agreement.
15.
Power of Attorney; Further Assurances.
(a) Each
Debtor authorizes the Agent, and does hereby make, constitute and appoint the Agent and its officers, agents, successors or assigns with
full power of substitution, as such Debtor’s true and lawful attorney-in-fact, with power, in the name of the Agent or such Debtor,
to, after the occurrence and during the continuance of an Event of Default: (i) endorse any note, checks, drafts, money orders or other
instruments of payment (including payments payable under or in respect of any policy of insurance) in respect of the Collateral that
may come into possession of the Agent, (ii) to sign and endorse any financing statement pursuant to the UCC or any invoice, freight or
express bill, bill of lading, storage or warehouse receipts, drafts against debtors, assignments, verifications and notices in connection
with accounts, and other documents relating to the Collateral, (iii) to pay or discharge taxes, liens, security interests or other encumbrances
at any time levied or placed on or threatened against the Collateral, (iv) to demand, collect, receipt for, compromise, settle and sue
for monies due in respect of the Collateral, (v) to transfer any Intellectual Property or provide licenses respecting any Intellectual
Property, and (vi) generally, at the option of the Agent, and at the expense of the Debtors, at any time, or from time to time, to execute
and deliver any and all documents and instruments and to do all acts and things which the Agent deems necessary to protect, preserve
and realize upon the Collateral and the Security Interests granted therein in order to effect the intent of this Agreement and the Notes
all as fully and effectually as the Debtors might or could do; and each Debtor hereby ratifies all that said attorney shall lawfully
do or cause to be done by virtue hereof. This power of attorney is coupled with an interest and shall be irrevocable for the term of
this Agreement and thereafter as long as any of the Obligations shall be outstanding. The designation set forth herein shall be deemed
to amend and supersede any inconsistent provision in the Organizational Documents or other documents or agreements to which any Debtor
is subject or to which any Debtor is a party. Without limiting the generality of the foregoing, after the occurrence and during the continuance
of an Event of Default, each Secured Party is specifically authorized to execute and file any applications for or instruments of transfer
and assignment of any patents, trademarks, copyrights or other Intellectual Property with the United States Patent and Trademark Office
and the United States Copyright Office.
(b) On
a continuing basis, each Debtor will make, execute, acknowledge, deliver, file and record, as the case may be, with the proper filing
and recording agencies in any jurisdiction, including, without limitation, the jurisdictions indicated on Schedule C attached
hereto, all such instruments, and take all such action as may reasonably be deemed necessary or advisable, or as reasonably requested
by the Agent, to perfect the Security Interests granted hereunder and otherwise to carry out the intent and purposes of this Agreement,
or for assuring and confirming to the Agent the grant or perfection of a perfected security interest in all the Collateral under the
UCC.
(c) Each
Debtor hereby irrevocably appoints the Agent as such Debtor’s attorney-in-fact, with full authority in the place and instead of
such Debtor and in the name of such Debtor, from time to time in the Agent’s discretion, to take any action and to execute any
instrument which the Agent may deem necessary or advisable to accomplish the purposes of this Agreement, pertaining to the filing, in
its sole discretion, of one or more financing or continuation statements and amendments thereto, relative to any of the Collateral without
the signature of such Debtor where permitted by law, which financing statements may (but need not) describe the Collateral as “all
assets” or “all personal property” or words of like import, and ratifies all such actions taken by the Agent.
This power of attorney is coupled with an interest and shall be irrevocable for the term of this Agreement and thereafter as long as
any of the Obligations shall be outstanding.
16. Notices.
All notices, requests, demands and other communications hereunder shall be subject to the notice provision of the Purchase Agreement
(as such term is defined in the Notes).
17. Other
Security. To the extent that the Obligations are now or hereafter secured by property other than the Collateral or by the guarantee,
endorsement or property of any other person, firm, corporation or other entity, then the Agent shall have the right, in its sole discretion,
to pursue, relinquish, subordinate, modify or take any other action with respect thereto, without in any way modifying or affecting any
of the Secured Parties’ rights and remedies hereunder.
18. Appointment
of Agent. The Secured Parties hereby appoint [●] to act as their agent (“Agent”) for purposes of exercising
any and all rights and remedies of the Secured Parties hereunder. Such appointment shall continue until revoked in writing by a Majority
in Interest, at which time a Majority in Interest shall appoint a new Agent. The Agent shall have the rights, responsibilities and immunities
set forth in Annex B hereto.
19.
Miscellaneous.
(a) No
course of dealing between the Debtors and the Secured Parties, nor any failure to exercise, nor any delay in exercising, on the part
of the Secured Parties, any right, power or privilege hereunder or under the Notes shall operate as a waiver thereof; nor shall any single
or partial exercise of any right, power or privilege hereunder or thereunder preclude any other or further exercise thereof or the exercise
of any other right, power or privilege.
(b) All
of the rights and remedies of the Secured Parties with respect to the Collateral, whether established hereby or by the Notes or by any
other agreements, instruments or documents or by law shall be cumulative and may be exercised singly or concurrently.
(c) This
Agreement, together with the exhibits and schedules hereto, contain the entire understanding of the parties with respect to the subject
matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into this Agreement and the exhibits and schedules hereto. No provision of this Agreement may be waived,
modified, supplemented or amended except in a written instrument signed, in the case of an amendment, by the Debtors and the Secured
Parties holding 67% or more of the principal amount of Notes then outstanding, or, in the case of a waiver , by the party against whom
enforcement of any such waived provision is sought, if such party is a Debtor or by the Secured Parties holding 67% or more of the principal
amount of the Notes then outstanding, if the parties against whom enforcement of any such waiver provision is sought are the Secured
Parties.
(d) If
any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void
or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts
to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.
(e) No
waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver
in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any
delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right.
(f) This
Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Company and the
Guarantors may not assign this Agreement or any rights or obligations hereunder without the prior written consent of each Secured Party
(other than by merger). Any Secured Party may assign any or all of its rights under this Agreement to any Person (as defined in the Purchase
Agreement) to whom such Secured Party assigns or transfers any Obligations, provided such transferee agrees in writing to be bound, with
respect to the transferred Obligations, by the provisions of this Agreement that apply to the “Secured Parties.”
(g) Each
party shall take such further action and execute and deliver such further documents as may be necessary or appropriate in order to carry
out the provisions and purposes of this Agreement.
(h) Except
to the extent mandatorily governed by the jurisdiction or situs where the Collateral is located, all questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal
laws of the State of New York, without regard to the principles of conflicts of law thereof. Except to the extent mandatorily governed
by the jurisdiction or situs where the Collateral is located, each Debtor agrees that all proceedings concerning the interpretations,
enforcement and defense of the transactions contemplated by this Agreement and the Notes (whether brought against a party hereto or its
respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in the
state and federal courts sitting in the City of New York, Borough of Manhattan. Except to the extent mandatorily governed by the jurisdiction
or situs where the Collateral is located, each Debtor hereby irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith
or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any proceeding,
any claim that it is not personally subject to the jurisdiction of any such court, that such proceeding is improper. Each party hereto
hereby irrevocably waives personal service of process and consents to process being served in any such proceeding by mailing a copy thereof
via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices
to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Each party hereto hereby
irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising
out of or relating to this Agreement or the transactions contemplated hereby.
(i) This
Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and, all of
which taken together shall constitute one and the same Agreement. If any signature is delivered by facsimile transmission, such signature
shall create a valid binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same
force and effect as if such facsimile signature were the original thereof.
(j) All
Debtors shall jointly and severally be liable for the obligations of each Debtor to the Secured Parties hereunder.
(k) Each
Debtor shall indemnify, reimburse and hold harmless the Agent and the Secured Parties and their respective partners, members, shareholders,
officers, directors, employees and agents (and any other persons with other titles that have similar functions) (collectively, “Indemnitees”)
from and against any and all losses, claims, liabilities, damages, penalties, suits, costs and expenses, of any kind or nature, (including
fees relating to the cost of investigating and defending any of the foregoing) imposed on, incurred by or asserted against such Indemnitee
in any way related to or arising from or alleged to arise from this Agreement or the Collateral, except any such losses, claims, liabilities,
damages, penalties, suits, costs and expenses which result from the gross negligence or willful misconduct of any Indemnitee as determined
by a final, non- appealable decision of a court of competent jurisdiction. This indemnification provision is in addition to, and not
in limitation of, any other indemnification provision in the Notes, the Purchase Agreement or any other agreement, instrument or other
document executed or delivered in connection herewith or therewith.
(l) Nothing
in this Agreement shall be construed to subject Agent or any Secured Party to liability as a partner in any Debtor or any if its direct
or indirect subsidiaries that is a partnership or as a member in any Debtor or any of its direct or indirect subsidiaries that is a limited
liability company, nor shall Agent or any Secured Party be deemed to have assumed any obligations under any partnership agreement or
limited liability company agreement, as applicable, of any such Debtor or any of its direct or indirect subsidiaries or otherwise, unless
and until any such Secured Party exercises its right to be substituted for such Debtor as a partner or member, as applicable, pursuant
hereto.
(m) To
the extent that the grant of the security interest in the Collateral and the enforcement of the terms hereof require the consent, approval
or action of any partner or member, as applicable, of any Debtor or any direct or indirect subsidiary of any Debtor or compliance with
any provisions of any of the Organizational Documents, the Debtors hereby grant such consent and approval and waive any such noncompliance
with the terms of said documents.
[SIGNATURE
PAGES FOLLOW]
IN
WITNESS WHEREOF, the parties hereto have caused this Security Agreement to be duly executed on the day and year first above written.
ADHERA
THERAPEUTICS, INC. |
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Title: |
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GUARANTORS
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AGENT: |
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[●] |
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Notice
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[SIGNATURE
PAGE OF SECURED PARTIES TO THE SECURITY AGREEMENT]
[ENTITY
SIGNATURE PAGE]
Name
of Investing Entity: __________________________
Signature
of Authorized Signatory of Investing entity: _________
___________________________________________________
Name
of Authorized Signatory: ___________________________
Title
of Authorized Signatory: ____________________________
Notice
Address: ______________________________________
Email:
______________________________________________
[SIGNATURE
PAGE OF SECURED PARTIES TO THE SECURITY AGREEMENT] [INDIVIDUAL SIGNATURE PAGE]
Name:
_______________________
Signature:
______________________
Notice
Address: _____________________________________
Email:
_______________________________________________
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