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): May 7, 2015
INFINITY
ENERGY RESOURCES, INC.
(Exact
name of Registrant as Specified in its Charter)
Delaware |
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0-17204 |
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220-3126427 |
(State
or other jurisdiction of |
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(Commission |
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(I.R.S.
Employer |
incorporation
or organization) |
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File
Number) |
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Identification
No.) |
11900
College Blvd, Suite 310, Overland Park, KS 66210
(Address
of Principal Executive Offices; Zip Code)
Registrant’s
telephone number, including area code: ((913) 948-9512
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))
Item
1.01. Entry Into a Material Definitive Agreement.
On
May 7, 2015, Infinity Energy Resources, Inc. (the “Company”) completed a private placement (the “Private Placement”)
of a $12.0 million principal amount Senior Secured Convertible Note (the “Note”) and warrant to purchase 18,000,000
shares of the Company’s common stock, $0.0001 par value (the “Warrant”). WestPark Capital acted as Placement
Agent for the Company in the transaction and will receive a fee of 6% of cash proceeds, or $600,000, if and when the Company receives
the full cash proceeds. It received $27,000 of such amount at the closing.
The
Note and Warrant were issued pursuant to a Securities Purchase Agreement, dated May 7, 2015, by and between the Company and an
institutional investor that is an “accredited investor” within the meaning of the Securities Act of 1933, as amended
(the “Investor”) (the “Purchase Agreement”). The Private Placement was made pursuant to an exemption from
registration under such Act. At the closing, the Investor acquired the Note by paying $450,000 in cash and issuing a secured promissory
note, secured by cash, with an aggregate initial principal amount of $9,550,000 (the “Investor Note”). Assuming all
amounts payable to the Company under the Investor Note are paid without any offset or default, the Private Placement will result
in gross proceeds of $10.0 million before placement agent fees and other expenses associated with the transaction, subject to
the satisfaction of certain conditions. The Company will use the proceeds from this offering to retire certain outstanding obligations,
including the 2015 area and training fees relating to its oil and gas concessions offshore Nicaragua (the “Nicaraguan Concessions”),
and to provide working capital.
The
Company will receive the remaining cash proceeds upon each voluntary or mandatory prepayment of the Investor Note. An Investor
may, at its option and at any time, voluntarily prepay the Investor Note, in whole or in part. The Investor Note is also subject
to mandatory prepayment, in whole or in part, upon the occurrence of one or more of the following mandatory prepayment events:
(1)
Mandatory Prepayment upon Conversion – At any time the Investor has converted more than $2.0 million principal amount
of the Note, representing the original issue discount of the Note, the Investor will be required to prepay the Investor Note,
on a dollar-for-dollar basis, for each subsequent conversion of the Note.
(2)
Mandatory Prepayment upon Mandatory Prepayment Notices – The Company may require the Investor to prepay the Investor
Note by delivering a mandatory prepayment notice to the Investor, subject to (i) the satisfaction of certain equity conditions,
(ii) the Company’s receipt of all Governmental Authorizations, as defined in the Purchase Agreement, necessary to commence
drilling on at least five Properties, also as defined in the Purchase Agreement, within the Nicaraguan Concessions, and (iii)
the Company obtaining forbearance agreements from certain third parties to whom the Company owes obligations. Notwithstanding
the foregoing, the Company may not request a mandatory prepayment if after giving effect to such proposed mandatory prepayment,
the Company and its subsidiaries, on a consolidated basis, would hold more than $4.0 million in cash or if prepayment under the
Investor Note for the preceding sixty calendar day period would exceed $2.0 million.
The
Investor Note also contains certain offset rights, which if executed, would reduce the amount outstanding under the Note and the
Investor Note and the cash proceeds received by the Company.
Description
of the Note
The
Note ranks senior to the Company’s existing and future indebtedness and is secured by all of the assets of the Company,
excluding the Nicaraguan Concessions, and to the extent and as provided in the security documents attached hereto as Exhibits.
The
Note is convertible at any time at the option of the holder into shares of the Company’s common stock at $0.50 per share
(the “Conversion Price”). The Note matures on the three-year anniversary of the issuance date thereof. If the Company
issues or sells shares of its common stock, rights to purchase shares of its common stock, or securities convertible into shares
of its common stock for a price per share that is less than the Conversion Price then in effect, the then current Conversion Price
will be decreased to equal such lower price. The foregoing adjustments to the Conversion Price for future stock issues will not
apply to certain exempt issuances, including issuances pursuant to certain employee benefit plans. In addition, the Conversion
Price is subject to adjustment upon stock splits, reverse stock splits, and similar capital changes.
On
the first business day of each month beginning on the earlier of the (i) effectiveness of a registration statement the Company
files to register the shares of common stock issuable upon conversion of the Note or exercise of the Warrant, as defined below,
or (ii) sixth month following the date of the Note through and including the maturity date (the “Installment Dates”),
the Company will pay to the Note holder an amount equal to (i) one-thirtieth (1/30th) of the original principal amount of the
Note (or the principal outstanding on the Installment Date, if less) plus (ii) the accrued and unpaid interest with respect to
such principal plus (iii) the accrued and unpaid late charges (if any) with respect to such principal and interest. The Investor
has the ability to defer or accelerate such monthly payments in its sole discretion.
Prior
to the maturity date, the Note will bear interest at 8% per annum (or 18% per annum during an event of default) with interest
payable in cash or in shares of Common Stock quarterly in arrears on the first business day of each calendar quarter following
the issuance date.
Each
monthly payment may be made in cash, in shares of the Company’s common stock, or in a combination of cash and shares of
its common stock. The Company’s ability to make such payments with shares of its common stock will be subject to various
equity conditions, including the existence of an effective registration statement covering the resale of the shares issued in
payment (or, in the alternative, the eligibility of the shares issuable pursuant to the Note and the Warrant, as defined below,
for sale without restriction under Rule 144 and without the need for the Company to remain current with its public filing obligations)
and certain minimum trading price and trading volume. Such shares will be valued, as of the date on which notice is given by the
Company that payment will be made in shares, at the lower of (1) the then applicable Conversion Price and (2) a price that is
80.0% of the arithmetic average of the three lowest weighted average prices of the Company’s common stock during the twenty-trading
day period ending two trading days before the applicable determination date (the “Measurement Period”). If the Company
elects to pay such monthly payment in shares of the Company’s stock it is required to pre-deliver shares of the Company’s
common stock and is required to deliver additional shares, if any, to a true-up such number of shares to the number of shares
required to be delivered on the applicable Installment Date pursuant to the calculation above.
At
any time after the issuance date, the Company will have the right to redeem all or any portion of the outstanding principal balance
of the Note plus all accrued but unpaid interest and any other charges at a price equal to 125% of such amount provided that (i)
the arithmetic average of the closing sale price of the common stock for any twenty (20) consecutive Trading Days equals or exceeds
200% of the Conversion Price and (ii) among other conditions, there is an effective registration statement covering the resale
of the shares issued in payment or, in the alternative, the eligibility of the shares issuable pursuant to the Note and the Warrant
for sale without restriction under Rule 144 and without the need for the Company to remain current with its public filing obligations.
The Investor has the right to convert any or all of the amount to be redeemed into common stock prior to redemption.
Upon
the occurrence of an event of default under the Note, the Investor may, so long as the event of default is continuing, require
the Company to redeem all or a portion of its Note. Each portion of the Note subject to such redemption must be redeemed by the
Company, in cash, at a price equal to the greater of (1) 125% of the amount being redeemed, including principal, accrued and unpaid
interest, and accrued and unpaid late charges, and (2) the product of (I) the amount being redeemed and (II) the quotient determined
by dividing (A) the greatest closing sale price of the shares of common stock during the period beginning on the date immediately
preceding the event of default and ending on the date the holder delivers a redemption notice to the Company, by (B) the lowest
Conversion Price in effect during such period.
Subject
to certain conditions, the Investor may also require the Company to redeem all or a portion of its Note in connection with a transaction
that results in a Change of Control, as defined in the Note. The Company must redeem each portion of the Note subject to such
redemption in cash at a price equal to the greater of (1) 125% of the amount being redeemed (including principal, accrued and
unpaid interest, and accrued and unpaid late charges), and (2) the product of (I) the amount being redeemed and (II) the quotient
determined by dividing (A) the greatest closing sale price of the shares of common stock during the period beginning on the date
immediately preceding the earlier to occur of (i) the consummation of the Change of Control and (ii) the public announcement of
such Change of Control and ending on the date the holder delivers a redemption notice to the Company, by (B) the lowest Conversion
Price in effect during such period.
Description
of the Warrant.
As
a part of the Private Placement, the Company issued a Warrant to the Investor giving it the right to purchase up to an aggregate
of 18,000,000 shares of the Company’s common stock at an exercise price of $0.50 per share. The Warrant is exercisable commencing
six months from the date of issuance and the exercise prices for the Warrant is subject to adjustment for certain events, such
as stock splits and stock dividends. If the Company issues or sells shares of its common stock, rights to purchase shares of its
common stock, or securities convertible into shares of its common stock for a price per share that is less than the exercise price
then in effect, the exercise price of the Warrant will be decreased to equal such lesser price. Upon each such adjustment, the
number of the shares of the Company’s common stock issuable upon exercise of the Warrant will increase proportionately.
The foregoing adjustments to the exercise price for future stock issues will not apply to certain exempt issuances, including
issuances pursuant to certain employee benefit plans. In addition, the Conversion Price is subject to adjustment upon stock splits,
reverse stock splits, and similar capital changes. The Warrant will expire on the seventh (7th) anniversary of the date of issuance.
9.99%
Restriction on Conversion of Note and Exercise of Warrant
The
Investor has no right to convert the Note or exercise the Warrant to the extent that such conversion or exercise would result
in the Investor being the beneficial owner in excess of 9.99% of the Company’s common stock. The Company is required to
hold a meeting of its shareholders to approve increase the number of its authorized shares to meet its obligations under the Purchase
Agreement to have reserved 200% of the shares issuable upon conversion of the Note and exercise of the Warrant not later than
July 30, 2015.
Registration
Rights Agreement
In
connection with the Private Placement, the Company and the Investor entered into a Registration Rights Agreement under which the
Company is required, on or before 45 days after the closing of the Private Placement, to file a registration statement with the
Securities and Exchange Commission (the “SEC”) covering the resale of 130% of the shares of the Company’s common
stock issuable pursuant to the Note and Warrant and to use its best efforts to have the registration declared effective as soon
as practicable. The Company will be subject to certain monetary penalties, as set forth in the Registration Rights Agreement,
if the registration statement is not filed or does not remain available for the resale (subject to certain allowable grace periods)
of the Registrable Securities, as such term is defined in the Registration Rights Agreement.
Participation
Rights
If,
during the period beginning on the closing date and ending on the four (4) year anniversary of the closing date, the Company offers,
sells, grants any option to purchase, or otherwise disposes of any of its or its subsidiaries’ equity or equity equivalent
securities (a “Subsequent Placement”), the Investor will have the right to participate for 50% of any such future
Subsequent Placement.
The
foregoing does not purport to be a complete description of the Purchase Agreement, the Registration Rights Agreement, the Note,
the Warrant, the Security and Pledge Agreement, the Investor Note and the Guarantee Agreement and is qualified in its entirety
by reference to the full text of such documents, which are attached as Exhibits 10.46, 10.47, 10.48, 10.49, 10.50. 10.51 10.52,
10.53, 10.54 and 10.55, to this Form 8-K and are incorporated by reference herein.
Item
2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The
information included in Item 1.01 of this Form 8-K is hereby incorporated by reference into this Item 2.03.
Item
3.02. Unregistered Sales of Equity Securities.
The
information included in Item 1.01 of this Form 8-K is hereby incorporated by reference into this Item 3.02.
Item
9.01. Financial Statements and Exhibits.
See
the Exhibit Index set forth below for a list of exhibits included with this Form 8-K.
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
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INFINITY
ENERGY RESOURCES, INC. |
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By: |
/s/
Stanton E. Ross |
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Stanton
E. Ross |
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Chairman,
President & Chief Executive Officer |
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Date:
May 8, 2015 |
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EXHIBIT
INDEX
Exhibit
Number |
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Description |
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10.46 |
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Securities
Purchase Agreement |
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10.47 |
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Registration
Rights Agreement |
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10.48 |
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Senior
Secured Convertible Note. |
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10.49 |
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Warrant |
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10.50 |
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Security
and Pledge Agreement |
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10.51 |
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Investor
Note |
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10.52 |
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Form
of Guaranty Agreement |
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EXHIBIT
10.46
SECURITIES
PURCHASE AGREEMENT
This
SECURITIES PURCHASE AGREEMENT (the “Agreement”), dated as of May 7, 2015, is by and among Infinity Energy
Resources, Inc., a Delaware corporation with offices located at 11900 College Blvd., Suite 310, Overland Park KS 66210 (the “Company”),
and each of the investors listed on the Schedule of Buyers attached hereto (individually, a “Buyer” and collectively,
the “Buyers”).
RECITALS
A. The
Company and each Buyer is executing and delivering this Agreement in reliance upon the exemption from securities registration
afforded by Section 4(a)(2) of the Securities Act of 1933, as amended (the “1933 Act”), and Rule 506(b) of
Regulation D (“Regulation D”) as promulgated by the United States Securities and Exchange Commission (the “SEC”)
under the 1933 Act.
B. The
Company has authorized a new series of senior secured convertible notes of the Company, in the aggregate original principal amount
of $12 million, substantially in the form attached hereto as Exhibit A (the “Notes”), which Notes
shall be convertible into shares of Common Stock (as defined below) (the shares of Common Stock issuable pursuant to the terms
of the Notes, including, without limitation, upon conversion or otherwise, collectively, the “Conversion Shares”),
in accordance with the terms of the Notes.
C. Each
Buyer wishes to purchase, and the Company wishes to sell, upon the terms and conditions stated in this Agreement, (i) a Note in
the aggregate original principal amount set forth opposite such Buyer’s name in column (3) on the Schedule of Buyers and
(ii) a warrant to initially acquire up to that aggregate number of additional shares of Common Stock set forth opposite such Buyer’s
name in column (4) on the Schedule of Buyers, substantially in the form attached hereto as Exhibit B (the “Warrants”)
(as exercised, collectively, the “Warrant Shares”).
D. At
the Closing, the parties hereto shall execute and deliver a Registration Rights Agreement, in the form attached hereto as Exhibit
C (the “Registration Rights Agreement”), pursuant to which the Company has agreed to provide certain
registration rights with respect to the Registrable Securities (as defined in the Registration Rights Agreement), under the 1933
Act and the rules and regulations promulgated thereunder, and applicable state securities laws.
E. The
Notes, the Conversion Shares, the Warrants and the Warrant Shares are collectively referred to herein as the “Securities.”
F. The
Notes will rank senior to all outstanding and future indebtedness of the Company, and its Subsidiaries (as defined below) the
Notes will be secured by a first priority perfected security interest in all of the existing and future assets of the Company
and its direct and indirect Subsidiaries, including a pledge of all of the capital stock of each of the Subsidiaries, as evidenced
by (i) a security agreement in the form attached hereto as Exhibit D (the “Security Agreement”),
(ii) account control agreements with respect to certain accounts described in the Note and the Security Agreement, in form and
substance acceptable to each Buyer, duly executed by the Company and each depositary bank (each, an “Controlled Account
Bank”) in which each such account is maintained (the “Controlled Account Agreements”, and together
with the Security Agreement, the Perfection Certificate (as defined below) and the other security documents and agreements entered
into in connection with this Agreement and each of such other documents and agreements, as each may be amended or modified from
time to time, collectively, the “Security Documents”), and (iii) a guaranty executed by each Subsidiary of
the Company, in the form attached hereto as Exhibit E (collectively, the “Guaranties”) pursuant
to which each of them guarantees the obligations of the Company under the Transaction Documents (as defined below).
AGREEMENT
NOW,
THEREFORE, in consideration of the premises and the mutual covenants contained herein and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Company and each Buyer hereby agree as follows:
1. PURCHASE
AND SALE OF NOTES AND WARRANTS.
(a) Purchase
of Notes and Warrants. Subject to the satisfaction (or waiver) of the conditions set forth in Sections 6 and 7 below, the
Company shall issue and sell to each Buyer, and each Buyer severally, but not jointly, agrees to purchase from the Company on
the Closing Date (as defined below) a Note in the original principal amount as is set forth opposite such Buyer’s name in
column (3) on the Schedule of Buyers along with Warrants to initially acquire up to that aggregate number of Warrant Shares as
is set forth opposite such Buyer’s name in column (4) on the Schedule of Buyers.
(b) Closing.
The closing (the “Closing”) of the purchase of the Notes and the Warrants by the Buyers shall occur at the
offices of Kelley Drye & Warren LLP, 101 Park Avenue, New York, NY 10178. The date and time of the Closing (the “Closing
Date”) shall be 10:00 a.m., New York time, on the first (1st) Business Day on which the conditions to the Closing set
forth in Sections 6 and 7 below are satisfied or waived (or such other date as is mutually agreed to by the Company and each Buyer).
As used herein “Business Day” means any day other than a Saturday, Sunday or other day on which commercial
banks in New York, New York are authorized or required by law to remain closed.
(c) Purchase
Price. The aggregate purchase price for the Notes and the Warrants to be purchased by each Buyer (the “Purchase Price”)
shall be the amount set forth opposite such Buyer’s name in column (5) on the Schedule of Buyers, consisting of (x) a cash
payment of such aggregate amount set forth opposite such Buyer’s name in column (6) on the Schedule of Buyers (the “Cash
Purchase Price”), (y) the issuance by such Buyer of a promissory note in the form attached hereto as Exhibit F
(each, an “Investor Note”, and collectively, the “Investor Notes”) in the aggregate
original principal amount set forth opposite such Buyer’s name in column (7) on the Schedule of Buyers (each, an “Investor
Note Amount”) and (z) an authorized person of such Buyer shall certify in a written certificate in the form attached
hereto as Exhibit G (the “Investor Collateral Certificate”) that as of the Closing Date the bank
account described on Schedule I to such Investor Note, which secures such Investor Note in accordance therewith, contains at least
the Investor Note Amount of cash, in U.S. dollars and immediately available funds. Each Buyer shall pay approximately $833.33
for each $1,000 of principal amount of Notes and related Warrants to be purchased by such Buyer at the Closing. Each Buyer and
the Company agree that the Notes and the Warrants constitute an “investment unit” for purposes of Section 1273(c)(2)
of the Internal Revenue Code of 1986, as amended (the “Code”). The Buyers and the Company mutually agree that
the allocation of the issue price of such investment unit between the Notes and the Warrants in accordance with Section 1273(c)(2)
of the Code and Treasury Regulation Section 1.1273-2(h) shall be an aggregate amount of $13,125 allocated to the Warrants and
the balance of the Purchase Price allocated to the Notes, and neither the Buyers nor the Company shall take any position inconsistent
with such allocation in any tax return or in any judicial or administrative proceeding in respect of taxes.
(d) Form
of Payment. On the Closing Date, (i) each Buyer shall pay its respective Purchase Price (less, in the case of any Buyer, the
amounts withheld pursuant to Section 4(g)) to the Company for the Notes and the Warrants to be issued and sold to such Buyer at
the Closing, by wire transfer of immediately available funds in accordance with the by wire transfer of immediately available
funds in accordance with the Flow of Funds Letter (as defined below) and (ii) the Company shall deliver to each Buyer (A) a Note
in the aggregate original principal amount as is set forth opposite such Buyer’s name in column (3) of the Schedule of Buyers
and (B) a Warrant pursuant to which such Buyer shall have the right to initially acquire up to such aggregate number of Warrant
Shares as is set forth opposite such Buyer’s name in column (4) of the Schedule of Buyers, in all cases, duly executed on
behalf of the Company and registered in the name of such Buyer or its designee.
(e) Residency.
Such Buyer is a resident of that jurisdiction specified below its address of the Schedule of Buyers.
2. BUYER’S
REPRESENTATIONS AND WARRANTIES.
Each
Buyer, severally and not jointly, represents and warrants to the Company with respect to only itself that, as of the date hereof
and as of the Closing Date:
(a) No
Public Sale or Distribution. Such Buyer (i) is acquiring its Note and Warrants, (ii) upon conversion of its Note will acquire
the Conversion Shares issuable upon conversion thereof, and (iii) upon exercise of its Warrants (other than pursuant to a Cashless
Exercise (as defined in the Warrants)) will acquire the Warrant Shares issuable upon exercise thereof, in each case, for its own
account and not with a view towards, or for resale in connection with, the public sale or distribution thereof in violation of
applicable securities laws, except pursuant to sales registered or exempted under the 1933 Act; provided, however, by making the
representations herein, such Buyer does not agree, or make any representation or warranty, to hold any of the Securities for any
minimum or other specific term and reserves the right to dispose of the Securities at any time in accordance with or pursuant
to a registration statement or an exemption from registration under the 1933 Act. Such Buyer does not presently have any agreement
or understanding, directly or indirectly, with any Person to distribute any of the Securities in violation of applicable securities
laws. For purposes of this Agreement, “Person” means an individual, a limited liability company, a partnership,
a joint venture, a corporation, a trust, an unincorporated organization, any other entity and any Governmental Entity or any department
or agency thereof
(b) Accredited
Investor Status. Such Buyer is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D.
(c) Reliance
on Exemptions. Such Buyer understands that the Securities are being offered and sold to it in reliance on specific exemptions
from the registration requirements of United States federal and state securities laws and that the Company is relying in part
upon the truth and accuracy of, and such Buyer’s compliance with, the representations, warranties, agreements, acknowledgments
and understandings of such Buyer set forth herein in order to determine the availability of such exemptions and the eligibility
of such Buyer to acquire the Securities.
(d) Information.
Such Buyer and its advisors, if any, have been furnished with all materials relating to the business, finances and operations
of the Company and materials relating to the offer and sale of the Securities that have been requested by such Buyer. Such Buyer
and its advisors, if any, have been afforded the opportunity to ask questions of the Company. Neither such inquiries nor any other
due diligence investigations conducted by such Buyer or its advisors, if any, or its representatives shall modify, amend or affect
such Buyer’s right to rely on the Company’s representations and warranties contained herein. Such Buyer understands
that its investment in the Securities involves a high degree of risk. Such Buyer has sought such accounting, legal and tax advice
as it has considered necessary to make an informed investment decision with respect to its acquisition of the Securities.
(e) No
Governmental Review. Such Buyer understands that no United States federal or state agency or any other government or governmental
agency has passed on or made any recommendation or endorsement of the Securities or the fairness or suitability of the investment
in the Securities nor have such authorities passed upon or endorsed the merits of the offering of the Securities.
(f) Transfer
or Resale. Such Buyer understands that except as provided in the Registration Rights Agreement and Section 4(h) hereof: (i)
the Securities have not been and are not being registered under the 1933 Act or any state securities laws, and may not be offered
for sale, sold, assigned or transferred unless (A) subsequently registered thereunder, (B) such Buyer shall have delivered to
the Company (if requested by the Company) an opinion of counsel, in a form reasonably acceptable to the Company, to the effect
that such Securities to be sold, assigned or transferred may be sold, assigned or transferred pursuant to an exemption from such
registration, or (C) such Buyer provides the Company with reasonable assurance that such Securities can be sold, assigned or transferred
pursuant to Rule 144 or Rule 144A promulgated under the 1933 Act (or a successor rule thereto) (collectively, “Rule 144”);
(ii) any sale of the Securities made in reliance on Rule 144 may be made only in accordance with the terms of Rule 144, and further,
if Rule 144 is not applicable, any resale of the Securities under circumstances in which the seller (or the Person through whom
the sale is made) may be deemed to be an underwriter (as that term is defined in the 1933 Act) may require compliance with some
other exemption under the 1933 Act or the rules and regulations of the SEC promulgated thereunder; and (iii) neither the Company
nor any other Person is under any obligation to register the Securities under the 1933 Act or any state securities laws or to
comply with the terms and conditions of any exemption thereunder. Notwithstanding the foregoing, the Securities may be pledged
in connection with a bona fide margin account or other loan or financing arrangement secured by the Securities and such pledge
of Securities shall not be deemed to be a transfer, sale or assignment of the Securities hereunder, and no Buyer effecting a pledge
of Securities shall be required to provide the Company with any notice thereof or otherwise make any delivery to the Company pursuant
to this Agreement or any other Transaction Document (as defined in Section 3(b)), including, without limitation, this Section
2(f).
(g) Validity;
Enforcement. This Agreement and the Registration Rights Agreement have been duly and validly authorized, executed and delivered
on behalf of such Buyer and shall constitute the legal, valid and binding obligations of such Buyer enforceable against such Buyer
in accordance with their respective terms, except as such enforceability may be limited by general principles of equity or to
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally,
the enforcement of applicable creditors’ rights and remedies.
(h) No
Conflicts. The execution, delivery and performance by such Buyer of this Agreement and the Registration Rights Agreement and
the consummation by such Buyer of the transactions contemplated hereby and thereby will not (i) result in a violation of the organizational
documents of such Buyer, or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which such Buyer is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment
or decree (including federal and state securities laws) applicable to such Buyer, except in the case of clauses (ii) and (iii)
above, for such conflicts, defaults, rights or violations which could not, individually or in the aggregate, reasonably be expected
to have a material adverse effect on the ability of such Buyer to perform its obligations hereunder.
3. REPRESENTATIONS
AND WARRANTIES OF THE COMPANY.
The
Company represents and warrants to each of the Buyers that, as of the date hereof and as of the Closing Date:
(a) Organization
and Qualification. Each of the Company and each of its Subsidiaries are entities duly organized and validly existing and in
good standing under the laws of the jurisdiction in which they are formed, and have the requisite power and authority to own their
properties and to carry on their business as now being conducted and as presently proposed to be conducted. Each of the Company
and each of its Subsidiaries is duly qualified as a foreign entity to do business and is in good standing in every jurisdiction
in which its ownership of property or the nature of the business conducted by it makes such qualification necessary, except to
the extent that the failure to be so qualified or be in good standing would not reasonably be expected to have a Material Adverse
Effect (as defined below). As used in this Agreement, “Material Adverse Effect” means any material adverse
effect on (i) the business, properties, assets, liabilities, operations (including results thereof), condition (financial or otherwise)
or prospects of the Company or any Subsidiary, individually or taken as a whole, (ii) the transactions contemplated hereby or
in any of the other Transaction Documents or any other agreements or instruments to be entered into in connection herewith or
therewith or (iii) the authority or ability of the Company or any of its Subsidiaries to perform any of their respective obligations
under any of the Transaction Documents (as defined below). Notwithstanding any reference herein to the contrary, as of the date
hereof and as of the Closing Date, the Company has no Subsidiaries. “Subsidiaries” means any Person in which
the Company, directly or indirectly, (I) owns any of the outstanding capital stock or holds any equity or similar interest of
such Person or (II) controls or operates all or any part of the business, operations or administration of such Person, and each
of the foregoing, is individually referred to herein as a “Subsidiary.”
(b) Authorization;
Enforcement; Validity. The Company has the requisite power and authority to enter into and perform its obligations under this
Agreement and the other Transaction Documents and to issue the Securities in accordance with the terms hereof and thereof. Each
Subsidiary has the requisite power and authority to enter into and perform its obligations under the Transaction Documents to
which it is a party. The execution and delivery of this Agreement and the other Transaction Documents by the Company and its Subsidiaries,
and the consummation by the Company and its Subsidiaries of the transactions contemplated hereby and thereby (including, without
limitation, the issuance of the Notes and the reservation for issuance and issuance of the Conversion Shares issuable upon conversion
of the Notes and the issuance of the Warrants and the reservation for issuance and issuance of the Warrant Shares issuable upon
exercise of the Warrants) have been duly authorized by the Company’s board of directors and each of its Subsidiaries’
board of directors or other governing body, as applicable, and (other than the filing with the SEC of one or more Registration
Statements in accordance with the requirements of the Registration Rights Agreement, a Form D with the SEC and any other filings
as may be required by any state securities agencies) no further filing, consent or authorization is required by the Company, its
Subsidiaries, their respective boards of directors or their stockholders or other governing body. This Agreement has been, and
the other Transaction Documents to which it is a party will be prior to the Closing, duly executed and delivered by the Company,
and each constitutes the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with
its respective terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors’
rights and remedies and except as rights to indemnification and to contribution may be limited by federal or state securities
law and public policy, and the remedy of specific performance and injunctive and other forms of equitable relief may be subject
to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought. Prior to the Closing,
the Transaction Documents to which each Subsidiary is a party will be duly executed and delivered by each such Subsidiary, and
shall constitute the legal, valid and binding obligations of each such Subsidiary, enforceable against each such Subsidiary in
accordance with their respective terms, except as such enforceability may be limited by general principles of equity or applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement
of applicable creditors’ rights and remedies and except as rights to indemnification and to contribution may be limited
by federal or state securities law. “Transaction Documents” means, collectively, this Agreement, the Notes,
the Investor Note, the Warrants, the Guaranties, the Security Documents, the Registration Rights Agreement, the Irrevocable Transfer
Agent Instructions (as defined below) and each of the other agreements and instruments entered into or delivered by any of the
parties hereto in connection with the transactions contemplated hereby and thereby, as may be amended from time to time.
(c) Issuance
of Securities. The issuance of the Notes and the Warrants are duly authorized and upon issuance in accordance with the terms
of the Transaction Documents shall be validly issued, fully paid and non-assessable and free from all preemptive or similar rights,
mortgages, defects, claims, liens, pledges, charges, taxes, rights of first refusal, encumbrances, security interests and other
encumbrances (collectively “Liens”) with respect to the issuance thereof. As of the Closing, the Company shall
have reserved from its duly authorized capital stock not less than the sum of (i) 130% of the maximum number of Conversion Shares
issuable upon conversion of the Notes (assuming for purposes hereof that (x) the Notes are convertible at the initial Conversion
Price (as defined in the Notes), (y) interest on the Notes shall accrue through the third anniversary of the Closing Date and
will be converted in shares of Common Stock at a conversion price equal to the Alternate Conversion Price (as defined in the Notes)
assuming an Alternate Conversion Date (as defined in the Note) as of the date hereof and (z) any such conversion shall not take
into account any limitations on the conversion of the Notes set forth in the Notes), and (ii) 50% of the maximum number of Warrant
Shares initially issuable upon exercise of the Warrants (without taking into account any limitations on the exercise of the Warrants
set forth therein). Upon issuance or conversion in accordance with the Notes or exercise in accordance with the Warrants (as the
case may be), the Conversion Shares and the Warrant Shares, respectively, when issued, will be validly issued, fully paid and
nonassessable and free from all preemptive or similar rights or Liens with respect to the issue thereof, with the holders being
entitled to all rights accorded to a holder of Common Stock. Subject to the accuracy of the representations and warranties of
the Buyers in this Agreement, the offer and issuance by the Company of the Securities is exempt from registration under the 1933
Act. “Common Stock” means (i) the Company’s shares of common stock, $0.0001 par value per share, and
(ii) any capital stock into which such common stock shall have been changed or any share capital resulting from a reclassification
of such common stock.
(d) No
Conflicts. The execution, delivery and performance of the Transaction Documents by the Company and its Subsidiaries and the
consummation by the Company and its Subsidiaries of the transactions contemplated hereby and thereby (including, without limitation,
the issuance of the Notes, the Warrants, the Conversion Shares and the Warrant Shares and the reservation for issuance of the
Conversion Shares and the Warrant Shares) will not (i) result in a violation of the Certificate of Incorporation (as defined below)
(including, without limitation, any certificate of designation contained therein), By-Laws (as defined below), certificate of
formation, memorandum of association, articles of association, bylaws or other organizational documents of the Company or any
of its Subsidiaries, or any capital stock or other securities of the Company or any of its Subsidiaries, (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both would become a default) in any respect under, or
give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to
which the Company or any of its Subsidiaries is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment
or decree (including foreign, federal and state securities laws and regulations and the rules and regulations of the OTCQB (the
“Principal Market”) and including all applicable foreign, federal and state laws, rules and regulations) applicable
to the Company or any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries is bound
or affected.
(e) Consents.
Neither the Company nor any Subsidiary is required to obtain any consent from, authorization or order of, or make any filing or
registration with (other than the filing with the SEC of one or more Registration Statements in accordance with the requirements
of the Registration Rights Agreement, a Form D with the SEC and any other filings as may be required by any state securities agencies),
any Governmental Entity (as defined below) or any regulatory or self-regulatory agency or any other Person in order for it to
execute, deliver or perform any of its respective obligations under or contemplated by the Transaction Documents, in each case,
in accordance with the terms hereof or thereof. All consents, authorizations, orders, filings and registrations which the Company
or any Subsidiary is required to obtain pursuant to the preceding sentence have been or will be obtained or effected on or prior
to the Closing Date, and neither the Company nor any of its Subsidiaries are aware of any facts or circumstances which might prevent
the Company or any of its Subsidiaries from obtaining or effecting any of the registration, application or filings contemplated
by the Transaction Documents. The Company is not in violation of the requirements of the Principal Market and has no knowledge
of any facts or circumstances which could reasonably lead to delisting or suspension of the Common Stock in the foreseeable future.
“Governmental Entity” means any nation, state, county, city, town, village, district, or other political jurisdiction
of any nature, federal, state, local, municipal, foreign, or other government, governmental or quasi-governmental authority of
any nature (including any governmental agency, branch, department, official, or entity and any court or other tribunal), multi-national
organization or body; or body exercising, or entitled to exercise, any administrative, executive, judicial, legislative, police,
regulatory, or taxing authority or power of any nature or instrumentality of any of the foregoing, including any entity or enterprise
owned or controlled by a government or a public international organization or any of the foregoing.
(f) Acknowledgment
Regarding Buyer’s Purchase of Securities. The Company acknowledges and agrees that each Buyer is acting solely in the
capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated hereby
and thereby and that no Buyer is (i) an officer or director of the Company or any of its Subsidiaries, (ii) an “affiliate”
(as defined in Rule 144) of the Company or any of its Subsidiaries or (iii) to its knowledge, a “beneficial owner”
of more than 10% of the shares of Common Stock (as defined for purposes of Rule 13d-3 of the Securities Exchange Act of 1934,
as amended (the “1934 Act”)). The Company further acknowledges that no Buyer is acting as a financial advisor
or fiduciary of the Company or any of its Subsidiaries (or in any similar capacity) with respect to the Transaction Documents
and the transactions contemplated hereby and thereby, and any advice given by a Buyer or any of its representatives or agents
in connection with the Transaction Documents and the transactions contemplated hereby and thereby is merely incidental to such
Buyer’s purchase of the Securities. The Company further represents to each Buyer that the Company’s and each Subsidiary’s
decision to enter into the Transaction Documents to which it is a party has been based solely on the independent evaluation by
the Company, each Subsidiary and their respective representatives.
(g) No
General Solicitation; Placement Agent’s Fees. Neither the Company, nor any of its Subsidiaries or affiliates, nor any
Person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning
of Regulation D) in connection with the offer or sale of the Securities. The Company shall be responsible for the payment of any
placement agent’s fees, financial advisory fees, or brokers’ commissions (other than for Persons engaged by any Buyer
or its investment advisor) relating to or arising out of the transactions contemplated hereby, including, without limitation,
placement agent fees payable to Westpark Capital, Inc., as placement agent (the “Placement Agent”) in connection
with the sale of the Securities. The fees and expenses of the Placement Agent to be paid by the Company or any of its Subsidiaries
are as set forth on Schedule 3(g) attached hereto. The Company shall pay, and hold each Buyer harmless against, any liability,
loss or expense (including, without limitation, attorney’s fees and out-of-pocket expenses) arising in connection with any
such claim. The Company acknowledges that it has engaged the Placement Agent in connection with the sale of the Securities. Other
than the Placement Agent, neither the Company nor any of its Subsidiaries has engaged any placement agent or other agent in connection
with the offer or sale of the Securities.
(h) No
Integrated Offering. None of the Company, its Subsidiaries or any of their affiliates, nor any Person acting on 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 require registration of any of the Securities under the 1933 Act, whether through integration with prior offerings
or otherwise, or cause this offering of the Securities to require approval of stockholders of the Company for purposes of the
1933 Act or under any applicable stockholder approval provisions, including, without limitation, under the rules and regulations
of any exchange or automated quotation system on which any of the securities of the Company are listed or designated for quotation.
None of the Company, its Subsidiaries, their affiliates nor any Person acting on their behalf will take any action or steps that
would require registration of any of the Securities under the 1933 Act or cause the offering of any of the Securities to be integrated
with other offerings of securities of the Company.
(i) Dilutive
Effect. The Company understands and acknowledges that the number of Conversion Shares and Warrant Shares will increase in
certain circumstances. The Company further acknowledges that its obligation to issue the Conversion Shares pursuant to the terms
of the Notes in accordance with this Agreement and the Notes and the Warrant Shares upon exercise of the Warrants in accordance
with this Agreement, the Notes and the Warrants is, in each case, absolute and unconditional regardless of the dilutive effect
that such issuance may have on the ownership interests of other stockholders of the Company.
(j) Application
of Takeover Protections; Rights Agreement. The Company and its board of directors have taken all necessary action, if any,
in order to render inapplicable any control share acquisition, interested stockholder, business combination, poison pill (including,
without limitation, any distribution under a rights agreement), stockholder rights plan or other similar anti-takeover provision
under the Certificate of Incorporation, Bylaws or other organizational documents or the laws of the jurisdiction of its incorporation
or otherwise which is or could become applicable to any Buyer as a result of the transactions contemplated by this Agreement,
including, without limitation, the Company’s issuance of the Securities and any Buyer’s ownership of the Securities.
The Company and its board of directors have taken all necessary action, if any, in order to render inapplicable any stockholder
rights plan or similar arrangement relating to accumulations of beneficial ownership of shares of Common Stock or a change in
control of the Company or any of its Subsidiaries.
(k) SEC
Documents; Financial Statements. During the two (2) years prior to the date hereof, the Company has filed all reports, schedules,
forms, proxy statements, statements and other documents required to be filed by it with the SEC pursuant to the reporting requirements
of the 1934 Act (all of the foregoing filed prior to the date hereof and all exhibits and appendices included therein and financial
statements, notes and schedules thereto and documents incorporated by reference therein being hereinafter referred to as the “SEC
Documents”). The Company has delivered or has made available to the Buyers or their respective representatives true,
correct and complete copies of each of the SEC Documents not available on the EDGAR system. As of their respective dates, the
SEC Documents complied in all material respects with the requirements of the 1934 Act and the rules and regulations of the SEC
promulgated thereunder applicable to the SEC Documents, and none of the SEC Documents, at the time they were filed with the SEC,
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. As of their
respective dates, the financial statements of the Company included in the SEC Documents complied in all material respects with
applicable accounting requirements and the published rules and regulations of the SEC with respect thereto as in effect as of
the time of filing. Such financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”),
consistently applied, during the periods involved (except (i) as may be otherwise indicated in such financial statements or the
notes thereto, or (ii) in the case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed
or summary statements) and fairly present in all material respects the financial position of the Company as of the dates thereof
and the results of its operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to
normal year-end audit adjustments which will not be material, either individually or in the aggregate). The reserves, if any,
established by the Company or the lack of reserves, if applicable, are reasonable based upon facts and circumstances known by
the Company on the date hereof and there are no loss contingencies that are required to be accrued by the Statement of Financial
Accounting Standard No. 5 of the Financial Accounting Standards Board which are not provided for by the Company in its financial
statements or otherwise. No other information provided by or on behalf of the Company to any of the Buyers which is not included
in the SEC Documents (including, without limitation, information referred to in Section 2(d) of this Agreement or in the disclosure
schedules to this Agreement) contains any untrue statement of a material fact or omits to state any material fact necessary in
order to make the statements therein not misleading, in the light of the circumstance under which they are or were made. The Company
is not currently contemplating to amend or restate any of the financial statements (including, without limitation, any notes or
any letter of the independent accountants of the Company with respect thereto) included in the SEC Documents (the “Financial
Statements”), nor is the Company currently aware of facts or circumstances which would require the Company to amend
or restate any of the Financial Statements, in each case, in order for any of the Financials Statements to be in compliance with
GAAP and the rules and regulations of the SEC. The Company has not been informed by its independent accountants that they recommend
that the Company amend or restate any of the Financial Statements or that there is any need for the Company to amend or restate
any of the Financial Statements.
(l) Absence
of Certain Changes. Since the date of the Company’s most recent audited financial statements contained in a Form 10-K,
there has been no material adverse change and no material adverse development in the business, assets, liabilities, properties,
operations (including results thereof), condition (financial or otherwise) or prospects of the Company or any of its Subsidiaries.
Since the date of the Company’s most recent audited financial statements contained in a Form 10-K, neither the Company nor
any of its Subsidiaries has (i) declared or paid any dividends, (ii) sold any assets, individually or in the aggregate, outside
of the ordinary course of business or (iii) made any capital expenditures, individually or in the aggregate, outside of the ordinary
course of business. Neither the Company nor any of its Subsidiaries has taken any steps to seek protection pursuant to any law
or statute relating to bankruptcy, insolvency, reorganization, receivership, liquidation or winding up, nor does the Company or
any Subsidiary have any knowledge or reason to believe that any of their respective creditors intend to initiate involuntary bankruptcy
proceedings or any actual knowledge of any fact which would reasonably lead a creditor to do so. The Company and its Subsidiaries,
individually and on a consolidated basis, are not as of the date hereof, and after giving effect to the transactions contemplated
hereby to occur at the Closing, will not be Insolvent (as defined below). For purposes of this Section 3(l), “Insolvent”
means, (I) with respect to the Company and its Subsidiaries, on a consolidated basis, (i) the present fair saleable value of the
Company’s and its Subsidiaries’ assets is less than the amount required to pay the Company’s and its Subsidiaries’
total Indebtedness (as defined below), (ii) the Company and its Subsidiaries are unable to pay their debts and liabilities, subordinated,
contingent or otherwise, as such debts and liabilities become absolute and matured or (iii) the Company and its Subsidiaries intend
to incur or believe that they will incur debts that would be beyond their ability to pay as such debts mature; and (II) with respect
to the Company and each Subsidiary, individually, (i) the present fair saleable value of the Company’s or such Subsidiary’s
(as the case may be) assets is less than the amount required to pay its respective total Indebtedness, (ii) the Company or such
Subsidiary (as the case may be) is unable to pay its respective debts and liabilities, subordinated, contingent or otherwise,
as such debts and liabilities become absolute and matured or (iii) the Company or such Subsidiary (as the case may be) intends
to incur or believes that it will incur debts that would be beyond its respective ability to pay as such debts mature. Neither
the Company nor any of its Subsidiaries has engaged in any business or in any transaction, and is not about to engage in any business
or in any transaction, for which the Company’s or such Subsidiary’s remaining assets constitute unreasonably small
capital with which to conduct the business in which it is engaged as such business is now conducted and is proposed to be conducted.
(m) No
Undisclosed Events, Liabilities, Developments or Circumstances. No event, liability, development or circumstance has occurred
or exists, or is reasonably expected to exist or occur with respect to the Company, any of its Subsidiaries or any of their respective
businesses, properties, liabilities, prospects, operations (including results thereof) or condition (financial or otherwise),
that (i) would be required to be disclosed by the Company under applicable securities laws on a registration statement on Form
S-1 filed with the SEC relating to an issuance and sale by the Company of its Common Stock and which has not been publicly announced,
(ii) could have a material adverse effect on any Buyer’s investment hereunder or (iii) could have a Material Adverse Effect.
(n) Conduct
of Business; Regulatory Permits. Neither the Company nor any of its Subsidiaries is in violation of any term of or in default
under its Certificate of Incorporation, any certificate of designation, preferences or rights of any other outstanding series
of preferred stock of the Company or any of its Subsidiaries or Bylaws or their organizational charter, certificate of formation,
memorandum of association, articles of association, Certificate of Incorporation or certificate of incorporation or bylaws, respectively.
Neither the Company nor any of its Subsidiaries is in violation of any judgment, decree or order or any statute, ordinance, rule
or regulation applicable to the Company or any of its Subsidiaries, and neither the Company nor any of its Subsidiaries will conduct
its business in violation of any of the foregoing, except in all cases for possible violations which could not, individually or
in the aggregate, have a Material Adverse Effect. Without limiting the generality of the foregoing, the Company is not in violation
of any of the rules, regulations or requirements of the Principal Market and has no knowledge of any facts or circumstances that
could reasonably lead to delisting or suspension of the Common Stock by the Principal Market in the foreseeable future. During
the two years prior to the date hereof, (i) the Common Stock has been listed or designated for quotation on the Principal Market,
(ii) trading in the Common Stock has not been suspended by the SEC or the Principal Market and (iii) the Company has received
no communication, written or oral, from the SEC or the Principal Market regarding the suspension or delisting of the Common Stock
from the Principal Market. 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 would not have, individually or in the aggregate, a Material Adverse Effect, and
neither the Company nor any such Subsidiary has received any notice of proceedings relating to the revocation or modification
of any such certificate, authorization or 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) Foreign
Corrupt Practices. Neither the Company, the Company’s subsidiary or any director, officer, agent, employee, nor any
other person acting for or on behalf of the foregoing (individually and collectively, a “Company Affiliate”)
have violated the U.S. Foreign Corrupt Practices Act (the “FCPA”) or any other applicable anti-bribery or anti-corruption
laws, nor has any Company Affiliate offered, paid, promised to pay, or authorized the payment of any money, or offered, given,
promised to give, or authorized the giving of anything of value, to any officer, employee or any other person acting in an official
capacity for any Governmental Entity to any political party or official thereof or to any candidate for political office (individually
and collectively, a “Government Official”) or to any person under circumstances where such Company Affiliate
knew or was aware of a high probability that all or a portion of such money or thing of value would be offered, given or promised,
directly or indirectly, to any Governmental Official, for the purpose of:
(i) (A)
influencing any act or decision of such Government Official in his/her official capacity, (B) inducing such Government Official
to do or omit to do any act in violation of his/her lawful duty, (C) securing any improper advantage, or (D) inducing such Government
Official to influence or affect any act or decision of any Governmental Entity, or
(ii) assisting
the Company or its Subsidiaries in obtaining or retaining business for or with, or directing business to, the Company or its Subsidiaries.
(p) Sarbanes-Oxley
Act. The Company and each Subsidiary is in compliance with any and all applicable requirements of the Sarbanes-Oxley Act of
2002, as amended, and any and all applicable rules and regulations promulgated by the SEC thereunder that are effective as of
the date hereof.
(q) Transactions
With Affiliates. No current or former employee, partner, director, officer or stockholder (direct or indirect) of the Company
or its Subsidiaries, or any associate, or, to the knowledge of the Company, any affiliate of any thereof, or any relative with
a relationship no more remote than first cousin of any of the foregoing, is presently, or has ever been, (i) a party to any transaction
with the Company or its Subsidiaries (including any contract, agreement or other arrangement providing for the furnishing of services
by, or rental of real or personal property from, or otherwise requiring payments to, any such director, officer or stockholder
or such associate or affiliate or relative Subsidiaries (other than for ordinary course services as employees, officers or directors
of the Company or any of its Subsidiaries)) or (ii) the direct or indirect owner of an interest in any corporation, firm, association
or business organization which is a competitor, supplier or customer of the Company or its Subsidiaries (except for a passive
investment (direct or indirect) in less than 5% of the common stock of a company whose securities are traded on or quoted through
an Eligible Market (as defined in the Notes)), nor does any such Person receive income from any source other than the Company
or its Subsidiaries which relates to the business of the Company or its Subsidiaries or should properly accrue to the Company
or its Subsidiaries. No employee, officer, stockholder or director of the Company or any of its Subsidiaries or member of his
or her immediate family is indebted to the Company or its Subsidiaries, as the case may be, nor is the Company or any of its Subsidiaries
indebted (or committed to make loans or extend or guarantee credit) to any of them, other than (i) for payment of salary for services
rendered, (ii) reimbursement for reasonable expenses incurred on behalf of the Company, and (iii) for other standard employee
benefits made generally available to all employees or executives (including stock option agreements outstanding under any stock
option plan approved by the Board of Directors of the Company).
(r) Equity
Capitalization. As of the date hereof, the authorized capital stock of the Company consists of (i) 75,000,000 shares of Common
Stock, of which, 26,866,939 are issued and outstanding and 8,354.460 shares are reserved for issuance pursuant to Convertible
Securities (as defined below) (other than the Notes and the Warrants) and (ii) 10,000,000 shares of preferred stock, of which
none are issued and outstanding. No shares of Common Stock are held in treasury. All of such outstanding shares are duly authorized
and have been, or upon issuance will be, validly issued and are fully paid and nonassessable. 6,046,250 shares of the Company’s
issued and outstanding Common Stock on the date hereof are as of the date hereof owned by Persons who are “affiliates”
(as defined in Rule 405 of the 1933 Act and calculated based on the assumption that only officers, directors and holders of at
least 10% of the Company’s issued and outstanding Common Stock are “affiliates” without conceding that any such
Persons are “affiliates” for purposes of federal securities laws) of the Company or any of its Subsidiaries. To the
Company’s knowledge, no Person owns 10% or more of the Company’s issued and outstanding shares of Common Stock (calculated
based on the assumption that all Convertible Securities (as defined below), whether or not presently exercisable or convertible,
have been fully exercised or converted (as the case may be) taking account of any limitations on exercise or conversion (including
“blockers”) contained therein without conceding that such identified Person is a 10% stockholder for purposes of federal
securities laws). (i) None of the Company’s or any Subsidiary’s shares, interests or capital stock is subject to preemptive
rights or any other similar rights or Liens suffered or permitted by the Company or any Subsidiary; (ii) except as disclosed in
Schedule 3(r)(ii), there are no outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any shares, interests or
capital stock of the Company or any of its Subsidiaries, or contracts, commitments, understandings or arrangements by which the
Company or any of its Subsidiaries is or may become bound to issue additional shares, interests or capital stock of the Company
or any of its Subsidiaries or options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, or exercisable or exchangeable for, any shares, interests or capital stock
of the Company or any of its Subsidiaries; (iii) other than as set forth on Schedule 3(s), there are no outstanding debt securities,
notes, credit agreements, credit facilities or other agreements, documents or instruments evidencing Indebtedness of the Company
or any of its Subsidiaries or by which the Company or any of its Subsidiaries is or may become bound; (iv) there are no financing
statements securing obligations in any amounts, either singly or in the aggregate, filed in connection with the Company or any
of its Subsidiaries; (v) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated
to register the sale of any of their securities under the 1933 Act (except pursuant to the Registration Rights Agreement); (vi)
there are no outstanding securities or instruments of the Company or any of its Subsidiaries which contain any redemption or similar
provisions, and there are no contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries
is or may become bound to redeem a security of the Company or any of its Subsidiaries; (vii) there are no securities or instruments
containing anti-dilution or similar provisions that will be triggered by the issuance of the Securities; (viii) neither the Company
nor any Subsidiary has any stock appreciation rights or “phantom stock” plans or agreements or any similar plan or
agreement; and (ix) neither the Company nor any of its Subsidiaries have any liabilities or obligations required to be disclosed
in the SEC Documents which are not so disclosed in the SEC Documents, other than those incurred in the ordinary course of the
Company’s or its Subsidiaries’ respective businesses and which, individually or in the aggregate, do not or could
not have a Material Adverse Effect. The Company has furnished to the Buyers true, correct and complete copies of the Company’s
Certificate of Incorporation, as amended and as in effect on the date hereof (the “Certificate of Incorporation”),
and the Company’s bylaws, as amended and as in effect on the date hereof (the “Bylaws”), and the terms
of all Convertible Securities and the material rights of the holders thereof in respect thereto.
(s) Indebtedness
and Other Contracts. Neither the Company nor any of its Subsidiaries, (i) except as disclosed on Schedule 3(s), has
any outstanding Indebtedness (as defined below), outstanding debt securities, notes, credit agreements, credit facilities or other
agreements, documents or instruments evidencing Indebtedness of the Company or any of its Subsidiaries or by which the Company
or any of its Subsidiaries is or may become bound, (ii) is a party to any contract, agreement or instrument, the violation of
which, or default under which, by the other party(ies) to such contract, agreement or instrument could reasonably be expected
to result in a Material Adverse Effect, (iii) is in violation of any term of, or in default under, any contract, agreement or
instrument relating to any Indebtedness, except where such violations and defaults would not result, individually or in the aggregate,
in a Material Adverse Effect, or (iv) is a party to any contract, agreement or instrument relating to any Indebtedness, the performance
of which, in the judgment of the Company’s officers, has or is expected to have a Material Adverse Effect. For purposes
of this Agreement: (x) “Indebtedness” of any Person means, without duplication (A) all indebtedness for borrowed
money, (B) all obligations issued, undertaken or assumed as the deferred purchase price of property or services (including, without
limitation, “capital leases” in accordance with GAAP) (other than trade payables entered into in the ordinary course
of business consistent with past practice), (C) all reimbursement or payment obligations with respect to letters of credit, surety
bonds and other similar instruments, (D) all obligations evidenced by notes, bonds, debentures or similar instruments, including
obligations so evidenced incurred in connection with the acquisition of property, assets or businesses, (E) all indebtedness created
or arising under any conditional sale or other title retention agreement, or incurred as financing, in either case with respect
to any property or assets acquired with the proceeds of such indebtedness (even though the rights and remedies of the seller or
bank under such agreement in the event of default are limited to repossession or sale of such property), (F) all monetary obligations
under any leasing or similar arrangement which, in connection with GAAP, consistently applied for the periods covered thereby,
is classified as a capital lease, (G) all indebtedness referred to in clauses (A) through (F) above secured by (or for which the
holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien upon or in any property
or assets (including accounts and contract rights) owned by any Person, even though the Person which owns such assets or property
has not assumed or become liable for the payment of such indebtedness, and (H) all Contingent Obligations in respect of indebtedness
or obligations of others of the kinds referred to in clauses (A) through (G) above; and(y) “Contingent Obligation”
means, as to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to any Indebtedness,
lease, dividend or other obligation of another Person if the primary purpose or intent of the Person incurring such liability,
or the primary effect thereof, is to provide assurance to the obligee of such liability that such liability will be paid or discharged,
or that any agreements relating thereto will be complied with, or that the holders of such liability will be protected (in whole
or in part) against loss with respect thereto.
(t) Litigation.
There is no action, suit, arbitration, proceeding, inquiry or investigation before or by the Principal Market, any court, public
board, other Governmental Entity, self-regulatory organization or body pending or, to the knowledge of the Company, threatened
against or affecting the Company or any of its Subsidiaries, the Common Stock or any of the Company’s or its Subsidiaries’
officers or directors , whether of a civil or criminal nature or otherwise, in their capacities as such, except as set forth in
Schedule 3(t). No director, officer or employee of the Company or any of its subsidiaries has willfully violated 18 U.S.C.
§1519 or engaged in spoliation in reasonable anticipation of litigation. Without limitation of the foregoing, there has not
been, and to the knowledge of the Company, there is not pending or contemplated, any investigation by the SEC involving the Company,
any of its Subsidiaries or any current or former director or officer of the Company or any of its Subsidiaries. The SEC has not
issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company under the
1933 Act or the 1934 Act. Except as set forth in Schedule 3(t), after reasonable inquiry of its employees, the Company
is not aware of any fact which might result in or form the basis for any such action, suit, arbitration, investigation, inquiry
or other proceeding. Neither the Company nor any of its Subsidiaries is subject to any order, writ, judgment, injunction, decree,
determination or award of any Governmental Authority.
(u) Insurance.
Except as set forth in Schedule 3(u), the Company and each of its Subsidiaries are insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as management of the Company believes to be prudent and customary
in the businesses in which the Company and its Subsidiaries are engaged. Neither the Company nor any such Subsidiary has been
refused any insurance coverage sought or applied for, and neither the Company nor any such Subsidiary has any reason to believe
that it will be unable 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 at a cost that would not have a Material Adverse Effect.
(v) Employee
Relations. Neither the Company nor any of its Subsidiaries is a party to any collective bargaining agreement or employs any
member of a union. The Company and its Subsidiaries believe that their relations with their employees are good. No executive officer
(as defined in Rule 501(f) promulgated under the 1933 Act) or other key employee of the Company or any of its Subsidiaries has
notified the Company or any such Subsidiary that such officer intends to leave the Company or any such Subsidiary or otherwise
terminate such officer’s employment with the Company or any such Subsidiary. No executive officer or other key employee
of the Company or any of its Subsidiaries is, or is now expected to be, in violation of any material term of any employment contract,
confidentiality, disclosure or proprietary information agreement, non-competition agreement, or any other contract or agreement
or any restrictive covenant, and the continued employment of each such executive officer or other key employee (as the case may
be) does not subject the Company or any of its Subsidiaries to any liability with respect to any of the foregoing matters. The
Company and its Subsidiaries are in compliance with all federal, state, local and foreign laws and regulations respecting labor,
employment and employment practices and benefits, terms and conditions of employment and wages and hours, except where failure
to be in compliance would not, either individually or in the aggregate, reasonably be expected to result in a Material Adverse
Effect.
(w) Non-Oil
and Gas Real Property. Each of the Company and its Subsidiaries holds good title to all real property, leases in real
property, or other interests in real property owned or held by the Company or any of its Subsidiaries (other than any property
included in the Interests (as defined below)) (the “Other Real Property”) owned by the Company or any of its
Subsidiaries, as applicable. The Other Real Property is free and clear of all Liens and is not subject to any rights of way, building
use restrictions, exceptions, variances, reservations, or limitations of any nature except for (a) Liens for current taxes not
yet due, and (b) zoning laws and other land use restrictions that do not impair the present or anticipated use of the property
subject thereto.
(x) Non-Oil
and Gas Fixtures and Equipment. Each of the Company and its Subsidiaries, as applicable, has good title to, or a valid
leasehold interest in, the tangible personal property, equipment, improvements, fixtures, and other personal property and appurtenances
that are used by the Company or its Subsidiary in connection with the conduct of its business (the “Company Fixtures
and Equipment”), except that the Company Fixtures and Equipment do not include any property included in the Interests.
The Company Fixtures and Equipment are structurally sound, are in good operating condition and repair, are adequate for the uses
to which they are being put, are not in need of maintenance or repairs except for ordinary, routine maintenance and repairs and
are sufficient for the conduct of the Company’s and/or its Subsidiaries’ businesses, as applicable, in the manner
as conducted prior to the Closing. Each of the Company and its Subsidiaries owns all of its Company Fixtures and Equipment free
and clear of all Liens except for (a) Liens for current taxes not yet due, and (b) zoning laws and other land use restrictions
that do not impair the present or anticipated use of the property subject thereto.
(y) Oil
and Gas Interests.
(i) For the purpose of this Agreement, the following definitions shall apply:
(1) “Appurtenant
Rights” means, with respect to the Properties (as defined below), in each case, insofar as they may relate to the Properties,
the Company’s or any of its Subsidiaries’, as applicable, interest in (a) all presently existing and valid unitization
and pooling declarations, agreements, and/or orders relating to or affecting the Properties and all rights in the Properties
covered by the Units (as defined below) created thereby; (b) all wells, well and leasehold equipment, pipelines, platforms, facilities,
improvements, goods and other personal property located on or used in connection with the Properties; (c) all presently existing
production sales contracts, operating and other contracts or agreements which relate to the Properties; and (d) all permits, licenses,
easements, rights-of-way, rights of use, and similar agreements pertaining to the Properties.
(2) “Basic
Documents” means all of the following documents and instruments, including those that are recorded and unrecorded, with
respect to the Company or any of its Subsidiaries:
a. All
material contracts and agreements comprising any part of, or relating or pertaining to, the Interests, including, without limitation,
farm-in agreements, farm-out agreements, joint operating agreements, Unit agreements and contracts by which the Interests were
acquired;
b. All
agreements or arrangements for the sale, gathering, transportation, compression, treating, processing or other marketing of a
material volume of production from the Interests (including calls on, or other rights to purchase, production, whether or not
the same are currently being exercised), comprising any part of or otherwise relating or pertaining to the Interests; and
c. All
documents and instruments evidencing the Interests.
(3) “Consent”
means any consents, approvals, orders, authorizations, notifications, notices, estoppel certificates, releases, registrations,
ratifications, declarations, filings, waivers, exemptions or variances.
(4) “Good
and Defensible Title” means, as to the Interest in question, (i) title to such Interest by virtue of which the Company
or any of its Subsidiaries, as applicable, can successfully defend against a claim to the contrary made by a third party, based
upon industry standards in the acquisition of oil and gas properties, and in the exercise of reasonable judgment and in good faith;
and, (ii) in the case of the Wells (as defined below), title (x) evidenced by a title opinion from a nationally recognized title
company with respect to any such patented claim, (y) evidenced by a title insurance from a nationally recognized title company
with respect to any such applicable unpatented claim and (z) that entitles the Company or such Subsidiary, as applicable, to receive
not less than the Net Revenue Interest (as defined below) for each of the Wells and obligates the Company or such Subsidiary,
as applicable, to bear not more than the Working Interest for each of the Wells (unless there is a corresponding increase in the
Net Revenue Interest for a respective Well); and (iii) such Interest is not subject to any Liens.
(5) “Governmental
Authorizations” means any approval, consent, license, permit, waiver, or other authorization issued, granted, given,
or otherwise made available by or under the authority of any Governmental Entity or pursuant to any Legal Requirement.
(6) “Interests”
means the Properties and the Appurtenant Rights of the Company and its Subsidiaries.
(7) “Legal
Requirement” means any federal, state, local, municipal, foreign, international, multinational, or other administrative
order, constitution, law, ordinance, principle of common law, regulation, statute, or treaty.
(8)
“Net Revenue Interest” means a share, expressed as a decimal, of the oil and gas (or the proceeds of sale thereof)
produced and saved from or otherwise attributable to an Interest and the zones, horizons and reservoirs produced therefrom, after
the deduction of all royalties, overriding royalties and other burdens on production.
(9) “Over-produced”
means to have taken more production from an Interest (or the Units in which the Interest participates) or any product thereof,
than the ownership of the Company or any of its Subsidiaries and the Company’s or any of its Subsidiaries’ predecessors
in the Interest would entitle the Company or any of its Subsidiaries and/or the Company’s or any of its Subsidiaries’
predecessors (absent any balancing agreement or arrangement) to receive.
(10) “Preferential
Right” means any preferential right or option to purchase or otherwise to acquire an Interest or any interest therein,
held by another party to a Basic Document, which arises as a result of the transactions contemplated by this Agreement.
(11) “Properties”
means all of the Company’s and its Subsidiaries’ rights, titles and interests in and to the following oil and gas
properties:
a. All
oil and/or gas patented claims, unpatented claims, rights, concessions and/or leases and other interests, including, without limitation,
all of the Company’s operating rights, record title interests, working interests, and overriding royalty interests, without
depth or other restrictions or exclusions;
b. All
Wells of the Company and its Subsidiaries;
c. All
surface leases, rights-of-way, easements, servitudes and other rights-of-use (whether surface, subsurface or subsea); and
d. All
licenses and servitudes.
(12) “Routine
Governmental Approvals” means Governmental Authorizations required to be obtained from any Governmental Entity that
are customarily obtained after consummation of a transaction.
(13) “Under-produced”
means to have taken less production from an Interest (or the Units in which the Interest participates) or any product thereof,
than the ownership of the Company or any of its Subsidiaries and the Company’s or any of its Subsidiaries’ predecessors
in the Interest would entitle the Company or any of its Subsidiaries and/or the Company’s or any of its Subsidiaries’
predecessors (absent any balancing agreement or arrangement) to receive.
(14) “Units”
means oil and gas production, proration, or other types of units, and any ownership interests therein.
(15) “Well”
or “Wells” means all of the Company’s and any of its Subsidiaries’ oil, gas and condensate wells,
(whether producing, not producing or abandoned or temporarily abandoned).
(16) “Working
Interest” means a share, expressed as a decimal, of the costs of exploring, drilling, developing and operating an Interest
and producing oil and gas from the zones, horizons and reservoirs therein and thereunder.
(ii) Except
as disclosed in Schedule 3(y), the Company holds Good and Defensible Title to the Interests.
(iii) Except
as disclosed in Schedule 3(y), the Basic Documents are in full force and effect and constitute valid and binding obligations of
the parties thereto.
(iv) Except
as disclosed in Schedule 3(y), neither the Company nor any of its Subsidiaries is in material breach or default (and no situation
exists which with the passing of time or giving of notice would give rise to such a breach or default) of its obligations under
any Basic Document, and no breach or default by any other party to any Basic Document (or situation which with the passage of
time or giving of notice would give rise to such a breach or default) exists, to the extent such breach or default (whether by
the Company, any Subsidiary or another party to any Basic Document) could adversely affect any of the Interests.
(v) All
payments (including, without limitation, all delay rentals, royalties, excess royalties, minimum royalties, overriding royalty
interests, shut in royalties and valid calls for payment or prepayment under operating agreements) owing under the Basic Documents
have been and are being made timely and properly, and before the same became delinquent (by the Company or the applicable Subsidiary
where the non payment of same by another party to any Basic Document could adversely affect any of the Interests) have been and
are being made by such other party in all material respects.
(vi) All
conditions necessary to maintain the Basic Documents in force have been duly performed.
(vii) No
non-consent operations exist with respect to any of the Interests that have resulted or will result in a temporary or permanent
increase or decrease in either the Company’s or any of its Subsidiaries’ Net Revenue Interest or Working Interest
in such Interest.
(viii) Except
as disclosed in Schedule 3(y), all expenses payable under the terms of the Basic Documents have been properly and timely paid
except for such expenses as are being currently paid or will be paid prior to delinquency. Except for budgeted capital expenditures
disclosed in the SEC Documents, no proposals calling for expenditures in excess of $25,000 for any one project are currently outstanding
(whether made by the Company, any of its Subsidiaries, or by any other party) to drill additional wells, or to deepen, plug back,
sidetrack, abandon, or rework existing Wells or to conduct other operations for which consent is required under the applicable
operating agreement, or to conduct any other operations, other than normal operation of existing Wells on the Interests.
(ix) Neither
the Company nor any of its Subsidiaries has received prepayments (including, without limitation, payments for oil and gas not
taken pursuant to “take or pay” arrangements) for any oil or gas produced from the Interests as a result of which
the obligation does (or may) exist (i) to deliver oil or gas produced from the Interests without then receiving payment therefor,
or (ii) to make repayments in cash. There is no Interest with respect to which the Company has taken an Over-Produced or Under-Produced
position to the extent such Over-produced or Under-produced position has not, as of the day immediately preceding the date hereof
been fully made up or otherwise extinguished. No pipeline imbalances have arisen and remain outstanding due to the failure of
nominations made by the Company or any of its Subsidiaries to match actual deliveries of production from any one or more of the
Interests. None of the purchasers under any production sales contracts relating to an Interest has (i) exercised any economic
out provision; (ii) curtailed its takes of natural gas in violation of such contracts; or (iii) given notice that it desires to
amend the production sales contracts with respect to price or quantity of deliveries under take-or-pay provisions or otherwise.
(x) To
the Company’s knowledge, except as disclosed in Schedule 3(y), no delinquent unpaid bills or past due charges exist for
any labor and materials incurred by or on behalf of the Company or any of its current or former Subsidiaries’ related to
the exploration, development or operation of any of the Interests.
(xi) Except
as may be provided for by a Basic Document, neither the Company nor any of its Subsidiaries nor any of the Interests is subject
to (i) any area of mutual interest agreements, (ii) any farm out or farm in agreement under which any party thereto is entitled
to receive assignments of any Interest or any interest therein not yet made, or could earn additional assignments of any Interest
or any interest therein after the date hereof, (iii) any tax partnership or (iv) any agreement, contract or commitment relating
to the disposition or acquisition of the assets of, or any interest in, any other Person.
(xii) All
severance, production, ad valorem and other similar taxes based on or measured by ownership or operation of, or production from,
the Interests have been, and are being, paid (properly and timely, and before the same become delinquent) by the Company or the
applicable Subsidiary in all respects.
(xiii) (i)
Except as disclosed in Schedule 3(y), the ownership and operation of the Interests has, to the extent that non conformance could
adversely affect any of the Interests, been conducted in conformity with all applicable material Legal Requirements of all Governmental
Entities having jurisdiction over any of the Interests, the Company or any of its Subsidiaries, and (ii) neither the Company nor
any of its Subsidiaries has received any notice of noncompliance with regard to any material Legal Requirement of any Governmental
Entity having jurisdiction over any of the Interests, the Company or any of its Subsidiaries.
(xiv) There
are no Preferential Rights or Consents, other than Routine Governmental Approvals that affect any of the Interests and that will
be triggered by the transactions contemplated by the Transaction Documents.
(xv) There
exist no agreements or other arrangements under which the Company or any of its Subsidiaries undertakes to perform gathering,
transportation, processing or other marketing services for any other party for a fee or other consideration that is now, or may
hereafter be, unrepresentative of commercial rates being received by other parties in comparable, arm’s length transactions.
(xvi) Except
as disclosed in Schedule 3(y), there are no Wells, as applicable, located on any of the Interests that (i) the Company or any
of its Subsidiaries is currently obligated by law or contract to currently plug and abandon or to cease development or exploration,
(ii) the Company or any of its Subsidiaries will be obligated by law or contract to plug and abandon with the lapse of time or
notice or both because the Well is not currently capable of producing severed crude oil, natural gas, casinghead gas, drip gasoline,
natural gasoline, petroleum, natural gas liquids, condensate, products, liquids, other hydrocarbons or other materials in paying
quantities or otherwise currently being used in normal operations, (iii) are subject to exceptions to a requirement to plug and
abandon issued by a Governmental Entity, or (iv) to the Company’s knowledge, have been plugged and abandoned, but have not
been plugged in accordance in all material respects with all applicable requirements of any Governmental Entity.
(xvii) Except
as disclosed in Schedule 3(y), no suit, action or proceeding (including, without limitation, tax or environmental demands proceedings)
is pending or threatened, which might result in material impairment or loss of title to any of the Interests or the material value
thereof.
(xviii) All
proceeds from the sale of hydrocarbons produced from the Company’s or the applicable Subsidiaries’ proportionate share
of the Interests are currently being paid to the Company or such Subsidiary in all material respects, and no portion of such proceeds
is currently being held in suspense by any purchaser thereof or any other party by whom proceeds are paid except for immaterial
amounts.
(z) Intellectual
Property Rights. The Company and its Subsidiaries own or possess adequate rights or licenses to use all trademarks, trade
names, service marks, service mark registrations, service names, original works of authorship, patents, patent rights, copyrights,
inventions, licenses, approvals, governmental authorizations, trade secrets and other intellectual property rights and all applications
and registrations therefor (“Intellectual Property Rights”) necessary to conduct their respective businesses
as now conducted. Each of patents owned by the Company or any of its Subsidiaries is listed on Schedule 3(z)(i). Except as set
forth in Schedule 3(z)(ii), none of the Company’s Intellectual Property Rights have expired or terminated or have been abandoned
or are expected to expire or terminate or are expected to be abandoned, within three years from the date of this Agreement. The
Company does not have any knowledge of any infringement by the Company or its Subsidiaries of Intellectual Property Rights of
others. There is no claim, action or proceeding being made or brought, or to the knowledge of the Company or any of its Subsidiaries,
being threatened, against the Company or any of its Subsidiaries regarding its Intellectual Property Rights. Neither the Company
nor any of its Subsidiaries is aware of any facts or circumstances which might give rise to any of the foregoing infringements
or claims, actions or proceedings. The Company and its Subsidiaries have taken reasonable security measures to protect the secrecy,
confidentiality and value of all of their Intellectual Property Rights
(aa) Environmental
Laws. Except as disclosed in Schedule 3(aa), (i) the Company and its Subsidiaries (A) are in compliance with any and
all Environmental Laws (as defined below), (B) have received all permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (C) are in compliance with all terms and conditions of any such
permit, license or approval where, in each of the foregoing clauses (A), (B) and (C), the failure to so comply could be reasonably
expected to have, individually or in the aggregate, a Material Adverse Effect. The term “Environmental Laws”
means all federal, state, local or foreign laws relating to pollution or protection of human health or the environment (including,
without limitation, ambient air, surface water, groundwater, land surface or subsurface strata), including, without limitation,
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.
(ii) No
Hazardous Materials:
(A) have
been disposed of or otherwise released from any Interest of the Company or any of its Subsidiaries in violation of any Environmental
Laws; or
(B) are
present on, over, beneath, in or upon an Interest or any portion thereof in quantities that would constitute a violation of any
Environmental Laws. No prior use by the Company or any of its Subsidiaries of any Property or Interest has occurred that violates
any Environmental Laws, which violation would have a material adverse effect on the Business.
(iii) Neither
the Company nor any of its Subsidiaries knows of any other person who or entity which has stored, treated, recycled, disposed
of or otherwise located on any Interest any Hazardous Materials, including, without limitation, such substances as asbestos and
polychlorinated biphenyls.
(iv) None
of the Interests are on any federal or state “Superfund” list or Liability Information System (“CERCLIS”)
list or any state environmental agency list of sites under consideration for CERCLIS, nor subject to any environmental related
Liens.
(bb) Subsidiary
Rights. The Company or one of its Subsidiaries has the unrestricted right to vote, and (subject to limitations imposed by
applicable law) to receive dividends and distributions on, all capital securities of its Subsidiaries as owned by the Company
or such Subsidiary.
(cc) Tax
Status. The Company and each of its Subsidiaries (i) has timely made or filed all foreign, federal and state income and all
other tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has timely paid all taxes
and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports
and declarations, except those being contested in good faith and (iii) has set aside on its books provision reasonably adequate
for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There
are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of
the Company and its Subsidiaries know of no basis for any such claim. The Company is not operated in such a manner as to qualify
as a passive foreign investment company, as defined in Section 1297 of the Code. The net operating loss carryforwards (“NOLs”)
for United States federal income tax purposes of the consolidated group of which the Company is the common parent, if any, shall
not be adversely effected by the transactions contemplated hereby. The transactions contemplated hereby do not constitute an “ownership
change” within the meaning of Section 382 of the Code, thereby preserving the Company’s ability to utilize such NOLs.
(dd) Internal
Accounting and Disclosure Controls. The Company and each of its Subsidiaries maintains internal control over financial reporting
(as such term is defined in Rule 13a-15(f) under the 1934 Act) that is effective to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles, including 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 and liability accountability, (iii) access to assets or incurrence of liabilities is permitted
only in accordance with management’s general or specific authorization and (iv) the recorded accountability for assets and
liabilities is compared with the existing assets and liabilities at reasonable intervals and appropriate action is taken with
respect to any difference. The Company maintains disclosure controls and procedures (as such term is defined in Rule 13a-15(e)
under the 1934 Act) that are effective in ensuring that information required to be disclosed by the Company in the reports that
it files or submits under the 1934 Act is recorded, processed, summarized and reported, within the time periods specified in the
rules and forms of the SEC, including, without limitation, controls and procedures designed to ensure that information required
to be disclosed by the Company in the reports that it files or submits under the 1934 Act is accumulated and communicated to the
Company’s management, including its principal executive officer or officers and its principal financial officer or officers,
as appropriate, to allow timely decisions regarding required disclosure. During the twelve months prior to the date hereof, neither
the Company nor any of its Subsidiaries has received any notice or correspondence from any accountant or other Person or any Governmental
Authority relating to any potential material weakness or significant deficiency in any part of the internal controls over financial
reporting of the Company or any of its Subsidiaries.
(ee) Off
Balance Sheet Arrangements. There is no transaction, arrangement, or other relationship between the Company or any of its
Subsidiaries and an unconsolidated or other off balance sheet entity that is required to be disclosed by the Company in its 1934
Act filings and is not so disclosed or that otherwise could be reasonably likely to have a Material Adverse Effect.
(ff) Investment
Company Status. The Company is not, and upon consummation of the sale of the Securities will not be, an “investment
company,” an affiliate of an “investment company,” a company controlled by an “investment company”
or an “affiliated person” of, or “promoter” or “principal underwriter” for, an “investment
company” as such terms are defined in the Investment Company Act of 1940, as amended.
(gg) Acknowledgement
Regarding Buyers’ Trading Activity. It is understood and acknowledged by the Company that (i) following the public disclosure
of the transactions contemplated by the Transaction Documents, in accordance with the terms thereof, none of the Buyers have been
asked by the Company or any of its Subsidiaries to agree, nor has any Buyer agreed with the Company or any of its Subsidiaries,
to desist from effecting any transactions in or with respect to (including, without limitation, purchasing or selling, long and/or
short) any securities of the Company, or “derivative” securities based on securities issued by the Company or to hold
any of the Securities for any specified term; (ii) any Buyer, and counterparties in “derivative” transactions to which
any such Buyer is a party, directly or indirectly, presently may have a “short” position in the Common Stock which
was established prior to such Buyer’s knowledge of the transactions contemplated by the Transaction Documents; and (iii)
each Buyer shall not be deemed to have any affiliation with or control over any arm’s length counterparty in any “derivative”
transaction. The Company further understands and acknowledges that following the public disclosure of the transactions contemplated
by the Transaction Documents pursuant to the Press Release (as defined below) one or more Buyers may engage in hedging and/or
trading activities at various times during the period that the Securities are outstanding, including, without limitation, during
the periods that the value and/or number of the Warrant Shares or Conversion Shares, as applicable, deliverable with respect to
the Securities are being determined and such hedging and/or trading activities, if any, can reduce the value of the existing stockholders’
equity interest in the Company both at and after the time the hedging and/or trading activities are being conducted. The Company
acknowledges that such aforementioned hedging and/or trading activities do not constitute a breach of this Agreement, the Notes,
the Warrants or any other Transaction Document or any of the documents executed in connection herewith or therewith.
(hh) Manipulation
of Price. Neither the Company nor any of its Subsidiaries has, and, to the knowledge of the Company, no Person acting on their
behalf has, directly or indirectly, (i) taken any action designed to cause or to result in the stabilization or manipulation of
the price of any security of the Company or any of its Subsidiaries 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 (other than the Placement
Agent), (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other securities of
the Company or any of its Subsidiaries or (iv) paid or agreed to pay any Person for research services with respect to any securities
of the Company or any of its Subsidiaries.
(ii) U.S.
Real Property Holding Corporation. Neither the Company nor any of its Subsidiaries is, or has ever been, and so long as any
of the Securities are held by any of the Buyers, shall become, a U.S. real property holding corporation within the meaning of
Section 897 of the Code, and the Company and each Subsidiary shall so certify upon any Buyer’s request.
(jj) Registration
Eligibility. The Company is eligible to register the Registrable Securities for resale by the Buyers using Form S-1 promulgated
under the 1933 Act.
(kk) Transfer
Taxes. On the Closing Date, all stock transfer or other taxes (other than income or similar taxes) which are required to be
paid in connection with the issuance, sale and transfer of the Securities to be sold to each Buyer hereunder will be, or will
have been, fully paid or provided for by the Company, and all laws imposing such taxes will be or will have been complied with.
(ll) Bank
Holding Company Act. Neither the Company nor any of its Subsidiaries is subject to the Bank Holding Company Act of 1956, as
amended (the “BHCA”) and to regulation by the Board of Governors of the Federal Reserve System (the “Federal
Reserve”). Neither the Company nor any of its Subsidiaries or affiliates owns or controls, directly or indirectly, five
percent (5%) or more of the outstanding shares of any class of voting securities or twenty-five percent (25%) or more of the total
equity of a bank or any 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.
(mm) [Intentionally
Omitted].
(nn) Illegal
or Unauthorized Payments; Political Contributions. Neither the Company nor any of its Subsidiaries nor, to the best of the
Company’s knowledge (after reasonable inquiry of its officers and directors), any of the officers, directors, employees,
agents or other representatives of the Company or any of its Subsidiaries or any other business entity or enterprise with which
the Company or any Subsidiary is or has been affiliated or associated, has, directly or indirectly, made or authorized any payment,
contribution or gift of money, property, or services, whether or not in contravention of applicable law, (i) as a kickback or
bribe to any Person or (ii) to any political organization, or the holder of or any aspirant to any elective or appointive public
office except for personal political contributions not involving the direct or indirect use of funds of the Company or any of
its Subsidiaries.
(oo) Money
Laundering. The Company and its Subsidiaries are in compliance with, and have not previously violated, the USA Patriot Act
of 2001 and all other applicable U.S. and non-U.S. anti-money laundering laws and regulations, including, but not limited to,
the laws, regulations and Executive Orders and sanctions programs administered by the U.S. Office of Foreign Assets Control, including,
but not limited, to (i) Executive Order 13224 of September 23, 2001 entitled, “Blocking Property and Prohibiting Transactions
With Persons Who Commit, Threaten to Commit, or Support Terrorism” (66 Fed. Reg. 49079 (2001)); and (ii) any regulations
contained in 31 CFR, Subtitle B, Chapter V.
(pp) Management.
Except as set forth in Schedule 3(pp) hereto, during the past five year period, no current or former officer or
director or, to the knowledge of the Company, no current ten percent (10%) or greater stockholder of the Company or any of its
Subsidiaries has been the subject of:
(i) a
petition under bankruptcy laws or any other insolvency or moratorium law or the appointment by a court of a receiver, fiscal agent
or similar officer for such Person, or any partnership in which such person was a general partner at or within two years before
the filing of such petition or such appointment, or any corporation or business association of which such person was an executive
officer at or within two years before the time of the filing of such petition or such appointment;
(ii) a
conviction in a criminal proceeding or a named subject of a pending criminal proceeding (excluding traffic violations that do
not relate to driving while intoxicated or driving under the influence);
(iii) any
order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently
or temporarily enjoining any such person from, or otherwise limiting, the following activities:
(1) Acting
as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage
transaction merchant, any other person regulated by the United States Commodity Futures Trading Commission or an associated person
of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person,
director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing
any conduct or practice in connection with such activity;
(2) Engaging
in any type of business practice; or
(3) Engaging
in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of securities
laws or commodities laws;
(iv) any
order, judgment or decree, not subsequently reversed, suspended or vacated, of any authority barring, suspending or otherwise
limiting for more than sixty (60) days the right of any such person to engage in any activity described in the preceding sub paragraph,
or to be associated with persons engaged in any such activity;
(v) a
finding by a court of competent jurisdiction in a civil action or by the SEC or other authority to have violated any securities
law, regulation or decree and the judgment in such civil action or finding by the SEC or any other authority has not been subsequently
reversed, suspended or vacated; or
(vi) a
finding by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated
any federal commodities law, and the judgment in such civil action or finding has not been subsequently reversed, suspended or
vacated.
(qq) Stock
Option Plans. Each stock option granted by the Company was granted (i) in accordance with the terms of the applicable
stock option plan of the Company and (ii) with an exercise price at least equal to the fair market value of the Common Stock on
the date such stock option would be considered granted under GAAP and applicable law. No stock option granted under the Company’s
stock option plan has been backdated. The Company has not knowingly granted, and there is no and has been no policy or practice
of the Company to knowingly grant, stock options prior to, or otherwise knowingly coordinate the grant of stock options with,
the release or other public announcement of material information regarding the Company or its Subsidiaries or their financial
results or prospects.
(rr) No
Disagreements with Accountants and Lawyers. There are no material disagreements of any kind presently existing, or
reasonably anticipated by the Company to arise, between the Company and the accountants and lawyers formerly or presently employed
by the Company and the Company is current with respect to any fees owed to its accountants and lawyers which could affect the
Company’s ability to perform any of its obligations under any of the Transaction Documents. In addition, on or prior to
the date hereof, the Company had discussions with its accountants about its financial statements previously filed with the SEC.
Based on those discussions, the Company has no reason to believe that it will need to restate any such financial statements or
any part thereof.
(ss) No
Disqualification Events. With respect to Securities to be offered and sold hereunder in reliance on Rule 506(b) under
the 1933 Act (“Regulation D Securities”), none of the Company, any of its predecessors, any affiliated issuer,
any director, executive officer, other officer of the Company participating in the offering contemplated hereby, any beneficial
owner of 20% or more of the Company’s outstanding voting equity securities, calculated on the basis of voting power, nor
any promoter (as that term is defined in Rule 405 under the 1933 Act) connected with the Company in any capacity at the time of
sale (each, an “Issuer Covered Person” 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 1933 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 Buyers a copy of any disclosures provided
thereunder.
(tt) Other
Covered Persons. The Company is not aware of any Person (other than the Placement Agent) that has been or will be paid
(directly or indirectly) remuneration for solicitation of Buyers or potential purchasers in connection with the sale of any Regulation
D Securities.
(uu) No
Additional Agreements. The Company does not have any agreement or understanding with any Buyer with respect to the transactions
contemplated by the Transaction Documents other than as specified in the Transaction Documents.
(vv) Public
Utility Holding Act. None of the Company nor any of its Subsidiaries is a “holding company,” or an “affiliate”
of a “holding company,” as such terms are defined in the Public Utility Holding Act of 2005.
(ww) Federal
Power Act. None of the Company nor any of its Subsidiaries is subject to regulation as a “public utility” under
the Federal Power Act, as amended.
(xx) Ranking
of Notes. No Indebtedness of the Company, at the Closing, will be senior to, or pari passu with, the Notes in right
of payment, whether with respect to payment or redemptions, interest, damages, upon liquidation or dissolution or otherwise.
(yy) Disclosure.
The Company confirms that neither it nor any other Person acting on its behalf has provided any of the Buyers or their agents
or counsel with any information that constitutes or could reasonably be expected to constitute material, non-public information
concerning the Company or any of its Subsidiaries, other than the existence of the transactions contemplated by this Agreement
and the other Transaction Documents. The Company understands and confirms that each of the Buyers will rely on the foregoing representations
in effecting transactions in securities of the Company. All disclosure provided to the Buyers regarding the Company and its Subsidiaries,
their businesses and the transactions contemplated hereby, including the schedules to this Agreement, furnished by or on behalf
of the Company or any of its Subsidiaries is true and correct and does not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under
which they were made, not misleading. All of the written information furnished after the date hereof by or on behalf of the Company
or any of its Subsidiaries to each Buyer pursuant to or in connection with this Agreement and the other Transaction Documents,
taken as a whole, will be true and correct in all material respects as of the date on which such information is so provided and
will not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements
made therein, in the light of the circumstances under which they were made, not misleading. Each press release issued by the Company
or any of its Subsidiaries during the twelve (12) months preceding the date of this Agreement did not at the time of release 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 the light of the circumstances under which they are made, not misleading. No event or circumstance
has occurred or information exists with respect to the Company or any of its Subsidiaries or its or their business, properties,
liabilities, prospects, operations (including results thereof) or conditions (financial or otherwise), which, under applicable
law, rule or regulation, requires public disclosure at or before the date hereof or announcement by the Company but which has
not been so publicly disclosed. All financial projections and forecasts that have been prepared by or on behalf of the Company
or any of its Subsidiaries and made available to you have been prepared in good faith based upon reasonable assumptions and represented,
at the time each such financial projection or forecast was delivered to each Buyer, the Company’s best estimate of future
financial performance (it being recognized that such financial projections or forecasts are not to be viewed as facts and that
the actual results during the period or periods covered by any such financial projections or forecasts may differ from the projected
or forecasted results). The Company acknowledges and agrees that no Buyer makes or has made any representations or warranties
with respect to the transactions contemplated hereby other than those specifically set forth in Section 2.
4. COVENANTS.
(a) Best
Efforts. Each Buyer shall use its best efforts to timely satisfy each of the covenants hereunder and conditions to be satisfied
by it as provided in Section 6 of this Agreement. The Company shall use its best efforts to timely satisfy each of the covenants
hereunder and conditions to be satisfied by it as provided in Section 7 of this Agreement.
(b) Form
D and Blue Sky. The Company shall file a Form D with respect to the Securities as required under Regulation D and to provide
a copy thereof to each Buyer promptly after such filing. The Company shall, on or before the Closing Date, take such action as
the Company shall reasonably determine is necessary in order to obtain an exemption for, or to, qualify the Securities for sale
to the Buyers at the Closing pursuant to this Agreement under applicable securities or “Blue Sky” laws of the states
of the United States (or to obtain an exemption from such qualification), and shall provide evidence of any such action so taken
to the Buyers on or prior to the Closing Date. Without limiting any other obligation of the Company under this Agreement, the
Company shall timely make all filings and reports relating to the offer and sale of the Securities required under all applicable
securities laws (including, without limitation, all applicable federal securities laws and all applicable “Blue Sky”
laws), and the Company shall comply with all applicable foreign, federal, state and local laws, statutes, rules, regulations and
the like relating to the offering and sale of the Securities to the Buyers.
(c) Reporting
Status. Until the date on which the Buyers shall have sold all of the Registrable Securities (the “Reporting Period”),
the Company shall timely file all reports required to be filed with the SEC pursuant to the 1934 Act, and the Company shall not
terminate its status as an issuer required to file reports under the 1934 Act even if the 1934 Act or the rules and regulations
thereunder would no longer require or otherwise permit such termination. From the time Form S-3 is available to the Company for
the registration of the Registrable Securities, the Company shall take all actions necessary to maintain its eligibility to register
the Registrable Securities for resale by the Buyers on Form S-3.
(d) Use
of Proceeds. The Company will use the proceeds from the sale of the Securities for general corporate purposes, but not, directly
or indirectly, for (i) except as set forth on Schedule 4(d), the satisfaction of any indebtedness of the Company or any of its
Subsidiaries, (ii) the redemption or repurchase of any securities of the Company or any of its Subsidiaries, or (iii) the settlement
of any outstanding litigation.
(e) Financial
Information. The Company agrees to send the following to each Investor (as defined in the Registration Rights Agreement) during
the Reporting Period (i) unless the following are filed with the SEC through EDGAR and are available to the public through the
EDGAR system, within one (1) Business Day after the filing thereof with the SEC, a copy of its Annual Reports on Form 10-K and
Quarterly Reports on Form 10-Q, any interim reports or any consolidated balance sheets, income statements, stockholders’
equity statements and/or cash flow statements for any period other than annual, any Current Reports on Form 8-K and any registration
statements (other than on Form S-8) or amendments filed pursuant to the 1933 Act, (ii) unless the following are either filed with
the SEC through EDGAR or are otherwise widely disseminated via a recognized news release service (such as PR Newswire), on the
same day as the release thereof, facsimile copies of all press releases issued by the Company or any of its Subsidiaries and (iii)
unless the following are filed with the SEC through EDGAR, copies of any notices and other information made available or given
to the stockholders of the Company generally, contemporaneously with the making available or giving thereof to the stockholders.
(f) Listing.
The Company shall promptly secure the listing or designation for quotation (as the case may be) of all of the Registrable Securities
upon each national securities exchange and automated quotation system, if any, upon which the Common Stock is then listed or designated
for quotation (as the case may be) (subject to official notice of issuance) and shall maintain such listing or designation for
quotation (as the case may be) of all Registrable Securities from time to time issuable under the terms of the Transaction Documents
on such national securities exchange or automated quotation system. The Company shall maintain the Common Stock’s listing
or authorization for quotation (as the case may be) on the Principal Market, The New York Stock Exchange, the NYSE MKT, the Nasdaq
Capital Market, the Nasdaq Global Market or the Nasdaq Global Select Market (each, an “Eligible Market”). Neither
the Company nor any of its Subsidiaries shall take any action which could be reasonably expected to result in the delisting or
suspension of the Common Stock on an Eligible Market. The Company shall pay all fees and expenses in connection with satisfying
its obligations under this Section 4(f).
(g) Fees.
The Company shall reimburse the lead Buyer for all reasonable costs and expenses incurred by it or its affiliates in connection
with the structuring, documentation, negotiation and closing of the transactions contemplated by the Transaction Documents (including,
without limitation, as applicable, all reasonable legal fees of outside counsel and disbursements of Kelley Drye & Warren
LLP, counsel to the lead Buyer, any other reasonable fees and expenses in connection with the structuring, documentation, negotiation
and closing of the transactions contemplated by the Transaction Documents and due diligence and regulatory filings in connection
therewith) (the “Transaction Expenses”) and shall be withheld by the lead Buyer from its Purchase Price at
the Closing, less $30,000 previously paid by the Company to Kelley Drye & Warren LLP; provided, that the Company shall promptly
reimburse Kelley Drye & Warren LLP on demand for all Transaction Expenses not so reimbursed through such withholding at the
Closing. The Company shall be responsible for the payment of any placement agent’s fees, financial advisory fees, Controlled
Account Bank fees, transfer agent fees, DTC (as defined below) fees or broker’s commissions (other than for Persons engaged
by any Buyer) relating to or arising out of the transactions contemplated hereby (including, without limitation, any fees or commissions
payable to the Placement Agent, who is the Company’s sole placement agent in connection with the transactions contemplated
by this Agreement). The Company shall pay, and hold each Buyer harmless against, any liability, loss or expense (including, without
limitation, reasonable attorneys’ fees and out-of-pocket expenses) arising in connection with any claim relating to any
such payment. Except as otherwise set forth in the Transaction Documents, each party to this Agreement shall bear its own expenses
in connection with the sale of the Securities to the Buyers.
(h) Pledge
of Securities. Notwithstanding anything to the contrary contained in this Agreement, the Company acknowledges and agrees that
the Securities may be pledged by an Investor in connection with a bona fide margin agreement or other loan or financing arrangement
that is secured by the Securities. The pledge of Securities shall not be deemed to be a transfer, sale or assignment of the Securities
hereunder, and no Investor effecting a pledge of Securities shall be required to provide the Company with any notice thereof or
otherwise make any delivery to the Company pursuant to this Agreement or any other Transaction Document, including, without limitation,
Section 2(f) hereof; provided that an Investor and its pledgee shall be required to comply with the provisions of Section
2(f) hereof in order to effect a sale, transfer or assignment of Securities to such pledgee. The Company hereby agrees to execute
and deliver such documentation as a pledgee of the Securities may reasonably request in connection with a pledge of the Securities
to such pledgee by a Buyer.
(i) Disclosure
of Transactions and Other Material Information.
(i) Disclosure
of Transaction. The Company shall, on or before 9:30 a.m., New York time, on the first (1st) Business Day after the date of
this Agreement, issue a press release (the “Press Release”) reasonably acceptable to the Buyers disclosing
all the material terms of the transactions contemplated by the Transaction Documents. On or before 9:30 a.m., New York time, on
the first (1st) Business Day after the date of this Agreement, the Company shall file a Current Report on Form 8-K describing
all the material terms of the transactions contemplated by the Transaction Documents in the form required by the 1934 Act and
attaching all the material Transaction Documents (including, without limitation, this Agreement (and all schedules to this Agreement),
the Investor Note, the form of Notes, the form of the Warrants, the form of Guaranties, the form of Security Documents and the
form of the Registration Rights Agreement) (including all attachments, the “8-K Filing”). From and after the
filing of the 8-K Filing, the Company shall have disclosed all material, non-public information (if any) provided to any of the
Buyers 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 the 8-K Filing, the
Company acknowledges and agrees that any and all confidentiality or similar obligations under any agreement, whether written or
oral, between the Company, any of its Subsidiaries or any of their respective officers, directors, affiliates, employees or agents,
on the one hand, and any of the Buyers or any of their affiliates, on the other hand, shall terminate.
(ii) Limitations
on Disclosure. The Company shall not, and the Company shall cause each of its Subsidiaries and each of its and their respective
officers, directors, employees and agents not to, provide any Buyer with any material, non-public information regarding the Company
or any of its Subsidiaries from and after the date hereof without the express prior written consent of such Buyer (which may be
granted or withheld in such Buyer’s sole discretion). In the event of a breach of any of the foregoing covenants, including,
without limitation, Section 4(o) of this Agreement, or any of the covenants or agreements contained in any other Transaction Document,
by the Company, any of its Subsidiaries, or any of its or their respective officers, directors, employees and agents (as determined
in the reasonable good faith judgment of such Buyer), in addition to any other remedy provided herein or in the Transaction Documents,
such Buyer shall have the right to make a public disclosure, in the form of a press release, public advertisement or otherwise,
of such breach or such material, non-public information, as applicable, without the prior approval by the Company, any of its
Subsidiaries, or any of its or their respective officers, directors, employees or agents. No Buyer shall have any liability to
the Company, any of its Subsidiaries, or any of its or their respective officers, directors, employees, affiliates, stockholders
or agents, for any such disclosure. To the extent that the Company delivers any material, non-public information to a Buyer without
such Buyer’s consent, the Company hereby covenants and agrees that such Buyer shall not have any duty of confidentiality
with respect to, or a duty not to trade on the basis of, such material, non-public information. Subject to the foregoing, neither
the Company, its Subsidiaries nor any Buyer shall issue any press releases or any other public statements with respect to the
transactions contemplated hereby; provided, however, the Company shall be entitled, without the prior approval of any Buyer, to
make the Press Release and any press release or other public disclosure with respect to such transactions (i) in substantial conformity
with the 8-K Filing and contemporaneously therewith and (ii) as is required by applicable law and regulations (provided that in
the case of clause (i) each Buyer shall be consulted by the Company in connection with any such press release or other public
disclosure prior to its release). Without the prior written consent of the applicable Buyer (which may be granted or withheld
in such Buyer’s sole discretion), the Company shall not (and shall cause each of its Subsidiaries and affiliates to not)
disclose the name of such Buyer in any filing, announcement, release or otherwise. Notwithstanding anything contained in this
Agreement to the contrary and without implication that the contrary would otherwise be true, the Company expressly acknowledges
and agrees that no Buyer shall have (unless expressly agreed to by a particular Buyer after the date hereof in a written definitive
and binding agreement executed by the Company and such particular Buyer (it being understood and agreed that no Buyer may bind
any other Buyer with respect thereto)), any duty of confidentiality with respect to, or a duty not to trade on the basis of, any
material, non-public information regarding the Company or any of its Subsidiaries.
(iii) Other
Confidential Information. Disclosure Failures; Disclosure Delay Payments. In addition to other remedies set forth in this
Section 4(i), and without limiting anything set forth in any other Transaction Document, at any time after the Closing Date if
the Company, any of its Subsidiaries, or any of their respective officers, directors, employees or agents, provides any Buyer
with material non-public information relating to the Company or any of its Subsidiaries (each, the “Confidential Information”,
the Company shall, on or prior to the applicable Required Disclosure Date (as defined below), publicly disclose such Confidential
Information on a Current Report on Form 8-K or otherwise (each, a “Disclosure”). From and after such Disclosure,
the Company shall have disclosed all Confidential Information provided to such Buyer 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 such Disclosure, 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, affiliates, employees or agents, on the one hand, and any of the Buyers or any of their affiliates,
on the other hand, shall terminate. In the event that the Company fails to effect such Disclosure on or prior to the Required
Disclosure Date and such Buyer shall have possessed Confidential Information for at least ten (10) consecutive Trading Days (each,
a “Disclosure Failure”), then, as partial relief for the damages to such Buyer by reason of any such delay
in, or reduction of, its ability to buy or sell shares of Common Stock after such Required Disclosure Date (which remedy shall
not be exclusive of any other remedies available at law or in equity), the Company shall pay to such Buyer an amount in cash equal
to the greater of (I) two percent (2%) of the aggregate Purchase Price and (II) the applicable Disclosure Restitution Amount,
on each of the following dates (each, a “Disclosure Delay Payment Date”): (i) on the date of such Disclosure
Failure and (ii) on every thirty (30) day anniversary such Disclosure Failure until the earlier of (x) the date such Disclosure
Failure is cured and (y) such time as all such non-public information provided to such Buyer shall cease to be Confidential Information
(as evidenced by a certificate, duly executed by an authorized officer of the Company to the foregoing effect) (such earlier date,
as applicable, a “Disclosure Cure Date”). Following the initial Disclosure Delay Payment for any particular
Disclosure Failure, without limiting the foregoing, if a Disclosure Cure Date occurs prior to any thirty (30) day anniversary
of such Disclosure Failure, then such Disclosure Delay Payment (prorated for such partial month) shall be made on the third (3rd)
Business Day after such Disclosure Cure Date. The payments to which an Investor shall be entitled pursuant to this Section 4(l)(iii)
are referred to herein as “Disclosure Delay Payments.” In the event the Company fails to make Disclosure Delay
Payments in a timely manner in accordance with the foregoing, such Disclosure Delay Payments shall bear interest at the rate of
two percent (2%) per month (prorated for partial months) until paid in full.
(iv) For
the purpose of this Agreement the following definitions shall apply:
(1)
“Disclosure Failure Market Price” means, as of any Disclosure Delay Payment Date, the price computed as the
quotient of (I) the sum of the five (5) highest VWAPs (as defined in the Warrants) of the Common Stock during the applicable Disclosure
Restitution Period (as defined below), divided by (II) five (5) (such period, the “Disclosure Failure Measuring Period”).
All such determinations to be appropriately adjusted for any share dividend, share split, share combination, reclassification
or similar transaction that proportionately decreases or increases the Common Stock during such Disclosure Failure Measuring Period.
(2) “Disclosure
Restitution Amount” means, as of any Disclosure Delay Payment Date, the product of (x) difference of (I) the Disclosure
Failure Market Price less (II) the lowest purchase price, per share of Common Stock, of any Common Stock issued or issuable to
such Buyer pursuant to this Agreement or any other Transaction Documents, multiplied by (y) 10% of the aggregate daily dollar
trading volume (as reported on Bloomberg (as defined in the Warrants)) of the Common Stock on the Principal Market for each Trading
Day either (1) with respect to the initial Disclosure Delay Payment Date, during the period commencing on the applicable Required
Disclosure Date through and including the Trading Day immediately prior to the initial Disclosure Delay Payment Date or (2) with
respect to each other Disclosure Delay Payment Date, during the period commencing the immediately preceding Disclosure Delay Payment
Date through and including the Trading Day immediately prior to such applicable Disclosure Delay Payment Date (such applicable
period, the “Disclosure Restitution Period”).
(3) “Required
Disclosure Date” means (x) if such Buyer authorized the delivery of such Confidential Information, either (I) if the
Company and such Buyer have mutually agreed upon a date (as evidenced by an e-mail or other writing) of Disclosure of such Confidential
Information, such agreed upon date or (II) otherwise, the seventh (7th) calendar day after the date such Buyer first received
any Confidential Information or (y) if such Buyer did not authorize the delivery of such Confidential Information, the first (1st)
Business Day after such Buyer’s receipt of such Confidential Information.
(j) Additional
Registration Statements. Until the Applicable Date (as defined below) and at any time thereafter while any Registration Statement
is not effective or the prospectus contained therein is not available for use or any Current Public Information Failure (as defined
in the Registration Rights Agreement) exists, the Company shall not file a registration statement under the 1933 Act relating
to securities that are not the Registrable Securities (other than a registration statement on Form S-8 or such supplements or
amendments to registration statements that are outstanding and have been declared effective by the SEC as of the date hereof (solely
to the extent necessary to keep such registration statements effective and available and not with respect to any Subsequent Placement)).
“Applicable Date” means the earlier of (x) the first date on which the resale by the Buyers of all the Registrable
Securities required to be filed on the initial Registration Statement (as defined in the Registration Rights Agreement) pursuant
to the Registration Rights Agreement is declared effective by the SEC (and each prospectus contained therein is available for
use on such date) or (y) the first date on which all of the Registrable Securities are eligible to be resold by the Buyers pursuant
to Rule 144 (or, if a Current Public Information Failure (as defined in the Registration Rights Agreement) has occurred and is
continuing, such later date after which the Company has cured such Current Public Information Failure).
(k) Additional
Issuance of Securities. So long as any Buyer beneficially owns any Securities, the Company will not, without the prior written
consent of the Required Holders, issue any Notes (other than to the Buyers as contemplated hereby) and the Company shall not issue
any other securities that would cause a breach or default under the Notes or the Warrants. The Company agrees that for the period
commencing on the date hereof and ending on the date immediately following the 90th Trading Day after the Applicable Date (provided
that such period shall be extended by the number of calendar days during such period and any extension thereof contemplated by
this proviso on which any Registration Statement is not effective or any prospectus contained therein is not available for use
or any Current Public Information Failure exists) (the “Restricted Period”), neither the Company nor
any of its Subsidiaries shall directly or indirectly issue, offer, sell, grant any option or right to purchase, or otherwise dispose
of (or announce any issuance, offer, sale, grant of any option or right to purchase or other disposition of) any equity security
or any equity-linked or related security (including, without limitation, any “equity security” (as that term is defined
under Rule 405 promulgated under the 1933 Act), any Convertible Securities (as defined below), any debt, any preferred stock or
any purchase rights) (any such issuance, offer, sale, grant, disposition or announcement (whether occurring during the Restricted
Period or at any time thereafter) is referred to as a “Subsequent Placement”). Notwithstanding the foregoing,
this Section 4(k) shall not apply in respect of the issuance of (i) shares of Common Stock or standard options to purchase Common
Stock to consultants, attorneys, accountants, directors, officers or employees of the Company in their capacity as such pursuant
to an Approved Stock Plan (as defined below), provided that (1) all such issuances (taking into account the shares of Common Stock
issuable upon exercise of such options) after the date hereof pursuant to this clause (i) do not, in the aggregate, exceed more
than 5% of the Common Stock issued and outstanding immediately prior to the date hereof and (2) the exercise price of any such
options is not lowered, none of such options are amended to increase the number of shares issuable thereunder and none of the
terms or conditions of any such options are otherwise materially changed in any manner that adversely affects any of the Buyers;
(ii) shares of Common Stock issued upon the conversion or exercise of Convertible Securities (other than standard options to purchase
Common Stock issued pursuant to an Approved Stock Plan that are covered by clause (i) above) issued prior to the date hereof,
provided that the conversion, exercise or other method of issuance (as the case may be) of any such Convertible Security is made
solely pursuant to the conversion, exercise or other method of issuance (as the case may be) provisions of such Convertible Security
that were in effect on the date immediately prior to the date of this Agreement, the conversion, exercise or issuance price of
any such Convertible Securities (other than standard options to purchase Common Stock issued pursuant to an Approved Stock Plan
that are covered by clause (i) above) is not lowered, none of such Convertible Securities (other than standard options to purchase
Common Stock issued pursuant to an Approved Stock Plan that are covered by clause (i) above) are amended to increase the number
of shares issuable thereunder and none of the terms or conditions of any such Convertible Securities (other than standard options
to purchase Common Stock issued pursuant to an Approved Stock Plan that are covered by clause (A) above) are otherwise materially
changed in any manner that adversely affects any of the Buyers; (C) the Conversion Shares, (D) the Warrant Shares and (E) shares
of Common Stock issued or issuable in connection with strategic alliances and strategic partnerships, provided, that (x) the primary
purpose of such issuance is not to raise capital as determined in good faith by the Required Holders, (y) the purchaser or acquirer
of the securities in such issuance solely consists of either (I) the actual operating participants in such strategic alliance
or strategic partnership or (II) the stockholders, partners or members of the foregoing Persons and (z) the number or amount of
securities issued to such Person by the Company shall not be disproportionate to such Person’s actual participation in such
strategic alliance or strategic partnership, as applicable (each of the foregoing in clauses (A) through (E), collectively the
“Excluded Securities”) and (F) unregistered shares of Common Stock and warrants to purchase Common Stock issued
by the Company in a private placement consummated on or prior to the first anniversary of the Closing Date at a fixed price per
share of Common Stock and warrant to purchase Common Stock. “Approved Stock Plan” means any employee benefit
plan which has been approved by the board of directors of the Company prior to or subsequent to the date hereof pursuant to which
shares of Common Stock and standard options to purchase Common Stock may be issued to any consultant, attorney, accountant, employee,
officer or director for services provided to the Company in their capacity as such. “Convertible Securities”
means any capital stock or other security of the Company or any of its Subsidiaries 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 capital stock or other security of the Company (including, without limitation, Common Stock) or any of its Subsidiaries.
(l) Reservation
of Shares. So long as any of the Notes or Warrants remain outstanding, the Company shall take all action necessary to at all
times have authorized, and reserved for the purpose of issuance, no less than (x) if prior to the first Business Day after the
Stockholder Approval Date, (i) 130% of the maximum number of shares of Common Stock issuable upon conversion of all the Notes
then outstanding (assuming for purposes hereof that (A) the Notes are convertible at the Conversion Price (then in effect, (B)
interest on the Notes shall accrue through the second anniversary of the Closing Date and will be converted in shares of Common
Stock at a conversion price equal to the Alternate Conversion Price assuming an Alternate Conversion Date as of the applicable
date of determination and (C) any such conversion shall not take into account any limitations on the conversion of the Notes set
forth in the Notes), and (ii) 50% of the maximum number of Warrant Shares issuable upon exercise of all the Warrants then outstanding
(without regard to any limitations on the exercise of the Warrants set forth therein) or (y) if on or after the first Business
Day after the Stockholder Approval Date, 200% of (i) the maximum number of shares of Common Stock issuable upon conversion of
all the Notes then outstanding (assuming for purposes hereof that (A) the Notes are convertible at the Conversion Price (then
in effect, (B) interest on the Notes shall accrue through the second anniversary of the Closing Date and will be converted in
shares of Common Stock at a conversion price equal to the Alternate Conversion Price assuming an Alternate Conversion Date as
of the applicable date of determination and (c) any such conversion shall not take into account any limitations on the conversion
of the Notes set forth in the Notes), and (ii) the maximum number of Warrant Shares issuable upon exercise of all the Warrants
then outstanding (without regard to any limitations on the exercise of the Warrants set forth therein) (collectively, the “Required
Reserve Amount”); provided that at no time shall the number of shares of Common Stock reserved pursuant to this Section
4(l) be reduced other than proportionally in connection with any conversion, exercise and/or redemption, as applicable of Notes
and Warrants. If at any time the number of shares of Common Stock authorized and reserved for issuance is not sufficient to meet
the Required Reserved Amount, the Company will promptly take all corporate action necessary to authorize and reserve a sufficient
number of shares, including, without limitation, calling a special meeting of stockholders to authorize additional shares to meet
the Company’s obligations pursuant to the Transaction Documents, in the case of an insufficient number of authorized shares,
obtain stockholder approval of an increase in such authorized number of shares, and voting the management shares of the Company
in favor of an increase in the authorized shares of the Company to ensure that the number of authorized shares is sufficient to
meet the Required Reserved Amount.
(m) Conduct
of Business. The business of the Company and its Subsidiaries shall not be conducted in violation of any law, ordinance or
regulation of any Governmental Entity, except where such violations would not reasonably be expected to result, either individually
or in the aggregate, in a Material Adverse Effect.
(n) Other
Notes; Variable Securities. So long as any Notes remain outstanding, the Company and each Subsidiary shall be prohibited
from effecting or entering into an agreement to effect any Subsequent Placement involving a Variable Rate Transaction. “Variable
Rate Transaction” means a transaction in which the Company or any Subsidiary (i) issues or sells any Convertible Securities
either (A) at a conversion, exercise or exchange rate or other price that is based upon and/or varies with the trading prices
of or quotations for the shares of Common Stock at any time after the initial issuance of such Convertible Securities, or (B)
with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of
such Convertible Securities or upon the occurrence of specified or contingent events directly or indirectly related to the business
of the Company or the market for the Common Stock, other than pursuant to a customary “weighted average” anti-dilution
provision or (ii) enters into any agreement (including, without limitation, an equity line of credit or an “at-the-market”
offering) whereby the Company or any Subsidiary may sell securities at a future determined price (other than standard and customary
“preemptive” or “participation” rights). Each Buyer shall be entitled to obtain injunctive relief against
the Company and its Subsidiaries to preclude any such issuance, which remedy shall be in addition to any right to collect damages.
(o) Participation
Right. At any time on or prior to the fourth anniversary of the Closing Date, neither the Company nor any of its Subsidiaries
shall, directly or indirectly, effect any Subsequent Placement unless the Company shall have first complied with this Section
4(o). The Company acknowledges and agrees that the right set forth in this Section 4(o) is a right granted by the Company, separately,
to each Buyer.
(i) At
least five (5) Trading Days prior to any proposed or intended Subsequent Placement, the Company shall deliver to each Buyer a
written notice (each such notice, a “Pre-Notice”), which Pre-Notice shall not contain any information (including,
without limitation, material, non-public information) other than: (i) if the proposed Offer Notice (as defined below) constitutes
or contains material, non-public information, a statement asking whether the Investor is willing to accept material non-public
information or (ii) if the proposed Offer Notice does not constitute or contain material, non-public information, (A) a statement
that the Company proposes or intends to effect a Subsequent Placement, (B) a statement that the statement in clause (A) above
does not constitute material, non-public information and (C) a statement informing such Buyer that it is entitled to receive an
Offer Notice (as defined below) with respect to such Subsequent Placement upon its written request. Upon the written request of
a Buyer within three (3) Trading Days after the Company’s delivery to such Buyer of such Pre-Notice, and only upon a written
request by such Buyer, the Company shall promptly, but no later than one (1) Trading Day after such request, deliver to such Buyer
an irrevocable written notice (the “Offer Notice”) of any proposed or intended issuance or sale or exchange
(the “Offer”) of the securities being offered (the “Offered Securities”) in a Subsequent
Placement, which Offer Notice shall (w) identify and describe the Offered Securities, (x) describe the price and other terms upon
which they are to be issued, sold or exchanged, and the number or amount of the Offered Securities to be issued, sold or exchanged,
(y) identify the Persons (if known) to which or with which the Offered Securities are to be offered, issued, sold or exchanged
and (z) offer to issue and sell to or exchange with such Buyer in accordance with the terms of the Offer such Buyer’s pro
rata portion of 50% of the Offered Securities, provided that the number of Offered Securities which such Buyer shall have the
right to subscribe for under this Section 4(o) shall be (a) based on such Buyer’s pro rata portion of the aggregate original
principal amount of the Notes purchased hereunder by all Buyers (the “Basic Amount”), and (b) with respect
to each Buyer that elects to purchase its Basic Amount, any additional portion of the Offered Securities attributable to the Basic
Amounts of other Buyers as such Buyer shall indicate it will purchase or acquire should the other Buyers subscribe for less than
their Basic Amounts (the “Undersubscription Amount”), which process shall be repeated until each Buyer shall
have an opportunity to subscribe for any remaining Undersubscription Amount.
(ii) To
accept an Offer, in whole or in part, such Buyer must deliver a written notice to the Company prior to the end of the fifth (5th)
Business Day after such Buyer’s receipt of the Offer Notice (the “Offer Period”), setting forth the portion
of such Buyer’s Basic Amount that such Buyer elects to purchase and, if such Buyer shall elect to purchase all of its Basic
Amount, the Undersubscription Amount, if any, that such Buyer elects to purchase (in either case, the “Notice of Acceptance”).
If the Basic Amounts subscribed for by all Buyers are less than the total of all of the Basic Amounts, then each Buyer who has
set forth an Undersubscription Amount in its Notice of Acceptance shall be entitled to purchase, in addition to the Basic Amounts
subscribed for, the Undersubscription Amount it has subscribed for; provided, however, if the Undersubscription Amounts subscribed
for exceed the difference between the total of all the Basic Amounts and the Basic Amounts subscribed for (the “Available
Undersubscription Amount”), each Buyer who has subscribed for any Undersubscription Amount shall be entitled to purchase
only that portion of the Available Undersubscription Amount as the Basic Amount of such Buyer bears to the total Basic Amounts
of all Buyers that have subscribed for Undersubscription Amounts, subject to rounding by the Company to the extent it deems reasonably
necessary. Notwithstanding the foregoing, if the Company desires to modify or amend the terms and conditions of the Offer prior
to the expiration of the Offer Period, the Company may deliver to each Buyer a new Offer Notice and the Offer Period shall expire
on the fifth (5th) Business Day after such Buyer’s receipt of such new Offer Notice.
(iii) The
Company shall have five (5) Business Days from the expiration of the Offer Period above (i) to offer, issue, sell or exchange
all or any part of such Offered Securities as to which a Notice of Acceptance has not been given by a Buyer (the “Refused
Securities”) pursuant to a definitive agreement(s) (the “Subsequent Placement Agreement”), but only
to the offerees described in the Offer Notice (if so described therein) and only upon terms and conditions (including, without
limitation, unit prices and interest rates) that are not more favorable to the acquiring Person or Persons or less favorable to
the Company than those set forth in the Offer Notice and (ii) to publicly announce (a) the execution of such Subsequent Placement
Agreement, and (b) either (x) the consummation of the transactions contemplated by such Subsequent Placement Agreement or (y)
the termination of such Subsequent Placement Agreement, which shall be filed with the SEC on a Current Report on Form 8-K with
such Subsequent Placement Agreement and any documents contemplated therein filed as exhibits thereto.
(iv) In
the event the Company shall propose to sell less than all the Refused Securities (any such sale to be in the manner and on the
terms specified in Section 4(o)(iii) above), then each Buyer may, at its sole option and in its sole discretion, reduce the number
or amount of the Offered Securities specified in its Notice of Acceptance to an amount that shall be not less than the number
or amount of the Offered Securities that such Buyer elected to purchase pursuant to Section 4(o)(ii) above multiplied by a fraction,
(i) the numerator of which shall be the number or amount of Offered Securities the Company actually proposes to issue, sell or
exchange (including Offered Securities to be issued or sold to Buyers pursuant to this Section 4(o) prior to such reduction) and
(ii) the denominator of which shall be the original amount of the Offered Securities. In the event that any Buyer so elects to
reduce the number or amount of Offered Securities specified in its Notice of Acceptance, the Company may not issue, sell or exchange
more than the reduced number or amount of the Offered Securities unless and until such securities have again been offered to the
Buyers in accordance with Section 4(o)(i) above.
(v) Upon
the closing of the issuance, sale or exchange of all or less than all of the Refused Securities, such Buyer shall acquire from
the Company, and the Company shall issue to such Buyer, the number or amount of Offered Securities specified in its Notice of
Acceptance, as reduced pursuant to Section 4(o)(iv) above if such Buyer has so elected, upon the terms and conditions specified
in the Offer. The purchase by such Buyer of any Offered Securities is subject in all cases to the preparation, execution and delivery
by the Company and such Buyer of a separate purchase agreement relating to such Offered Securities reasonably satisfactory in
form and substance to such Buyer and its counsel.
(vi) Any
Offered Securities not acquired by a Buyer or other Persons in accordance with this Section 4(o) may not be issued, sold or exchanged
until they are again offered to such Buyer under the procedures specified in this Agreement.
(vii) The
Company and each Buyer agree that if any Buyer elects to participate in the Offer, (x) neither the Subsequent Placement Agreement
with respect to such Offer nor any other transaction documents related thereto (collectively, the “Subsequent Placement
Documents”) shall include any term or provision whereby such Buyer shall be required to agree to any restrictions on
trading as to any securities of the Company 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, any agreement previously entered into with the Company or any instrument received
from the Company, and (y) any registration rights set forth in such Subsequent Placement Documents shall be similar in all material
respects to the registration rights contained in the Registration Rights Agreement.
(viii) Notwithstanding
anything to the contrary in this Section 4(o) and unless otherwise agreed to by such Buyer, the Company shall either confirm in
writing to such Buyer that the transaction with respect to the Subsequent Placement has been abandoned or shall publicly disclose
its intention to issue the Offered Securities, in either case, in such a manner such that such Buyer will not be in possession
of any material, non-public information, by the fifth (5th) Business Day following delivery of the Offer Notice. If by such fifth
(5th) Business Day, no public disclosure regarding a transaction with respect to the Offered Securities has been made, and no
notice regarding the abandonment of such transaction has been received by such Buyer, such transaction shall be deemed to have
been abandoned and such Buyer shall not be in possession of any material, non-public information with respect to the Company or
any of its Subsidiaries. Should the Company decide to pursue such transaction with respect to the Offered Securities, the Company
shall provide such Buyer with another Offer Notice and such Buyer will again have the right of participation set forth in this
Section 4(o). The Company shall not be permitted to deliver more than one such Offer Notice to such Buyer in any sixty (60) day
period, except as expressly contemplated by the last sentence of Section 4(o)(ii).
(ix) The
restrictions contained in this Section 4(o) shall not apply in connection with the issuance of any Excluded Securities. The Company
shall not circumvent the provisions of this Section 4(o) by providing terms or conditions to one Buyer that are not provided to
all.
(p) Dilutive
Issuances. For so long as any Notes or Warrants remain outstanding, the Company shall not, in any manner, enter into or affect
any Dilutive Issuance (as defined in the Notes) if the effect of such Dilutive Issuance is to cause the Company to be required
to issue upon conversion of any Notes or exercise of any Warrant any shares of Common Stock in excess of that number of shares
of Common Stock which the Company may issue upon conversion of the Notes and exercise of the Warrants without breaching the Company’s
obligations under the rules or regulations of the Principal Market.
(q) Passive
Foreign Investment Company. The Company shall conduct its business, and shall cause its Subsidiaries to conduct their respective
businesses, in such a manner as will ensure that the Company will not be deemed to constitute a passive foreign investment company
within the meaning of Section 1297 of the Code.
(r) Restriction
on Redemption and Cash Dividends. So long as any Notes are outstanding, the Company shall not, directly or indirectly, redeem,
or declare or pay any cash dividend or distribution on, any securities of the Company without the prior express written consent
of the Buyers.
(s) Corporate
Existence. So long as any Buyer beneficially owns any Notes or Warrants, the Company shall not be party to any Fundamental
Transaction (as defined in the Notes) unless the Company is in compliance with the applicable provisions governing Fundamental
Transactions set forth in the Notes and the Warrants.
(t) Stock
Splits. Until the Notes and all notes issued pursuant to the terms thereof are no longer outstanding, the Company shall not
effect any stock combination, reverse stock split or other similar transaction (or make any public announcement or disclosure
with respect to any of the foregoing) without the prior written consent of the Required Holders (as defined below).
(u) Conversion
and Exercise Procedures. Each of the form of Notice of Exercise included in the Warrants and the form of Notice of Conversion
included in the Notes set forth the totality of the procedures required of the Buyers in order to exercise the Warrants or convert
the Notes. Except as provided in Section 5(d), no additional legal opinion, other information or instructions shall be required
of the Buyers to exercise their Warrants or convert their Notes. The Company shall honor exercises of the Warrants and conversions
of the Notes and shall deliver the Conversion Shares and Warrant Shares in accordance with the terms, conditions and time periods
set forth in the Notes and Warrants.
(v) Collateral
Agent. Each Buyer hereby (i) appoints Hudson Bay Master Fund Ltd., as the collateral agent hereunder and under the other Security
Documents (in such capacity, the “Collateral Agent”), and (ii) authorizes the Collateral Agent (and its officers,
directors, employees and agents) to take such action on such Buyer’s behalf in accordance with the terms hereof and thereof.
The Collateral Agent shall not have, by reason hereof or any of the other Security Documents, a fiduciary relationship in respect
of any Buyer. Neither the Collateral Agent nor any of its officers, directors, employees or agents shall have any liability to
any Buyer for any action taken or omitted to be taken in connection hereof or any other Security Document except to the extent
caused by its own gross negligence or willful misconduct, and each Buyer agrees to defend, protect, indemnify and hold harmless
the Collateral Agent and all of its officers, directors, employees and agents (collectively, the “Collateral Agent Indemnitees”)
from and against any losses, damages, liabilities, obligations, penalties, actions, judgments, suits, fees, costs and expenses
(including, without limitation, reasonable attorneys’ fees, costs and expenses) incurred by such Collateral Agent Indemnitee,
whether direct, indirect or consequential, arising from or in connection with the performance by such Collateral Agent Indemnitee
of the duties and obligations of Collateral Agent pursuant hereto or any of the Security Documents. The Collateral Agent shall
not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall
be fully protected in so acting or refraining from acting) upon the instructions of the Required Holders, and such instructions
shall be binding upon all holders of Notes; provided, however, that the Collateral Agent shall not be required to take any action
which, in the reasonable opinion of the Collateral Agent, exposes the Collateral Agent to liability or which is contrary to this
Agreement or any other Transaction Document or applicable law. The Collateral Agent shall be entitled to rely upon any written
notices, statements, certificates, orders or other documents or any telephone message believed by it in good faith to be genuine
and correct and to have been signed, sent or made by the proper Person, and with respect to all matters pertaining to this Agreement
or any of the other Transaction Documents and its duties hereunder or thereunder, upon advice of counsel selected by it.
(w) Successor
Collateral Agent.
(i) The
Collateral Agent may resign from the performance of all its functions and duties hereunder and under the other Transaction Documents
at any time by giving at least ten (10) Business Days’ prior written notice to the Company and each holder of Notes. Such
resignation shall take effect upon the acceptance by a successor Collateral Agent of appointment pursuant to clauses (ii) and
(iii) below or as otherwise provided below. If at any time the Collateral Agent (together with its affiliates) beneficially owns
less than $100,000 in aggregate principal amount of Notes, the Required Holders may, by written consent, remove the Collateral
Agent from all its functions and duties hereunder and under the other Transaction Documents.
(ii) Upon
any such notice of resignation or removal, the Required Holders shall appoint a successor collateral agent. Upon the acceptance
of any appointment as Collateral Agent hereunder by a successor agent, such successor collateral agent shall thereupon succeed
to and become vested with all the rights, powers, privileges and duties of the collateral agent, and the Collateral Agent shall
be discharged from its duties and obligations under this Agreement and the other Transaction Documents. After the Collateral Agent’s
resignation or removal hereunder as the collateral agent, the provisions of this Section 4(w) shall inure to its benefit as to
any actions taken or omitted to be taken by it while it was the Collateral Agent under this Agreement and the other Transaction
Documents.
(iii) If
a successor collateral agent shall not have been so appointed within ten (10) Business Days of receipt of a written notice of
resignation or removal, the Collateral Agent shall then appoint a successor collateral agent who shall serve as the Collateral
Agent until such time, if any, as the Required Holders appoint a successor collateral agent as provided above.
(iv) In
the event that a successor Collateral Agent is appointed pursuant to the provisions of this Section 4(w) that is not a Buyer or
an affiliate of any Buyer (or the Required Holders or the Collateral Agent (or its successor), as applicable, notify the Company
that they or it wants to appoint such a successor Collateral Agent pursuant to the terms of this Section 4(w)), the Company and
each Subsidiary thereof covenants and agrees to promptly take all actions reasonably requested by the Required Holders or the
Collateral Agent (or its successor), as applicable, from time to time, to secure a successor Collateral Agent satisfactory to
the requesting part(y)(ies), in their sole discretion, including, without limitation, by paying all reasonable and customary fees
and expenses of such successor Collateral Agent, by having the Company and each Subsidiary thereof agree to indemnify any successor
Collateral Agent pursuant to reasonable and customary terms and by each of the Company and each Subsidiary thereof executing a
collateral agency agreement or similar agreement and/or any amendment to the Security Documents reasonably requested or required
by the successor Collateral Agent.
(x) Regulation
M. The Company will not take any action prohibited by Regulation M under the 1934 Act, in connection with the distribution
of the Securities contemplated hereby.
(y) General
Solicitation. None of the Company, any of its affiliates (as defined in Rule 501(b) under the 1933 Act) or any person
acting on behalf of the Company or such affiliate will solicit any offer to buy or offer or sell the Securities by means of any
form of general solicitation or general advertising within the meaning of Regulation D, including: (i) any advertisement, article,
notice or other communication published in any newspaper, magazine or similar medium or broadcast over television or radio; and
(ii) any seminar or meeting whose attendees have been invited by any general solicitation or general advertising.
(z) Integration.
None of the Company, any of its affiliates (as defined in Rule 501(b) under the 1933 Act), or any person acting on behalf of the
Company or such affiliate will sell, offer for sale, or solicit offers to buy or otherwise negotiate in respect of any security
(as defined in the 1933 Act) which will be integrated with the sale of the Securities in a manner which would require the registration
of the Securities under the 1933 Act or require stockholder approval under the rules and regulations of the Principal Market and
the Company will take all action that is appropriate or necessary to assure that its offerings of other securities will not be
integrated for purposes of the 1933 Act or the rules and regulations of the Principal Market, with the issuance of Securities
contemplated hereby.
(aa) Notice
of Disqualification Events. The Company will notify the Buyers 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, become a Disqualification
Event relating to any Issuer Covered Person.
(bb) Subsidiary
Guarantee. For so long as any Notes remain outstanding, upon any entity becoming a Subsidiary of the Company, the Company
shall cause each such Subsidiary to become party to the Guaranty by executing a joinder to the Guaranty reasonably satisfactory
in form and substance to the Required Holders.
(cc) Stockholder
Approval. The Company shall provide each stockholder entitled to vote at a special or annual meeting of stockholders of the
Company (the “Stockholder Meeting”), which shall be promptly called and held not later than July 31, 2015 (the
“Stockholder Meeting Deadline”), a proxy statement, in a form reasonably acceptable to the Buyers and Kelley
Drye & Warren LLP, at the expense of the Company, with the Company obligated to reimburse the expenses of Kelley Drye &
Warren LLP incurred in connection therewith in an amount not exceed $5,000, soliciting each such stockholder’s affirmative
vote at the Stockholder Meeting for approval of resolutions (“Stockholder Resolutions”) providing for the increase
of the authorized shares of Common Stock of the Company from 75,000,000 to 250,000,000 (the “Stockholder Approval”,
and the date the Stockholder Approval is obtained, the “Stockholder Approval Date”), and the Company shall
use its reasonable best efforts to solicit its stockholders’ approval of such resolutions and to cause the Board of Directors
of the Company to recommend to the stockholders that they approve such resolutions. The Company shall be obligated to seek to
obtain the Stockholder Approval by the Stockholder Meeting Deadline. If, despite the Company’s reasonable best efforts the
Stockholder Approval is not obtained on or prior to the Stockholder Meeting Deadline, the Company shall cause an additional Stockholder
Meeting to be held on or prior to December 31, 2015. If, despite the Company’s reasonable best efforts the Stockholder Approval
is not obtained after such subsequent stockholder meetings, the Company shall cause an additional Stockholder Meeting to be held
semi-annually thereafter until such Stockholder Approval is obtained.
(dd) Closing
Documents. On or prior to thirty (30) calendar days after the Closing Date, the Company agrees to deliver, or cause to be
delivered, to each Buyer and Kelley Drye & Warren LLP a complete closing set of the executed Transaction Documents, Securities
and any other document required to be delivered to any party pursuant to Section 7 hereof or otherwise.
5. REGISTER;
TRANSFER AGENT INSTRUCTIONS; LEGEND.
(a) Register.
The Company shall maintain at its principal executive offices (or such other office or agency of the Company as it may designate
by notice to each holder of Securities), a register for the Notes and the Warrants in which the Company shall record the name
and address of the Person in whose name the Notes and the Warrants have been issued (including the name and address of
each transferee), the principal amount of the Notes held by such Person, the number of Conversion Shares issuable pursuant to
the terms of the Notes and the number of Warrant Shares issuable upon exercise of the Warrants held by such Person. The Company
shall keep the register open and available at all times during business hours for inspection of any Buyer or its legal representatives.
(b) Transfer
Agent Instructions. The Company shall issue irrevocable instructions to its transfer agent and any subsequent transfer agent
in a form acceptable to each of the Buyers (the “Irrevocable Transfer Agent Instructions”) to issue certificates
or credit shares to the applicable balance accounts at The Depository Trust Company (“DTC”), registered in
the name of each Buyer or its respective nominee(s), for the Conversion Shares and the Warrant Shares in such amounts as specified
from time to time by each Buyer to the Company upon conversion of the Notes or the exercise of the Warrants (as the case may be).
The Company represents and warrants that no instruction other than the Irrevocable Transfer Agent Instructions referred to in
this Section 5(b), and stop transfer instructions to give effect to Section 2(f) hereof, will be given by the Company to its transfer
agent with respect to the Securities, and that the Securities shall otherwise be freely transferable on the books and records
of the Company, as applicable, to the extent provided in this Agreement and the other Transaction Documents. If a Buyer effects
a sale, assignment or transfer of the Securities in accordance with Section 2(f), the Company shall permit the transfer and shall
promptly instruct its transfer agent to issue one or more certificates or credit shares to the applicable balance accounts at
DTC in such name and in such denominations as specified by such Buyer to effect such sale, transfer or assignment. In the event
that such sale, assignment or transfer involves Conversion Shares or Warrant Shares sold, assigned or transferred pursuant to
an effective registration statement or in compliance with Rule 144, the transfer agent shall issue such shares to such Buyer,
assignee or transferee (as the case may be) without any restrictive legend in accordance with Section 5(d) below. The Company
acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to a Buyer. Accordingly, the Company
acknowledges that the remedy at law for a breach of its obligations under this Section 5(b) will be inadequate and agrees, in
the event of a breach or threatened breach by the Company of the provisions of this Section 5(b), that a Buyer shall be entitled,
in addition to all other available remedies, to an order and/or injunction restraining any breach and requiring immediate issuance
and transfer, without the necessity of showing economic loss and without any bond or other security being required. The Company
shall cause its counsel to issue the legal opinion referred to in the Irrevocable Transfer Agent Instructions to the Company’s
transfer agent on each Effective Date (as defined in the Registration Rights Agreement). Any fees (with respect to the transfer
agent, counsel to the Company or otherwise) associated with the issuance of such opinion or the removal of any legends on any
of the Securities shall be borne by the Company.
(c) Legends.
Each Buyer understands that the Securities have been issued (or will be issued in the case of the Conversion Shares and the Warrant
Shares) pursuant to an exemption from registration or qualification under the 1933 Act and applicable state securities laws, and
except as set forth below, the Securities shall bear any legend as required by the “blue sky” laws of any state and
a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of such stock
certificates):
[NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE [CONVERTIBLE]
[EXERCISABLE] HAVE BEEN][THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN] REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED
(I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR (B) AN OPINION OF COUNSEL TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER
SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.
(d) Removal
of Legends. Certificates evidencing Securities shall not be required to contain the legend set forth in Section 5(c) above
or any other legend (i) while a registration statement (including a Registration Statement) covering the resale of such Securities
is effective under the 1933 Act, (ii) following any sale of such Securities pursuant to Rule 144 (assuming the transferor is not
an affiliate of the Company), (iii) if such Securities are eligible to be sold, assigned or transferred under Rule 144 (provided
that a Buyer provides the Company with reasonable assurances that such Securities are eligible for sale, assignment or transfer
under Rule 144 which shall not include an opinion of Buyer’s counsel), (iv) in connection with a sale, assignment or other
transfer (other than under Rule 144), provided that such Buyer provides the Company with an opinion of counsel to such Buyer,
in a generally acceptable form, to the effect that such sale, assignment or transfer of the Securities may be made without registration
under the applicable requirements of the 1933 Act or (v) if such legend is not required under applicable requirements of the 1933
Act (including, without limitation, controlling judicial interpretations and pronouncements issued by the SEC). If a legend is
not required pursuant to the foregoing, the Company shall no later than three (3) Trading Days (or such earlier date as required
pursuant to the 1934 Act or other applicable law, rule or regulation for the settlement of a trade initiated on the date such
Buyer delivers such legended certificate representing such Securities to the Company) following the delivery by a Buyer to the
Company or the transfer agent (with notice to the Company) of a legended certificate representing such Securities (endorsed or
with stock powers attached, signatures guaranteed, and otherwise in form necessary to affect the reissuance and/or transfer, if
applicable), together with any other deliveries from such Buyer as may be required above in this Section 5(d), as directed by
such Buyer, either: (A) provided that the Company’s transfer agent is participating in the DTC Fast Automated Securities
Transfer Program and such Securities are Conversion Shares or Warrant Shares, credit the aggregate number of shares of Common
Stock to which such Buyer shall be entitled to such Buyer’s or its designee’s balance account with DTC through its
Deposit/Withdrawal at Custodian system or (B) if the Company’s transfer agent is not participating in the DTC Fast Automated
Securities Transfer Program, issue and deliver (via reputable overnight courier) to such Buyer, a certificate representing such
Securities that is free from all restrictive and other legends, registered in the name of such Buyer or its designee (the date
by which such credit is so required to be made to the balance account of such Buyer’s or such Buyer’s designee with
DTC or such certificate is required to be delivered to such Buyer pursuant to the foregoing is referred to herein as the “Required
Delivery Date”, and the date such shares of Common Stock are actually delivered without restrictive legend to such Buyer
or such Buyer’s designee with DTC, as applicable, the “Share Delivery Date”). The Company shall be responsible
for any transfer agent fees or DTC fees with respect to any issuance of Securities or the removal of any legends with respect
to any Securities in accordance herewith.
(e) Failure
to Timely Deliver; Buy-In. If the Company fails to fail, for any reason or for no reason, to issue and deliver (or cause to
be delivered) to a Buyer (or its designee) by the Required Delivery Date, either (I) if the Transfer Agent is not participating
in the DTC Fast Automated Securities Transfer Program, a certificate for the number of Conversion Shares or Warrant Shares (as
the case may be) to which such Buyer is entitled and register such Conversion Shares or Warrant Shares (as the case may be) on
the Company’s share register or, if the Transfer Agent is participating in the DTC Fast Automated Securities Transfer Program,
to credit the balance account of such Buyer or such Buyer’s designee with DTC for such number of Conversion Shares or Warrant
Shares (as the case may be) submitted for legend removal by such Buyer pursuant to Section 5(d) above or (II) if the Registration
Statement covering the resale of the Conversion Shares or Warrant Shares (as the case may be) submitted for legend removal by
such Buyer pursuant to Section 5(d) above (the “Unavailable Shares”) is not available for the resale of such
Unavailable Shares and the Company fails to promptly, but in no event later than as required pursuant to the Registration Rights
Agreement (x) so notify such Buyer and (y) deliver the Conversion Shares or Warrant Shares, as applicable, electronically without
any restrictive legend by crediting such aggregate number of Conversion Shares or Warrant Shares (as the case may be) submitted
for legend removal by such Buyer pursuant to Section 5(d) above to such Buyer’s or its designee’s balance account
with DTC through its Deposit/Withdrawal At Custodian system (the event described in the immediately foregoing clause (II) is hereinafter
referred as a “Notice Failure” and together with the event described in clause (I) above, a “Delivery
Failure”), then, in addition to all other remedies available to such Buyer, the Company shall pay in cash to such Buyer
on each day after the Share Delivery Date and during such Delivery Failure an amount equal to 2% of the product of (A) the sum
of the number of shares of Common Stock not issued to such Buyer on or prior to the Required Delivery Date and to which such Buyer
is entitled, and (B) any trading price of the Common Stock selected by such Buyer in writing as in effect at any time during the
period beginning on the date of the delivery by such Buyer to the Company of the applicable Conversion Shares or Warrant Shares
(as the case may be) and ending on the applicable Share Delivery Date. In addition to the foregoing, if on or prior to the Required
Delivery Date either (I) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, the
Company shall fail to issue and deliver a certificate to a Buyer and register such shares of Common Stock on the Company’s
share register or, if the Transfer Agent is participating in the DTC Fast Automated Securities Transfer Program, credit the balance
account of such Buyer or such Buyer’s designee with DTC for the number of shares of Common Stock to which such Buyer submitted
for legend removal by such Buyer pursuant to Section 5(d) above (ii) below or (II) a Notice Failure occurs, and if on or after
such Trading Day such Buyer purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction
of a sale by such Buyer of shares of Common Stock submitted for legend removal by such Buyer pursuant to Section 5(d) above that
such Buyer anticipated receiving from the Company (a “Buy-In”), then the Company shall, within three (3) Trading
Days after such Buyer’s request and in such Buyer’s discretion, either (i) pay cash to such Buyer in an amount equal
to such Buyer’s total purchase price (including brokerage commissions and other out-of-pocket expenses, if any) for the
shares of Common Stock so purchased) (the “Buy-In Price”), at which point the Company’s obligation to
so deliver such certificate or credit such Buyer’s balance account shall terminate and such shares shall be cancelled, or
(ii) promptly honor its obligation to so deliver to such Buyer a certificate or certificates or credit the balance account of
such Buyer or such Buyer’s designee with DTC representing such number of shares of Common Stock that would have been so
delivered if the Company timely complied with its obligations hereunder and pay cash to such Buyer in an amount equal to the excess
(if any) of the Buy-In Price over the product of (A) such number of shares of Conversion Shares or Warrant Shares (as the case
may be) that the Company was required to deliver to such Buyer by the Required Delivery Date multiplied by (B) the lowest Closing
Sale Price (as defined in the Warrants) of the Common Stock on any Trading Day during the period commencing on the date of the
delivery by such Buyer to the Company of the applicable Conversion Shares or Warrant Shares (as the case may be) and ending on
the date of such delivery and payment under this clause (ii). Nothing shall limit such Buyer’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
(or to electronically deliver such shares of Common Stock) as required pursuant to the terms hereof. Notwithstanding anything
herein to the contrary, with respect to any given Notice Failure and/or Delivery Failure, this Section 5(e) shall not apply to
the applicable Buyer the extent the Company has already paid such amounts in full to such Buyer with respect to such Notice Failure
and/or Delivery Failure, as applicable, pursuant to the analogous sections of the Note or Warrant, as applicable, held by such
Buyer.
6. CONDITIONS
TO THE COMPANY’S OBLIGATION TO SELL.
(a) The
obligation of the Company hereunder to issue and sell the Notes and the related Warrants to each Buyer at the Closing is
subject to the satisfaction, at or before the Closing Date, of each of the following conditions, provided that these conditions
are for the Company’s sole benefit and may be waived by the Company at any time in its sole discretion by providing each
Buyer with prior written notice thereof:
(i) Such
Buyer shall have duly executed and delivered to the Company an Investor Collateral Certificate and, at the Company’s direction,
an Investor Note to the Collateral Agent in such original principal amount as is set forth across from such Buyer’s name
in column (7) of the Schedule of Buyers.
(ii) Such
Buyer shall have executed each of the other Transaction Documents to which it is a party and delivered the same to the Company.
(iii) Such
Buyer and each other Buyer shall have delivered to the Company the Cash Purchase Price (less, in the case of any Buyer, the amounts
withheld pursuant to Section 4(g)) for the Note and the related Warrants being purchased by such Buyer at the Closing by wire
transfer of immediately available funds in accordance with the Flow of Funds Letter.
(iv) The
representations and warranties of such Buyer shall be true and correct in all material respects as of the date when made and as
of the Closing Date as though originally made at that time (except for representations and warranties that speak as of a specific
date, which shall be true and correct as of such specific date), and such Buyer shall have performed, satisfied and complied in
all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied
with by such Buyer at or prior to the Closing Date.
7. CONDITIONS
TO EACH BUYER’S OBLIGATION TO PURCHASE.
(a) The
obligation of each Buyer hereunder to purchase its Note and its related Warrants at the Closing is subject to the satisfaction,
at or before the Closing Date, of each of the following conditions, provided that these conditions are for each Buyer’s
sole benefit and may be waived by such Buyer at any time in its sole discretion by providing the Company with prior written notice
thereof:
(i) The
Company and each Subsidiary (as the case may be) shall have duly executed and delivered to such Buyer each of the Transaction
Documents to which it is a party and the Company shall have duly executed and delivered to such Buyer a Note (in such original
principal amount as is set forth across from such Buyer’s name in column (3) of the Schedule of Buyers) together with the
related Warrants (initially for such aggregate number of Warrant Shares as is set forth across from such Buyer’s name in
column (4) of the Schedule of Buyers) being purchased by such Buyer at the Closing pursuant to this Agreement.
(ii) Such
Buyer shall have received the opinion of Christian J. Hoffmann, III, the Company’s securities counsel, dated as of the Closing
Date, in the form acceptable to such Buyer.
(iii) The
Company shall have delivered to such Buyer a copy of the Irrevocable Transfer Agent Instructions, in the form acceptable to such
Buyer, which instructions shall have been delivered to and acknowledged in writing by the Company’s transfer agent.
(iv) The
Company shall have delivered to such Buyer a certificate evidencing the formation and good standing of the Company and each of
its Subsidiaries in each such entity’s jurisdiction of formation issued by the Secretary of State (or comparable office)
of such jurisdiction of formation as of a date within ten (10) days of the Closing Date.
(v) The
Company shall have delivered to such Buyer a certificate evidencing the Company’s and each Subsidiary’s qualification
as a foreign corporation and good standing issued by the Secretary of State (or comparable office) of each jurisdiction in which
the Company and each Subsidiary conducts business and is required to so qualify, as of a date within ten (10) days of the Closing
Date.
(vi) The
Company shall have delivered to such Buyer a certified copy of the Certificate of Incorporation as certified by the Delaware Secretary
of State within ten (10) days of the Closing Date.
(vii) Each
Subsidiary shall have delivered to such Buyer a certified copy of its Certificate of Incorporation (or such equivalent organizational
document) as certified by the Secretary of State (or comparable office) of such Subsidiary’s jurisdiction of incorporation
within ten (10) days of the Closing Date.
(viii) The
Company and each Subsidiary shall have delivered to such Buyer a certificate, in the form acceptable to such Buyer, executed by
the Secretary of the Company and each Subsidiary and dated as of the Closing Date, as to (i) the resolutions consistent with Section
3(b) as adopted by the Company’s and each Subsidiary’s board of directors in a form reasonably acceptable to such
Buyer, (ii) the Certificate of Incorporation of the Company and the organizational documents of each Subsidiary and (iii) the
Bylaws of the Company and the bylaws of each Subsidiary, each as in effect at the Closing.
(ix) Each
and every representation and warranty of the Company shall be true and correct as of the date when made and as of the Closing
Date as though originally made at that time (except for representations and warranties that speak as of a specific date, which
shall be true and correct as of such specific date) and the Company shall have performed, satisfied and complied in all respects
with the covenants, agreements and conditions required to be performed, satisfied or complied with by the Company at or prior
to the Closing Date. Such Buyer shall have received a certificate, duly executed by the Chief Executive Officer of the Company,
dated as of the Closing Date, to the foregoing effect and as to such other matters as may be reasonably requested by such Buyer
in the form acceptable to such Buyer.
(x) The
Company shall have delivered to such Buyer a letter from the Company’s transfer agent certifying the number of shares of
Common Stock outstanding on the Closing Date immediately prior to the Closing.
(xi) The
Company shall have directed each Buyer to deliver such Buyer’s Investor Note to the Collateral Agent and the Collateral
Agent shall have physical possession of each Investor Note at the Closing.
(xii) The
Common Stock (A) shall be designated for quotation or listed (as applicable) on the Principal Market and (B) shall not have been
suspended, as of the Closing Date, by the SEC or the Principal Market from trading on the Principal Market nor shall suspension
by the SEC or the Principal Market have been threatened, as of the Closing Date, either (I) in writing by the SEC or the Principal
Market or (II) by falling below the minimum maintenance requirements of the Principal Market.
(xiii) The
Company shall have obtained all governmental, regulatory or third party consents and approvals, if any, necessary for the sale
of the Securities, including without limitation, those required by the Principal Market, if any.
(xiv) No
statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed
by any court or Governmental Entity of competent jurisdiction that prohibits the consummation of any of the transactions contemplated
by the Transaction Documents.
(xv) Since
the date of execution of this Agreement, no event or series of events shall have occurred that reasonably would have or result
in a Material Adverse Effect.
(xvi) The
Company shall have obtained approval of the Principal Market to list or designate for quotation (as the case may be) the Conversion
Shares and the Warrant Shares.
(xvii) In
accordance with the terms of the Security Documents, the Company shall have delivered to the Collateral Agent (A) original certificates
(I) representing the Subsidiaries’ shares of capital stock to the extent such subsidiary is a corporation or otherwise has
certificated equity, if any, and (II) representing all other equity interests and all promissory notes required to be pledged
thereunder, in each case, accompanied by undated stock powers and allonges executed in blank and other proper instruments of transfer
and (B) appropriate financing statements on Form UCC-1 to be duly filed in such office or offices as may be necessary or, in the
opinion of the Collateral Agent, desirable to perfect the security interests purported to be created by each Security Document
(the “Perfection Certificate”).
(xviii) Within
two (2) Business Days prior to the Closing, the Company shall have delivered or caused to be delivered to each Buyer and the Collateral
Agent (A) certified copies of requests for copies of information on Form UCC-11, listing all effective financing statements which
name as debtor the Company or any of its Subsidiaries and which are filed in such office or offices as may be necessary or, in
the opinion of the Collateral Agent or the Buyers, desirable to perfect the security interests purported to be created by the
Security Agreement, together with copies of such financing statements, none of which, except as otherwise agreed in writing by
the Collateral Agent, shall cover any of the Collateral, and the results of searches for any tax Lien and judgment Lien filed
against such Person or its property, which results, except as otherwise agreed to in writing by the Collateral Agent and the Buyers,
shall not show any such Liens; and (B) a perfection certificate, duly completed and executed by the Company and each of its Subsidiaries,
in form and substance satisfactory to the Buyers.
(xix) The
Collateral Agent shall have received the Security Agreement, duly executed by the Company and each of its Subsidiaries, together
with the original stock certificates representing all of the equity interests and all promissory notes required to be pledged
thereunder, accompanied by undated stock powers and allonges executed in blank and other proper instruments of transfer.
(xx) With
respect to the Intellectual Property, if any, of the Company or any of its Subsidiaries, the Company and/or such Subsidiaries,
as applicable, shall have duly executed and delivered to such Buyer each Assignment For Security for the Intellectual Property
of the Company and its Subsidiaries, in the form attached as Exhibit A to the Security Agreement.
(xxi) Each
Control Account Bank (as defined in the Notes) and the Collateral Agent shall have duly executed and delivered to such Buyer a
Controlled Account Agreement (as defined in the Notes) with respect to each account of the Company or any of its Subsidiaries
held at such Control Account Bank).
(xxii) Such
Buyer shall have received a letter on the letterhead of the Company, duly executed by the Chief Executive Officer of the Company,
setting forth the wire amounts of each Buyer and the wire transfer instructions of the Company with respect to the portion of
the Cash Purchase Price set forth in column (6) of the Schedule of Buyers (the “Flow of Funds Letter”).
(xxiii) The
Company and its Subsidiaries shall have delivered to such Buyer such other documents, instruments or certificates relating to
the transactions contemplated by this Agreement as such Buyer or its counsel may reasonably request.
8. TERMINATION.
In
the event that the Closing shall not have occurred with respect to a Buyer within five (5) days of the date hereof, then such
Buyer shall have the right to terminate its obligations under this Agreement with respect to itself at any time on or after the
close of business on such date without liability of such Buyer to any other party; provided, however, (i) the right to terminate
this Agreement under this Section 8 shall not be available to such Buyer if the failure of the transactions contemplated by this
Agreement to have been consummated by such date is the result of such Buyer’s breach of this Agreement and (ii) the abandonment
of the sale and purchase of the Notes and the Warrants shall be applicable only to such Buyer providing such written notice, provided
further that no such termination shall affect any obligation of the Company under this Agreement to reimburse such Buyer for the
expenses described in Section 4(g) above. Nothing contained in this Section 8 shall be deemed to release any party from any liability
for any breach by such party of the terms and provisions of this Agreement or the other Transaction Documents or to impair the
right of any party to compel specific performance by any other party of its obligations under this Agreement or the other Transaction
Documents.
9. MISCELLANEOUS.
(a) Governing
Law; Jurisdiction; Jury Trial. All questions concerning the construction, validity, enforcement and interpretation of this
Agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict
of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the
laws of any jurisdictions other than the State of New York. The Company hereby irrevocably submits to the exclusive jurisdiction
of the state and federal courts sitting in The City of New York, Borough of Manhattan, for the adjudication of any dispute hereunder
or in connection herewith or under any of the other Transaction Documents or with any transaction contemplated hereby or thereby,
and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that
the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address
for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process
and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted
by law. Nothing contained herein shall be deemed or operate to preclude any Buyer from bringing suit or taking other legal action
against the Company in any other jurisdiction to collect on the Company’s obligations to such Buyer or to enforce a judgment
or other court ruling in favor of such Buyer. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT
TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR UNDER ANY OTHER TRANSACTION DOCUMENT OR IN CONNECTION
WITH OR ARISING OUT OF THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY.
(b) Counterparts.
This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement
and shall become effective when counterparts have been signed by each party and delivered to the other party. In the event that
any signature is delivered by facsimile transmission or by an e-mail which contains a portable document format (.pdf) file of
an executed signature page, such signature page 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 signature page were an original thereof.
(c) Headings;
Gender. The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation
of, this Agreement. Unless the context clearly indicates otherwise, each pronoun herein shall be deemed to include the masculine,
feminine, neuter, singular and plural forms thereof. The terms “including,” “includes,” “include”
and words of like import shall be construed broadly as if followed by the words “without limitation.” The terms “herein,”
“hereunder,” “hereof” and words of like import refer to this entire Agreement instead of just the provision
in which they are found.
(d) Severability;
Maximum Payment Amounts. If any provision of this Agreement is prohibited by law or otherwise determined to be invalid or
unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable
shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability
of such provision shall not affect the validity of the remaining provisions of this Agreement so long as this Agreement as so
modified continues to express, without material change, the original intentions of the parties as to the subject matter hereof
and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective
expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred
upon the parties. The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s)
with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable
provision(s). Notwithstanding anything to the contrary contained in this Agreement or any other Transaction Document (and without
implication that the following is required or applicable), it is the intention of the parties that in no event shall amounts and
value paid by the Company and/or any of its Subsidiaries (as the case may be), or payable to or received by any of the Buyers,
under the Transaction Documents (including without limitation, any amounts that would be characterized as “interest”
under applicable law) exceed amounts permitted under any applicable law. Accordingly, if any obligation to pay, payment made to
any Buyer, or collection by any Buyer pursuant the Transaction Documents is finally judicially determined to be contrary to any
such applicable law, such obligation to pay, payment or collection shall be deemed to have been made by mutual mistake of such
Buyer, the Company and its Subsidiaries and such amount shall be deemed to have been adjusted with retroactive effect to the maximum
amount or rate of interest, as the case may be, as would not be so prohibited by the applicable law. Such adjustment shall be
effected, to the extent necessary, by reducing or refunding, at the option of such Buyer, the amount of interest or any other
amounts which would constitute unlawful amounts required to be paid or actually paid to such Buyer under the Transaction Documents.
For greater certainty, to the extent that any interest, charges, fees, expenses or other amounts required to be paid to or received
by such Buyer under any of the Transaction Documents or related thereto are held to be within the meaning of “interest”
or another applicable term to otherwise be violative of applicable law, such amounts shall be pro-rated over the period of time
to which they relate.
(e) Entire
Agreement; Amendments. This Agreement, the other Transaction Documents and the schedules and exhibits attached hereto and
thereto and the instruments referenced herein and therein supersede all other prior oral or written agreements between the Buyers,
the Company, its Subsidiaries, their affiliates and Persons acting on their behalf, including, without limitation, any transactions
by any Buyer with respect to Common Stock or the Securities, and the other matters contained herein and therein, and this Agreement,
the other Transaction Documents, the schedules and exhibits attached hereto and thereto and the instruments referenced herein
and therein contain the entire understanding of the parties solely with respect to the matters covered herein and therein; provided,
however, nothing contained in this Agreement or any other Transaction Document shall (or shall be deemed to) (i) have any effect
on any agreements any Buyer has entered into with, or any instruments any Buyer has received from, the Company or any of its Subsidiaries
prior to the date hereof with respect to any prior investment made by such Buyer in the Company or (ii) waive, alter, modify or
amend in any respect any obligations of the Company or any of its Subsidiaries, or any rights of or benefits to any Buyer or any
other Person, in any agreement entered into prior to the date hereof between or among the Company and/or any of its Subsidiaries
and any Buyer, or any instruments any Buyer received from the Company and/or any of its Subsidiaries prior to the date hereof,
and all such agreements and instruments shall continue in full force and effect. Except as specifically set forth herein or therein,
neither the Company nor any Buyer makes any representation, warranty, covenant or undertaking with respect to such matters. For
clarification purposes, the Recitals are part of this Agreement. No provision of this Agreement may be amended other than by an
instrument in writing signed by the Company and the Required Holders (as defined below), and any amendment to any provision of
this Agreement made in conformity with the provisions of this Section 9(e) shall be binding on all Buyers and holders of Securities,
as applicable; provided that no such amendment shall be effective to the extent that it (A) applies to less than all of the holders
of the Securities then outstanding or (B) imposes any obligation or liability on any Buyer without such Buyer’s prior written
consent (which may be granted or withheld in such Buyer’s sole discretion); and provided further that the provisions of
Sections 4(v) and 4(w) above cannot be amended or waived without the additional prior written approval of the Collateral Agent
or its successor. No waiver shall be effective unless it is in writing and signed by an authorized representative of the waiving
party, provided that the Required Holders may waive any provision of this Agreement, and any waiver of any provision of this Agreement
made in conformity with the provisions of this Section 9(e) shall be binding on all Buyers and holders of Securities, as applicable,
provided that no such waiver shall be effective to the extent that it (1) applies to less than all of the holders of the Securities
then outstanding (unless a party gives a waiver as to itself only) or (2) imposes any obligation or liability on any Buyer without
such Buyer’s prior written consent (which may be granted or withheld in such Buyer’s sole discretion). No consideration
(other than reimbursement of legal fees) shall be offered or paid to any Person to amend or consent to a waiver or modification
of any provision of any of the Transaction Documents unless the same consideration also is offered to all of the parties to the
Transaction Documents, all holders of the Notes or all holders of the Warrants (as the case may be) (except that a holder of Notes
that does not have any of its Notes secured by cash amounts in a Master Control Account will not be entitled to any consideration
granted to any other holder of Notes in connection with any amendment, consent, waiver or modification related to any provision
relating to any Master Control Account). From the date hereof and while any Notes or Warrants are outstanding, the Company shall
not be permitted to receive any consideration from a Buyer or a holder of Notes or Warrants that is not otherwise contemplated
by the Transaction Documents in order to, directly or indirectly, induce the Company or any Subsidiary (i) to treat such Buyer
or holder of Notes or Warrants in a manner that is more favorable than to other similarly situated Buyers or holders of Notes
or Warrants, as applicable, or (ii) to treat any Buyer(s) or holder(s) of Notes or Warrants in a manner that is less favorable
than the Buyer or holder of Notes or Warrants that is paying such consideration; provided, however, that the determination of
whether a Buyer has been treated more or less favorably than another Buyer shall disregard any securities of the Company purchased
or sold by any Buyer. The Company has not, directly or indirectly, made any agreements with any Buyers relating to the terms or
conditions of the transactions contemplated by the Transaction Documents except as set forth in the Transaction Documents. Without
limiting the foregoing, the Company confirms that, except as set forth in this Agreement, no Buyer has made any commitment or
promise or has any other obligation to provide any financing to the Company, any Subsidiary or otherwise. As a material inducement
for each Buyer to enter into this Agreement, the Company expressly acknowledges and agrees that (x) no due diligence or other
investigation or inquiry conducted by a Buyer, any of its advisors or any of its representatives shall affect such Buyer’s
right to rely on, or shall modify or qualify in any manner or be an exception to any of, the Company’s representations and
warranties contained in this Agreement or any other Transaction Document and (y) unless a provision of this Agreement or any other
Transaction Document is expressly preceded by the phrase “except as disclosed in the SEC Documents,” nothing contained
in any of the SEC Documents shall affect such Buyer’s right to rely on, or shall modify or qualify in any manner or be an
exception to any of, the Company’s representations and warranties contained in this Agreement or any other Transaction Document.
“Required Holders” means (I) prior to the Closing Date, each Buyer entitled to purchase Notes at the Closing
and (II) on or after the Closing Date, holders of a majority of the Registrable Securities as of such time (excluding any Registrable
Securities held by the Company or any of its Subsidiaries as of such time) issued or issuable hereunder or pursuant to the Notes
and/or the Warrants (or the Buyers, with respect to any waiver or amendment of Section 4(o)); provided, that such majority must
include each holder of at least $500,000 in aggregate principal amount of Notes.
(f) Notices.
Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must
be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when
sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending
party) or electronic mail; or (iii) one (1) Business Day after deposit with an overnight courier service with next day delivery
specified, in each case, properly addressed to the party to receive the same. The addresses, facsimile numbers and e-mail addresses
for such communications shall be:
If to the
Company:
Infinity
Energy Resources, Inc.
11900 College Blvd., Suite 310
Overland Park, KS 66210
Telephone: (913) 948-9512
Facsimile: (913) 338-4455
Attention: Chief Executive Officer
Email: rossy1979@aol.com
With a copy
(for informational purposes only) to:
Christian
J. Hoffmann, III
Securities Counsel
Infinity Energy Resources, Inc.
Telephone: (602) 370-0150
E-Mail: cjhoff3@gmail.com
If to the
Transfer Agent:
Action Stock
Transfer Corporation
2469 E. Fort Union Blvd., Suite 214
Salt
Lake City, UT 84121
Telephone:
(801)274-1088
Facsimile: (801) 274-1099
Attention: Justeene Blankenship
Email: jb@actionstocktransfer.com
If
to a Buyer, to its address, e-mail address and facsimile number set forth on the Schedule of Buyers, with copies to such Buyer’s
representatives as set forth on the Schedule of Buyers,
with a copy
(for informational purposes only) to:
Kelley Drye
& Warren LLP
101 Park Avenue
New York, NY 10178
Telephone: (212) 808-7540
Facsimile: (212) 808-7897
Attention: Michael A. Adelstein, Esq.
E-mail: madelstein@kelleydrye.com
or
to such other address, e-mail address and/or facsimile number and/or to the attention of such other Person as the recipient party
has specified by written notice given to each other party five (5) days prior to the effectiveness of such change, provided that
Kelley Drye & Warren LLP shall only be provided copies of notices sent to the lead Buyer. Written confirmation of receipt
(A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated
by the sender’s facsimile machine or e-mail containing the time, date, recipient facsimile number and, with respect to each
facsimile transmission, an image of the first page of such transmission or (C) provided by an overnight courier service shall
be rebuttable evidence of personal service, receipt by facsimile or receipt from an overnight courier service in accordance with
clause (i), (ii) or (iii) above, respectively.
(g) Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors
and assigns, including any purchasers of any of the Notes and Warrants. The Company shall not assign this Agreement or any rights
or obligations hereunder without the prior written consent of the Required Holders, including, without limitation, by way of a
Fundamental Transaction (as defined in the Warrants) (unless the Company is in compliance with the applicable provisions governing
Fundamental Transactions set forth in the Warrants) or a Fundamental Transaction (as defined in the Notes) (unless the Company
is in compliance with the applicable provisions governing Fundamental Transactions set forth in the Notes). A Buyer may assign
some or all of its rights hereunder in connection with any transfer of any of its Securities without the consent of the Company,
in which event such assignee shall be deemed to be a Buyer hereunder with respect to such assigned rights.
(h) No
Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted
successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, other than
the Indemnitees referred to in Section 9(k).
(i) Survival.
The representations, warranties, agreements and covenants shall survive the Closing. Each Buyer shall be responsible only for
its own representations, warranties, agreements and covenants hereunder.
(j) Further
Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall
execute and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably request
in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated
hereby.
(k) Indemnification.
In consideration of each Buyer’s execution and delivery of the Transaction Documents and acquiring the Securities thereunder
and in addition to all of the Company’s other obligations under the Transaction Documents, the Company shall defend, protect,
indemnify and hold harmless each Buyer and each holder of any Securities and all of their stockholders, partners, members, officers,
directors, employees and direct or indirect investors and any of the foregoing Persons’ agents or other representatives
(including, without limitation, those retained in connection with the transactions contemplated by this Agreement) (collectively,
the “Indemnitees”) from and against any and all actions, causes of action, suits, claims, losses, costs, penalties,
fees, liabilities and damages, and expenses in connection therewith (irrespective of whether any such Indemnitee is a party to
the action for which indemnification hereunder is sought), and including reasonable attorneys’ fees and disbursements (the
“Indemnified Liabilities”), incurred by any Indemnitee as a result of, or arising out of, or relating to (i)
any misrepresentation or breach of any representation or warranty made by the Company or any Subsidiary in any of the Transaction
Documents, (ii) any breach of any covenant, agreement or obligation of the Company or any Subsidiary contained in any of the Transaction
Documents or (iii) any cause of action, suit, proceeding or claim brought or made against such Indemnitee by a third party (including
for these purposes a derivative action brought on behalf of the Company or any Subsidiary) or which otherwise involves such Indemnitee
that arises out of or results from (A) the execution, delivery, performance or enforcement of any of the Transaction Documents,
(B) any transaction financed or to be financed in whole or in part, directly or indirectly, with the proceeds of the issuance
of the Securities, (C) any disclosure properly made by such Buyer pursuant to Section 4(i), or (D) the status of such Buyer or
holder of the Securities either as an investor in the Company pursuant to the transactions contemplated by the Transaction Documents
or as a party to this Agreement (including, without limitation, as a party in interest or otherwise in any action or proceeding
for injunctive or other equitable relief). To the extent that the foregoing undertaking by the Company may be unenforceable for
any reason, the Company shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities
which is permissible under applicable law. Except as otherwise set forth herein, the mechanics and procedures with respect to
the rights and obligations under this Section 9(k) shall be the same as those set forth in Section 6 of the Registration Rights
Agreement.
(l) Construction.
The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and
no rules of strict construction will be applied against any party. No specific representation or warranty shall limit the generality
or applicability of a more general representation or warranty. Each and every reference to share prices, shares of Common Stock
and any other numbers in this Agreement that relate to the Common Stock shall be automatically adjusted for any stock splits,
stock dividends, stock combinations, recapitalizations or other similar transactions that occur with respect to the Common Stock
after the date of this Agreement. It is expressly understood and agreed that for all purposes of this Agreement, and without implication
that the contrary would otherwise be true, neither transactions nor purchases nor sales shall include the location and/or reservation
of borrowable shares of Common Stock.
(m) Remedies.
Each Buyer and in the event of assignment by Buyer of its rights and obligations hereunder, each holder of Securities, shall have
all rights and remedies set forth in the Transaction Documents and all rights and remedies which such holders have been granted
at any time under any other agreement or contract and all of the rights which such holders have under any law. Any Person having
any rights under any provision of this Agreement shall be entitled to enforce such rights specifically (without posting a bond
or other security), to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights
granted by law. Furthermore, the Company recognizes that in the event that it or any Subsidiary fails to perform, observe, or
discharge any or all of its or such Subsidiary’s (as the case may be) obligations under the Transaction Documents, any remedy
at law may prove to be inadequate relief to the Buyers. The Company therefore agrees that the Buyers shall be entitled to seek
specific performance and/or temporary, preliminary and permanent injunctive or other equitable relief from any court of competent
jurisdiction in any such case without the necessity of proving actual damages and without posting a bond or other security. The
remedies provided in this Agreement and the other Transaction Documents shall be cumulative and in addition to all other remedies
available under this Agreement and the other Transaction Documents, at law or in equity (including a decree of specific performance
and/or other injunctive relief).
(n) Withdrawal
Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) the Transaction
Documents, whenever any Buyer exercises a right, election, demand or option under a Transaction Document and the Company or any
Subsidiary does not timely perform its related obligations within the periods therein provided, then such Buyer may rescind or
withdraw, in its sole discretion from time to time upon written notice to the Company or such Subsidiary (as the case may be),
any relevant notice, demand or election in whole or in part without prejudice to its future actions and rights.
(o) Payment
Set Aside; Currency. To the extent that the Company makes a payment or payments to any Buyer hereunder or pursuant to any
of the other Transaction Documents or any of the Buyers enforce or exercise their rights hereunder or 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, foreign, 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. Unless otherwise expressly indicated, all dollar amounts referred to in this Agreement
and the other Transaction Documents are in United States Dollars (“U.S. Dollars”), and all amounts owing under
this Agreement and all other Transaction Documents shall be paid in U.S. Dollars. All amounts denominated in other currencies
(if any) shall be converted into the U.S. Dollar equivalent amount in accordance with the Exchange Rate on the date of calculation.
“Exchange Rate” means, in relation to any amount of currency to be converted into U.S. Dollars pursuant
to this Agreement, the U.S. Dollar exchange rate as published in the Wall Street Journal on the relevant date of calculation.
(p) Judgment
Currency.
(i) If
for the purpose of obtaining or enforcing judgment against the Company in connection with this Agreement or any other Transaction
Document in any court in any jurisdiction it becomes necessary to convert into any other currency (such other currency being hereinafter
in this Section 9(p) referred to as the “Judgment Currency”) an amount due in US Dollars under this Agreement,
the conversion shall be made at the Exchange Rate prevailing on the Trading Day immediately preceding:
(1) the
date actual payment of the amount due, in the case of any proceeding in the courts of New York or in the courts of any other jurisdiction
that will give effect to such conversion being made on such date: or
(2) the
date on which the foreign court determines, in the case of any proceeding in the courts of any other jurisdiction (the date as
of which such conversion is made pursuant to this Section 9(p)(i)(2) being hereinafter referred to as the “Judgment Conversion
Date”).
(ii) If
in the case of any proceeding in the court of any jurisdiction referred to in Section 9(p)(i)(2) above, there is a change in the
Exchange Rate prevailing between the Judgment Conversion Date and the date of actual payment of the amount due, the applicable
party shall pay such adjusted amount as may be necessary to ensure that the amount paid in the Judgment Currency, when converted
at the Exchange Rate prevailing on the date of payment, will produce the amount of US Dollars which could have been purchased
with the amount of Judgment Currency stipulated in the judgment or judicial order at the Exchange Rate prevailing on the Judgment
Conversion Date.
(iii) Any
amount due from the Company under this provision shall be due as a separate debt and shall not be affected by judgment being obtained
for any other amounts due under or in respect of this Agreement or any other Transaction Document.
(q) Independent
Nature of Buyers’ Obligations and Rights. The obligations of each Buyer under the Transaction Documents are several
and not joint with the obligations of any other Buyer, and no Buyer shall be responsible in any way for the performance of the
obligations of any other Buyer under any Transaction Document. Nothing contained herein or in any other Transaction Document,
and no action taken by any Buyer pursuant hereto or thereto, shall be deemed to constitute the Buyers as, and the Company acknowledges
that the Buyers do not so constitute, a partnership, an association, a joint venture or any other kind of group or entity, or
create a presumption that the Buyers are in any way acting in concert or as a group or entity, and the Company shall not assert
any such claim with respect to such obligations or the transactions contemplated by the Transaction Documents or any matters,
and the Company acknowledges that the Buyers are not acting in concert or as a group, and the Company shall not assert any such
claim, with respect to such obligations or the transactions contemplated by the Transaction Documents. The decision of each Buyer
to purchase Securities pursuant to the Transaction Documents has been made by such Buyer independently of any other Buyer. Each
Buyer acknowledges that no other Buyer has acted as agent for such Buyer in connection with such Buyer making its investment hereunder
and that no other Buyer will be acting as agent of such Buyer in connection with monitoring such Buyer’s investment in the
Securities or enforcing its rights under the Transaction Documents. The Company and each Buyer confirms that each Buyer has independently
participated with the Company and its Subsidiaries in the negotiation of the transaction contemplated hereby with the advice of
its own counsel and advisors. Each Buyer shall be entitled to independently protect and enforce its rights, including, without
limitation, the rights arising out of this Agreement or out of any other Transaction Documents, and it shall not be necessary
for any other Buyer to be joined as an additional party in any proceeding for such purpose. The use of a single agreement to effectuate
the purchase and sale of the Securities contemplated hereby was solely in the control of the Company, not the action or decision
of any Buyer, and was done solely for the convenience of the Company and its Subsidiaries and not because it was required or requested
to do so by any Buyer. It is expressly understood and agreed that each provision contained in this Agreement and in each other
Transaction Document is between the Company, each Subsidiary and a Buyer, solely, and not between the Company, its Subsidiaries
and the Buyers collectively and not between and among the Buyers.
[signature
pages follow]
IN
WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this Agreement to be duly executed
as of the date first written above.
|
COMPANY: |
|
|
|
INFINITY
ENERGY RESOURCES, INC. |
|
|
|
By: |
/s/
Stanton E. Ross |
|
Name: |
Stanton E. Ross |
|
Title: |
Chairman, President
& CEO |
IN
WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this Agreement to be duly executed
as of the date first written above.
|
BUYER: |
|
|
|
|
HUDSON BAY MASTER FUND LTD |
|
|
|
|
By: |
/s/
George Antonopoulos |
|
Name: |
George
Antonopoulos |
|
Title: |
|
SCHEDULE
OF BUYERS
(1) | |
(2) | |
| (3) | | |
| (4) | | |
| (5) | | |
| (6) | | |
| (7) | | |
(8) |
| |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
|
Buyer | |
Address and
Facsimile Number | |
| Original
Principal Amount of Notes | | |
| Aggregate
Number of Warrant Shares | | |
| Purchase
Price | | |
| Wire
Amount to Company | | |
| Original
Principal Amount of Investor Notes | | |
Legal Representative’s
Address and Facsimile Number |
Hudson Bay Master Fund Ltd. | |
Please deliver any notices other than Pre-Notices to:
777 Third Avenue, 30th Floor
New York, NY 10017
Attention: Yoav Roth Facsimile: (212) 571-1279
E-mail: investments@hudsonbaycapital.com
Residence: Cayman Islands
Please deliver any Pre-Notice to:
777 Third Ave., 30th Floor New York, NY 10017 Facsimile: (646) 214-7946 Attention: Scott Black General Counsel and Chief
Compliance Officer
| |
| 12,000,000 | | |
| 18,000,000 | | |
| 10,000,000 | | |
$ | 450,000 | | |
$ | 9,550,000 | | |
Kelley Drye & Warren LLP 101 Park Avenue New York, NY 10178 Telephone: (212) 808-7540 Facsimile: (212) 808-7897 Attention: Michael A. Adelstein, Esq. |
EXHIBIT
10.47
REGISTRATION
RIGHTS AGREEMENT
This
REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of May 7, 2015, is by and among Infinity
Energy Resources, Inc., a Delaware corporation with offices located at 11900 College Blvd., Suite 310, Overland Park KS 66210
(the “Company”), and the undersigned buyers (each, a “Buyer,” and collectively, the “Buyers”).
RECITALS
A. In
connection with the Securities Purchase Agreement by and among the parties hereto, dated as of May 7, 2015 (the “Securities
Purchase Agreement”), the Company has agreed, upon the terms and subject to the conditions of the Securities Purchase
Agreement, to issue and sell to each Buyer (i) the Notes (as defined in the Securities Purchase Agreement) which will be convertible
into Conversion Shares (as defined in the Securities Purchase Agreement) in accordance with the terms of the Notes and (ii) the
Warrants (as defined in the Securities Purchase Agreement) which will be exercisable to purchase Warrant Shares (as defined in
the Securities Purchase Agreement) in accordance with the terms of the Warrants.
B. To
induce the Buyers to consummate the transactions contemplated by the Securities Purchase Agreement, the Company has agreed to
provide certain registration rights under the Securities Act of 1933, as amended, and the rules and regulations thereunder, or
any similar successor statute (collectively, the “1933 Act”), and applicable state securities laws.
AGREEMENT
NOW,
THEREFORE, in consideration of the premises and the mutual covenants contained herein and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Company and each of the Buyers hereby agree as follows:
1. Definitions.
Capitalized
terms used herein and not otherwise defined herein shall have the respective meanings set forth in the Securities Purchase Agreement.
As used in this Agreement, the following terms shall have the following meanings:
(a) “Business
Day” means any day other than Saturday, Sunday or any other day on which commercial banks in New York, New York are
authorized or required by law to remain closed.
(b) “Closing
Date” shall have the meaning set forth in the Securities Purchase Agreement.
(c) “Effective
Date” means the date that the applicable Registration Statement has been declared effective by the SEC.
(d) “Effectiveness
Deadline” means (i) with respect to the initial Registration Statement required to be filed pursuant to Section 2(a),
means the date which is the earlier of (x) (a) in the event that the Initial Registration Statement is not subject to a full or
limited review by the SEC, ninety (90) calendar days after the Closing Date or (b) in the event that the Initial Registration
Statement is subject to a full or limited review by the SEC, one hundred twenty (120) calendar days after the Closing Date and
(y) the fifth (5th) Business Day after the date the Company is notified (orally or in writing, whichever is earlier)
by the SEC that such Initial Registration Statement will not be reviewed or will not be subject to further review; and (ii) with
respect to any additional Registration Statements that may be required to be filed by the Company pursuant to this Agreement,
the earlier of the (A) 90th calendar day following the date on which the Company was required to file such additional
Registration Statement and (B) 2nd Business Day after the date the Company is notified (orally or in writing, whichever
is earlier) by the SEC that such Registration Statement will not be reviewed or will not be subject to further review; provided,
however, that if the Effectiveness Deadline falls on a Saturday, Sunday or other day that the SEC is closed for business, the
Effectiveness Deadline shall be extended to the next Business Day on which the SEC is open for business.
(e) “Filing
Deadline” means (i) with respect to the initial Registration Statement required to be filed pursuant to Section 2(a),
the 45th calendar day after the Closing Date and (ii) with respect to any additional Registration Statements that may
be required to be filed by the Company pursuant to this Agreement, the date on which the Company was required to file such additional
Registration Statement pursuant to the terms of this Agreement.
(f) “Investor”
means a Buyer or any transferee or assignee of any Registrable Securities, Notes or Warrants, as applicable, to whom a Buyer assigns
its rights under this Agreement and who agrees to become bound by the provisions of this Agreement in accordance with Section
9 and any transferee or assignee thereof to whom a transferee or assignee of any Registrable Securities, Notes or Warrants, as
applicable, assigns its rights under this Agreement and who agrees to become bound by the provisions of this Agreement in accordance
with Section 9.
(g) “Person”
means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization
or a government or any department or agency thereof.
(h) “register,”
“registered,” and “registration” refer to a registration effected by preparing and filing
one or more Registration Statements in compliance with the 1933 Act and pursuant to Rule 415 and the declaration of effectiveness
of such Registration Statement(s) by the SEC.
(i) “Registrable
Securities” means (i) the Conversion Shares, (ii) the Warrant Shares and (iii) any capital stock of the Company issued
or issuable with respect to the Conversion Shares, the Warrant Shares, the Notes or the Warrants, including, without limitation,
(1) as a result of any stock split, stock dividend, recapitalization, exchange or similar event or otherwise and (2) shares of
capital stock of the Company into which the shares of Common Stock (as defined in the Notes) are converted or exchanged and shares
of capital stock of a Successor Entity (as defined in the Warrants) into which the shares of Common Stock are converted or exchanged,
in each case, without regard to any limitations on conversion of the Notes or exercise of the Warrants.
(j) “Registration
Statement” means a registration statement or registration statements of the Company filed under the 1933 Act covering
Registrable Securities.
(k) “Required
Holders” means, as of any given time, the holders of a majority of the Registrable Securities as of such time (excluding
any Registrable Securities held by the Company or any of its Subsidiaries as of such time); provided, that such majority must
include each holder of at least $500,000 in aggregate principal amount of Notes.
(l) “Required
Registration Amount” means the sum of (i) 130% of the maximum number of Conversion Shares issuable upon conversion of
the Notes (assuming for purposes hereof that (x) the Notes are convertible at the initial Conversion Price (as defined in the
Notes), (y) interest on the Notes shall accrue through the second anniversary of the Closing Date and will be converted in shares
of Common Stock at an interest conversion price equal to the Interest Conversion Price (as defined in the Notes) assuming an Interest
Date (as defined in the Note) as of the date hereof and (z) any such conversion shall not take into account any limitations on
the conversion of the Notes set forth in the Notes) and (ii) the maximum number of Warrant Shares issuable upon exercise of the
Warrants (without taking into account any limitations on the exercise of the Warrants set forth therein), all subject to adjustment
as provided in Section 2(d) and/or Section 2(f).
(m) “Rule
144” means Rule 144 promulgated by the SEC under the 1933 Act, as such rule may be amended from time to time, or any
other similar or successor rule or regulation of the SEC that may at any time permit the Investors to sell securities of the Company
to the public without registration.
(n) “Rule
415” means Rule 415 promulgated by the SEC under the 1933 Act, as such rule may be amended from time to time, or any
other similar or successor rule or regulation of the SEC providing for offering securities on a continuous or delayed basis.
(o) “SEC”
means the United States Securities and Exchange Commission or any successor thereto.
2. Registration.
(a) Mandatory
Registration. The Company shall prepare and, as soon as practicable, but in no event later than the Filing Deadline, file
with the SEC an initial Registration Statement on Form S-1 covering the resale of all of the Registrable Securities, provided
that such initial Registration Statement shall register for resale at least the number of shares of Common Stock equal to the
Required Registration Amount as of the date such Registration Statement is initially filed with the SEC. Such initial Registration
Statement, and each other Registration Statement required to be filed pursuant to the terms of this Agreement, shall contain (except
if otherwise directed by the Required Holders) the “Selling Stockholders” and “Plan of Distribution”
sections in substantially the form attached hereto as Exhibit B. The Company shall use its best efforts to have such initial
Registration Statement, and each other Registration Statement required to be filed pursuant to the terms of this Agreement and
declared effective by the SEC as soon as practicable by the applicable Effectiveness Deadline for such Registration Statement.
(b) Legal
Counsel. Subject to Section 5 hereof, Kelley Drye & Warren LLP, counsel solely to the lead investor (“Legal Counsel”)
shall review and oversee any registration, solely on behalf of the lead investor, pursuant to this Section 2.
(c) Ineligibility
to Use Form S-3. In the event that Form S-3 is not available for the registration of the resale of Registrable
Securities hereunder, the Company shall (i) register the resale of the Registrable Securities on Form S-1 or another
appropriate form reasonably acceptable to the Required Holders and (ii) undertake to register the resale of the Registrable
Securities on Form S-3 as soon as such form is available, provided that the Company shall maintain the effectiveness of all
Registration Statements then in effect until such time as a Registration Statement on Form S-3 covering the resale of all the
Registrable Securities has been declared effective by the SEC and the prospectus contained therein is available for
use.
(d) Sufficient
Number of Shares Registered. In the event the number of shares available under any Registration Statement is insufficient
to cover all of the Registrable Securities required to be covered by such Registration Statement or an Investor’s allocated
portion of the Registrable Securities pursuant to Section 2(h), the Company shall amend such Registration Statement (if permissible),
or file with the SEC a new Registration Statement (on the short form available therefor, if applicable), or both, so as to cover
at least the Required Registration Amount as of the Trading Day immediately preceding the date of the filing of such amendment
or new Registration Statement, in each case, as soon as practicable, but in any event not later than fifteen (15) days after the
necessity therefor arises (but taking account of any Staff position with respect to the date on which the Staff will permit such
amendment to the Registration Statement and/or such new Registration Statement (as the case may be) to be filed with the SEC).
The Company shall use its best efforts to cause such amendment to such Registration Statement and/or such new Registration Statement
(as the case may be) to become effective as soon as practicable following the filing thereof with the SEC, but in no event later
than the applicable Effectiveness Deadline for such Registration Statement. For purposes of the foregoing provision, the number
of shares available under a Registration Statement shall be deemed “insufficient to cover all of the Registrable Securities”
if at any time the number of shares of Common Stock available for resale under the applicable Registration Statement is less than
the product determined by multiplying (i) the Required Registration Amount as of such time by (ii) 0.90. The calculation set forth
in the foregoing sentence shall be made without regard to any limitations on conversion, amortization and/or redemption of the
Notes ir exercise if tge Warrants (and such calculation shall assume (A) that the Notes are then convertible in full into shares
of Common Stock at the thenprevailing Conversion Rate (as defined in the Notes), (B) the initial outstanding principal amount
of the Notes remains outstanding through the scheduled Maturity Date (as defined in the Notes) and no redemptions of the Notes
occur prior to the scheduled Maturity Date and (C) the Warrants are then exercisable in full into shares of Common Stock at the
thenprevailing Exercise Price (as defined in the Warrants)).
(e) Effect
of Failure to File and Obtain and Maintain Effectiveness of any Registration Statement. If (i) a Registration Statement covering
the resale of all of the Registrable Securities required to be covered thereby (disregarding any reduction pursuant to Section
2(f)) and required to be filed by the Company pursuant to this Agreement is not filed with the SEC on or before the Filing Deadline
for such Registration Statement (a “Filing Failure”) (it being understood that if the Company files a Registration
Statement without affording each Investor and Legal Counsel the opportunity to review and comment on the same as required by Section
3(c) hereof, the Company shall be deemed to not have satisfied this clause (i)(A) and such event shall be deemed to be a Filing
Failure), (ii) other than during an Allowable Grace Period (as defined below), on any day after the Effective Date of a Registration
Statement sales of all of the Registrable Securities required to be included on such Registration Statement (disregarding any
reduction pursuant to Section 2(f)) cannot be made pursuant to such Registration Statement (including, without limitation, because
of a failure to keep such Registration Statement effective, a failure to disclose such information as is necessary for sales to
be made pursuant to such Registration Statement, a suspension or delisting of (or a failure to timely list) the shares of Common
Stock on the Principal Market (as defined in the Securities Purchase Agreement) or any other limitations imposed by the Principal
Market, or a failure to register a sufficient number of shares of Common Stock or by reason of a stop order) or the prospectus
contained therein is not available for use for any reason (a “Maintenance Failure”), or (iii) if a Registration
Statement is not effective for any reason or the prospectus contained therein is not available for use for any reason, and either
(x) the Company fails for any reason to satisfy the requirements of Rule 144(c)(1), including, without limitation, the failure
to satisfy the current public information requirement under Rule 144(c) or (y) the Company 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) (a “Current Public Information Failure”) as a result of which any of the Investors are unable to
sell Registrable Securities without restriction under Rule 144 (including, without limitation, volume restrictions), then, as
partial relief for the damages to any holder by reason of any such delay in, or reduction of, its ability to sell the underlying
shares of Common Stock (which remedy shall not be exclusive of any other remedies available at law or in equity, including, without
limitation, specific performance), the Company shall pay to each holder of Registrable Securities relating to such Registration
Statement an amount in cash equal to two percent (2%) of such Investor’s original principal amount stated in such Investor’s
Note on the Closing Date (1) on the date of such Filing Failure, Maintenance Failure or Current Public Information Failure, as
applicable, and (2) on every thirty (30) day anniversary of (I) a Filing Failure until such Filing Failure is cured; (II) a Maintenance
Failure until such Maintenance Failure is cured; and (III) a Current Public Information Failure until the earlier of (i) the date
such Current Public Information Failure is cured and (ii) such time that such public information is no longer required pursuant
to Rule 144 (in each case, pro rated for periods totaling less than thirty (30) days). The payments to which a holder of Registrable
Securities shall be entitled pursuant to this Section 2(e) are referred to herein as “Registration Delay Payments.”
Following the initial Registration Delay Payment for any particular event or failure (which shall be paid on the date of such
event or failure, as set forth above), without limiting the foregoing, if an event or failure giving rise to the Registration
Delay Payments is cured prior to any thirty (30) day anniversary of such event or failure, then such Registration Delay Payment
shall be made on the third (3rd) Business Day after such cure. In the event the Company fails to make Registration
Delay Payments in a timely manner in accordance with the foregoing, such Registration Delay Payments shall bear interest at the
rate of two percent (2%) per month (prorated for partial months) until paid in full. Notwithstanding the foregoing, no Registration
Delay Payments shall be owed to an Investor (other than with respect to a Maintenance Failure resulting from a suspension or delisting
of (or a failure to timely list) the shares of Common Stock on the Principal Market) with respect to any period during which all
of such Investor’s Registrable Securities may be sold by such Investor without restriction under Rule 144 (including, without
limitation, volume restrictions) and without the need for current public information required by Rule 144(c)(1) (or Rule 144(i)(2),
if applicable).
(f) Offering.
Notwithstanding anything to the contrary contained in this Agreement, but subject to the payment of the Registration Delay Payments
pursuant to Section 2(e), in the event the staff of the SEC (the “Staff”) or the SEC seeks to characterize
any offering pursuant to a Registration Statement filed pursuant to this Agreement as constituting an offering of securities by,
or on behalf of, the Company, or in any other manner, such that the Staff or the SEC do not permit such Registration Statement
to become effective and used for resales in a manner that does not constitute such an offering and that permits the continuous
resale at the market by the Investors participating therein (or as otherwise may be acceptable to each Investor) without being
named therein as an “underwriter,” then the Company shall reduce the number of shares to be included in such Registration
Statement by all Investors until such time as the Staff and the SEC shall so permit such Registration Statement to become effective
as aforesaid. In making such reduction, the Company shall reduce the number of shares to be included by all Investors on a pro
rata basis (based upon the number of Registrable Securities otherwise required to be included for each Investor) unless the inclusion
of shares by a particular Investor or a particular set of Investors are resulting in the Staff or the SEC’s “by or
on behalf of the Company” offering position, in which event the shares held by such Investor or set of Investors shall be
the only shares subject to reduction (and if by a set of Investors on a pro rata basis by such Investors or on such other basis
as would result in the exclusion of the least number of shares by all such Investors); provided, that, with respect to such pro
rata portion allocated to any Investor, such Investor may elect the allocation of such pro rata portion among the Registrable
Securities of such Investor. In addition, in the event that the Staff or the SEC requires any Investor seeking to sell securities
under a Registration Statement filed pursuant to this Agreement to be specifically identified as an ”underwriter”
in order to permit such Registration Statement to become effective, and such Investor does not consent to being so named as an
underwriter in such Registration Statement, then, in each such case, the Company shall reduce the total number of Registrable
Securities to be registered on behalf of such Investor, until such time as the Staff or the SEC does not require such identification
or until such Investor accepts such identification and the manner thereof. Any reduction pursuant to this paragraph will first
reduce all Registrable Securities other than those issued pursuant to the Securities Purchase Agreement. In the event of any reduction
in Registrable Securities pursuant to this paragraph, an affected Investor shall have the right to require, upon delivery of a
written request to the Company signed by such Investor, the Company to file a registration statement within twenty (20) days of
such request (subject to any restrictions imposed by Rule 415 or required by the Staff or the SEC) for resale by such Investor
in a manner acceptable to such Investor, and the Company shall following such request cause to be and keep effective such registration
statement in the same manner as otherwise contemplated in this Agreement for registration statements hereunder, in each case until
such time as: (i) all Registrable Securities held by such Investor have been registered and sold pursuant to an effective Registration
Statement in a manner acceptable to such Investor or (ii) all Registrable Securities may be resold by such Investor without restriction
(including, without limitation, volume limitations) pursuant to Rule 144 (taking account of any Staff position with respect to
“affiliate” status) and without the need for current public information required by Rule 144(c)(1) (or Rule 144(i)(2),
if applicable) or (iii) such Investor agrees to be named as an underwriter in any such Registration Statement in a manner acceptable
to such Investor as to all Registrable Securities held by such Investor and that have not theretofore been included in a Registration
Statement under this Agreement (it being understood that the special demand right under this sentence may be exercised by an Investor
multiple times and with respect to limited amounts of Registrable Securities in order to permit the resale thereof by such Investor
as contemplated above).
(g) Piggyback
Registrations. Without limiting any obligation of the Company hereunder or under the Securities Purchase Agreement, if there
is not an effective Registration Statement covering all of the Registrable Securities or the prospectus contained therein is not
available for use and the Company shall determine to prepare and file with the SEC a registration statement relating to an offering
for its own account or the account of others under the 1933 Act of any of its equity securities (other than on Form S-4 or Form
S-8 (each as promulgated under the 1933 Act) or their then equivalents relating to equity securities to be issued solely in connection
with any acquisition of any entity or business or equity securities issuable in connection with the Company’s stock option
or other employee benefit plans), then the Company shall deliver to each Investor a written notice of such determination and,
if within fifteen (15) days after the date of the delivery of such notice, any such Investor shall so request in writing, the
Company shall include in such registration statement all or any part of such Registrable Securities such Investor requests to
be registered; provided, however, the Company shall not be required to register any Registrable Securities pursuant to this Section
2(g) that are eligible for resale pursuant to Rule 144 without restriction (including, without limitation, volume restrictions)
and without the need for current public information required by Rule 144(c)(1) (or Rule 144(i)(2), if applicable) or that are
the subject of a then-effective Registration Statement.
(h) Allocation
of Registrable Securities. The initial number of Registrable Securities included in any Registration Statement and any increase
in the number of Registrable Securities included therein shall be allocated pro rata among the Investors based on the number of
Registrable Securities held by each Investor at the time such Registration Statement covering such initial number of Registrable
Securities or increase thereof is declared effective by the SEC. In the event that an Investor sells or otherwise transfers any
of such Investor’s Registrable Securities, each transferee or assignee (as the case may be) that becomes an Investor shall
be allocated a pro rata portion of the then-remaining number of Registrable Securities included in such Registration Statement
for such transferor or assignee (as the case may be). Any shares of Common Stock included in a Registration Statement and which
remain allocated to any Person which ceases to hold any Registrable Securities covered by such Registration Statement shall be
allocated to the remaining Investors, pro rata based on the number of Registrable Securities then held by such Investors which
are covered by such Registration Statement.
(i) No
Inclusion of Other Securities. The Company shall in no event include any securities other than Registrable Securities on any
Registration Statement filed in accordance herewith without the prior written consent of the Required Holders. Until the Applicable
Date (as defined in the Securities Purchase Agreement), the Company shall not enter into any agreement providing any registration
rights to any of its security holders, except as otherwise permitted under the Securities Purchase Agreement.
3. Related
Obligations.
The
Company shall use its best efforts to effect the registration of the Registrable Securities in accordance with the intended method
of disposition thereof, and, pursuant thereto, the Company shall have the following obligations:
(a) The
Company shall promptly prepare and file with the SEC a Registration Statement with respect to all the Registrable Securities (but
in no event later than the applicable Filing Deadline) and use its best efforts to cause such Registration Statement to become
effective as soon as practicable after such filing (but in no event later than the Effectiveness Deadline). Subject to Allowable
Grace Periods, the Company shall keep each Registration Statement effective (and the prospectus contained therein available for
use) pursuant to Rule 415 for resales by the Investors on a delayed or continuous basis at then-prevailing market prices (and
not fixed prices) at all times until the earlier of (i) the date as of which all of the Investors may sell all of the Registrable
Securities required to be covered by such Registration Statement (disregarding any reduction pursuant to Section 2(f)) without
restriction pursuant to Rule 144 (including, without limitation, volume restrictions) and without the need for current public
information required by Rule 144(c)(1) (or Rule 144(i)(2), if applicable) or (ii) the date on which the Investors shall have sold
all of the Registrable Securities covered by such Registration Statement (the “Registration Period”). Notwithstanding
anything to the contrary contained in this Agreement, the Company shall ensure that, when filed and at all times while effective,
each Registration Statement (including, without limitation, all amendments and supplements thereto) and the prospectus (including,
without limitation, all amendments and supplements thereto) used in connection with such Registration Statement (1) shall not
contain any untrue statement of a material fact or omit to state a material fact required to be stated therein, or necessary to
make the statements therein (in the case of prospectuses, in the light of the circumstances in which they were made) not misleading
and (2) will disclose (whether directly or through incorporation by reference to other SEC filings to the extent permitted) all
material information regarding the Company and its securities. The Company shall submit to the SEC, within one (1) Business Day
after the later of the date that (i) the Company learns that no review of a particular Registration Statement will be made by
the Staff or that the Staff has no further comments on a particular Registration Statement (as the case may be) and (ii) the consent
of Legal Counsel is obtained pursuant to Section 3(c) (which consent shall be immediately sought), a request for acceleration
of effectiveness of such Registration Statement to a time and date not later than twenty-four (24) hours after the submission
of such request. The Company shall respond in writing to comments made by the SEC in respect of a Registration Statement as soon
as practicable, but in no event later than fifteen (15) days after the receipt of comments by or notice from the SEC that an amendment
is required in order for a Registration Statement to be declared effective.
(b) Subject
to Section 3(r) of this Agreement, the Company shall prepare and file with the SEC such amendments (including, without limitation,
post-effective amendments) and supplements to each Registration Statement and the prospectus used in connection with each such
Registration Statement, which prospectus is to be filed pursuant to Rule 424 promulgated under the 1933 Act, as may be necessary
to keep each such Registration Statement effective at all times during the Registration Period for such Registration Statement,
and, during such period, comply with the provisions of the 1933 Act with respect to the disposition of all Registrable Securities
of the Company required to be covered by such Registration Statement until such time as all of such Registrable Securities shall
have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof as set forth in
such Registration Statement; provided, however, by 8:30 a.m. (New York time) on the Business Day immediately following each Effective
Date, the Company shall file with the SEC in accordance with Rule 424(b) under the 1933 Act the final prospectus to be used in
connection with sales pursuant to the applicable Registration Statement (whether or not such a prospectus is technically required
by such rule). In the case of amendments and supplements to any Registration Statement which are required to be filed pursuant
to this Agreement (including, without limitation, pursuant to this Section 3(b)) by reason of the Company filing a report on Form
8-K, Form 10-Q or Form 10-K or any analogous report under the Securities Exchange Act of 1934, as amended (the “1934
Act”), the Company shall, if permitted under the applicable rules and regulations of the SEC, have incorporated such
report by reference into such Registration Statement, if applicable, or shall file such amendments or supplements with the SEC
on the same day on which the 1934 Act report is filed which created the requirement for the Company to amend or supplement such
Registration Statement.
(c) The
Company shall (A) permit Legal Counsel and legal counsel for each other Investor to review and comment upon (i) each Registration
Statement at least five (5) Business Days prior to its filing with the SEC and (ii) all amendments and supplements to each Registration
Statement (including, without limitation, the prospectus contained therein) (except for Annual Reports on Form 10-K, Quarterly
Reports on Form 10-Q, Current Reports on Form 8-K, and any similar or successor reports) within a reasonable number of days prior
to their filing with the SEC, and (B) not file any Registration Statement or amendment or supplement thereto in a form to which
Legal Counsel or any legal counsel for any other Investor reasonably objects. The Company shall not submit a request for acceleration
of the effectiveness of a Registration Statement or any amendment or supplement thereto or to any prospectus contained therein
without the prior consent of Legal Counsel, which consent shall not be unreasonably withheld. The Company shall promptly furnish
to Legal Counsel and legal counsel for each other Investor, without charge, (i) copies of any correspondence from the SEC or the
Staff to the Company or its representatives relating to each Registration Statement, provided that such correspondence shall not
contain any material, non-public information regarding the Company or any of its Subsidiaries (as defined in the Securities Purchase
Agreement), (ii) after the same is prepared and filed with the SEC, one (1) copy of each Registration Statement and any amendment(s)
and supplement(s) thereto, including, without limitation, financial statements and schedules, all documents incorporated therein
by reference, if requested by an Investor, and all exhibits and (iii) upon the effectiveness of each Registration Statement, one
(1) copy of the prospectus included in such Registration Statement and all amendments and supplements thereto. The Company shall
reasonably cooperate with Legal Counsel and legal counsel for each other Investor in performing the Company’s obligations
pursuant to this Section 3.
(d) The
Company shall promptly furnish to each Investor whose Registrable Securities are included in any Registration Statement, without
charge, (i) after the same is prepared and filed with the SEC, at least one (1) copy of each Registration Statement and any amendment(s)
and supplement(s) thereto, including, without limitation, financial statements and schedules, all documents incorporated therein
by reference, if requested by an Investor, all exhibits and each preliminary prospectus, (ii) upon the effectiveness of each Registration
Statement, ten (10) copies of the prospectus included in such Registration Statement and all amendments and supplements thereto
(or such other number of copies as such Investor may reasonably request from time to time) and (iii) such other documents, including,
without limitation, copies of any preliminary or final prospectus, as such Investor may reasonably request from time to time in
order to facilitate the disposition of the Registrable Securities owned by such Investor.
(e) The
Company shall use its best efforts to (i) register and qualify, unless an exemption from registration and qualification applies,
the resale by Investors of the Registrable Securities covered by a Registration Statement under such other securities or “blue
sky” laws of all applicable jurisdictions in the United States, (ii) prepare and file in those jurisdictions, such amendments
(including, without limitation, post-effective amendments) and supplements to such registrations and qualifications as may be
necessary to maintain the effectiveness thereof during the Registration Period, (iii) take such other actions as may be necessary
to maintain such registrations and qualifications in effect at all times during the Registration Period, and (iv) take all other
actions reasonably necessary or advisable to qualify the Registrable Securities for sale in such jurisdictions; provided, however,
the Company shall not be required in connection therewith or as a condition thereto to (x) qualify to do business in any jurisdiction
where it would not otherwise be required to qualify but for this Section 3(e), (y) subject itself to general taxation in any such
jurisdiction, or (z) file a general consent to service of process in any such jurisdiction. The Company shall promptly notify
Legal Counsel, legal counsel for each other Investor and each Investor who holds Registrable Securities of the receipt by the
Company of any notification with respect to the suspension of the registration or qualification of any of the Registrable Securities
for sale under the securities or “blue sky” laws of any jurisdiction in the United States or its receipt of actual
notice of the initiation or threatening of any proceeding for such purpose.
(f) The
Company shall notify Legal Counsel, legal counsel for each other Investor and each Investor in writing of the happening of any
event, as promptly as practicable after becoming aware of such event, as a result of which the prospectus included in a Registration
Statement, as then in effect, may include an untrue statement of a material fact or omission to state a material fact required
to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made,
not misleading (provided that in no event shall such notice contain any material, non-public information regarding the Company
or any of its Subsidiaries), and, subject to Section 3(r), promptly prepare a supplement or amendment to such Registration Statement
and such prospectus contained therein to correct such untrue statement or omission and deliver ten (10) copies of such supplement
or amendment to Legal Counsel, legal counsel for each other Investor and each Investor (or such other number of copies as Legal
Counsel, legal counsel for each other Investor or such Investor may reasonably request). The Company shall also promptly notify
Legal Counsel, legal counsel for each other Investor and each Investor in writing (i) when a prospectus or any prospectus supplement
or post-effective amendment has been filed, when a Registration Statement or any post-effective amendment has become effective
(notification of such effectiveness shall be delivered to Legal Counsel, legal counsel for each other Investor and each Investor
by facsimile or e-mail on the same day of such effectiveness and by overnight mail), and when the Company receives written notice
from the SEC that a Registration Statement or any post-effective amendment will be reviewed by the SEC, (ii) of any request by
the SEC for amendments or supplements to a Registration Statement or related prospectus or related information, (iii) of the Company’s
reasonable determination that a post-effective amendment to a Registration Statement would be appropriate; and (iv) of the receipt
of any request by the SEC or any other federal or state governmental authority for any additional information relating to the
Registration Statement or any amendment or supplement thereto or any related prospectus. The Company shall respond as promptly
as practicable to any comments received from the SEC with respect to each Registration Statement or any amendment thereto (it
being understood and agreed that the Company’s response to any such comments shall be delivered to the SEC no later than
fifteen (15) Business Days after the receipt thereof).
(g) The
Company shall (i) use its best efforts to prevent the issuance of any stop order or other suspension of effectiveness of each
Registration Statement or the use of any prospectus contained therein, or the suspension of the qualification, or the loss of
an exemption from qualification, of any of the Registrable Securities for sale in any jurisdiction and, if such an order or suspension
is issued, to obtain the withdrawal of such order or suspension at the earliest possible moment and (ii) notify Legal Counsel,
legal counsel for each other Investor and each Investor who holds Registrable Securities of the issuance of such order and the
resolution thereof or its receipt of actual notice of the initiation or threat of any proceeding for such purpose.
(h) If
any Investor may be required under applicable securities law to be described in any Registration Statement as an underwriter and
such Investor consents to so being named an underwriter, at the request of any Investor, the Company shall furnish to such Investor,
on the date of the effectiveness of such Registration Statement and thereafter from time to time on such dates as an Investor
may reasonably request (i) a letter, dated such date, from the Company’s independent certified public accountants in form
and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering,
addressed to the Investors, and (ii) an opinion, dated as of such date, of counsel representing the Company for purposes of such
Registration Statement, in form, scope and substance as is customarily given in an underwritten public offering, addressed to
the Investors.
(i) If
any Investor may be required under applicable securities law to be described in any Registration Statement as an underwriter and
such Investor consents to so being named an underwriter, upon the written request of such Investor, the Company shall make available
for inspection by (i) such Investor, (ii) legal counsel for such Investor and (iii) one (1) firm of accountants or other agents
retained by such Investor (collectively, the “Inspectors”), all pertinent financial and other records, and
pertinent corporate documents and properties of the Company (collectively, the “Records”), as shall be reasonably
deemed necessary by each Inspector, and cause the Company’s officers, directors and employees to supply all information
which any Inspector may reasonably request; provided, however, each Inspector shall agree in writing to hold in strict confidence
and not to make any disclosure (except to such Investor) or use of any Record or other information which the Company’s board
of directors determines in good faith to be confidential, and of which determination the Inspectors are so notified, unless (1)
the disclosure of such Records is necessary to avoid or correct a misstatement or omission in any Registration Statement or is
otherwise required under the 1933 Act, (2) the release of such Records is ordered pursuant to a final, non-appealable subpoena
or order from a court or government body of competent jurisdiction, or (3) the information in such Records has been made generally
available to the public other than by disclosure in violation of this Agreement or any other Transaction Document (as defined
in the Securities Purchase Agreement). Such Investor agrees that it shall, upon learning that disclosure of such Records is sought
in or by a court or governmental body of competent jurisdiction or through other means, give prompt notice to the Company and
allow the Company, at its expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for,
the Records deemed confidential. Nothing herein (or in any other confidentiality agreement between the Company and such Investor,
if any) shall be deemed to limit any Investor’s ability to sell Registrable Securities in a manner which is otherwise consistent
with applicable laws and regulations.
(j) The
Company shall hold in confidence and not make any disclosure of information concerning an Investor provided to the Company unless
(i) disclosure of such information is necessary to comply with federal or state securities laws, (ii) the disclosure of such information
is necessary to avoid or correct a misstatement or omission in any Registration Statement or is otherwise required to be disclosed
in such Registration Statement pursuant to the 1933 Act, (iii) the release of such information is ordered pursuant to a subpoena
or other final, non-appealable order from a court or governmental body of competent jurisdiction, or (iv) such information has
been made generally available to the public other than by disclosure in violation of this Agreement or any other Transaction Document.
The Company agrees that it shall, upon learning that disclosure of such information concerning an Investor is sought in or by
a court or governmental body of competent jurisdiction or through other means, give prompt written notice to such Investor and
allow such Investor, at such Investor’s expense, to undertake appropriate action to prevent disclosure of, or to obtain
a protective order for, such information.
(k) Without
limiting any obligation of the Company under the Securities Purchase Agreement, the Company shall use its best efforts either
to (i) cause all of the Registrable Securities covered by each Registration Statement to be listed on each securities exchange
on which securities of the same class or series issued by the Company are then listed, if any, if the listing of such Registrable
Securities is then permitted under the rules of such exchange, (ii) secure designation and quotation of all of the Registrable
Securities covered by each Registration Statement on an Eligible Market (as defined in the Securities Purchase Agreement), or
(iii) if, despite the Company’s best efforts to satisfy the preceding clauses (i) or (ii) the Company is unsuccessful in
satisfying the preceding clauses (i) or (ii), without limiting the generality of the foregoing, to use its best efforts to arrange
for at least two market makers to register with the Financial Industry Regulatory Authority (“FINRA”) as such
with respect to such Registrable Securities. In addition, the Company shall cooperate with each Investor and any broker or dealer
through which any such Investor proposes to sell its Registrable Securities in effecting a filing with FINRA pursuant to FINRA
Rule 5110 as requested by such Investor. The Company shall pay all fees and expenses in connection with satisfying its obligations
under this Section 3(k).
(l) The
Company shall cooperate with the Investors who hold Registrable Securities being offered and, to the extent applicable, facilitate
the timely preparation and delivery of certificates (not bearing any restrictive legend) representing the Registrable Securities
to be offered pursuant to a Registration Statement and enable such certificates to be in such denominations or amounts (as the
case may be) as the Investors may reasonably request from time to time and registered in such names as the Investors may request.
(m) If
requested by an Investor, the Company shall as soon as practicable after receipt of notice from such Investor and subject to Section
3(r) hereof, (i) incorporate in a prospectus supplement or post-effective amendment such information as an Investor reasonably
requests to be included therein relating to the sale and distribution of Registrable Securities, including, without limitation,
information with respect to the number of Registrable Securities being offered or sold, the purchase price being paid therefor
and any other terms of the offering of the Registrable Securities to be sold in such offering; (ii) make all required filings
of such prospectus supplement or post-effective amendment after being notified of the matters to be incorporated in such prospectus
supplement or post-effective amendment; and (iii) supplement or make amendments to any Registration Statement or prospectus contained
therein if reasonably requested by an Investor holding any Registrable Securities.
(n) The
Company shall use its best efforts to cause the Registrable Securities covered by a Registration Statement to be registered with
or approved by such other governmental agencies or authorities as may be necessary to consummate the disposition of such Registrable
Securities.
(o) The
Company shall make generally available to its security holders as soon as practical, but not later than ninety (90) days after
the close of the period covered thereby, an earnings statement (in form complying with, and in the manner provided by, the provisions
of Rule 158 under the 1933 Act) covering a twelve-month period beginning not later than the first day of the Company’s fiscal
quarter next following the applicable Effective Date of each Registration Statement.
(p) The
Company shall otherwise use its best efforts to comply with all applicable rules and regulations of the SEC in connection with
any registration hereunder.
(q) Within
one (1) Business Day after a Registration Statement which covers Registrable Securities is declared effective by the SEC, the
Company shall deliver, and shall cause legal counsel for the Company to deliver, to the transfer agent for such Registrable Securities
(with copies to the Investors whose Registrable Securities are included in such Registration Statement) confirmation that such
Registration Statement has been declared effective by the SEC in the form attached hereto as Exhibit A.
(r) Notwithstanding
anything to the contrary herein (but subject to the last sentence of this Section 3(r)), at any time after the Effective Date
of a particular Registration Statement, the Company may delay the disclosure of material, non-public information concerning the
Company or any of its Subsidiaries the disclosure of which at the time is not, in the good faith opinion of the board of directors
of the Company, in the best interest of the Company and, in the opinion of counsel to the Company, otherwise required (a “Grace
Period”), provided that the Company shall promptly notify the Investors in writing of the (i) existence of material,
non-public information giving rise to a Grace Period (provided that in each such notice the Company shall not disclose the content
of such material, non-public information to any of the Investors) and the date on which such Grace Period will begin and (ii)
date on which such Grace Period ends, provided further that (I) no Grace Period shall exceed ten (10) consecutive days and during
any three hundred sixty five (365) day period all such Grace Periods shall not exceed an aggregate of thirty (30) days, (II) the
first day of any Grace Period must be at least five (5) Trading Days after the last day of any prior Grace Period and (III) no
Grace Period may exist during the sixty (60) Trading Day period immediately following the Effective Date of such Registration
Statement (provided that such sixty (60) Trading Day period shall be extended by the number of Trading Days during such period
and any extension thereof contemplated by this proviso during which such Registration Statement is not effective or the prospectus
contained therein is not available for use) (each, an “Allowable Grace Period”). For purposes of determining
the length of a Grace Period above, such Grace Period shall begin on and include the date the Investors receive the notice referred
to in clause (i) above and shall end on and include the later of the date the Investors receive the notice referred to in clause
(ii) above and the date referred to in such notice. The provisions of Section 3(g) hereof shall not be applicable during the period
of any Allowable Grace Period. Upon expiration of each Grace Period, the Company shall again be bound by the first sentence of
Section 3(f) with respect to the information giving rise thereto unless such material, non-public information is no longer applicable.
Notwithstanding anything to the contrary contained in this Section 3(r), the Company shall cause its transfer agent to deliver
unlegended shares of Common Stock to a transferee of an Investor in accordance with the terms of the Securities Purchase Agreement
in connection with any sale of Registrable Securities with respect to which such Investor has entered into a contract for sale,
and delivered a copy of the prospectus included as part of the particular Registration Statement to the extent applicable, prior
to such Investor’s receipt of the notice of a Grace Period and for which the Investor has not yet settled.
(s) The
Company shall take all other reasonable actions necessary to expedite and facilitate disposition by each Investors of its Registrable
Securities pursuant to each Registration Statement.
(t) Neither
the Company nor any Subsidiary or affiliate thereof shall identify any Investor as an underwriter in any public disclosure or
filing with the SEC, the Principal Market or any Eligible Market and any Buyer being deemed an underwriter by the SEC shall not
relieve the Company of any obligations it has under this Agreement or any other Transaction Document (as defined in the Securities
Purchase Agreement); provided, however, that the foregoing shall not prohibit the Company from including the disclosure found
in the “Plan of Distribution” section attached hereto as Exhibit B in the Registration Statement.
(u) Neither
the Company nor any of its Subsidiaries has entered, as of the date hereof, nor shall the Company or any of its Subsidiaries,
on or after the date of this Agreement, enter into any agreement with respect to its securities, that would have the effect of
impairing the rights granted to the Buyers in this Agreement or otherwise conflicts with the provisions hereof.
4. Obligations
of the Investors.
(a) At
least five (5) Business Days prior to the first anticipated filing date of each Registration Statement, the Company shall notify
each Investor in writing of the information the Company requires from each such Investor with respect to such Registration Statement.
It shall be a condition precedent to the obligations of the Company to complete the registration pursuant to this Agreement with
respect to the Registrable Securities of a particular Investor that such Investor shall furnish to the Company such information
regarding itself, the Registrable Securities held by it and the intended method of disposition of the Registrable Securities held
by it, as shall be reasonably required to effect and maintain the effectiveness of the registration of such Registrable Securities
and shall execute such documents in connection with such registration as the Company may reasonably request.
(b) Each
Investor, by such Investor’s acceptance of the Registrable Securities, agrees to cooperate with the Company as reasonably
requested by the Company in connection with the preparation and filing of each Registration Statement hereunder, unless such Investor
has notified the Company in writing of such Investor’s election to exclude all of such Investor’s Registrable Securities
from such Registration Statement.
(c) Each
Investor agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section
3(g) or the first sentence of 3(f), such Investor will immediately discontinue disposition of Registrable Securities pursuant
to any Registration Statement(s) covering such Registrable Securities until such Investor’s receipt of the copies of the
supplemented or amended prospectus contemplated by Section 3(g) or the first sentence of Section 3(f) or receipt of notice that
no supplement or amendment is required. Notwithstanding anything to the contrary in this Section 4(c), the Company shall cause
its transfer agent to deliver unlegended shares of Common Stock to a transferee of an Investor in accordance with the terms of
the Securities Purchase Agreement in connection with any sale of Registrable Securities with respect to which such Investor has
entered into a contract for sale prior to the Investor’s receipt of a notice from the Company of the happening of any event
of the kind described in Section 3(g) or the first sentence of Section 3(f) and for which such Investor has not yet settled.
(d) Each
Investor covenants and agrees that it will comply with the prospectus delivery requirements of the 1933 Act as applicable to it
or an exemption therefrom in connection with sales of Registrable Securities pursuant to a Registration Statement.
5. Expenses
of Registration.
All
reasonable expenses, other than underwriting discounts and commissions, incurred in connection with registrations, filings or
qualifications pursuant to Sections 2 and 3, including, without limitation, all registration, listing and qualifications fees,
printers and accounting fees, FINRA filing fees (if any) and fees and disbursements of counsel for the Company shall be paid by
the Company. The Company shall reimburse Legal Counsel for its fees and disbursements in connection with registration, filing
or qualification pursuant to Sections 2 and 3 of this Agreement which amount shall be limited to $10,000 for each such registration,
filing or qualification.
6. Indemnification.
(a) To
the fullest extent permitted by law, the Company will, and hereby does, indemnify, hold harmless and defend each Investor and
each of its directors, officers, shareholders, members, partners, employees, agents, advisors, representatives (and any other
Persons with a functionally equivalent role of a Person holding such titles notwithstanding the lack of such title or any other
title) and each Person, if any, who controls such Investor within the meaning of the 1933 Act or the 1934 Act and each of the
directors, officers, shareholders, members, partners, employees, agents, advisors, representatives (and any other Persons with
a functionally equivalent role of a Person holding such titles notwithstanding the lack of such title or any other title) of such
controlling Persons (each, an “Indemnified Person”), against any losses, obligations, claims, damages, liabilities,
contingencies, judgments, fines, penalties, charges, costs (including, without limitation, court costs, reasonable attorneys’
fees and costs of defense and investigation), amounts paid in settlement or expenses, joint or several, (collectively, “Claims”)
incurred in investigating, preparing or defending any action, claim, suit, inquiry, proceeding, investigation or appeal taken
from the foregoing by or before any court or governmental, administrative or other regulatory agency, body or the SEC, whether
pending or threatened, whether or not an Indemnified Person is or may be a party thereto (“Indemnified Damages”),
to which any of them may become subject insofar as such Claims (or actions or proceedings, whether commenced or threatened, in
respect thereof) arise out of or are based upon: (i) any untrue statement or alleged untrue statement of a material fact in a
Registration Statement or any post-effective amendment thereto or in any filing made in connection with the qualification of the
offering under the securities or other “blue sky” laws of any jurisdiction in which Registrable Securities are offered
(“Blue Sky Filing”), or the omission or alleged omission to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, (ii) any untrue statement or alleged untrue statement of a material
fact contained in any preliminary prospectus if used prior to the effective date of such Registration Statement, or contained
in the final prospectus (as amended or supplemented, if the Company files any amendment thereof or supplement thereto with the
SEC) or the omission or alleged omission to state therein any material fact necessary to make the statements made therein, in
light of the circumstances under which the statements therein were made, not misleading or (iii) any violation or alleged violation
by the Company of the 1933 Act, the 1934 Act, any other law, including, without limitation, any state securities law, or any rule
or regulation thereunder relating to the offer or sale of the Registrable Securities pursuant to a Registration Statement or (iv)
any voliation of this Agreement (the matters in the foregoing clauses (i) through (iv) being, collectively, “Violations”).
Subject to Section 6(c), the Company shall reimburse the Indemnified Persons, promptly as such expenses are incurred and are due
and payable, for any legal fees or other reasonable expenses incurred by them in connection with investigating or defending any
such Claim. Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section
6(a): (i) shall not apply to a Claim by an Indemnified Person arising out of or based upon a Violation which occurs in reliance
upon and in conformity with information furnished in writing to the Company by such Indemnified Person for such Indemnified Person
expressly for use in connection with the preparation of such Registration Statement or any such amendment thereof or supplement
thereto, if such prospectus was timely made available by the Company pursuant to Section 3(d); and (ii) shall not apply to amounts
paid in settlement of any Claim if such settlement is effected without the prior written consent of the Company, which consent
shall not be unreasonably withheld or delayed. Such indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of the Indemnified Person and shall survive the transfer of any of the Registrable Securities by any of the
Investors pursuant to Section 9.
(b) In
connection with any Registration Statement in which an Investor is participating, such Investor agrees to severally and not jointly
indemnify, hold harmless and defend, to the same extent and in the same manner as is set forth in Section 6(a), the Company, each
of its directors, each of its officers who signs the Registration Statement and each Person, if any, who controls the Company
within the meaning of the 1933 Act or the 1934 Act (each, an “Indemnified Party”), against any Claim or Indemnified
Damages to which any of them may become subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such Claim or Indemnified
Damages arise out of or are based upon any Violation, in each case, to the extent, and only to the extent, that such Violation
occurs in reliance upon and in conformity with written information furnished to the Company by such Investor expressly for use
in connection with such Registration Statement; and, subject to Section 6(c) and the below provisos in this Section 6(b), such
Investor will reimburse an Indemnified Party any legal or other expenses reasonably incurred by such Indemnified Party in connection
with investigating or defending any such Claim; provided, however, the indemnity agreement contained in this Section 6(b) and
the agreement with respect to contribution contained in Section 7 shall not apply to amounts paid in settlement of any Claim if
such settlement is effected without the prior written consent of such Investor, which consent shall not be unreasonably withheld
or delayed, provided further that such Investor shall be liable under this Section 6(b) for only that amount of a Claim or Indemnified
Damages as does not exceed the net proceeds to such Investor as a result of the applicable sale of Registrable Securities pursuant
to such Registration Statement. Such indemnity shall remain in full force and effect regardless of any investigation made by or
on behalf of such Indemnified Party and shall survive the transfer of any of the Registrable Securities by any of the Investors
pursuant to Section 9.
(c) Promptly
after receipt by an Indemnified Person or Indemnified Party (as the case may be) under this Section 6 of notice of the commencement
of any action or proceeding (including, without limitation, any governmental action or proceeding) involving a Claim, such Indemnified
Person or Indemnified Party (as the case may be) shall, if a Claim in respect thereof is to be made against any indemnifying party
under this Section 6, deliver to the indemnifying party a written notice of the commencement thereof, and the indemnifying party
shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to assume control of the defense thereof with counsel mutually satisfactory to the indemnifying party
and the Indemnified Person or the Indemnified Party (as the case may be); provided, however, an Indemnified Person or Indemnified
Party (as the case may be) shall have the right to retain its own counsel with the fees and expenses of such counsel to be paid
by the indemnifying party if: (i) the indemnifying party has agreed in writing to pay such fees and expenses; (ii) the indemnifying
party shall have failed promptly to assume the defense of such Claim and to employ counsel reasonably satisfactory to such Indemnified
Person or Indemnified Party (as the case may be) in any such Claim; or (iii) the named parties to any such Claim (including, without
limitation, any impleaded parties) include both such Indemnified Person or Indemnified Party (as the case may be) and the indemnifying
party, and such Indemnified Person or such Indemnified Party (as the case may be) shall have been advised by counsel that a conflict
of interest is likely to exist if the same counsel were to represent such Indemnified Person or such Indemnified Party and the
indemnifying party (in which case, if such Indemnified Person or such Indemnified Party (as the case may be) notifies the indemnifying
party in writing that it elects to employ separate counsel at the expense of the indemnifying party, then the indemnifying party
shall not have the right to assume the defense thereof and such counsel shall be at the expense of the Indemnifying Party, provided
further that in the case of clause (iii) above the indemnifying party shall not be responsible for the reasonable fees and expenses
of more than one (1) separate legal counsel for such Indemnified Person or Indemnified Party (as the case may be). The Indemnified
Party or Indemnified Person (as the case may be) shall reasonably cooperate with the indemnifying party in connection with any
negotiation or defense of any such action or Claim by the indemnifying party and shall furnish to the indemnifying party all information
reasonably available to the Indemnified Party or Indemnified Person (as the case may be) which relates to such action or Claim.
The indemnifying party shall keep the Indemnified Party or Indemnified Person (as the case may be) reasonably apprised at all
times as to the status of the defense or any settlement negotiations with respect thereto. No indemnifying party shall be liable
for any settlement of any action, claim or proceeding effected without its prior written consent; provided, however, the indemnifying
party shall not unreasonably withhold, delay or condition its consent. No indemnifying party shall, without the prior written
consent of the Indemnified Party or Indemnified Person (as the case may be), consent to entry of any judgment or enter into any
settlement or other compromise which does not include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified Party or Indemnified Person (as the case may be) of a release from all liability in respect to such Claim
or litigation, and such settlement shall not include any admission as to fault on the part of the Indemnified Party. Following
indemnification as provided for hereunder, the indemnifying party shall be subrogated to all rights of the Indemnified Party or
Indemnified Person (as the case may be) with respect to all third parties, firms or corporations relating to the matter for which
indemnification has been made. The failure to deliver written notice to the indemnifying party within a reasonable time of the
commencement of any such action shall not relieve such indemnifying party of any liability to the Indemnified Person or Indemnified
Party (as the case may be) under this Section 6, except to the extent that the indemnifying party is materially and adversely
prejudiced in its ability to defend such action.
(d) The
indemnification required by this Section 6 shall be made by periodic payments of the amount thereof during the course of the investigation
or defense, as and when bills are received or Indemnified Damages are incurred.
(e) The
indemnity and contribution agreements contained herein shall be in addition to (i) any cause of action or similar right of the
Indemnified Party or Indemnified Person against the indemnifying party or others, and (ii) any liabilities the indemnifying party
may be subject to pursuant to the law.
7. Contribution.
To
the extent any indemnification by an indemnifying party is prohibited or limited by law, the indemnifying party agrees to make
the maximum contribution with respect to any amounts for which it would otherwise be liable under Section 6 to the fullest extent
permitted by law; provided, however: (i) no contribution shall be made under circumstances where the maker would not have been
liable for indemnification under the fault standards set forth in Section 6 of this Agreement, (ii) no Person involved in the
sale of Registrable Securities which Person is guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the 1933 Act) in connection with such sale shall be entitled to contribution from any Person involved in such sale of Registrable
Securities who was not guilty of fraudulent misrepresentation; and (iii) contribution by any seller of Registrable Securities
shall be limited in amount to the amount of net proceeds received by such seller from the applicable sale of such Registrable
Securities pursuant to such Registration Statement. Notwithstanding the provisions of this Section 7, no Investor shall be required
to contribute, in the aggregate, any amount in excess of the amount by which the net proceeds actually received by such Investor
from the applicable sale of the Registrable Securities subject to the Claim exceeds the amount of any damages that such Investor
has otherwise been required to pay, or would otherwise be required to pay under Section 6(b), by reason of such untrue or alleged
untrue statement or omission or alleged omission.
8. Reports
Under the 1934 Act.
With
a view to making available to the Investors the benefits of Rule 144, the Company agrees to:
(a) make
and keep public information available, as those terms are understood and defined in Rule 144;
(b) file
with the SEC in a timely manner all reports and other documents required of the Company under the 1933 Act and the 1934 Act so
long as the Company remains subject to such requirements (it being understood and agreed that nothing herein shall limit any obligations
of the Company under the Securities Purchase Agreement) and the filing of such reports and other documents is required for the
applicable provisions of Rule 144; and
(c) furnish
to each Investor so long as such Investor owns Registrable Securities, promptly upon request, (i) a written statement by the Company,
if true, that it has complied with the reporting, submission and posting requirements of Rule 144, the 1933 Act and the 1934 Act,
(ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the
Company with the SEC if such reports are not publicly available via EDGAR, and (iii) such other information as may be reasonably
requested to permit the Investors to sell such securities pursuant to Rule 144 without registration.
9. Assignment
of Registration Rights.
All
or any portion of the rights under this Agreement shall be automatically assignable by each Investor to any transferee or assignee
(as the case may be) of all or any portion of such Investor’s Registrable Securities, Notes or Warrants if: (i) such Investor
agrees in writing with such transferee or assignee (as the case may be) to assign all or any portion of such rights, and a copy
of such agreement is furnished to the Company within a reasonable time after such transfer or assignment (as the case may be);
(ii) the Company is, within a reasonable time after such transfer or assignment (as the case may be), furnished with written notice
of (a) the name and address of such transferee or assignee (as the case may be), and (b) the securities with respect to which
such registration rights are being transferred or assigned (as the case may be); (iii) immediately following such transfer or
assignment (as the case may be) the further disposition of such securities by such transferee or assignee (as the case may be)
is restricted under the 1933 Act or applicable state securities laws if so required; (iv) at or before the time the Company receives
the written notice contemplated by clause (ii) of this sentence such transferee or assignee (as the case may be) agrees in writing
with the Company to be bound by all of the provisions contained herein; (v) such transfer or assignment (as the case may be) shall
have been made in accordance with the applicable requirements of the Securities Purchase Agreement, the Notes and the Warrants
(as the case may be); and (vi) such transfer or assignment (as the case may be) shall have been conducted in accordance with all
applicable federal and state securities laws.
10. Amendment
of Registration Rights.
Provisions
of this Agreement may be amended and the observance thereof may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company and the Required Holders; provided that any such
amendment or waiver that complies with the foregoing, but that disproportionately, materially and adversely affects the rights
and obligations of any Investor relative to the comparable rights and obligations of the other Investors shall require the prior
written consent of such adversely affected Investor. Any amendment or waiver effected in accordance with this Section 10 shall
be binding upon each Investor and the Company, provided that no such amendment shall be effective to the extent that it (1) applies
to less than all of the holders of Registrable Securities or (2) imposes any obligation or liability on any Investor without such
Investor’s prior written consent (which may be granted or withheld in such Investor’s sole discretion). No waiver
shall be effective unless it is in writing and signed by an authorized representative of the waiving party. No consideration shall
be offered or paid to any Person to amend or consent to a waiver or modification of any provision of this Agreement unless the
same consideration (other than the reimbursement of legal fees) also is offered to all of the parties to this Agreement.
11. Miscellaneous.
(a) Solely
for purposes of this Agreement, a Person is deemed to be a holder of Registrable Securities whenever such Person owns, or is deemed
to own, of record such Registrable Securities. If the Company receives conflicting instructions, notices or elections from two
or more Persons with respect to the same Registrable Securities, the Company shall act upon the basis of instructions, notice
or election received from such record owner of such Registrable Securities.
(b) Any
notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be
in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent
by facsimile or electronic mail (provided confirmation of transmission is mechanically or electronically generated and kept on
file by the sending party); or (iii) one (1) Business Day after deposit with a nationally recognized overnight delivery service
with next day delivery specified, in each case, properly addressed to the party to receive the same. The addresses, facsimile
numbers and email addresses for such communications shall be:
If
to the Company:
Infinity
Energy Resources, Inc..
11900 College Blvd., Suite 310
Overland Park, KS 66210
Telephone: (913) 948-9512
Facsimile: (913) 338-4455
Attention: Chief Executive Officer
Email: rossy1979@aol.com
With
a copy (for informational purposes only) to:
Christian
Hoffmann, III
Securities Counsel
Infinity Energy Resources, Inc.
Telephone: (602) 370-0150
Email: cjhoff3@gmail.com
If
to the Transfer Agent:
Action
Stock Transfer Corporation
2469 E. Fort Union Blvd., Suite 214
Salt
Lake City, UT 84121
Telephone:
(801)274-1088
Facsimile: (801) 274-1099
Attention: Justeene Blankenship
Email: jb@actionstocktransfer.com
If
to Legal Counsel:
Kelley
Drye & Warren LLP
MetLife Building
200 Park Avenue
New York, NY 10166
Telephone: (212) 801-9200
Facsimile: (212) 805-9222
Attention: Michael A. Adelstein, Esq.
Email: madelstein@kelleydrye.com
If
to a Buyer, to its address, facsimile number and/or email address set forth on the Schedule of Buyers attached to the Securities
Purchase Agreement, with copies to such Buyer’s representatives as set forth on the Schedule of Buyers, or to such other
address, facsimile number, and/or email address and/or to the attention of such other Person as the recipient party has specified
by written notice given to each other party five (5) days prior to the effectiveness of such change, provided that Kelley Drye
& Warren LLP shall only be provided notices sent to the lead investor. Written confirmation of receipt (A) given by the recipient
of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender’s facsimile
machine or email containing the time, date, recipient facsimile number or email address and an image of the first page of such
transmission or (C) provided by a courier or overnight courier service shall be rebuttable evidence of personal service, receipt
by facsimile or receipt from a nationally recognized overnight delivery service in accordance with clause (i), (ii) or (iii) above,
respectively.
(c) Failure
of any party to exercise any right or remedy under this Agreement or otherwise, or delay by a party in exercising such right or
remedy, shall not operate as a waiver thereof. The Company and each Investor acknowledge and agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that each party hereto shall be entitled to an injunction or injunctions to
prevent or cure breaches of the provisions of this Agreement by any other party hereto and to enforce specifically the terms and
provisions hereof (without the necessity of showing economic loss and without any bond or other security being required), this
being in addition to any other remedy to which any party may be entitled by law or equity.
(d) All
questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal
laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the
State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the
State of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting
in The City of New York, Borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with
any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action
or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party
hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding
by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service
shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit
in any way any right to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE
TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING
OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
(e) If
any provision of this Agreement is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent
jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the
broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect
the validity of the remaining provisions of this Agreement so long as this Agreement as so modified continues to express, without
material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity
or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations
of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties. The parties will
endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s),
the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).
(f) This
Agreement, the other Transaction Documents, the schedules and exhibits attached hereto and thereto and the instruments referenced
herein and therein constitute the entire agreement among the parties hereto and thereto solely with respect to the subject matter
hereof and thereof. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to
herein and therein. This Agreement, the other Transaction Documents, the schedules and exhibits attached hereto and thereto and
the instruments referenced herein and therein supersede all prior agreements and understandings among the parties hereto solely
with respect to the subject matter hereof and thereof; provided, however, nothing contained in this Agreement or any other Transaction
Document shall (or shall be deemed to) (i) have any effect on any agreements any Investor has entered into with the Company or
any of its Subsidiaries prior to the date hereof with respect to any prior investment made by such Investor in the Company, (ii)
waive, alter, modify or amend in any respect any obligations of the Company or any of its Subsidiaries or any rights of or benefits
to any Investor or any other Person in any agreement entered into prior to the date hereof between or among the Company and/or
any of its Subsidiaries and any Investor and all such agreements shall continue in full force and effect or (iii) limit any obligations
of the Company under any of the other Transaction Documents.
(g) Subject
to compliance with Section 9 (if applicable), this Agreement shall inure to the benefit of and be binding upon the permitted successors
and assigns of each of the parties hereto. This Agreement is not for the benefit of, nor may any provision hereof be enforced
by, any Person, other than the parties hereto, their respective permitted successors and assigns and the Persons referred to in
Sections 6 and 7 hereof.
(h) The
headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. Unless
the context clearly indicates otherwise, each pronoun herein shall be deemed to include the masculine, feminine, neuter, singular
and plural forms thereof. The terms “including,” “includes,” “include” and words of like import
shall be construed broadly as if followed by the words “without limitation.” The terms “herein,” “hereunder,”
“hereof” and words of like import refer to this entire Agreement instead of just the provision in which they are found.
(i) This
Agreement may be executed in two or more identical counterparts, each of which shall be deemed an origination, but all of which
shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and
delivered to the other party. In the event that any signature is delivered by facsimile transmission or by an email which contains
a portable document format (.pdf) file of an executed signature page, such signature page 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 signature page
were an original thereof.
(j) Each
party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver
all such other agreements, certificates, instruments and documents as any other party may reasonably request in order to carry
out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.
(k) The
language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent and no
rules of strict construction will be applied against any party. Notwithstanding anything to the contrary set forth in Section
10, terms used in this Agreement but defined in the other Transaction Documents shall have the meanings ascribed to such terms
on the Closing Date in such other Transaction Documents unless otherwise consented to in writing by each Investor.
(l) All
consents and other determinations required to be made by the Investors pursuant to this Agreement shall be made, unless otherwise
specified in this Agreement, by the Required Holders, determined as if all of the outstanding Notes then held by the Investors
have been converted for Registrable Securities without regard to any limitations on redemption, amortization and/or conversion
of the Notes and the outstanding Warrants then held by Investors have been exercised for Registrable Securities without regard
to any limitations on exercise of the Warrants.
(m) This
Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not
for the benefit of, nor may any provision hereof be enforced by, any other Person.
(n) The
obligations of each Investor under this Agreement and the other Transaction Documents are several and not joint with the obligations
of any other Investor, and no Investor shall be responsible in any way for the performance of the obligations of any other Investor
under this Agreement or any other Transaction Document. Nothing contained herein or in any other Transaction Document, and no
action taken by any Investor pursuant hereto or thereto, shall be deemed to constitute the Investors as, and the Company acknowledges
that the Investors do not so constitute, a partnership, an association, a joint venture or any other kind of group or entity,
or create a presumption that the Investors are in any way acting in concert or as a group or entity with respect to such obligations
or the transactions contemplated by the Transaction Documents or any matters, and the Company acknowledges that the Investors
are not acting in concert or as a group, and the Company shall not assert any such claim, with respect to such obligations or
the transactions contemplated by this Agreement or any of the other the Transaction Documents. Each Investor shall be entitled
to independently protect and enforce its rights, including, without limitation, the rights arising out of this Agreement or out
of any other Transaction Documents, and it shall not be necessary for any other Investor to be joined as an additional party in
any proceeding for such purpose. The use of a single agreement with respect to the obligations of the Company contained herein
was solely in the control of the Company, not the action or decision of any Investor, and was done solely for the convenience
of the Company and not because it was required or requested to do so by any Investor. It is expressly understood and agreed that
each provision contained in this Agreement and in each other Transaction Document is between the Company and an Investor, solely,
and not between the Company and the Investors collectively and not between and among Investors.
[signature
page follows]
IN
WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this Registration Rights Agreement
to be duly executed as of the date first written above.
|
COMPANY: |
|
|
|
INFINITY
ENERGY RESOURCES, INC. |
|
|
|
|
By: |
/s/
Stanton E. Ross
|
|
Name: |
Stanton E. Ross |
|
Title: |
Chairman,
President & CEO |
IN
WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this Registration Rights Agreement
to be duly executed as of the date first written above.
|
BUYERS: |
|
|
|
HUDSON
BAY MASTER FUND LTD |
|
|
|
By: |
/s/
George Antonopoulos |
|
Name |
George
Antonopoulos |
|
Title: |
|
EXHIBIT
A
FORM
OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
Action Stock
Transfer Corporation
2469 E. Fort Union Blvd., Suite 214
Salt Lake
City, UT 84121
Attention:
Justeene Blankenship
Re: Infinity
Energy Resources, Inc.
Ladies and
Gentlemen:
[We
are][I am] counsel to Infinity Energy Resources, Inc., a Delaware corporation (the “Company”), and have represented
the Company in connection with that certain Securities Purchase Agreement (the “Securities Purchase Agreement”)
entered into by and among the Company and the buyers named therein (collectively, the “Holders”) pursuant to
which the Company issued to the Holders senior secured convertible notes (the “Notes”) convertible into the
Company’s shares of common stock, $0.001 par value per share (the “Common Stock”), and warrants exercisable
for shares of Common Stock (the “Warrants”). Pursuant to the Securities Purchase Agreement, the Company also
has entered into a Registration Rights Agreement with the Holders (the “Registration Rights Agreement”) pursuant
to which the Company agreed, among other things, to register the Registrable Securities (as defined in the Registration Rights
Agreement), including the shares of Common Stock issuable upon conversion of the Notes and exercise of the Warrants, under the
Securities Act of 1933, as amended (the “1933 Act”). In connection with the Company’s obligations under
the Registration Rights Agreement, on ____________ ___, 20__, the Company filed a Registration Statement on Form [S-1][S-3] (File
No. 333-_____________) (the “Registration Statement”) with the Securities and Exchange Commission (the “SEC”)
relating to the Registrable Securities which names each of the Holders as a selling stockholder thereunder.
In
connection with the foregoing, [we][I] advise you that [a member of the SEC’s staff has advised [us][me] by telephone that
[the SEC has entered an order declaring the Registration Statement effective under the 1933 Act at [ENTER TIME OF EFFECTIVENESS]
on [ENTER DATE OF EFFECTIVENESS]] [an order declaring the Registration Statement effective under the 1933 Act at [ENTER TIME OF
EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS]] has been posted on the web site of the SEC at www.sec.gov] and [we][I] have no
knowledge, after a review of information posted on the website of the SEC at http://www.sec.gov/litigation/stoporders.shtml, that
any stop order suspending its effectiveness has been issued or that any proceedings for that purpose are pending before, or threatened
by, the SEC and the Registrable Securities are available for resale under the 1933 Act pursuant to the Registration Statement.
This
letter shall serve as our standing opinion to you that the shares of Common Stock underlying the Notes and Warrants are freely
transferable by the Holders pursuant to the Registration Statement. You need not require further letters from us to effect any
future legend-free issuance or reissuance of such shares of Common Stock to the Holders as contemplated by the Company’s
Irrevocable Transfer Agent Instructions dated _________ __, 20__.
|
Very truly yours, |
|
[ISSUER’S COUNSEL] |
CC: Hudson
Bay Master Fund Ltd
EXHIBIT
B
SELLING
STOCKHOLDERS
The
shares of common stock being offered by the selling stockholders are those issuable to the selling stockholders upon conversion
of the notes and exercise of the warrants. For additional information regarding the issuance of the notes and the warrants, see
“Private Placement of Notes and Warrants” above. We are registering the shares of common stock in order to permit
the selling stockholders to offer the shares for resale from time to time. Except for the ownership of the notes and the warrants
issued pursuant to the Securities Purchase Agreement, the selling stockholders have not had any material relationship with us
within the past three years.
The
table below lists the selling stockholders and other information regarding the beneficial ownership (as determined under Section
13(d) of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder) of the shares of common stock
held by each of the selling stockholders. The second column lists the number of shares of common stock beneficially owned by the
selling stockholders, based on their respective ownership of shares of common stock, notes and warrants, as of ________, 2015,
assuming conversion of the notes and exercise of the warrants held by each such selling stockholder on that date but taking account
of any limitations on conversion and exercise set forth therein.
The
third column lists the shares of common stock being offered by this prospectus by the selling stockholders and does not take in
account any limitations on (i) conversion of the notes set forth therein or (ii) exercise of the warrants set forth therein.
In
accordance with the terms of a registration rights agreement with the holders of the notes and the warrants, this prospectus generally
covers the resale of the sum of (i) 130% of the maximum number of shares of common stock issuable upon conversion of the notes
and (ii) the maximum number of shares of common stock issuable upon exercise of the warrants, in each case, determined as if the
outstanding notes and warrants were converted or exercised (as the case may be) in full (without regard to any limitations on
conversion or exercise contained therein) as of the trading day immediately preceding the date this registration statement was
initially filed with the SEC. Because the conversion price of the notes and the exercise price of the warrants may be adjusted,
the number of shares that will actually be issued may be more or less than the number of shares being offered by this prospectus.
The fourth column assumes the sale of all of the shares offered by the selling stockholders pursuant to this prospectus.
Under
the terms of the notes and the warrants, a selling stockholder may not convert the notes or exercise the warrants to the extent
(but only to the extent) such selling stockholder or any of its affiliates would beneficially own a number of shares of our common
stock which would exceed 9.99% of the outstanding shares of the Company. The number of shares in the second column reflects these
limitations. The selling stockholders may sell all, some or none of their shares in this offering. See “Plan of Distribution.”
Name
of Selling Stockholder |
|
Number
of Shares of
Common Stock
Owned Prior to
Offering |
|
Maximum
Number of
Shares of Common
Stock to be Sold
Pursuant to this
Prospectus |
|
Number
of Shares of
Common Stock of
Owned After Offering |
|
|
|
|
|
|
|
Hudson Bay Master Fund Ltd (1) |
|
|
|
|
|
|
Name
of Selling Stockholder |
|
Number
of Shares
of Common Stock
Owned Prior to
Offering |
|
Maximum
Number
of Shares of
Common Stock to
be Sold Pursuant to
this Prospectus |
|
Number
of Shares
of Common Stock
of Owned After
Offering |
|
|
|
|
|
|
|
Hudson Bay Master Fund Ltd (1) |
|
|
|
|
|
|
PLAN
OF DISTRIBUTION
We
are registering the shares of common stock issuable upon conversion of the notes and exercise of the warrants to permit the resale
of these shares of common stock by the holders of the notes and warrants from time to time after the date of this prospectus.
We will not receive any of the proceeds from the sale by the selling stockholders of the shares of common stock, although we will
receive the exercise price of any Warrants not exercised by the selling stockholders on a cashless exercise basis. We will bear
all fees and expenses incident to our obligation to register the shares of common stock.
The
selling stockholders may sell all or a portion of the shares of common stock held by them and offered hereby from time to time
directly or through one or more underwriters, broker-dealers or agents. If the shares of common stock are sold through underwriters
or broker-dealers, the selling stockholders will be responsible for underwriting discounts or commissions or agent’s commissions.
The shares of common stock may be sold in one or more transactions at fixed prices, at prevailing market prices at the time of
the sale, at varying prices determined at the time of sale or at negotiated prices. These sales may be effected in transactions,
which may involve crosses or block transactions, pursuant to one or more of the following methods:
| ● | on
any national securities exchange or quotation service on which the securities may be
listed or quoted at the time of sale; |
| | |
| ● | in
the over-the-counter market; |
| | |
| ● | in
transactions otherwise than on these exchanges or systems or in the over-the-counter
market; |
| | |
| ● | through
the writing or settlement of options, whether such options are listed on an options exchange
or otherwise; |
| | |
| ● | ordinary
brokerage transactions and transactions in which the broker-dealer solicits purchasers; |
| | |
| ● | block
trades in which the broker-dealer will attempt to sell the shares as agent but may position
and resell a portion of the block as principal to facilitate the transaction; |
| | |
| ● | purchases
by a broker-dealer as principal and resale by the broker-dealer for its account; |
| | |
| ● | an
exchange distribution in accordance with the rules of the applicable exchange; |
| | |
| ● | privately
negotiated transactions; |
| | |
| ● | short
sales made after the date the Registration Statement is declared effective by the SEC; |
| | |
| ● | broker-dealers
may agree with a selling security holder to sell a specified number of such shares at
a stipulated price per share; |
| | |
| ● | a
combination of any such methods of sale; and |
| | |
| ● | any
other method permitted pursuant to applicable law. |
The
selling stockholders may also sell shares of common stock under Rule 144 promulgated under the Securities Act of 1933, as amended,
if available, rather than under this prospectus. In addition, the selling stockholders may transfer the shares of common stock
by other means not described in this prospectus. If the selling stockholders effect such transactions by selling shares of common
stock to or through underwriters, broker-dealers or agents, such underwriters, broker-dealers or agents may receive commissions
in the form of discounts, concessions or commissions from the selling stockholders or commissions from purchasers of the shares
of common stock for whom they may act as agent or to whom they may sell as principal (which discounts, concessions or commissions
as to particular underwriters, broker-dealers or agents may be in excess of those customary in the types of transactions involved).
In connection with sales of the shares of common stock or otherwise, the selling stockholders may enter into hedging transactions
with broker-dealers, which may in turn engage in short sales of the shares of common stock in the course of hedging in positions
they assume. The selling stockholders may also sell shares of common stock short and deliver shares of common stock covered by
this prospectus to close out short positions and to return borrowed shares in connection with such short sales. The selling stockholders
may also loan or pledge shares of common stock to broker-dealers that in turn may sell such shares.
The
selling stockholders may pledge or grant a security interest in some or all of the notes, warrants or shares of common stock owned
by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell
the shares of common stock from time to time pursuant to this prospectus or any amendment to this prospectus under Rule 424(b)(3)
or other applicable provision of the Securities Act amending, if necessary, the list of selling stockholders to include the pledgee,
transferee or other successors in interest as selling stockholders under this prospectus. The selling stockholders also may transfer
and donate the shares of common stock in other circumstances in which case the transferees, donees, pledgees or other successors
in interest will be the selling beneficial owners for purposes of this prospectus.
To
the extent required by the Securities Act and the rules and regulations thereunder, the selling stockholders and any broker-dealer
participating in the distribution of the shares of common stock may be deemed to be “underwriters” within the meaning
of the Securities Act, and any commission paid, or any discounts or concessions allowed to, any such broker-dealer may be deemed
to be underwriting commissions or discounts under the Securities Act. At the time a particular offering of the shares of common
stock is made, a prospectus supplement, if required, will be distributed, which will set forth the aggregate amount of shares
of common stock being offered and the terms of the offering, including the name or names of any broker-dealers or agents, any
discounts, commissions and other terms constituting compensation from the selling stockholders and any discounts, commissions
or concessions allowed or re-allowed or paid to broker-dealers.
Under
the securities laws of some states, the shares of common stock may be sold in such states only through registered or licensed
brokers or dealers. In addition, in some states the shares of common stock may not be sold unless such shares have been registered
or qualified for sale in such state or an exemption from registration or qualification is available and is complied with.
There
can be no assurance that any selling stockholder will sell any or all of the shares of common stock registered pursuant to the
registration statement, of which this prospectus forms a part.
The
selling stockholders and any other person participating in such distribution will be subject to applicable provisions of the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder, including, without limitation, to the extent applicable,
Regulation M of the Exchange Act, which may limit the timing of purchases and sales of any of the shares of common stock by the
selling stockholders and any other participating person. To the extent applicable, Regulation M may also restrict the ability
of any person engaged in the distribution of the shares of common stock to engage in market-making activities with respect to
the shares of common stock. All of the foregoing may affect the marketability of the shares of common stock and the ability of
any person or entity to engage in market-making activities with respect to the shares of common stock.
We
will pay all expenses of the registration of the shares of common stock pursuant to the registration rights agreement, estimated
to be $[ ] in total, including, without limitation, Securities and Exchange Commission filing fees and expenses of compliance
with state securities or “blue sky” laws; provided, however, a selling stockholder will pay all underwriting discounts
and selling commissions, if any. We will indemnify the selling stockholders against liabilities, including some liabilities under
the Securities Act in accordance with the registration rights agreements or the selling stockholders will be entitled to contribution.
We may be indemnified by the selling stockholders against civil liabilities, including liabilities under the Securities Act that
may arise from any written information furnished to us by the selling stockholder specifically for use in this prospectus, in
accordance with the related registration rights agreements or we may be entitled to contribution.
Once
sold under the registration statement, of which this prospectus forms a part, the shares of common stock will be freely tradable
in the hands of persons other than our affiliates.
EXHIBIT
10.48
NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT
BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM
REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD
PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH
A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES. ANY TRANSFEREE OF THIS NOTE SHOULD
CAREFULLY REVIEW THE TERMS OF THIS NOTE, INCLUDING SECTIONS 3(c)(iii) AND 18(a) HEREOF. THE PRINCIPAL AMOUNT REPRESENTED BY THIS
NOTE AND, ACCORDINGLY, THE SECURITIES ISSUABLE UPON CONVERSION HEREOF MAY BE LESS THAN THE AMOUNTS SET FORTH ON THE FACE HEREOF
PURSUANT TO SECTION 3(c)(iii) OF THIS NOTE.
Infinity
Energy Resources, Inc.
Senior
Secured Convertible Note
Issuance Date: May 7, 2015 |
|
Original Principal Amount: |
|
|
U.S. $12,000,000 |
FOR
VALUE RECEIVED, Infinity Energy Resources, Inc., a Delaware corporation (the “Company”), hereby promises
to pay to the order of HUDSON BAY MASTER FUND LTD or its registered assigns (“Holder”) the amount set forth
above as the Original Principal Amount (as reduced pursuant to the terms hereof pursuant to redemption, conversion or otherwise,
the “Principal”) when due, whether upon the Maturity Date, on any Installment Date with respect to the Installment
Amount due on such Installment Date (each as defined below), or upon acceleration, redemption or otherwise (in each case in accordance
with the terms hereof) and to pay interest (“Interest”) on any outstanding Principal at the applicable Interest
Rate (as defined below) from the date set forth above as the Issuance Date (the “Issuance Date”) until
the same becomes due and payable, whether upon the Maturity Date, on any Installment Date with respect to the Installment Amount
due on such Installment Date, or upon acceleration, conversion, redemption or otherwise (in each case in accordance with the terms
hereof). This Senior Secured Convertible Note (including all Senior Secured Convertible Notes issued in exchange, transfer or
replacement hereof, this “Note”) is one of an issue of Senior Secured Convertible Notes issued pursuant to
the Securities Purchase Agreement, dated as of May 7, 2015 (the “Subscription Date”), by and among the Company
and the investors (the “Buyers”) referred to therein, as amended from time to time (collectively, the “Notes”,
and such other Senior Secured Convertible Notes, the “Other Notes”). Certain capitalized terms used
herein are defined in Section 31.
1.
PRINCIPAL.
(a)
Payments of Principal. On each Installment Date, the Company shall pay to the Holder an amount equal to the Installment
Amount due on such Installment Date in accordance with Section 8. On the Maturity Date, the Company shall pay to the Holder an
amount in cash (excluding any amounts paid in shares of Common Stock on the Maturity Date in accordance with Section 8) representing
all outstanding Principal, accrued and unpaid Interest and accrued and unpaid Late Charges (as defined in Section 24(c)) on such
Principal and Interest. Other than as specifically permitted by this Note, the Company may not prepay any portion of the outstanding
Principal, accrued and unpaid Interest or accrued and unpaid Late Charges on Principal and Interest, if any.
(b)
Investor Prepayments; No Share Issuance until Paid in Full. Upon the consummation of any Investor Prepayment, the aggregate
outstanding Restricted Principal under this Note shall automatically become unrestricted Principal hereunder, on a dollar-for-dollar
basis, in an amount equal to the aggregate amount of cash paid in such Investor Prepayment. Notwithstanding anything herein to
the contrary, the shares of Common Stock issuable upon conversion of Restricted Principal hereunder shall not be issued by the
Company until such Restricted Principal subject to such conversion has been fully paid (to the Company or to such other Persons
as directed by the Company in writing) and becomes unrestricted in accordance with the preceding sentence.
(c)
Prohibited Transfer Reduction. Upon any Prohibited Transfer (as defined in the Investor Note) of the Investor Note, (x)
the Investor Note shall be deemed paid in full and shall be null and void, (y) 75% of the Restricted Principal then outstanding
hereunder shall be automatically cancelled and (z) the remaining 25% of Restricted Principal outstanding hereunder shall automatically
become unrestricted Principal hereunder.
(d)
Investor Offset Right Reduction. Upon any exercise by the Holder of Investor Offset Rights (as defined in the Investor
Note), the Restricted Principal hereunder shall automatically and simultaneously be reduced, on a dollar-for-dollar basis, by
such portion of the aggregate principal of the Investor Note cancelled pursuant to such Investor Offset Rights.
(e)
Single Integrated Transaction. The Company hereby acknowledges and agrees that (i) the Holder shall be entitled to exercise
the Investor Offset Rights through any means permissible under applicable law, including without limitation, set-off and recoupment
and (ii) the obligations of the Holder under the Investor Note and the obligations of the Company under this Note arise in a single
integrated transaction and constitute related and interdependent obligations within such transaction.
2. INTEREST;
INTEREST RATE.
(a)
Interest on this Note shall commence accruing on the Issuance Date and shall be computed on the basis of a 360-day year and twelve
30-day months and shall be payable in arrears on each Interest Date and shall compound each calendar month and shall be payable
in accordance with the terms of this Note. Interest shall be paid (i) on each Interest Date occurring on an Installment Date in
accordance with Section 8 as part of the applicable Installment Amount due on the applicable Installment Date and (ii) with respect
to each other Interest Date, on such Interest Date in cash.
(b)
Prior to the payment of Interest on an Interest Date, Interest on this Note shall accrue at the Interest Rate and be payable by
way of inclusion of the Interest in the Conversion Amount on each Conversion Date in accordance with Section 3(b)(i) or
upon any redemption in accordance with Section 11 or any required payment upon any Bankruptcy Event of Default.. From and after
the occurrence and during the continuance of any Event of Default, the Interest Rate shall automatically be increased to eighteen
percent (18.0%) per annum. In the event that such Event of Default is subsequently cured, the adjustment referred to in the preceding
sentence shall cease to be effective as of the calendar day immediately following the date of such cure; provided that the Interest
as calculated and unpaid at such increased rate during the continuance of such Event of Default shall continue to apply to the
extent relating to the days after the occurrence of such Event of Default through and including the date of such cure of such
Event of Default.
3. CONVERSION
OF NOTES. At any time after the Issuance Date, this Note shall be convertible into validly issued, fully paid and
non-assessable shares of Common Stock (as defined below), on the terms and conditions set forth in this Section 3.
(a)
Conversion Right. Subject to the provisions of Section 3(d), at any time or times on or after the Issuance Date, the Holder
shall be entitled to convert any portion of the outstanding and unpaid Conversion Amount (as defined below) into validly issued,
fully paid and non-assessable shares of Common Stock in accordance with Section 3(c), at the Conversion Rate (as defined below).
The Company shall not issue any fraction of a share of Common Stock upon any conversion. If the issuance would result in the issuance
of a fraction of a share of Common Stock, the Company shall round such fraction of a share of Common Stock up to the nearest whole
share. The Company shall pay any and all transfer, stamp, issuance and similar taxes, costs and expenses (including, without limitation,
fees and expenses of the Transfer Agent (as defined below)) that may be payable with respect to the issuance and delivery of Common
Stock upon conversion of any Conversion Amount.
(b)
Conversion Rate. The number of shares of Common Stock issuable upon conversion of any Conversion Amount pursuant to Section
3(a) shall be determined by dividing (x) such Conversion Amount by (y) the Conversion Price (the “Conversion Rate”).
(i)
“Conversion Amount” means the sum of (x) portion of the Principal to be converted, redeemed or otherwise with
respect to which this determination is being made and (y) all accrued and unpaid Interest with respect to such portion of the
Principal amount and accrued and unpaid Late Charges with respect to such portion of such Principal and such Interest, if any.
(ii)
“Conversion Price” means, as of any Conversion Date or other date of determination, $0.50, subject to adjustment
as provided herein.
(c)
Mechanics of Conversion.
(i)
Optional Conversion. To convert any Conversion Amount into shares of Common Stock on any date (a “Conversion Date“),
the Holder shall deliver (whether via facsimile, electronic mail or otherwise), for receipt on or prior to 11:59 p.m., New York
time, on such date, a copy of an executed notice of conversion in the form attached hereto as Exhibit I (the “Conversion
Notice”) to the Company. If required by Section 3(c)(iii), within three (3) Trading Days following a conversion of this
Note as aforesaid, the Holder shall surrender this Note to a nationally recognized overnight delivery service for delivery to
the Company (or an indemnification undertaking with respect to this Note in the case of its loss, theft or destruction as contemplated
by Section 18(b)). On or before the first (1st) Trading Day following the date of receipt of a Conversion Notice, the Company
shall transmit by facsimile or electronic mail an acknowledgment of confirmation, in the form attached hereto as Exhibit II, of
receipt of such Conversion Notice to the Holder and the Company’s transfer agent (the “Transfer Agent”)
which confirmation shall constitute an instruction to the Transfer Agent to process such Conversion Notice in accordance with
the terms herein. On or before the third (3rd) Trading Day following the date on which the Company has received a Conversion Notice
(or such earlier date as required pursuant to the 1934 Act or other applicable law, rule or regulation for the settlement of a
trade initiated on the applicable Conversion Date of such shares of Common Stock issuable pursuant to such Conversion Notice)
(the “Share Delivery Deadline”), the Company shall (1) provided that the Transfer Agent is participating in
The Depository Trust Company’s (“DTC”) Fast Automated Securities Transfer Program, credit such aggregate
number of shares of Common Stock to which the Holder shall be entitled pursuant to such conversion to the Holder’s or its
designee’s balance account with DTC through its Deposit/Withdrawal at Custodian system or (2) if the Transfer Agent is not
participating in the DTC Fast Automated Securities Transfer Program, upon the request of the Holder, issue and deliver (via reputable
overnight courier) to the address as specified in the Conversion Notice, a certificate, registered in the name of the Holder or
its designee, for the number of shares of Common Stock to which the Holder shall be entitled pursuant to such conversion. If this
Note is physically surrendered for conversion pursuant to Section 3(c)(iii) and the outstanding Principal of this Note is greater
than the Principal portion of the Conversion Amount being converted, then the Company shall as soon as practicable and in no event
later than three (3) Business Days after receipt of this Note and at its own expense, issue and deliver to the Holder (or its
designee) a new Note (in accordance with Section 18(d)) representing the outstanding Principal not converted. The Person or Persons
entitled to receive the shares of Common Stock issuable upon a conversion of this Note shall be treated for all purposes as the
record holder or holders of such shares of Common Stock on the Conversion Date. In the event of a partial conversion of this Note
pursuant hereto, the Principal amount converted shall be deducted from the Installment Amount(s) relating to the Installment Date(s)
as set forth in the applicable Conversion Notice. Notwithstanding anything to the contrary contained in this Note or the Registration
Rights Agreement, after the effective date of the Registration Statement (as defined in the Registration Rights Agreement) and
prior to the Holder’s receipt of the notice of a Grace Period (as defined in the Registration Rights Agreement), the Company
shall cause the Transfer Agent to deliver unlegended shares of Common Stock to the Holder (or its designee) in connection with
any sale of Registrable Securities (as defined in the Registration Rights Agreement) with respect to which the Holder has entered
into a contract for sale, and delivered a copy of the prospectus included as part of the particular Registration Statement to
the extent applicable, and for which the Holder has not yet settled.
(ii)
Company’s Failure to Timely Convert. If the Company shall fail, for any reason or for no reason, on or prior to the
applicable Share Delivery Deadline, either (I) if the Transfer Agent is not participating in the DTC Fast Automated Securities
Transfer Program, to issue and deliver to the Holder (or its designee) a certificate for the number of shares of Common Stock
to which the Holder is entitled and register such shares of Common Stock on the Company’s share register or, if the Transfer
Agent is participating in the DTC Fast Automated Securities Transfer Program, to credit the balance account of the Holder or the
Holder’s designee with DTC for such number of shares of Common Stock to which the Holder is entitled upon the Holder’s
conversion of this Note (as the case may be) or (II) if the Registration Statement covering the resale of the shares of Common
Stock that are the subject of the Conversion Notice (the “Unavailable Conversion Shares”) is not available
for the resale of such Unavailable Conversion Shares and the Company fails to promptly, but in no event later than as required
pursuant to the Registration Rights Agreement (x) so notify the Holder and (y) deliver the shares of Common Stock electronically
without any restrictive legend by crediting such aggregate number of shares of Common Stock to which the Holder is entitled pursuant
to such exercise to the Holder’s or its designee’s balance account with DTC through its Deposit/Withdrawal At Custodian
system (the event described in the immediately foregoing clause (II) is hereinafter referred as a “Notice Failure”
and together with the event described in clause (I) above, a “Conversion Failure”), then, in addition to all
other remedies available to the Holder, (1) the Company shall pay in cash to the Holder on each day after such Share Delivery
Deadline that the issuance of such shares of Common Stock is not timely effected an amount equal to 2% of the product of (A) the
sum of the number of shares of Common Stock not issued to the Holder on or prior to the Share Delivery Deadline and to which the
Holder is entitled, multiplied by (B) any trading price of the Common Stock selected by the Holder in writing as in effect at
any time during the period beginning on the applicable Conversion Date and ending on the applicable Share Delivery Date and (2)
the Holder, upon written notice to the Company, may void its Conversion Notice with respect to, and retain or have returned (as
the case may be) any portion of this Note that has not been converted pursuant to such Conversion Notice, provided that the voiding
of a Conversion Notice shall not affect the Company’s obligations to make any payments which have accrued prior to the date
of such notice pursuant to this Section 3(c)(ii) or otherwise. In addition to the foregoing, if on or prior to the Share Delivery
Deadline either (A) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, the Company
shall fail to issue and deliver to the Holder (or its designee) a certificate and register such shares of Common Stock on the
Company’s share register or, if the Transfer Agent is participating in the DTC Fast Automated Securities Transfer Program,
the Transfer Agent shall fail to credit the balance account of the Holder or the Holder’s designee with DTC for the number
of shares of Common Stock to which the Holder is entitled upon the Holder’s conversion hereunder or pursuant to the Company’s
obligation pursuant to clause (II) below or (B) a Notice Failure occurs, and if on or after such Share Delivery Deadline the Holder
purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder
of all or any portion of the number of shares of Common Stock issuable upon such conversion that the Holder anticipated receiving
from the Company (a “Buy-In”), then, in addition to all other remedies available to the Holder, the Company
shall, within three (3) Business Days after receipt of the Holder’s request and in the Holder’s discretion, either:
(I) pay cash to the Holder in an amount equal to the Holder’s total purchase price (including brokerage commissions and
other out-of-pocket expenses, if any) for the shares of Common Stock so purchased (including, without limitation, by any other
Person in respect, or on behalf, of the Holder) (the “Buy-In Price”), at which point the Company’s obligation
to so issue and deliver such certificate (and to issue such shares of Common Stock) or credit the balance account of such Holder
or such Holder’s designee, as applicable, with DTC for the number of shares of Common Stock to which the Holder is entitled
upon the Holder’s conversion hereunder (as the case may be) (and to issue such shares of Common Stock) shall terminate,
or (II) promptly honor its obligation to so issue and deliver to the Holder a certificate or certificates representing such shares
of Common Stock or credit the balance account of such Holder or such Holder’s designee, as applicable, with DTC for the
number of shares of Common Stock to which the Holder is entitled upon the Holder’s conversion hereunder (as the case may
be) and pay cash to the Holder in an amount equal to the excess (if any) of the Buy-In Price over the product of (x) such number
of shares of Common Stock multiplied by (y) the lowest Closing Sale Price of the Common Stock on any Trading Day during the period
commencing on the date of the applicable Conversion Notice and ending on the date of such issuance and payment under this clause
(II) (the “Buy-In Payment Amount”). Nothing shall limit the 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 (or to electronically
deliver such shares of Common Stock) upon the conversion of this Note as required pursuant to the terms hereof.
(iii)
Registration; Book-Entry. The Company shall maintain a register (the “Register”) for the recordation
of the names and addresses of the holders of each Note and the principal amount of the Notes and Restricted Principal held by
such holders held by such holders (the “Registered Notes”). The entries in the Register shall be conclusive
and binding for all purposes absent manifest error. The Company and the holders of the Notes shall treat each Person whose name
is recorded in the Register as the owner of a Note for all purposes (including, without limitation, the right to receive payments
of Principal and Interest hereunder) notwithstanding notice to the contrary. A Registered Note may be assigned, transferred or
sold in whole or in part only by registration of such assignment or sale on the Register. Upon its receipt of a written request
to assign, transfer or sell all or part of any Registered Note by the holder thereof, the Company shall record the information
contained therein in the Register and issue one or more new Registered Notes in the same aggregate principal amount as the principal
amount of the surrendered Registered Note to the designated assignee or transferee pursuant to Section 18, provided that if the
Company does not so record an assignment, transfer or sale (as the case may be) of all or part of any Registered Note within two
(2) Business Days of such a request, then the Register shall be automatically deemed updated to reflect such assignment, transfer
or sale (as the case may be). Notwithstanding anything to the contrary set forth in this Section 3, following conversion of any
portion of this Note in accordance with the terms hereof, the Holder shall not be required to physically surrender this Note to
the Company unless (A) the full Conversion Amount represented by this Note is being converted (in which event this Note shall
be delivered to the Company following conversion thereof as contemplated by Section 3(c)(i)) or (B) the Holder has provided the
Company with prior written notice (which notice may be included in a Conversion Notice) requesting reissuance of this Note upon
physical surrender of this Note. The Holder and the Company shall maintain records showing the Principal, Interest and Late Charges
converted and/or paid (as the case may be) or Restricted Principal becoming unrestricted and the dates of such conversions, Investor
Prepayments and/or payments (as the case may be) or shall use such other method, reasonably satisfactory to the Holder and the
Company, so as not to require physical surrender of this Note upon conversion. If the Company does not update the Register to
record such Principal, Interest and Late Charges converted and/or paid (as the case may be) or Restricted Principal becoming unrestricted
and the dates of such conversions, Investor Prepayment and/or payments (as the case may be) within two (2) Business Days of such
occurrence, then the Register shall be automatically deemed updated to reflect such occurrence.
(iv)
Pro Rata Conversion; Disputes. In the event that the Company receives a Conversion Notice from more than one holder of
Notes for the same Conversion Date and the Company can convert some, but not all, of such portions of the Notes submitted for
conversion, the Company, subject to Section 3(d), shall convert from each holder of Notes electing to have Notes converted on
such date a pro rata amount of such holder’s portion of its Notes submitted for conversion based on the principal amount
of Notes submitted for conversion on such date by such holder relative to the aggregate principal amount of all Notes submitted
for conversion on such date. In the event of a dispute as to the number of shares of Common Stock issuable to the Holder in connection
with a conversion of this Note, the Company shall issue to the Holder the number of shares of Common Stock not in dispute and
resolve such dispute in accordance with Section 23.
(d)
Limitations on Conversions. The Company shall not effect the conversion of any portion of this Note, and the Holder shall
not have the right to convert any portion of this Note pursuant to the terms and conditions of this Note and any such conversion
shall be null and void and treated as if never made, to the extent that after giving effect to such conversion, the Holder together
with the other Attribution Parties collectively would beneficially own in excess of 9.99% (the “Maximum Percentage”)
of the shares of Common Stock outstanding immediately after giving effect to such conversion. For purposes of the foregoing sentence,
the aggregate number of shares of Common Stock beneficially owned by the Holder and the other Attribution Parties shall include
the number of shares of Common Stock held by the Holder and all other Attribution Parties plus the number of shares of Common
Stock issuable upon conversion of this Note with respect to which the determination of such sentence is being made, but shall
exclude shares of Common Stock which would be issuable upon (A) conversion of the remaining, nonconverted portion of this Note
beneficially owned by the Holder or any of the other Attribution Parties and (B) exercise or conversion of the unexercised or
nonconverted portion of any other securities of the Company (including, without limitation, any convertible notes or convertible
preferred stock or warrants, including the Warrants) beneficially owned by the Holder or any other Attribution Party subject to
a limitation on conversion or exercise analogous to the limitation contained in this Section 3(d)(i). For purposes of this Section
3(d)(i), beneficial ownership shall be calculated in accordance with Section 13(d) of the 1934 Act. For purposes of determining
the number of outstanding shares of Common Stock the Holder may acquire upon the conversion of this Note without exceeding the
Maximum Percentage, the Holder may rely on the number of outstanding shares of Common Stock as reflected in (x) the Company’s
most recent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K or other public filing with
the SEC, as the case may be, (y) a more recent public announcement by the Company or (z) any other written notice by the Company
or the Transfer Agent, if any, setting forth the number of shares of Common Stock outstanding (the “Reported Outstanding
Share Number”). If the Company receives a Conversion Notice from the Holder at a time when the actual number of outstanding
shares of Common Stock is less than the Reported Outstanding Share Number, the Company shall notify the Holder in writing of the
number of shares of Common Stock then outstanding and, to the extent that such Conversion Notice would otherwise cause the Holder’s
beneficial ownership, as determined pursuant to this Section 3(d)(i), to exceed the Maximum Percentage, the Holder must notify
the Company of a reduced number of shares of Common Stock to be purchased pursuant to such Conversion Notice. For any reason at
any time, upon the written or oral request of the Holder, the Company shall within one (1) Business Day confirm orally and in
writing or by electronic mail 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 Note, by the Holder and any other Attribution Party since the date as of which the Reported Outstanding
Share Number was reported. In the event that the issuance of shares of Common Stock to the Holder upon conversion of this Note
results in the Holder and the other Attribution Parties being deemed to beneficially own, in the aggregate, more than the Maximum
Percentage of the number of outstanding shares of Common Stock (as determined under Section 13(d) of the 1934 Act), the number
of shares so issued by which the Holder’s and the other Attribution Parties’ aggregate beneficial ownership exceeds
the Maximum Percentage (the “Excess Shares”) shall be deemed null and void and shall be cancelled ab initio,
and the Holder shall not have the power to vote or to transfer the Excess Shares. Upon delivery of a written notice to the Company,
the Holder may from time to time increase (with such increase not effective until the sixty-first (61st) day after delivery of
such notice) or decrease the Maximum Percentage to any other percentage not in excess of 9.99% as specified in such notice; provided
that (i) any such increase in the Maximum Percentage will not be effective until the sixty-first (61st) day after such notice
is delivered to the Company and (ii) any such increase or decrease will apply only to the Holder and the other Attribution Parties
and not to any other holder of Notes that is not an Attribution Party of the Holder. For purposes of clarity, the shares of Common
Stock issuable pursuant to the terms of this Note in excess of the Maximum Percentage shall not be deemed to be beneficially owned
by the Holder for any purpose including for purposes of Section 13(d) or Rule 16a-1(a)(1) of the 1934 Act. No prior inability
to convert this Note pursuant to this paragraph shall have any effect on the applicability of the provisions of this paragraph
with respect to any subsequent determination of convertibility. The provisions of this paragraph shall be construed and implemented
in a manner otherwise than in strict conformity with the terms of this Section 3(d)(i) to the extent necessary to correct this
paragraph (or any portion of this paragraph) which may be defective or inconsistent with the intended beneficial ownership limitation
contained in this Section 3(d)(i) or to make changes or supplements necessary or desirable to properly give effect to such limitation.
The limitation contained in this paragraph may not be waived and shall apply to a successor holder of this Note.
(e)
Right of Alternate Conversion.
(i)
General.
(1)
Alternate Optional Conversion. At any time, at the option of the Holder, the Holder may convert (each, an “Alternate
Optional Conversion”, and the date of such Alternate Optional Conversion, an “Alternate Optional Conversion
Date”) all, or any part, of up to an aggregate of the Principal amount of this Note as of the initial Issuance Date
equal to the Holder Pro Rata Amount of $12 million (together with any accrued and unpaid Interest thereon and accrued and unpaid
Late Charges on such Principal and Interest through such Alternate Optional Conversion Date) into shares of Common Stock (such
portion of the Conversion Amount subject to such Alternate Optional Conversion, the “Alternate Optional Conversion Amount”)
at the Alternate Conversion Price. In the event that the Holder shall sell or otherwise transfer all or any portion of this Note,
each transferee shall be allocated such portion of the Conversion Amount eligible to be an Alternate Optional Conversion Amount,
if any, as specified in the documentation with respect to such transfer (or, if unspecified therein, pro rata based on the portion
of this Note transferred).
(2)
Alternate Conversion Upon an Event of Default. At any time at any time after the occurrence of an Event of Default (regardless
of whether such Event of Default has been cured or if the Holder has delivered an Event of Default Redemption Notice to the Company),
the Holder may, at the Holder’s option, convert (each, an “Alternate Event of Default Conversion” and
together with each Alternate Optional Conversion, each, an “Alternate Conversion”, and the date of such Alternate
Event of Default Conversion, each, an “Alternate Event of Default Conversion Date”, and together with each
Alternate Optional Conversion Date, each, an “Alternate Conversion Date”) all, or any part of, the Conversion
Amount (such portion of the Conversion Amount subject to such Alternate Conversion, the “Alternate Event of Default Conversion
Amount” and together with each Alternate Optional Conversion Amount, each, an “Alternate Conversion Amount”)
into shares of Common Stock at the Alternate Conversion Price.
(ii)
Mechanics of Alternate Conversion. On any Alternate Conversion Date, the Holder may voluntarily convert any Alternate Conversion
Amount pursuant to Section 3(c) (with “Alternate Conversion Price” replacing “Conversion Price” for all
purposes hereunder with respect to such Alternate Conversion and, solely with respect to the calculation of the number of shares
of Common Stock issuable upon conversion of any Conversion Amount in an Alternate Default Conversion, with “Redemption Premium
of the Conversion Amount” replacing “Conversion Amount” in clause (x) of the definition of Conversion Rate above
with respect to such Alternate Conversion) by designating in the Conversion Notice delivered pursuant to this Section 3(e) of
this Note that the Holder is electing to use the Alternate Conversion Price for such conversion. Notwithstanding anything to the
contrary in this Section 3(e), but subject to Section 3(d), until the Company delivers shares of Common Stock representing the
applicable Alternate Conversion Amount to the Holder, such Alternate Conversion Amount may be converted by the Holder into shares
of Common Stock pursuant to Section 3(c) without regard to this Section 3(e).
4.
RIGHTS UPON EVENT OF DEFAULT.
(a)
Event of Default. Each of the following events shall constitute an “Event of Default” and each of the
events in clauses (ix), (x) and (xi) shall constitute a “Bankruptcy Event of Default”:
(i)
the failure of the applicable Registration Statement (as defined in the Registration Rights Agreement) to be filed with the SEC
on or prior to the date that is five (5) days after the applicable Filing Deadline (as defined in the Registration Rights Agreement);
(ii)
at any time after the initial Registration Statement filed pursuant to the Registration Rights Agreement is declared effective
by the SEC, the effectiveness of such Registration Statement (or any other Registration Statement registering any Registrable
Securities (as defined in the Registration Rights Agreement)) lapses for any reason (including, without limitation, the issuance
of a stop order) or such Registration Statement (or the prospectus contained therein) is unavailable to any holder of Registrable
Securities for sale of all of such holder’s Registrable Securities in accordance with the terms of the Registration Rights
Agreement, and such lapse or unavailability continues for a period of five (5) consecutive days or for more than an aggregate
of fifteen (15) days in any 365-day period (excluding days during an Allowable Grace Period (as defined in the Registration Rights
Agreement));
(iii)
the suspension (or threatened suspension) from trading or the failure (or threatened failure) of the Common Stock to be trading
or listed (as applicable) on an Eligible Market for a period of five (5) consecutive Trading Days;
(iv)
the Company’s (A) failure to cure a Conversion Failure or a Delivery Failure (as defined in the Warrants) by delivery of
the required number of shares of Common Stock within five (5) Trading Days after the applicable Conversion Date or exercise date
(as the case may be) or (B) notice, written or oral, to any holder of the Notes or Warrants, including, without limitation, by
way of public announcement or through any of its agents, at any time, of its intention not to comply, as required, with a request
for conversion of any Notes into shares of Common Stock that is requested in accordance with the provisions of the Notes, other
than pursuant to Section 3(d), or a request for exercise of any Warrants for Warrant Shares in accordance with the provisions
of the Warrants;
(v)
except to the extent the Company is in compliance with Section 10(b) below, at any time following the tenth (10th) consecutive
day that the Holder’s Authorized Share Allocation (as defined in Section 10(a) below) is less than the number of shares
of Common Stock that the Holder would be entitled to receive upon a conversion of the full Conversion Amount of this Note (without
regard to any limitations on conversion set forth in Section 3(d) or otherwise), and (B) the number of shares of Common Stock
that the Holder would be entitled to receive upon exercise in full of the Holder’s Warrants (without regard to any limitations
on exercise set forth in the Warrants);
(vi)
the Company’s or any Subsidiary’s failure to pay to the Holder any amount of Principal, Interest, Late Charges or
other amounts when and as due under this Note (including, without limitation, the Company’s or any Subsidiary’s failure
to pay any redemption payments or amounts hereunder) or any other Transaction Document (as defined in the Securities Purchase
Agreement) or any other agreement, document, certificate or other instrument delivered in connection with the transactions contemplated
hereby and thereby, except, in the case of a failure to pay Interest and Late Charges when and as due, in which case only if such
failure remains uncured for a period of at least two (2) Trading Days;
(vii)
the Company fails to remove any restrictive legend on any certificate or any shares of Common Stock issued to the Holder upon
conversion or exercise (as the case may be) of any Securities acquired by the Holder under the Securities Purchase Agreement (including
this Note) as and when required by such Securities or the Securities Purchase Agreement, unless otherwise then prohibited by applicable
federal securities laws, and any such failure remains uncured for at least five (5) days;
(viii)
other than such Indebtedness or judgments set forth on Schedule 4(a)(viii) attached hereto (solely to the extent such holders
have not taken any action to enforce such Indebtedness or judgments, which would reasonably be expected to result in the seizure
of any assets of the Company or any of its Subsidiaries) (collectively, the “Permitted Default Indebtedness”),
the occurrence of any default under, redemption of or acceleration prior to maturity of at least an aggregate of $100,000 of Indebtedness
(as defined in the Securities Purchase Agreement) of the Company or any of its Subsidiaries, other than with respect to any Other
Notes;
(ix)
bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings for the relief of debtors shall be instituted
by or against the Company or any Subsidiary and, if instituted against the Company or any Subsidiary by a third party, shall not
be dismissed within thirty (30) days of their initiation;
(x)
the commencement by the Company or any Subsidiary of a voluntary case or proceeding under any applicable federal, state or foreign
bankruptcy, insolvency, reorganization or other similar law or of any other case or proceeding to be adjudicated a bankrupt or
insolvent, or the consent by it to the entry of a decree, order, judgment or other similar document in respect of the Company
or any Subsidiary in an involuntary case or proceeding under any applicable federal, state or foreign bankruptcy, insolvency,
reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against it, or the
filing by it of a petition or answer or consent seeking reorganization or relief under any applicable federal, state or foreign
law, or the consent by it to the filing of such petition or to the appointment of or taking possession by a custodian, receiver,
liquidator, assignee, trustee, sequestrator or other similar official of the Company or any Subsidiary or of any substantial part
of its property, or the making by it of an assignment for the benefit of creditors, or the execution of a composition of debts,
or the occurrence of any other similar federal, state or foreign proceeding, or the admission by it in writing of its inability
to pay its debts generally as they become due, the taking of corporate action by the Company or any Subsidiary in furtherance
of any such action or the taking of any action by any Person to commence a Uniform Commercial Code foreclosure sale or any other
similar action under federal, state or foreign law;
(xi)
the entry by a court of (i) a decree, order, judgment or other similar document in respect of the Company or any Subsidiary of
a voluntary or involuntary case or proceeding under any applicable federal, state or foreign bankruptcy, insolvency, reorganization
or other similar law or (ii) a decree, order, judgment or other similar document adjudging the Company or any Subsidiary as bankrupt
or insolvent, or approving as properly filed a petition seeking liquidation, reorganization, arrangement, adjustment or composition
of or in respect of the Company or any Subsidiary under any applicable federal, state or foreign law or (iii) a decree, order,
judgment or other similar document appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar
official of the Company or any Subsidiary or of any substantial part of its property, or ordering the winding up or liquidation
of its affairs, and the continuance of any such decree, order, judgment or other similar document or any such other decree, order,
judgment or other similar document unstayed and in effect for a period of thirty (30) consecutive days;
(xii)
other than with respect to the Permitted Default Indebtedness, a final judgment or judgments for the payment of money aggregating
in excess of $100,000 are rendered against the Company and/or any of its Subsidiaries and which judgments are not, within thirty
(30) days after the entry thereof, bonded, discharged, settled or stayed pending appeal, or are not discharged within thirty (30)
days after the expiration of such stay; provided, however, any judgment which is covered by insurance or an indemnity from a credit
worthy party shall not be included in calculating the $100,000 amount set forth above so long as the Company provides the Holder
a written statement from such insurer or indemnity provider (which written statement shall be reasonably satisfactory to the Holder)
to the effect that such judgment is covered by insurance or an indemnity and the Company or such Subsidiary (as the case may be)
will receive the proceeds of such insurance or indemnity within thirty (30) days of the issuance of such judgment;
(xiii)
other than with respect to the Permitted Default Indebtedness, the Company and/or any Subsidiary, individually or in the aggregate,
either (i) fails to pay, when due, or within any applicable grace period, any payment with respect to any Indebtedness in excess
of $100,000 due to any third party (other than, with respect to unsecured Indebtedness only, payments contested by the Company
and/or such Subsidiary (as the case may be) in good faith by proper proceedings and with respect to which adequate reserves have
been set aside for the payment thereof in accordance with GAAP) or is otherwise in breach or violation of any agreement for monies
owed or owing in an amount in excess of $100,000, which breach or violation permits the other party thereto to declare a default
or otherwise accelerate amounts due thereunder, or (ii) suffer to exist any other circumstance or event that would, with or without
the passage of time or the giving of notice, result in a default or event of default under any agreement binding the Company or
any Subsidiary, which default or event of default would or is likely to have a material adverse effect on the business, assets,
operations (including results thereof), liabilities, properties, condition (including financial condition) or prospects of the
Company or any of its Subsidiaries, individually or in the aggregate;
(xiv)
other than as specifically set forth in another clause of this Section 4(a), the Company or any Subsidiary breaches any representation,
warranty, covenant or other term or condition of any Transaction Document, except, in the case of a breach of a covenant or other
term or condition that is curable, only if such breach remains uncured for a period of five (5) consecutive Trading Days;
(xv)
a false or inaccurate certification (including a false or inaccurate deemed certification) by the Company that either (A) the
Equity Conditions are satisfied, (B) there has been no Equity Conditions Failure, or (C) as to whether any Event of Default has
occurred;
(xvi)
any breach or failure in any respect by the Company or any Subsidiary to comply with any provision of Section 13 of this Note;
(xvii)
any Material Adverse Effect (as defined in the Securities Purchase Agreement) occurs;
(xviii)
any provision of any Transaction Document (including, without limitation, the Security Documents and the Guaranties) 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 (including, without limitation, the Security Documents and the
Guaranties);
(xix)
any Security Document shall for any reason fail or cease to create a separate valid and perfected and, except to the extent permitted
by the terms hereof or thereof, first priority Lien (as defined in the Securities Purchase Agreement) on the Collateral (as defined
in the Security Documents) in favor of the Collateral Agent (as defined in the Securities Purchase Agreement) or any material
provision of any Security Document shall at any time for any reason cease to be valid and binding on or enforceable against the
Company or the validity or enforceability thereof shall be contested by any party thereto, or a proceeding shall be commenced
by the Company or any governmental authority having jurisdiction over the Company, seeking to establish the invalidity or unenforceability
thereof;
(xx)
any material damage to, or loss, theft or destruction of, any Collateral, whether or not insured, or any strike, lockout, labor
dispute, embargo, condemnation, act of God or public enemy, or other casualty which causes, for more than fifteen (15) consecutive
days, the cessation or substantial curtailment of revenue producing activities at any facility of the Company or any Subsidiary,
if any such event or circumstance could have a Material Adverse Effect; or
(xxi)
any Event of Default (as defined in the Other Notes) occurs with respect to any Other Notes.
(b)
Notice of an Event of Default; Redemption Right. Upon the occurrence of an Event of Default with respect to this Note or
any Other Note, the Company shall within two (2) Business Day deliver written notice thereof via facsimile or electronic mail
and overnight courier (with next day delivery specified) (an “Event of Default Notice”) to the Holder. At any
time after the earlier of the Holder’s receipt of an Event of Default Notice and the Holder becoming aware of an Event of
Default (such earlier date, the “Event of Default Right Commencement Date”) and ending (such ending date, the
“Event of Default Right Expiration Date”, and each such period, an “Event of Default Redemption Right
Period”) on the twentieth (20th) Trading Day after the later of (x) the date such Event of Default is cured and (y)
the Holder’s receipt of an Event of Default Notice that includes (I) a reasonable description of the applicable Event of
Default, (II) a certification as to whether, in the opinion of the Company, such Event of Default is capable of being cured and,
if applicable, a reasonable description of any existing plans of the Company to cure such Event of Default and (III) a certification
as to the date the Event of Default occurred and, if cured on or prior to the date of such Event of Default Notice, the applicable
Event of Default Right Expiration Date, the Holder may require the Company to redeem (regardless of whether such Event of Default
has been cured on or prior to the Event of Default Right Expiration Date) all or any portion of this Note by delivering written
notice thereof (the ”Event of Default Redemption Notice") to the Company, which Event of Default Redemption Notice
shall indicate the portion of this Note the Holder is electing to redeem. Each portion of this Note subject to redemption by the
Company pursuant to this Section 4(b) shall be redeemed by the Company at a price equal to the greater of (i) the product of (A)
the Conversion Amount to be redeemed multiplied by (B) the Redemption Premium and (ii) the product of (X) the Conversion Rate
with respect to the Conversion Amount in effect at such time as the Holder delivers an Event of Default Redemption Notice multiplied
by (Y) the product of (1) the Redemption Premium multiplied by (2) the greatest Closing Sale Price of the Common Stock on any
Trading Day during the period commencing on the date immediately preceding such Event of Default and ending on the date the Company
makes the entire payment required to be made under this Section 4(b) (the “Event of Default Redemption Price”).
Redemptions required by this Section 4(b) shall be made in accordance with the provisions of Section 11. To the extent redemptions
required by this Section 4(b) are deemed or determined by a court of competent jurisdiction to be prepayments of this Note by
the Company, such redemptions shall be deemed to be voluntary prepayments. Notwithstanding anything to the contrary in this Section
3(e), but subject to Section 3(d), until the Event of Default Redemption Price (together with any Late Charges thereon) is paid
in full, the Conversion Amount submitted for redemption under this Section 4(b) (together with any Late Charges thereon) may be
converted, in whole or in part, by the Holder into Common Stock pursuant to the terms of this Note. In the event of a partial
redemption of this Note pursuant hereto, the Principal amount redeemed shall be deducted from the Installment Amount(s) relating
to the applicable Installment Date(s) as set forth in the Event of Default Redemption Notice. In the event of the Company’s
redemption of any portion of this Note under this Section 4(b), the Holder’s damages would be uncertain and difficult to
estimate because of the parties’ inability to predict future interest rates and the uncertainty of the availability of a
suitable substitute investment opportunity for the Holder. Accordingly, any redemption premium due under this Section 4(b) is
intended by the parties to be, and shall be deemed, a reasonable estimate of the Holder’s actual loss of its investment
opportunity and not as a penalty. Any redemption upon an Event of Default shall not constitute an election of remedies by the
Holder, and all other rights and remedies of the Holder shall be preserved.
(c)
Mandatory Redemption upon Bankruptcy Event of Default. Notwithstanding anything to the contrary herein, and notwithstanding
any conversion that is then required or in process, upon any Bankruptcy Event of Default, whether occurring prior to or following
the Maturity Date, the Company shall immediately pay to the Holder an amount in cash representing (i) all outstanding Principal,
accrued and unpaid Interest and accrued and unpaid Late Charges on such Principal and Interest, multiplied by (ii) the Redemption
Premium, in addition to any and all other amounts due hereunder, without the requirement for any notice or demand or other action
by the Holder or any other person or entity, provided that the Holder may, in its sole discretion, waive such right to receive
payment upon a Bankruptcy Event of Default, in whole or in part, and any such waiver shall not affect any other rights of the
Holder hereunder, including any other rights in respect of such Bankruptcy Event of Default, any right to conversion, and any
right to payment of the Event of Default Redemption Price or any other Redemption Price, as applicable.
5.
RIGHTS UPON FUNDAMENTAL TRANSACTION.
(a)
Assumption. The Company shall not enter into or be party to a Fundamental Transaction unless (i) the Successor Entity assumes
in writing all of the obligations of the Company under this Note and the other Transaction Documents in accordance with the provisions
of this Section 4(c)(a) pursuant to written agreements in form and substance satisfactory to the Holder and approved by the Holder
prior to such Fundamental Transaction, including agreements to deliver to each holder of Notes in exchange for such Notes a security
of the Successor Entity evidenced by a written instrument substantially similar in form and substance to the Notes, including,
without limitation, having a principal amount and interest rate equal to the principal amounts then outstanding and the interest
rates of the Notes held by such holder, having similar conversion rights as the Notes and having similar ranking and security
to the Notes, and satisfactory to the Holder and (ii) the Successor Entity (including its Parent Entity) is a publicly traded
corporation whose common stock is quoted on or listed for trading on an Eligible Market. Upon the occurrence of any Fundamental
Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental
Transaction, the provisions of this Note and the other Transaction Documents referring to the “Company” shall refer
instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations
of the Company under this Note and the other Transaction Documents with the same effect as if such Successor Entity had been named
as the Company herein. Upon consummation of a Fundamental Transaction, the Successor Entity shall deliver to the Holder confirmation
that there shall be issued upon conversion or redemption of this Note at any time after the consummation of such Fundamental Transaction,
in lieu of the shares of Common Stock (or other securities, cash, assets or other property (except such items still issuable under
Sections 6 and 15, which shall continue to be receivable thereafter) issuable upon the conversion or redemption of the Notes prior
to such Fundamental Transaction, such shares of the publicly traded common stock (or their equivalent) of the Successor Entity
(including its Parent Entity) which the Holder would have been entitled to receive upon the happening of such Fundamental Transaction
had this Note been converted immediately prior to such Fundamental Transaction (without regard to any limitations on the conversion
of this Note), as adjusted in accordance with the provisions of this Note. Notwithstanding the foregoing, the Holder may elect,
at its sole option, by delivery of written notice to the Company to waive this Section 5(a) to permit the Fundamental Transaction
without the assumption of this Note. The provisions of this Section 4(c) shall apply similarly and equally to successive Fundamental
Transactions and shall be applied without regard to any limitations on the conversion of this Note.
(b)
Notice of a Change of Control; Redemption Right. No sooner than twenty (20) Trading Days nor later than ten (10) Trading
Days prior to the consummation of a Change of Control (the “Change of Control Date”), but not prior to the
public announcement of such Change of Control, the Company shall deliver written notice thereof via facsimile or electronic mail
and overnight courier to the Holder (a “Change of Control Notice”). At any time during the period beginning
after the Holder’s receipt of a Change of Control Notice or the Holder becoming aware of a Change of Control if a Change
of Control Notice is not delivered to the Holder in accordance with the immediately preceding sentence (as applicable) and ending
on the later of twenty (20) Trading Days after (A) consummation of such Change of Control or (B) the date of receipt of such Change
of Control Notice, the Holder may require the Company to redeem all or any portion of this Note by delivering written notice thereof
(“Change of Control Redemption Notice”) to the Company, which Change of Control Redemption Notice shall indicate
the Conversion Amount the Holder is electing to redeem. The portion of this Note subject to redemption pursuant to this Section
4(c) shall be redeemed by the Company in cash at a price equal to the greatest of (i) the product of (w) the Change of Control
Redemption Premium multiplied by (y) the Conversion Amount being redeemed, (ii) the product of (x) the Change of Control Redemption
Premium multiplied by (y) the product of (A) the Conversion Amount being redeemed multiplied by (B) the quotient determined by
dividing (I) the greatest Closing Sale Price of the shares of Common Stock during the period beginning on the date immediately
preceding the earlier to occur of (1) the consummation of the applicable Change of Control and (2) the public announcement of
such Change of Control and ending on the date the Holder delivers the Change of Control Redemption Notice by (II) the Conversion
Price then in effect and (iii) the product of (y) the Change of Control Redemption Premium multiplied by (z) the product
of (A) the Conversion Amount being redeemed multiplied by (B) the quotient of (I) the aggregate cash consideration and the aggregate
cash value of any non-cash consideration per share of Common Stock to be paid to the holders of the shares of Common Stock upon
consummation of such Change of Control (any such non-cash consideration constituting publicly-traded securities shall be valued
at the highest of the Closing Sale Price of such securities as of the Trading Day immediately prior to the consummation of such
Change of Control, the Closing Sale Price of such securities on the Trading Day immediately following the public announcement
of such proposed Change of Control and the Closing Sale Price of such securities on the Trading Day immediately prior to the public
announcement of such proposed Change of Control) divided by (II) the Conversion Price then in effect (the “Change of
Control Redemption Price”). Redemptions required by this Section 4(c) shall be made in accordance with the provisions
of Section 11 and shall have priority to payments to stockholders in connection with such Change of Control. To the extent redemptions
required by this Section 4(c)(b) are deemed or determined by a court of competent jurisdiction to be prepayments of this Note
by the Company, such redemptions shall be deemed to be voluntary prepayments. Notwithstanding anything to the contrary in this
Section 4(c), but subject to Section 3(d), until the Change of Control Redemption Price (together with any Late Charges thereon)
is paid in full, the Conversion Amount submitted for redemption under this Section 4(c)(b) (together with any Late Charges thereon)
may be converted, in whole or in part, by the Holder into Common Stock pursuant to Section 3. In the event of a partial redemption
of this Note pursuant hereto, the Principal amount redeemed shall be deducted from the Installment Amount(s) relating to the applicable
Installment Date(s) as set forth in the Change of Control Redemption Notice. In the event of the Company’s redemption of
any portion of this Note under this Section 4(c)(b), the Holder’s damages would be uncertain and difficult to estimate because
of the parties’ inability to predict future interest rates and the uncertainty of the availability of a suitable substitute
investment opportunity for the Holder. Accordingly, any redemption premium due under this Section 4(c)(b) is intended by the parties
to be, and shall be deemed, a reasonable estimate of the Holder’s actual loss of its investment opportunity and not as a
penalty.
6.
RIGHTS UPON ISSUANCE OF PURCHASE RIGHTS AND OTHER CORPORATE EVENTS.
(a)
Purchase Rights. In addition to any adjustments pursuant to Section 7 below, if at any time the Company grants, issues
or sells any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property pro rata to all
or substantially all of the record holders of any class of Common Stock (the “Purchase Rights”), then the Holder
will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder
could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete conversion of this Note
(without taking into account any limitations or restrictions on the convertibility of this Note) immediately prior to the date
on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as
of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights
(provided, however, that to the extent that the Holder’s right to participate in any such Purchase Right would result in
the Holder and the other Attribution Parties exceeding the Maximum Percentage, then the Holder shall not be entitled to participate
in such Purchase Right to such extent (and shall not be entitled to beneficial ownership of such shares of Common Stock as a result
of such Purchase Right (and beneficial ownership) to such extent) and such Purchase Right to such extent shall be held in abeyance
for the Holder until such time or times, if ever, as its right thereto would not result in the Holder and the other Attribution
Parties exceeding the Maximum Percentage, at which time or times the Holder shall be granted such right (and any Purchase Right
granted, issued or sold on such initial Purchase Right or on any subsequent Purchase Right to be held similarly in abeyance) to
the same extent as if there had been no such limitation).
(b)
Other Corporate Events. In addition to and not in substitution for any other rights hereunder, prior to the consummation
of any Fundamental Transaction pursuant to which holders of shares of Common Stock are entitled to receive securities or other
assets with respect to or in exchange for shares of Common Stock (a “Corporate Event”), the Company shall make
appropriate provision to ensure that the Holder will thereafter have the right to receive upon a conversion of this Note, at the
Holder’s option (i) in addition to the shares of Common Stock receivable upon such conversion, such securities or other
assets to which the Holder would have been entitled with respect to such shares of Common Stock had such shares of Common Stock
been held by the Holder upon the consummation of such Corporate Event (without taking into account any limitations or restrictions
on the convertibility of this Note) or (ii) in lieu of the shares of Common Stock otherwise receivable upon such conversion, such
securities or other assets received by the holders of shares of Common Stock in connection with the consummation of such Corporate
Event in such amounts as the Holder would have been entitled to receive had this Note initially been issued with conversion rights
for the form of such consideration (as opposed to shares of Common Stock) at a conversion rate for such consideration commensurate
with the Conversion Rate. Provision made pursuant to the preceding sentence shall be in a form and substance satisfactory to the
Holder. The provisions of this Section 6 shall apply similarly and equally to successive Corporate Events and shall be applied
without regard to any limitations on the conversion or redemption of this Note.
7.
RIGHTS UPON ISSUANCE OF OTHER SECURITIES.
(a)
Adjustment of Conversion Price upon Issuance of Common Stock. If and whenever on or after the Subscription Date the Company issues
or sells, or in accordance with this Section 7(a) is deemed to have issued or sold, any shares of Common Stock (including the
issuance or sale of shares of Common Stock owned or held by or for the account of the Company, but excluding any Excluded Securities
issued or sold or deemed to have been issued or sold) for a consideration per share (the “New Issuance Price”)
less than a price equal to the Conversion Price in effect immediately prior to such issuance or sale or deemed issuance or sale
(such Conversion Price then in effect is referred to herein as the “Applicable Price”) (the foregoing a “Dilutive
Issuance”), then, immediately after such Dilutive Issuance, the Conversion Price then in effect shall be reduced to
an amount equal to the New Issuance Price. For all purposes of the foregoing (including, without limitation, determining the adjusted
Conversion Price and the New Issuance Price under this Section 7(a)), the following shall be applicable:
(i)
Issuance of Options. If the Company in any manner grants or sells any Options and the lowest price per share for which
one share of Common Stock is 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 7(a)(i), the
“lowest price per share for which one share of Common Stock is issuable upon the exercise of any such Option or upon conversion,
exercise or exchange of any Convertible Securities issuable upon exercise of any such Option 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 Conversion Price shall be made upon the actual issuance
of such share of Common Stock or of such Convertible Securities upon the exercise of such Options or otherwise pursuant to the
terms thereof 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 7(a)(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 Conversion 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 the Conversion Price has been
or is to be made pursuant to other provisions of this Section 7(a), except as contemplated below, no further adjustment of the
Conversion Price shall be made by reason of such issuance or sale.
(iii)
Change in Option Price or Rate of Conversion. If the purchase or exercise price provided for in any Options, the additional
consideration, if any, payable upon the issue, conversion, exercise or exchange of any Convertible Securities, or the rate at
which any Convertible Securities are convertible into or exercisable or exchangeable for shares of Common Stock increases or decreases
at any time (other than proportional changes in conversion or exercise prices, as applicable, in connection with an event referred
to in Section 7(b) below), the Conversion Price in effect at the time of such increase or decrease shall be adjusted to the Conversion
Price which would have been in effect at such time had such Options or Convertible Securities provided for such increased or decreased
purchase price, additional consideration or increased or decreased conversion rate (as the case may be) at the time initially
granted, issued or sold. For purposes of this Section 7(a)(iii), if the terms of any Option or Convertible Security that was outstanding
as of the Subscription 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 7(a) shall be
made if such adjustment would result in an increase of the Conversion Price then in effect.
(iv)
Calculation of Consideration Received. If any Option and/or Convertible Security and/or Adjustment Right is issued in connection
with the issuance or sale or deemed issuance or sale of any other securities of the Company (as determined by the Holder, the
“Primary Security”, and such Option and/or Convertible Security and/or Adjustment Right, the “Secondary
Securities”), together comprising one integrated transaction (or one or more transactions if such issuances or sales
or deemed issuances or sales of securities of the Company either (A) have at least one investor or purchaser in common, (B) are
consummated in reasonable proximity to each other and/or (C) are consummated under the same plan of financing), the consideration
per share of Common Stock with respect to such Primary Security shall be deemed to be equal to the difference of (x) the lowest
price per share for which one share of Common Stock was issued in such integrated transaction (or was deemed to be issued pursuant
to Section 7(a)(i) or 7(a)(ii) above, as applicable) solely with respect to such Primary Security, minus (y) with respect to such
Secondary Securities, the sum of (I) the Black Scholes Consideration Value of each such Option, if any, (II) the fair market value
(as determined by the Holder in good faith) or the Black Scholes Consideration Value, as applicable, of such Adjustment Right,
if any, and (III) the fair market value (as determined by the Holder) of such Convertible Security, if any, in each case, as determined
on a per share basis in accordance with this Section 7(a)(iv). 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 (for the purpose of determining
the consideration paid for such Common Stock, Option or Convertible Security, but not for the purpose of the calculation of the
Black Scholes Consideration Value) 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 (for the purpose of determining the consideration paid for such Common Stock, Option
or Convertible Security, but not for the purpose of the calculation of the Black Scholes Consideration Value) 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 (5) 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 (for the purpose of determining the consideration paid for such Common Stock, Option
or Convertible Security, but not for the purpose of the calculation of the Black Scholes Consideration Value) will be deemed to
be the fair value of such portion of the net assets and business of the non-surviving entity as is attributable to such shares
of Common Stock, Options or Convertible Securities (as the case may be). The fair value of any consideration other than cash or
publicly traded securities will be determined jointly by the Company and the Holder. If such parties are unable to reach agreement
within ten (10) days after the occurrence of an event requiring valuation (the “Valuation Event”), the fair
value of such consideration will be determined within five (5) Trading Days after the tenth (10th) day following such Valuation
Event by an independent, reputable appraiser jointly selected by the Company and the Holder. The determination of such appraiser
shall be final and binding upon all parties absent manifest error and the fees and expenses of such appraiser shall be borne by
the Company.
(v)
Record Date. If the Company takes a record of the holders of shares of Common Stock for the purpose of entitling them (A)
to receive a dividend or other distribution payable in shares of Common Stock, Options or in Convertible Securities or (B) to
subscribe for or purchase shares of Common Stock, Options or Convertible Securities, then such record date will be deemed to be
the date of the 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).
(b)
Adjustment of Conversion Price upon Subdivision or Combination of Common Stock. Without limiting any provision of Section
4(c) or Section 7(a), if the Company at any time on or after the Subscription Date subdivides (by any stock split, stock dividend,
stock combination, recapitalization or other similar transaction) one or more classes of its outstanding shares of Common Stock
into a greater number of shares, the Conversion Price in effect immediately prior to such subdivision will be proportionately
reduced. Without limiting any provision of Section 4(c) or Section 7(a), if the Company at any time on or after the Subscription
Date combines (by any stock split, stock dividend, stock combination, recapitalization or other similar transaction) one or more
classes of its outstanding shares of Common Stock into a smaller number of shares, the Conversion Price in effect immediately
prior to such combination will be proportionately increased. Any adjustment pursuant to this Section 7(b) shall become effective
immediately after the effective date of such subdivision or combination. If any event requiring an adjustment under this Section
7(b) occurs during the period that a Conversion Price is calculated hereunder, then the calculation of such Conversion Price shall
be adjusted appropriately to reflect such event.
(c)
Holder’s Right of Adjusted Conversion Price. In addition to and not in limitation of the other provisions of this
Section 7, if the Company in any manner issues or sells or enters into any agreement to issue or sell, any Common Stock, Options
or Convertible Securities (any such securities, “Variable Price Securities”), after the Subscription Date that
are issuable pursuant to such agreement or convertible into or exchangeable or exercisable for shares of Common Stock at a price
which varies or may vary with the market price of the Common Shares, including by way of one or more reset(s) to a fixed price,
but exclusive of such formulations reflecting customary anti-dilution provisions (such as share splits, share combinations, share
dividends and similar transactions) (each of the formulations for such variable price being herein referred to as, the “Variable
Price”), the Company shall provide written notice thereof via facsimile and overnight courier to the Holder on the date
of such agreement and the issuance of such Convertible Securities or Options. From and after the date the Company enters into
such agreement or issues any such Variable Price Securities, the Holder shall have the right, but not the obligation, in its sole
discretion to substitute the Variable Price for the Conversion Price upon conversion of this Note by designating in the Conversion
Notice delivered upon any conversion of this Note that solely for purposes of such conversion the Holder is relying on the Variable
Price rather than the Conversion Price then in effect. The Holder’s election to rely on a Variable Price for a particular
conversion of this Note shall not obligate the Holder to rely on a Variable Price for any future conversion of this Note.
(d)
Stock Combination Event Adjustments. If at any time and from time to time on or after the Subscription Date there occurs
any stock split, stock dividend, stock combination recapitalization or other similar transaction involving the Common Stock (each,
a “Stock Combination Event”, and such date thereof, the “Stock Combination Event Date”)
and the Event Market Price is less than the Conversion Price then in effect (after giving effect to the adjustment in Section
7(b) above), then on the sixteenth (16th) Trading Day immediately following such Stock Combination Event Date, the Conversion
Price then in effect on such sixteenth (16th) Trading Day (after giving effect to the adjustment in Section 7(b) above) shall
be reduced (but in no event increased) to the Event Market Price. For the avoidance of doubt, if the adjustment in the immediately
preceding sentence would otherwise result in an increase in the Conversion Price hereunder, no adjustment shall be made.
(e)
Other Events. In the event that the Company (or any Subsidiary) shall take any action to which the provisions hereof are
not strictly applicable, or, if applicable, would not operate to protect the Holder from dilution or if any event occurs of the
type contemplated by the provisions of this Section 7 but not expressly provided for by such provisions (including, without limitation,
the granting of stock appreciation rights, phantom stock rights or other rights with equity features), then the Company’s
board of directors shall in good faith determine and implement an appropriate adjustment in the Conversion Price so as to protect
the rights of the Holder, provided that no such adjustment pursuant to this Section 7(e) will increase the Conversion Price as
otherwise determined pursuant to this Section 7, provided further that if the Holder does not accept such adjustments as appropriately
protecting its interests hereunder against such dilution, then the Company’s board of directors and the Holder shall agree,
in good faith, upon an independent investment bank of nationally recognized standing to make such appropriate adjustments, whose
determination shall be final and binding absent manifest error and whose fees and expenses shall be borne by the Company.
(f)
Calculations. All calculations under this Section 7 shall be made by rounding to the nearest cent or the nearest 1/100th
of a share, as applicable. The number of shares of Common Stock outstanding at any given time shall not include shares owned or
held by or for the account of the Company, and the disposition of any such shares shall be considered an issue or sale of Common
Stock.
(g)
Voluntary Adjustment by Company. The Company may at any time during the term of this Note, with the prior written consent
of the Required Holders, reduce the then current Conversion Price to any amount and for any period of time deemed appropriate
by the board of directors of the Company.
8.
INSTALLMENT CONVERSION OR REDEMPTION.
(a)
General. On each applicable Installment Date, provided there has been no Equity Conditions Failure, the Company shall pay
to the Holder of this Note the applicable Installment Amount due on such date by converting such Installment Amount in accordance
with this Section 8 (a “Installment Conversion”); provided, however, that the Company may, at its option following
notice to the Holder as set forth below, pay the Installment Amount by redeeming such Installment Amount in cash (a “Installment
Redemption”) or by any combination of an Installment Conversion and an Installment Redemption so long as all of the
outstanding applicable Installment Amount due on any Installment Date shall be converted and/or redeemed by the Company on the
applicable Installment Date, subject to the provisions of this Section 8. On the date which is the twenty-first (21st) Trading
Day prior to each Installment Date (or, with respect to the initial Installment Date, the Initial Installment Notice Due Date)(each,
an “Installment Notice Due Date”), the Company shall deliver written notice (each, a “Installment
Notice” and the date all of the holders receive such notice is referred to as to the “Installment Notice Date”),
to each holder of Notes and such Installment Notice shall (i) either (A) confirm that the applicable Installment Amount of such
holder’s Note shall be converted in whole pursuant to an Installment Conversion or (B) (1) state that the Company elects
to redeem for cash, or is required to redeem for cash in accordance with the provisions of the Notes, in whole or in part, the
applicable Installment Amount pursuant to an Installment Redemption and (2) specify the portion of such Installment Amount which
the Company elects or is required to redeem pursuant to an Installment Redemption (such amount to be redeemed in cash, the “Installment
Redemption Amount”) and the portion of the applicable Installment Amount, if any, with respect to which the Company
will, and is permitted to, effect an Installment Conversion (such amount of the applicable Installment Amount so specified to
be so converted pursuant to this Section 8 is referred to herein as the “Installment Conversion Amount”), which
amounts when added together, must at least equal the entire applicable Installment Amount and (ii) if the applicable Installment
Amount is to be paid, in whole or in part, pursuant to an Installment Conversion, certify that there is not then an Equity Conditions
Failure as of the applicable Installment Notice Date. Each Installment Notice shall be irrevocable. If the Company does not timely
deliver an Installment Notice in accordance with this Section 8 with respect to a particular Installment Date, then the Company
shall be deemed to have delivered an irrevocable Installment Notice confirming an Installment Conversion of the entire Installment
Amount payable on such Installment Date and shall be deemed to have certified that there is not then an Equity Conditions Failure
in connection with such Installment Conversion. No later than three (3) Trading Days (or such earlier date as required pursuant
to the 1934 Act or other applicable law, rule or regulation for the settlement of a trade initiated on the applicable Installment
Notice Due Date of such shares of Common Stock issuable pursuant to the applicable Installment Notice) after delivery or deemed
delivery (as applicable) of the applicable Installment Notice setting forth an Installment Conversion Amount, the Company shall
deliver to the Holder’s account with DTC such number of shares of Common Stock (the “Pre-Installment Conversion
Shares”) equal to the quotient of (x) such Installment Conversion Amount divided by (y) the Pre-Installment Conversion
Price, and as to which the Holder shall be the owner thereof as of such time of delivery or deemed delivery (as the case may be)
of such Installment Notice. Except as expressly provided in this Section 8(a), the Company shall convert and/or redeem the applicable
Installment Amount of this Note pursuant to this Section 8 and the corresponding Installment Amounts of the Other Notes pursuant
to the corresponding provisions of the Other Notes in the same ratio of the applicable Installment Amount being converted and/or
redeemed hereunder. The applicable Installment Conversion Amount (whether set forth in the applicable Installment Notice or by
operation of this Section 8) shall be converted in accordance with Section 8(b) and the applicable Installment Redemption Amount
shall be redeemed in accordance with Section 8(c).
(b)
Mechanics of Installment Conversion. Subject to Section 3(d), if the Company delivers an Installment Notice or is deemed
to have delivered an Installment Notice certifying that such Installment Amount is being paid, in whole or in part, in an Installment
Conversion in accordance with Section 8(a), then the remainder of this Section 8(b) shall apply. The applicable Installment Conversion
Amount, if any, shall be converted on the applicable Installment Date at the applicable Installment Conversion Price and the Company
shall, on such Installment Date, deliver to the Holder’s account with DTC such shares of Common Stock issued upon such conversion
(subject to the reduction contemplated by the immediately following sentence and, if applicable, the penultimate sentence of this
Section 8(b)), provided that the Equity Conditions are then satisfied (or waived in writing by the Holder) on such Installment
Date and an Installment Conversion is not otherwise prohibited under any other provision of this Note. The number of shares of
Common Stock to be delivered upon such Installment Conversion shall be reduced by the number of any Pre-Installment Conversion
Shares delivered in connection with such Installment Date. If an Event of Default occurs during any applicable Equity Conditions
Measuring Period, then, at the option of the Holder designated in writing to the Company, either (i) the Holder shall return to
the Company all, or any part, of such Pre-Installment Conversion Shares delivered in connection with the applicable Installment
Date or (ii) the Conversion Amount used to calculate the Event of Default Redemption Price shall be reduced by the product of
(x) the Installment Conversion Amount applicable to such Installment Date (as adjusted downward proportionally with respect to
any Pre-Installment Conversion Shares returned to the Company pursuant to clause (i) above) multiplied by (y) the Conversion Share
Ratio. If the Company confirmed (or is deemed to have confirmed by operation of Section 8(a)) the conversion of the applicable
Installment Conversion Amount, in whole or in part, and there was no Equity Conditions Failure as of the applicable Installment
Notice Date (or is deemed to have certified that the Equity Conditions in connection with any such conversion have been satisfied
by operation of Section 8(a)) but an Equity Conditions Failure occurred between the applicable Installment Notice Date and any
time through the applicable Installment Date (the “Interim Installment Period”), the Company shall provide
the Holder a subsequent notice to that effect. If there is an Equity Conditions Failure (which is not waived in writing by the
Holder) during such Interim Installment Period or an Installment Conversion is not otherwise permitted under any other provision
of this Note, then, at the option of the Holder designated in writing to the Company, the Holder may require the Company to do
any one or more of the following: (i) the Company shall redeem all or any part designated by the Holder of the unconverted Installment
Conversion Amount (such designated amount is referred to as the “Designated Redemption Amount”) and the Company
shall pay to the Holder within three (3) days of such Installment Date, by wire transfer of immediately available funds, an amount
in cash equal to 125% of such Designated Redemption Amount, and/or (ii) the Installment Conversion shall be null and void with
respect to all or any part designated by the Holder of the unconverted Installment Conversion Amount and the Holder shall be entitled
to all the rights of a holder of this Note with respect to such designated part of the Installment Conversion Amount; provided,
however, the Conversion Price for such designated part of such unconverted Installment Conversion Amount shall thereafter be adjusted
to equal the lesser of (A) the Installment Conversion Price as in effect on the date on which the Holder voided the Installment
Conversion and (B) the Installment Conversion Price that would be in effect on the date on which the Holder delivers a Conversion
Notice relating thereto as if such date was an Installment Date. In addition, if any of the Equity Conditions are not satisfied
(or waived in writing by the Holder) on such Installment Date or an Installment Conversion is not otherwise permitted under any
other provision of this Note, then, at the Holder’s option, either (I) the Holder shall return any Pre-Installment Conversion
Shares delivered in connection with the applicable Installment Date or (II) the applicable Designated Redemption Amount shall
be reduced by the product of (X) the Installment Conversion Amount applicable to such Installment Date multiplied by (Y) the Conversion
Share Ratio. If the Company fails to redeem any Designated Redemption Amount by the third (3rd) day following the applicable Installment
Date by payment of such amount by such date, then the Holder shall have the rights set forth in Section 11(a) as if the Company
failed to pay the applicable Installment Redemption Price (as defined below) and all other rights under this Note (including,
without limitation, such failure constituting an Event of Default described in Section 4(a)(vi)). Notwithstanding anything to
the contrary in this Section 8(b), but subject to 3(d), until the Company delivers Common Stock representing the Installment Conversion
Amount to the Holder, the Installment Conversion Amount may be converted by the Holder into Common Stock pursuant to Section 3.
In the event that the Holder elects to convert the Installment Conversion Amount prior to the applicable Installment Date as set
forth in the immediately preceding sentence, the Installment Conversion Amount so converted shall be deducted from the Installment
Amount(s) relating to the applicable Installment Date(s) as set forth in the applicable Conversion Notice. Notwithstanding anything
herein to the contrary, if, with respect to an Installment Date, the number of Pre-Installment Conversion Shares delivered to
the Holder exceeds the number of Post-Installment Conversion Shares with respect to such Installment Date, then the Holder shall
be entitled to keep any such excess as additional interest with respect to such Installment Amount due on such Installment Date.
The Company shall pay any and all taxes that may be payable with respect to the issuance and delivery of any shares of Common
Stock in any Installment Conversion hereunder.
(c)
Mechanics of Installment Redemption. If the Company elects or is required to effect an Installment Redemption, in whole
or in part, in accordance with Section 8(a), then the Installment Redemption Amount, if any, shall be redeemed by the Company
in cash on the applicable Installment Date by wire transfer to the Holder of immediately available funds in an amount equal to
the applicable Installment Redemption Amount (the “Installment Redemption Price”). If the Company fails to
redeem such Installment Redemption Amount on such Installment Date by payment of the Installment Redemption Price, then, at the
option of the Holder designated in writing to the Company (any such designation shall be a “Conversion Notice”
for purposes of this Note), the Holder may require the Company to convert all or any part of the Installment Redemption Amount
at the Installment Conversion Price (determined as of the date of such designation as if such date were an Installment Date).
Conversions required by this Section 8(c) shall be made in accordance with the provisions of Section 3(c). Notwithstanding anything
to the contrary in this Section 8(c), but subject to Section 3(d), until the Installment Redemption Price (together with any Late
Charges thereon) is paid in full, the Installment Redemption Amount (together with any Late Charges thereon) may be converted,
in whole or in part, by the Holder into Common Stock pursuant to Section 3. In the event the Holder elects to convert all or any
portion of the Installment Redemption Amount prior to the applicable Installment Date as set forth in the immediately preceding
sentence, the Installment Redemption Amount so converted shall be deducted from the Installment Amounts relating to the applicable
Installment Date(s) as set forth in the applicable Conversion Notice. Redemptions required by this Section 8(c) shall be made
in accordance with the provisions of Section 11.
(d)
Deferred Installment Amount. Notwithstanding any provision of this Section 8(d) to the contrary, the Holder may, at its
option and in its sole discretion, deliver a written notice to the Company no later than the Trading Day immediately prior to
the applicable Installment Date electing to have the payment of all or any portion of an Installment Amount payable on such Installment
Date deferred (such amount deferred, the “Deferral Amount”, and such deferral, each a “Deferral“)
until any subsequent Installment Date selected by the Holder, in its sole discretion, in which case, the Deferral Amount shall
be added to, and become part of, such subsequent Installment Amount and such Deferral Amount shall continue to accrue Interest
hereunder. Any notice delivered by the Holder pursuant to this Section 8(d) shall set forth (i) the Deferral Amount and (ii) the
date that such Deferral Amount shall now be payable.
(e)
Acceleration of Installment Amounts. Notwithstanding any provision of this Section 8 to the contrary, but subject to Section
3(d), if the Company delivers an Installment Notice and confirms, or is deemed to have delivered and confirmed, in whole or in
part, an Installment Conversion in accordance with Section 8(a) (each such applicable Installment Date, a “Current Installment
Date”), during the period commencing on the Installment Notice Due Date immediately prior to such applicable Current
Installment Date and ending on the Trading Day immediately prior to the next Installment Date (each, an “Installment
Period”), the Holder may elect, at its option and in its sole discretion, at one or more times in such Installment Period,
either (x) if such election is made prior to third (3rd) Trading Day immediately prior to such Current Installment Date (each,
a “Pre-Delivery Acceleration Expiration Date”), to increase the Installment Conversion Amount (and related
Installment Amount) with respect to such Current Installment Date in which case, such Acceleration Amount(s) (as defined below)
shall be added to, and become part of, the Installment Amount as such Installment Amount may have been increased pursuant to the
terms hereof, payable on such applicable Installment Date by including such Acceleration Amount(s) in the Installment Amount for
the applicable Installment Date and shall be payable in Common Stock by including such Acceleration Amount(s) in the Installment
Conversion Amount for the applicable Installment Date and (y) if such election is made on or after the Pre-Delivery Acceleration
Expiration Date, to convert other Installment Amounts as of such election date (each, an “Acceleration”, and
each such amount of acceleration or conversion, as applicable, an “Acceleration Amount”, and each such election
date, an “Acceleration Date”), in whole or in part, at the Installment Conversion Price of such Current Installment
Date (with “Installment Conversion Price” replacing “Conversion Price” and the “Acceleration Date”
replacing “Conversion Date” for all purposes hereunder with respect to such Acceleration) in accordance with the conversion
procedures set forth in Section 3 hereunder, mutatis mutandis. Any such notice delivered by the Holder (each, an “Acceleration
Notice”) shall set forth (i) the Acceleration Amount(s), (ii) the applicable Current Installment Date and (iii) the
date that such Acceleration Amount(s) should have been paid if not for the Holder’s right to accelerate such Installment
Amount(s) pursuant to this Section 8(e). To the extent more than one Installment Period exists as of an Acceleration Date, the
Holder shall also elect in such Acceleration Notice which Pre-Installment Conversion Price or Installment Conversion Price, as
applicable, that shall apply with respect to such Acceleration. The Company shall deliver Pre-Installment Conversion Shares to
the Holder with respect to any Acceleration occurring prior to the Pre-Delivery Acceleration Expiration Date related to the Current
Installment Date attributable to such Acceleration as soon as commercially practicable after the applicable Acceleration Date,
but no later than the third (3nd) Trading Day after such Acceleration Date. Subject to Section 3(d), until the Company delivers
shares of Common Stock representing the applicable Acceleration Amount to the Holder, such Acceleration Amount may be converted
by the Holder into shares of Common Stock pursuant to Section 3(c) without regard to this Section 8(e). Notwithstanding anything
to the contrary in this Section 8(e), (with respect to each period commencing on an Installment Notice Due Date (the “Current
Installment Notice Due Date”) and ending on the Trading Day immediately prior to the next Installment Notice Due Date
(each, an “Acceleration Measuring Period”), the Holder may not elect to effect an Acceleration (the “Current
Acceleration”, and such date of determination, the “Current Acceleration Determination Date”) during
such Acceleration Measuring Period if the sum of (x) the Installment Conversion Amount with respect to the Installment Date related
to such Current Acceleration (as adjusted for such Current Acceleration and any other Accelerations and Deferrals during such
Acceleration Measuring Period)and (y) the Installment Conversion Amount with respect to the Installment Date related to such Current
Acceleration (as adjusted for such Current Acceleration and any other Accelerations and Deferrals during such Acceleration Measuring
Period), collectively, exceeds five (5) times the Installment Amount with respect to the Installment Date related to such Current
Acceleration (without regard to any Accelerations or Deferrals with respect to the Installment Date related to such Current Acceleration).
9.
NONCIRCUMVENTION. The Company hereby covenants and agrees that the Company will not, by amendment of its Certificate of
Incorporation (as defined in the Securities Purchase Agreement), Bylaws (as defined in the Securities Purchase Agreement) or through
any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities,
or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Note, and will
at all times in good faith carry out all of the provisions of this Note and take all action as may be required to protect the
rights of the Holder of this Note. Without limiting the generality of the foregoing or any other provision of this Note or the
other Transaction Documents, the Company (a) shall not increase the par value of any shares of Common Stock receivable upon conversion
of this Note above the Conversion Price then in effect, and (b) shall take all such actions as may be necessary or appropriate
in order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock upon the conversion
of this Note. Notwithstanding anything herein to the contrary, if after the sixty (60) calendar day anniversary of the Issuance
Date, the Holder is not permitted to convert this Note in full for any reason (other than pursuant to restrictions set forth in
Section 3(d) hereof), the Company shall use its best efforts to promptly remedy such failure, including, without limitation, obtaining
such consents or approvals as necessary to permit such conversion into shares of Common Stock.
10.
RESERVATION OF AUTHORIZED SHARES.
(a)
Reservation. So long as any Notes remain outstanding, the Company shall at all times reserve at least (i) if prior to the
first Business Day after the Stockholder Approval Date (as defined in the Securities Purchase Agreement), 130% or (ii) if on or
after the first Business Day after the Stockholder Approval Date, 200%, each case, of the maximum number of shares of Common Stock
as shall from time to time be necessary to effect the conversion, including without limitation, Installment Conversions, Alternate
Conversions and Accelerations, of all of the Notes then outstanding (without regard to any limitations on conversions and assuming
such Notes remain outstanding until the Maturity Date) (the “Required Reserve Amount”). The Required Reserve
Amount (including, without limitation, each increase in the number of shares so reserved) shall be allocated pro rata among the
holders of the Notes based on the original principal amount of the Notes held by each holder on the Closing Date or increase in
the number of reserved shares, as the case may be (the “Authorized Share Allocation”). In the event that a
holder shall sell or otherwise transfer any of such holder’s Notes, each transferee shall be allocated a pro rata portion
of such holder’s Authorized Share Allocation. Any shares of Common Stock reserved and allocated to any Person which ceases
to hold any Notes shall be allocated to the remaining holders of Notes, pro rata based on the principal amount of the Notes then
held by such holders.
.
(b)
Insufficient Authorized Shares. If, notwithstanding Section 10(a), and not in limitation thereof, at any time while any
of the Notes remain outstanding the Company does not have a sufficient number of authorized and unreserved shares of Common Stock
to satisfy its obligation to reserve for issuance upon conversion of the Notes at least a number of shares of Common Stock equal
to the Required Reserve Amount (an “Authorized Share Failure”), then the Company shall immediately take all
action necessary to increase the Company’s authorized shares of Common Stock to an amount sufficient to allow the Company
to reserve the Required Reserve Amount for the Notes then outstanding. Without limiting the generality of the foregoing sentence,
as soon as practicable after the date of the occurrence of an Authorized Share Failure, but in no event later than sixty (60)
days after the occurrence of such Authorized Share Failure, the Company shall hold a meeting of its stockholders for the approval
of an increase in the number of authorized shares of Common Stock. In connection with such meeting, the Company shall provide
each stockholder with a proxy statement and shall use its best efforts to solicit its stockholders’ approval of such increase
in authorized shares of Common Stock and to cause its board of directors to recommend to the stockholders that they approve such
proposal. In the event that the Company is prohibited from issuing shares of Common Stock upon any conversion due to the failure
by the Company to have sufficient shares of Common Stock available out of the authorized but unissued shares of Common Stock (such
unavailable number of shares of Common Stock, the “Authorized Failure Shares”), in lieu of delivering such
Authorized Failure Shares to the Holder, the Company shall pay cash in exchange for the redemption of such portion of the Conversion
Amount convertible into such Authorized Failure Shares at a price equal to the sum of (i) the product of (x) such number of Authorized
Failure Shares and (y) the greatest Closing Sale Price of the Common Stock on any Trading Day during the period commencing on
the date the Holder delivers the applicable Conversion Notice with respect to such Authorized Failure Shares to the Company and
ending on the date of such issuance and payment under this Section 10(a); and (ii) to the extent the Holder purchases (in an open
market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of Authorized Failure
Shares, any brokerage commissions and other out-of-pocket expenses, if any, of the Holder incurred in connection therewith. Nothing
contained in Section 10(a) or this Section 10(b) shall limit any obligations of the Company under any provision of the Securities
Purchase Agreement.
11.
REDEMPTIONS.
(a)
Mechanics. The Company shall deliver the applicable Event of Default Redemption Price to the Holder in cash within five
(5) Business Days after the Company’s receipt of the Holder’s Event of Default Redemption Notice. If the Holder has
submitted a Change of Control Redemption Notice in accordance with Section 5(b), the Company shall deliver the applicable Change
of Control Redemption Price to the Holder in cash concurrently with the consummation of such Change of Control if such notice
is received prior to the consummation of such Change of Control and within five (5) Business Days after the Company’s receipt
of such notice otherwise. The Company shall deliver the applicable Installment Redemption Price to the Holder in cash on the applicable
Installment Date. Notwithstanding anything herein to the contrary, in connection with any redemption hereunder at a time the Holder
is entitled to receive a cash payment under any of the other Transaction Documents, at the option of the Holder delivered in writing
to the Company, the applicable Redemption Price hereunder shall be increased by the amount of such cash payment owed to the Holder
under such other Transaction Document and, upon payment in full or conversion in accordance herewith, shall satisfy the Company’s
payment obligation under such other Transaction Document. In the event of a redemption of less than all of the Conversion Amount
of this Note, the Company shall promptly cause to be issued and delivered to the Holder a new Note (in accordance with Section
18(d)) representing the outstanding Principal which has not been redeemed. In the event that the Company does not pay the applicable
Redemption Price to the Holder within the time period required, at any time thereafter and until the Company pays such unpaid
Redemption Price in full, the Holder shall have the option, in lieu of redemption, to require the Company to promptly return to
the Holder all or any portion of this Note representing the Conversion Amount that was submitted for redemption and for which
the applicable Redemption Price (together with any Late Charges thereon) has not been paid. Upon the Company’s receipt of
such notice, (x) the applicable Redemption Notice shall be null and void with respect to such Conversion Amount, (y) the Company
shall immediately return this Note, or issue a new Note (in accordance with Section 18(d)), to the Holder, and in each case the
principal amount of this Note or such new Note (as the case may be) shall be increased by an amount equal to the difference between
(1) the applicable Redemption Price (as the case may be, and as adjusted pursuant to this Section 11, if applicable) minus (2)
the Principal portion of the Conversion Amount submitted for redemption and (z) the Conversion Price of this Note or such new
Notes (as the case may be) shall be automatically adjusted with respect to each conversion effected thereafter by the Holder to
the lowest of (A) the Conversion Price as in effect on the date on which the applicable Redemption Notice is voided, (B) 75% of
the lowest Closing Bid Price of the Common Stock during the period beginning on and including the date on which the applicable
Redemption Notice is delivered to the Company and ending on and including the date on which the applicable Redemption Notice is
voided and (C) 75% of the quotient of (I) the sum of the five (5) lowest VWAPs of the Common Stock during the twenty (20) consecutive
Trading Day period ending and including the Trading Day immediately preceding the applicable Conversion Date divided by (II) five
(5) (it being understood and agreed that all such determinations shall be appropriately adjusted for any stock dividend, stock
split, stock combination or other similar transaction during such period). The Holder’s delivery of a notice voiding a Redemption
Notice and exercise of its rights following such notice shall not affect the Company’s obligations to make any payments
of Late Charges which have accrued prior to the date of such notice with respect to the Conversion Amount subject to such notice.
(b)
Redemption by Other Holders. Upon the Company’s receipt of notice from any of the holders of the Other Notes for
redemption or repayment as a result of an event or occurrence substantially similar to the events or occurrences described in
Section 4(b) or Section 5(b) (each, an “Other Redemption Notice”), the Company shall immediately, but no later
than one (1) Business Day of its receipt thereof, forward to the Holder by facsimile or electronic mail a copy of such notice.
If the Company receives a Redemption Notice and one or more Other Redemption Notices, during the seven (7) Business Day period
beginning on and including the date which is three (3) Business Days prior to the Company’s receipt of the Holder’s
applicable Redemption Notice and ending on and including the date which is three (3) Business Days after the Company’s receipt
of the Holder’s applicable Redemption Notice and the Company is unable to redeem all principal, interest and other amounts
designated in such Redemption Notice and such Other Redemption Notices received during such seven (7) Business Day period, then
the Company shall redeem a pro rata amount from each holder of the Notes (including the Holder) based on the principal amount
of the Notes submitted for redemption pursuant to such Redemption Notice and such Other Redemption Notices received by the Company
during such seven (7) Business Day period.
12.
VOTING RIGHTS. The Holder shall have no voting rights as the holder of this Note, except as required by law (including,
without limitation, the Delaware General Corporation Law) and as expressly provided in this Note.
13.
COVENANTS. Until all of the Notes have been converted, redeemed or otherwise satisfied in accordance with their terms:
(a)
Rank. All payments due under this Note (a) shall rank pari passu with all Other Notes and (b) shall be senior to
all other Indebtedness of the Company and its Subsidiaries.
(b)
Incurrence of Indebtedness. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly
or indirectly, incur or guarantee, assume or suffer to exist any Indebtedness (other than (i) the Indebtedness evidenced by this
Note and the Other Notes and (ii) other Permitted Indebtedness).
(c)
Existence of Liens. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly,
allow or suffer to exist any mortgage, lien, pledge, charge, security interest or other encumbrance upon or in any property or
assets (including accounts and contract rights) owned by the Company or any of its Subsidiaries (collectively, “Liens”)
other than Permitted Liens.
(d)
Restricted Payments. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly,
redeem, defease, repurchase, repay or make any payments in respect of, by the payment of cash or cash equivalents (in whole or
in part, whether by way of open market purchases, tender offers, private transactions or otherwise), all or any portion of any
Indebtedness (other than the Notes) whether by way of payment in respect of principal of (or premium, if any) or interest on,
such Indebtedness if at the time such payment is due or is otherwise made or, after giving effect to such payment, (i) an event
constituting an Event of Default has occurred and is continuing or (ii) an event that with the passage of time and without being
cured would constitute an Event of Default has occurred and is continuing.
(e)
Restriction on Redemption and Cash Dividends. The Company shall not, and the Company shall cause each of its Subsidiaries
to not, directly or indirectly, redeem, repurchase or declare or pay any cash dividend or distribution on any of its capital stock.
(f)
Restriction on Transfer of Assets. The Company shall not, and the Company shall cause each of its Subsidiaries to not,
directly or indirectly, sell, lease, license, assign, transfer, spin-off, split-off, close, convey or otherwise dispose of any
assets or rights of the Company or any Subsidiary owned or hereafter acquired whether in a single transaction or a series of related
transactions, other than (i) sales, leases, licenses, assignments, transfers, conveyances and other dispositions of such assets
or rights by the Company and its Subsidiaries in the ordinary course of business consistent with its past practice and (ii) sales
of inventory and product in the ordinary course of business.
(g)
Maturity of Indebtedness. Other than with respect to the Permitted Default Indebtedness, the Company shall not, and the
Company shall cause each of its Subsidiaries to not, directly or indirectly, permit any Indebtedness of the Company or any of
its Subsidiaries to mature or accelerate prior to the Maturity Date.
(h)
Change in Nature of Business. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly
or indirectly, engage in any material line of business substantially different from those lines of business conducted by or publicly
contemplated to be conducted by the Company and each of its Subsidiaries on the Subscription Date or any business substantially
related or incidental thereto. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or
indirectly, modify its or their corporate structure or purpose.
(i)
Preservation of Existence, Etc. The Company shall maintain and preserve, and cause each of its Subsidiaries to maintain
and preserve, its existence, rights and privileges, and become or remain, and cause each of its Subsidiaries to become or remain,
duly qualified and in good standing in each jurisdiction in which the character of the properties owned or leased by it or in
which the transaction of its business makes such qualification necessary.
(j)
Maintenance of Properties, Etc. Except as set forth in Schedule 13(j), the Company shall maintain and preserve, and cause
each of its Subsidiaries to maintain and preserve, all of its properties which are necessary or useful in the proper conduct of
its business in good working order and condition, ordinary wear and tear excepted, and comply, and cause each of its Subsidiaries
to comply, at all times with the provisions of all leases to which it is a party as lessee or under which it occupies property,
so as to prevent any loss or forfeiture thereof or thereunder.
(k)
Maintenance of Intellectual Property. The Company will, and will cause each of its Subsidiaries to, take all action necessary
or advisable to maintain all of the Intellectual Property Rights (as defined in the Securities Purchase Agreement) of the Company
and/or any of its Subsidiaries that are necessary or material to the conduct of its business in full force and effect.
(l)
Maintenance of Insurance. Except as set forth in Schedule 13(l), the Company shall maintain, and cause each of its Subsidiaries
to maintain, insurance with responsible and reputable insurance companies or associations (including, without limitation, comprehensive
general liability, hazard, rent and business interruption insurance) with respect to its properties (including all real properties
leased or owned by it) and business, in such amounts and covering such risks as is required by any governmental authority having
jurisdiction with respect thereto or as is carried generally in accordance with sound business practice by companies in similar
businesses similarly situated.
(m)
Transactions with Affiliates. The Company shall not, nor shall it permit any of its Subsidiaries to, enter into, renew,
extend or be a party to, any transaction or series of related transactions (including, without limitation, the purchase, sale,
lease, transfer or exchange of property or assets of any kind or the rendering of services of any kind) with any affiliate, except
in the ordinary course of business in a manner and to an extent consistent with past practice and necessary or desirable for the
prudent operation of its business, for fair consideration and on terms no less favorable to it or its Subsidiaries than would
be obtainable in a comparable arm’s length transaction with a Person that is not an affiliate thereof.
(n)
Restricted Issuances. The Company shall not, directly or indirectly, without the prior written consent of the holders of
a majority in aggregate principal amount of the Notes then outstanding, (i) issue any Notes (other than as contemplated by the
Securities Purchase Agreement and the Notes) or (ii) issue any other securities that would cause a breach or default under the
Notes or the Warrants.
(o)
New Subsidiaries. Simultaneously with the acquisition or formation of each New Subsidiary, the Company shall cause such
New Subsidiary to execute, and deliver to each holder of Notes, all Security Documents (as defined in the Securities Purchase
Agreement) and Guaranties (as defined in the Securities Purchase Agreement) as requested by the Collateral Agent or the Required
Holders, as applicable. The Company shall also deliver to the Collateral Agent an opinion of counsel to such New Subsidiary that
is reasonably satisfactory to the Collateral Agent and the Required Holders covering such legal matters with respect to such New
Subsidiary becoming a guarantor of the Company’s obligations, executing and delivering the Security Document and the Guaranties
and any other matters that the Collateral Agent or the Required Holders may reasonably request. The Company shall deliver, or
cause the applicable Subsidiary to deliver to the Collateral Agent, each of the physical stock certificates of such New Subsidiary,
along with undated stock powers for each such certificates, executed in blank (or, if any such shares of capital stock are uncertificated,
confirmation and evidence reasonably satisfactory to the Collateral Agent and the Required Holders that the security interest
in such uncertificated securities has been transferred to and perfected by the Collateral Agent, in accordance with Sections 8-313,
8-321 and 9-115 of the Uniform Commercial Code or any other similar or local or foreign law that may be applicable).
(p)
Change in Collateral; Collateral Records. The Company shall (i) give the Collateral Agent not less than thirty (30) days’
prior written notice of any change in the location of any Collateral (as defined in the Security Documents), other than to locations
set forth in the Perfection Certificate (as defined in the Securities Purchase Agreement) hereto and with respect to which the
Collateral Agent has filed financing statements and otherwise fully perfected its Liens thereon, (ii) advise the Collateral Agent
promptly, in sufficient detail, of any material adverse change relating to the type, quantity or quality of the Collateral or
the Lien granted thereon and (iii) execute and deliver, and cause each of its Subsidiaries to execute and deliver, to the Collateral
Agent for the benefit of the Holder and holders of the Other Notes from time to time, solely for the Collateral Agent’s
convenience in maintaining a record of Collateral, such written statements and schedules as the Collateral Agent or any Holder
may reasonably require, designating, identifying or describing the Collateral.
(q)
Controlled Accounts.
(i)
General. The Company shall establish and maintain cash management services of a type and on terms reasonably satisfactory
to Holder at and each bank listed on Schedule 13(q)(i) attached hereto (each a “Controlled Account Bank”)
and cause all cash and cash equivalents of the Company or any of its Subsidiaries to be held in Accounts (as defined in the Security
Agreement) at one or more Controlled Account Banks in accordance therewith. Subject to the foregoing, the Company shall establish
and maintain Controlled Account Agreements with the Collateral Agent (as each such term is defined in the Security Agreement)
and each Controlled Account Bank, in form and substance reasonably acceptable to the Collateral Agent and the Required Holders,
with respect to each account maintained at such bank on behalf of Company and/or its Subsidiaries (each such account a “Controlled
Account” and collectively, the “Controlled Accounts”), and the Operating Accounts (as defined below).
Each such Controlled Account Agreement shall provide, among other things, that (A) the Controlled Account Bank will comply with
any and all instructions originated by the Collateral Agent directing the disposition of the funds in the Controlled Accounts
without further consent by the Company or any such Subsidiaries, (B) the Controlled Account Bank waives, subordinates or agrees
not to exercise any rights of setoff or recoupment or any other claim against the applicable Controlled Account other than for
payment of its service fees and other charges directly related to the administration of such Controlled Account and for returned
checks or other items of payment, and (C) with respect to each Controlled Account (collectively, the “Operating Accounts”),
upon the instruction of Collateral Agent (an “Activation Instruction”), the Controlled Account Bank shall not
comply with any instructions, directions or orders of any form with respect to the Operating Accounts other than instructions,
directions or orders originated by Collateral Agent. The Collateral Agent shall not issue an Activation Instruction with respect
to the Operating Accounts unless an Event of Default has occurred and is continuing at the time such Activation Instruction is
issued.
(ii)
Additional Controlled Account Agreements. If at any time on or after the Closing Date, the average daily balance of any
Account of the Company or any of its Subsidiaries that is not subject to a Controlled Account Agreement, in form and substance
reasonably satisfactory to the Collateral Agent and the Required Holders, in favor of the Collateral Agent exceeds $25,000 (the
“Maximum Per Account Free Cash Amount”) during any calendar month (including the calendar month in which the
Closing Date occurs), the Company shall either (x) within twenty-one (21) calendar days following the last day of such calendar
month, deliver to the Collateral Agent a Controlled Account Agreement, in form and substance reasonably satisfactory to the Collateral
Agent, duly executed by the Company and the depositary bank in which such Account is maintained, (y) within two (2) Business Days
following such date, effect a transfer to a Controlled Account of a cash amount sufficient to reduce the amount of the Company’s
or the applicable Subsidiary’s cash held in such Account to an amount not in excess of the Maximum Per Account Free Cash
Amount or (z) effect one or more payments from such account of a cash amount sufficient to reduce the amount of the Company’s
or the applicable Subsidiary’s cash held in such Account to an amount not in excess of the Maximum Per Account Free Cash
Amount.
(iii)
Maximum Free Cash Amount. Notwithstanding anything to the contrary contained in Section 13(q)(ii) above, and without limiting
any of the foregoing, if at any time on or after the date that is twenty-one (21) calendar days following the Closing Date, the
total aggregate amount of the Company’s and any of its Subsidiaries, in the aggregate, cash that is not held in a Controlled
Account exceeds $50,000 (the “Maximum Free Cash Amount”, and such accounts, the “Uncontrolled Accounts”),
the Company shall (x) within two (2) Business Days following such date, effect a transfer to a Controlled Account of a cash amount
sufficient to reduce the total aggregate amount of the Company’s and its Subsidiaries’, as applicable, cash that is
not held in a Controlled Account to an amount not in excess of the Maximum Free Cash Amount or (y) effect one or more payments
from Uncontrolled Accounts of a cash amount sufficient to reduce the amount of the Company’s or the applicable Subsidiary’s
cash held in Uncontrolled Accounts to an amount not in excess of the Maximum Free Cash Amount.
(r)
Independent Investigation. At the request of the Holder either (x) at any time when an Event of Default has occurred and
is continuing, (y) upon the occurrence of an event that with the passage of time or giving of notice would constitute an Event
of Default or (z) at any time the Holder reasonably believes an Event of Default may have occurred or be continuing, the Company
shall hire an independent, reputable investment bank selected by the Company and approved by the Holder to investigate as to whether
any breach of this Note has occurred (the “Independent Investigator”). If the Independent Investigator determines
that such breach of this Note has occurred, the Independent Investigator shall notify the Company of such breach and the Company
shall deliver written notice to each holder of a Note of such breach. In connection with such investigation, the Independent Investigator
may, during normal business hours, inspect all contracts, books, records, personnel, offices and other facilities and properties
of the Company and its Subsidiaries and, to the extent available to the Company after the Company uses reasonable efforts to obtain
them, the records of its legal advisors and accountants (including the accountants’ work papers) and any books of account,
records, reports and other papers not contractually required of the Company to be confidential or secret, or subject to attorney-client
or other evidentiary privilege, and the Independent Investigator may make such copies and inspections thereof as the Independent
Investigator may reasonably request. The Company shall furnish the Independent Investigator with such financial and operating
data and other information with respect to the business and properties of the Company as the Independent Investigator may reasonably
request. The Company shall permit the Independent Investigator to discuss the affairs, finances and accounts of the Company with,
and to make proposals and furnish advice with respect thereto to, the Company’s officers, directors, key employees and independent
public accountants or any of them (and by this provision the Company authorizes said accountants to discuss with such Independent
Investigator the finances and affairs of the Company and any Subsidiaries), all at such reasonable times, upon reasonable notice,
and as often as may be reasonably requested.
14.
SECURITY. This Note and the Other Notes are secured to the extent and in the manner set forth in the Transaction Documents
(including, without limitation, the Security Agreement, the other Security Documents and the Guaranties).
15.
DISTRIBUTION OF ASSETS. In addition to any adjustments pursuant to Section 7, if the Company shall declare or make any
dividend or other distributions of its assets (or rights to acquire its assets) to any or all holders of shares of Common Stock,
by way of return of capital or otherwise (including without limitation, any distribution of cash, stock or other securities, property
or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction)
(the “Distributions”), then the Holder will be entitled to such Distributions as if the Holder had held the
number of shares of Common Stock acquirable upon complete conversion of this Note (without taking into account any limitations
or restrictions on the convertibility of this Note) immediately prior to the date on which a record is taken for such Distribution
or, if no such record is taken, the date as of which the record holders of Common Stock are to be determined for such Distributions
(provided, however, that to the extent that the Holder’s right to participate in any such Distribution would result in the
Holder and the other Attribution Parties exceeding the Maximum Percentage, then the Holder shall not be entitled to participate
in such Distribution to such extent (and shall not be entitled to beneficial ownership of such shares of Common Stock as a result
of such Distribution (and beneficial ownership) to such extent) and the portion of such Distribution shall be held in abeyance
for the Holder until such time or times as its right thereto would not result in the Holder and the other Attribution Parties
exceeding the Maximum Percentage, at which time or times, if any, the Holder shall be granted such rights (and any rights under
this Section 15 on such initial rights or on any subsequent such rights to be held similarly in abeyance) to the same extent as
if there had been no such limitation).
16.
AMENDING THE TERMS OF THIS NOTE. The prior written consent of the Holder shall be required for any change, waiver or amendment
to this Note.
17.
TRANSFER. This Note and any shares of Common Stock issued upon conversion of this Note may be offered, sold, assigned or
transferred by the Holder without the consent of the Company, subject only to the provisions of Section 2(g) of the Securities
Purchase Agreement.
18.
REISSUANCE OF THIS NOTE.
(a)
Transfer. If this Note is to be transferred, the Holder shall surrender this Note to the Company, whereupon the Company
will forthwith issue and deliver upon the order of the Holder a new Note (in accordance with Section 18(d)), registered as the
Holder may request, representing the outstanding Principal being transferred by the Holder and, if less than the entire outstanding
Principal is being transferred, a new Note (in accordance with Section 18(d)) to the Holder representing the outstanding Principal
not being transferred. The Holder and any assignee, by acceptance of this Note, acknowledge and agree that, by reason of the provisions
of Section 3(c)(iii) following conversion or redemption of any portion of this Note, the outstanding Principal represented by
this Note may be less than the Principal stated on the face of this Note.
(b)
Lost, Stolen or Mutilated Note. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss,
theft, destruction or mutilation of this Note (as to which a written certification and the indemnification contemplated below
shall suffice as such evidence), and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder
to the Company in customary and reasonable form and, in the case of mutilation, upon surrender and cancellation of this Note,
the Company shall execute and deliver to the Holder a new Note (in accordance with Section 18(d)) representing the outstanding
Principal.
(c)
Note Exchangeable for Different Denominations. This Note is exchangeable, upon the surrender hereof by the Holder at the
principal office of the Company, for a new Note or Notes (in accordance with Section 18(d) and in principal amounts of at least
$1,000) representing in the aggregate the outstanding Principal of this Note, and each such new Note will represent such portion
of such outstanding Principal as is designated by the Holder at the time of such surrender.
(d)
Issuance of New Notes. Whenever the Company is required to issue a new Note pursuant to the terms of this Note, such new
Note (i) shall be of like tenor with this Note, (ii) shall represent, as indicated on the face of such new Note, the Principal
remaining outstanding (or in the case of a new Note being issued pursuant to Section 18(a) or Section 18(c), the Principal designated
by the Holder which, when added to the principal represented by the other new Notes issued in connection with such issuance, does
not exceed the Principal remaining outstanding under this Note immediately prior to such issuance of new Notes), (iii) shall have
an issuance date, as indicated on the face of such new Note, which is the same as the Issuance Date of this Note, (iv) shall have
the same rights and conditions as this Note, and (v) shall represent accrued and unpaid Interest and Late Charges on the Principal
and Interest of this Note, from the Issuance Date.
19.
REMEDIES, CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF. The remedies provided in this Note shall
be cumulative and in addition to all other remedies available under this Note and any of the other Transaction Documents at law
or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the Holder’s
right to pursue actual and consequential damages for any failure by the Company to comply with the terms of this Note. The Company
covenants to the Holder that there shall be no characterization concerning this instrument other than as expressly provided herein.
Amounts set forth or provided for herein with respect to payments, conversion and the like (and the computation thereof) shall
be the amounts to be received by the Holder and shall not, except as expressly provided herein, be subject to any other obligation
of the Company (or the performance thereof). The Company acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate. The Company therefore agrees
that, in the event of any such breach or threatened breach, the Holder shall be entitled, in addition to all other available remedies,
to an injunction restraining any such breach or any such threatened breach, without the necessity of showing economic loss and
without any bond or other security being required. The Company shall provide all information and documentation to the Holder that
is requested by the Holder to enable the Holder to confirm the Company’s compliance with the terms and conditions of this
Note (including, without limitation, compliance with Section 7).
20.
PAYMENT OF COLLECTION, ENFORCEMENT AND OTHER COSTS. If (a) this Note is placed in the hands of an attorney for collection
or enforcement or is collected or enforced through any legal proceeding or the Holder otherwise takes action to collect amounts
due under this Note or to enforce the provisions of this Note or (b) there occurs any bankruptcy, reorganization, receivership
of the Company or other proceedings affecting Company creditors’ rights and involving a claim under this Note, then the
Company shall pay the costs incurred by the Holder for such collection, enforcement or action or in connection with such bankruptcy,
reorganization, receivership or other proceeding, including, without limitation, attorneys’ fees and disbursements. The
Company expressly acknowledges and agrees that no amounts due under this Note shall be affected, or limited, by the fact that
the purchase price paid for this Note was less than the original Principal amount hereof.
21.
CONSTRUCTION; HEADINGS. This Note shall be deemed to be jointly drafted by the Company and the initial Holder and shall
not be construed against any such Person as the drafter hereof. The headings of this Note are for convenience of reference and
shall not form part of, or affect the interpretation of, this Note. Unless the context clearly indicates otherwise, each pronoun
herein shall be deemed to include the masculine, feminine, neuter, singular and plural forms thereof. The terms “including,”
“includes,” “include” and words of like import shall be construed broadly as if followed by the words
“without limitation.” The terms “herein,” “hereunder,” “hereof” and words of like
import refer to this entire Agreement instead of just the provision in which they are found. Unless expressly indicated otherwise,
all section references are to sections of this Note. Terms used in this Note and not otherwise defined herein, but defined in
the other Transaction Documents, shall have the meanings ascribed to such terms on the Closing Date in such other Transaction
Documents unless otherwise consented to in writing by the Holder.
22.
FAILURE OR INDULGENCE NOT WAIVER. No failure or delay on the part of the Holder in the exercise of any power, right or
privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege
preclude other or further exercise thereof or of any other right, power or privilege. No waiver shall be effective unless it is
in writing and signed by an authorized representative of the waiving party. Notwithstanding the foregoing, nothing contained in
this Section 22 shall permit any waiver of any provision of Section 3(d).
23.
DISPUTE RESOLUTION.
(a)
Submission to Dispute Resolution.
(i)
In the case of a dispute relating to a Bid Price, a Closing Bid Price, a Closing Sale Price, a Conversion Price, an Installment
Conversion Price, a Pre-Installment Conversion Price, an Alternate Conversion Price, a VWAP or a fair market value or the arithmetic
calculation of a Conversion Rate, the Restricted Principal, or the applicable Redemption Price (as the case may be) (including,
without limitation, a dispute relating to the determination of any of the foregoing), the Company or the Holder (as the case may
be) shall submit the dispute to the other party via facsimile or electronic mail (A) if by the Company, within two (2) Business
Days after the occurrence of the circumstances giving rise to such dispute or (B) if by the Holder at any time after the Holder
learned of the circumstances giving rise to such dispute. If the Holder and the Company are unable to promptly resolve such dispute
relating to such Bid Price, such Closing Bid Price, such Closing Sale Price, such Conversion Price, such Installment Conversion
Price, such Pre-Installment Conversion Price, such Alternate Conversion Price, such VWAP or such fair market value, or the arithmetic
calculation of such Conversion Rate, the Restricted Principal or such applicable Redemption Price (as the case may be), at any
time after the second (2nd) Business Day following such initial notice by the Company or the Holder (as the case may be) of such
dispute to the Company or the Holder (as the case may be), then the Holder may, at its sole option, select an independent, reputable
investment bank to resolve such dispute.
(ii)
The Holder and the Company shall each deliver to such investment bank (A) a copy of the initial dispute submission so delivered
in accordance with the first sentence of this Section 23 and (B) written documentation supporting its position with respect to
such dispute, in each case, no later than 5:00 p.m. (New York time) by the fifth (5th) Business Day immediately following the
date on which the Holder selected such investment bank (the “Dispute Submission Deadline”) (the documents referred
to in the immediately preceding clauses (A) and (B) are collectively referred to herein as the “Required Dispute Documentation”)
(it being understood and agreed that if either the Holder or the Company fails to so deliver all of the Required Dispute Documentation
by the Dispute Submission Deadline, then the party who fails to so submit all of the Required Dispute Documentation shall no longer
be entitled to (and hereby waives its right to) deliver or submit any written documentation or other support to such investment
bank with respect to such dispute and such investment bank shall resolve such dispute based solely on the Required Dispute Documentation
that was delivered to such investment bank prior to the Dispute Submission Deadline). Unless otherwise agreed to in writing by
both the Company and the Holder or otherwise requested by such investment bank, neither the Company nor the Holder shall be entitled
to deliver or submit any written documentation or other support to such investment bank in connection with such dispute (other
than the Required Dispute Documentation).
(iii)
The Company and the Holder shall cause such investment bank to determine the resolution of such dispute and notify the Company
and the Holder of such resolution no later than ten (10) Business Days immediately following the Dispute Submission Deadline.
The fees and expenses of such investment bank shall be borne solely by the Company, and such investment bank’s resolution
of such dispute shall be final and binding upon all parties absent manifest error.
(b)
Miscellaneous. The Company expressly acknowledges and agrees that (i) this Section 23 constitutes an agreement to arbitrate
between the Company and the Holder (and constitutes an arbitration agreement) under § 7501, et seq. of the New York Civil
Practice Law and Rules (“CPLR”) and that the Holder is authorized to apply for an order to compel arbitration
pursuant to CPLR § 7503(a) in order to compel compliance with this Section 23, (ii) a dispute relating to a Conversion Price
includes, without limitation, disputes as to (A) whether an issuance or sale or deemed issuance or sale of Common Stock occurred
under Section 7(a), (B) the consideration per share at which an issuance or deemed issuance of Common Stock occurred, (C) whether
any issuance or sale or deemed issuance or sale of Common Stock was an issuance or sale or deemed issuance or sale of Excluded
Securities, (D) whether an agreement, instrument, security or the like constitutes and Option or Convertible Security and (E)
whether a Dilutive Issuance occurred, (iii) the terms of this Note and each other applicable Transaction Document shall serve
as the basis for the selected investment bank’s resolution of the applicable dispute, such investment bank shall be entitled
(and is hereby expressly authorized) to make all findings, determinations and the like that such investment bank determines are
required to be made by such investment bank in connection with its resolution of such dispute and in resolving such dispute such
investment bank shall apply such findings, determinations and the like to the terms of this Note and any other applicable Transaction
Documents, (iv) the Holder (and only the Holder), in its sole discretion, shall have the right to submit any dispute described
in this Section 23 to any state or federal court sitting in The City of New York, Borough of Manhattan in lieu of utilizing the
procedures set forth in this Section 23 and (v) nothing in this Section 23 shall limit the Holder from obtaining any injunctive
relief or other equitable remedies (including, without limitation, with respect to any matters described in this Section 23).
24.
NOTICES; CURRENCY; PAYMENTS.
(a)
Notices. Whenever notice is required to be given under this Note, unless otherwise provided herein, such notice shall be
given in accordance with Section 9(f) of the Securities Purchase Agreement. The Company shall provide the Holder with prompt written
notice of all actions taken pursuant to this Note, including in reasonable detail a description of such action and the reason
therefore. Without limiting the generality of the foregoing, the Company will give written notice to the Holder (i) immediately
upon any adjustment of the Conversion Price, setting forth in reasonable detail, and certifying, the calculation of such adjustment
and (ii) at least fifteen (15) days prior to the date on which the Company closes its books or takes a record (A) with respect
to any dividend or distribution upon the Common Stock, (B) with respect to any grant, issuances, or sales of any Options, Convertible
Securities or rights to purchase stock, warrants, securities or other property to holders of shares of Common Stock or (C) for
determining rights to vote with respect to any Fundamental Transaction, dissolution or liquidation, provided in each case that
such information shall be made known to the public prior to or in conjunction with such notice being provided to the Holder.
(b)
Currency. All dollar amounts referred to in this Note are in United States Dollars (“U.S. Dollars”),
and all amounts owing under this Note shall be paid in U.S. Dollars. All amounts denominated in other currencies (if any) shall
be converted into the U.S. Dollar equivalent amount in accordance with the Exchange Rate on the date of calculation. “Exchange
Rate” means, in relation to any amount of currency to be converted into U.S. Dollars pursuant to this Note, the U.S.
Dollar exchange rate as published in the Wall Street Journal on the relevant date of calculation (it being understood and agreed
that where an amount is calculated with reference to, or over, a period of time, the date of calculation shall be the final date
of such period of time).
(c)
Payments. Whenever any payment of cash is to be made by the Company to any Person pursuant to this Note, unless otherwise
expressly set forth herein, such payment shall be made in lawful money of the United States of America by a certified check drawn
on the account of the Company and sent via overnight courier service to such Person at such address as previously provided to
the Company in writing (which address, in the case of each of the Buyers, shall initially be as set forth on the Schedule of Buyers
attached to the Securities Purchase Agreement), provided that the Holder may elect to receive a payment of cash via wire transfer
of immediately available funds by providing the Company with prior written notice setting out such request and the Holder’s
wire transfer instructions. Whenever any amount expressed to be due by the terms of this Note is due on any day which is not a
Business Day, the same shall instead be due on the next succeeding day which is a Business Day. Any amount of Principal or other
amounts due under the Transaction Documents which is not paid when due shall result in a late charge being incurred and payable
by the Company in an amount equal to interest on such amount at the rate of eighteen percent (18%) per annum from the date such
amount was due until the same is paid in full (“Late Charge”).
25.
CANCELLATION. After all Principal, accrued Interest, Late Charges and other amounts at any time owed on this Note have
been paid in full, this Note shall automatically be deemed canceled, shall be surrendered to the Company for cancellation and
shall not be reissued.
26.
WAIVER OF NOTICE. To the extent permitted by law, the Company hereby irrevocably waives demand, notice, presentment, protest
and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Note
and the Securities Purchase Agreement.
27.
GOVERNING LAW. This Note shall be construed and enforced in accordance with, and all questions concerning the construction,
validity, interpretation and performance of this Note shall be governed by, the internal laws of the State of New York, without
giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than the State of New York. Except as otherwise required
by Section 23 above, the Company hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting
in The City of New York, Borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with
any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action
or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Nothing contained
herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any manner permitted by law. Nothing contained herein (i) shall
be deemed or operate to preclude the Holder from bringing suit or taking other legal action against the Company in any other jurisdiction
to collect on the Company’s obligations to the Holder, to realize on any collateral or any other security for such obligations,
or to enforce a judgment or other court ruling in favor of the Holder or (ii) shall limit, or shall be deemed or construed to
limit, any provision of Section 23. THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST,
A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS NOTE OR ANY TRANSACTION
CONTEMPLATED HEREBY.
28.
JUDGMENT CURRENCY.
(a)
If for the purpose of obtaining or enforcing judgment against the Company in any court in any jurisdiction it becomes necessary
to convert into any other currency (such other currency being hereinafter in this Section 28 referred to as the “Judgment
Currency”) an amount due in U.S. dollars under this Note, the conversion shall be made at the Exchange Rate prevailing
on the Trading Day immediately preceding:
(i)
the date actual payment of the amount due, in the case of any proceeding in the courts of New York or in the courts of any other
jurisdiction that will give effect to such conversion being made on such date: or
(ii)
the date on which the foreign court determines, in the case of any proceeding in the courts of any other jurisdiction (the date
as of which such conversion is made pursuant to this Section 28(a)(ii) being hereinafter referred to as the “Judgment
Conversion Date”).
(b)
If in the case of any proceeding in the court of any jurisdiction referred to in Section 28(a)(ii) above, there is a change in
the Exchange Rate prevailing between the Judgment Conversion Date and the date of actual payment of the amount due, the applicable
party shall pay such adjusted amount as may be necessary to ensure that the amount paid in the Judgment Currency, when converted
at the Exchange Rate prevailing on the date of payment, will produce the amount of US dollars which could have been purchased
with the amount of Judgment Currency stipulated in the judgment or judicial order at the Exchange Rate prevailing on the Judgment
Conversion Date.
(c)
Any amount due from the Company under this provision shall be due as a separate debt and shall not be affected by judgment being
obtained for any other amounts due under or in respect of this Note.
29.
SEVERABILITY. If any provision of this Note is prohibited by law or otherwise determined to be invalid or unenforceable
by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed
amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such
provision shall not affect the validity of the remaining provisions of this Note so long as this Note as so modified continues
to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited
nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations
or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the
parties. The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s)
with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable
provision(s).
30.
MAXIMUM PAYMENTS. Without limiting Section 9(d) of the Securities Purchase Agreement, nothing contained herein shall be
deemed to establish or require the payment of a rate of interest or other charges in excess of the maximum permitted by applicable
law. In the event that the rate of interest required to be paid or other charges hereunder exceed the maximum permitted by such
law, any payments in excess of such maximum shall be credited against amounts owed by the Company to the Holder and thus refunded
to the Company.
31.
CERTAIN DEFINITIONS. For purposes of this Note, the following terms shall have the following meanings:
(a)
“1933 Act” means the Securities Act of 1933, as amended, and the rules and regulations thereunder.
(b)
“1934 Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.
(c)
“Adjustment Right” means any right granted with respect to any securities issued in connection with, or with
respect to, any issuance or sale (or deemed issuance or sale in accordance with Section 7) of shares of Common Stock (other than
rights of the type described in Section 6(a) hereof) that could result in a decrease in the net consideration received by the
Company in connection with, or with respect to, such securities (including, without limitation, any cash settlement rights, cash
adjustment or other similar rights).
(d)
“Affiliate” means, with respect to any Person, any other Person that directly or indirectly controls, is controlled
by, or is under common control with, such Person, it being understood for purposes of this definition that “control”
of a Person means the power directly or indirectly either to vote 10% or more of the stock having ordinary voting power for the
election of directors of such Person or direct or cause the direction of the management and policies of such Person whether by
contract or otherwise.
(e)
“Alternate Conversion Price” means, with respect to any Alternate Conversion that price which shall be the
lower of (i) the applicable Conversion Price as in effect on the applicable Conversion Date of the applicable Alternate Conversion
and (ii) 80% of the lowest VWAP of the Common Stock during the eight (8) consecutive Trading Day period ending and including the
Trading Day immediately preceding the delivery or deemed delivery of the applicable Conversion Notice (such period, the “Alternate
Conversion Measuring Period”). All such determinations to be appropriately adjusted for any stock dividend, stock split,
stock combination, reclassification or similar transaction that proportionately decreases or increases the Common Stock during
such Alternate Conversion Measuring Period.
(f)
“Approved Stock Plan” means any employee benefit plan which has been approved by the board of directors of
the Company prior to or subsequent to the Subscription Date pursuant to which shares of Common Stock and standard options to purchase
Common Stock may be issued to any consultant, attorney, accountant, employee, officer or director for services provided to the
Company in their capacity as such.
(g)
“Attribution Parties” means, collectively, the following Persons and entities: (i) any investment vehicle,
including, any funds, feeder funds or managed accounts, currently, or from time to time after the Issuance Date, directly or indirectly
managed or advised by the Holder’s investment manager or any of its Affiliates or principals, (ii) any direct or indirect
Affiliates of the Holder or any of the foregoing, (iii) any Person acting or who could be deemed to be acting as a Group together
with the Holder or any of the foregoing and (iv) any other Persons whose beneficial ownership of the Company’s Common Stock
would or could be aggregated with the Holder’s and the other Attribution Parties for purposes of Section 13(d) of the 1934
Act. For clarity, the purpose of the foregoing is to subject collectively the Holder and all other Attribution Parties to the
Maximum Percentage.
(h)
“Black Scholes Consideration Value” means the value of the applicable Option, Convertible Security or Adjustment
Right (as the case may be) as of the date of issuance thereof calculated using the Black Scholes Option Pricing Model obtained
from the “OV” function on Bloomberg utilizing (i) an underlying price per share equal to the Closing Sale Price of
the Common Stock on the Trading Day immediately preceding the public announcement of the execution of definitive documents with
respect to the issuance of such Option, Convertible Security or Adjustment Right (as the case may be), (ii) a risk-free interest
rate corresponding to the U.S. Treasury rate for a period equal to the remaining term of such Option, Convertible Security or
Adjustment Right (as the case may be) as of the date of issuance of such Option, Convertible Security or Adjustment Right (as
the case may be), (iii) a zero cost of borrow and (iv) an expected volatility equal to the greater of 100% and the 100 day volatility
obtained from the “HVT” function on Bloomberg (determined utilizing a 365 day annualization factor) as of the Trading
Day immediately following the date of issuance of such Option, Convertible Security or Adjustment Right (as the case may be).
(i)
“Bloomberg” means Bloomberg, L.P.
(j)
“Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City
of New York are authorized or required by law to remain closed.
(k)
“Change of Control” means any Fundamental Transaction other than (i) any merger of the Company or any of its,
direct or indirect, wholly-owned Subsidiaries with or into any of the foregoing Persons, (ii) any reorganization, recapitalization
or reclassification of the shares of Common Stock in which holders of the Company’s voting power immediately prior to such
reorganization, recapitalization or reclassification continue after such reorganization, recapitalization or reclassification
to hold publicly traded securities and, directly or indirectly, are, in all material respects, the holders of the voting power
of the surviving entity (or entities with the authority or voting power to elect the members of the board of directors (or their
equivalent if other than a corporation) of such entity or entities) after such reorganization, recapitalization or reclassification,
or (iii) pursuant to a migratory merger effected solely for the purpose of changing the jurisdiction of incorporation of the Company
or any of its Subsidiaries.
(l)
“Change of Control Redemption Premium” means 125%.
(m)
“Closing Bid Price” and “Closing Sale Price” means, for any security as of any date, the
last closing bid price and last closing trade price, respectively, for such security on the Principal Market, as reported by Bloomberg,
or, if the Principal Market begins to operate on an extended hours basis and does not designate the closing bid price or the closing
trade price (as the case may be) then the last bid price or last trade price, respectively, of such security prior to 4:00:00
p.m., New York time, as reported by Bloomberg, or, if the Principal Market is not the principal securities exchange or trading
market for such security, the last closing bid price or last trade price, respectively, of such security on the principal securities
exchange or trading market where such security is listed or traded as reported by Bloomberg, or if the foregoing do not apply,
the last closing bid price or last trade price, respectively, of such security in the over-the-counter market on the electronic
bulletin board for such security as reported by Bloomberg, or, if no closing bid price or last trade price, respectively, is reported
for such security by Bloomberg, the average of the bid prices, or the ask prices, respectively, of any market makers for such
security as reported in the “pink sheets” by OTC Markets Group Inc. (formerly Pink Sheets LLC). If the Closing Bid
Price or the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing
Bid Price or the Closing Sale Price (as the case may be) of such security on such date shall be the fair market value as mutually
determined by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such
security, then such dispute shall be resolved in accordance with the procedures in Section 23. All such determinations shall be
appropriately adjusted for any stock splits, stock dividends, stock combinations, recapitalizations or other similar transactions
during such period.
(n)
“Closing Date” shall have the meaning set forth in the Securities Purchase Agreement, which date is the date
the Company initially issued Notes pursuant to the terms of the Securities Purchase Agreement.
(o)
“Common Stock” means (i) the Company’s shares of common stock, $0.0001 par value per share, and (ii)
any capital stock into which such common stock shall have been changed or any share capital resulting from a reclassification
of such common stock.
(p)
“Conversion Share Ratio” means as to any applicable Installment Date, the quotient of (i) the number of Pre-Installment
Conversion Shares delivered in connection with such Installment Date divided by (ii) the number of Post-Installment Conversion
Shares applicable to such Installment Date.
(q)
“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.
(r)
“Current Subsidiary” means any Person in which the Company on the Subscription Date, directly or indirectly,
(i) owns any of the outstanding capital stock or holds any equity or similar interest of such Person or (ii) controls or operates
all or any part of the business, operations or administration of such Person, and all of the foregoing, collectively, “Current
Subsidiaries”.
(s)
“Eligible Market” means The New York Stock Exchange, the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global
Select Market, the Nasdaq Global Market or the Principal Market.
(t)
“Eligible Marketable Securities” as of any date means marketable securities which would be reflected on a consolidated
balance sheet of the Company and its Subsidiaries prepared as of such date in accordance with GAAP, and which are permitted under
the Company’s investment policies as in effect on the Issuance Date or approved thereafter by the Company’s Board
of Directors.
(u)
“Equity Conditions” means, with respect to an given date of determination: (i) on each day during the period
beginning thirty calendar days prior to such applicable date of determination and ending on and including such applicable date
of determination (or, with respect to the initial Installment Date, during the period beginning on the Initial Installment Notice
Due Date and ending on and including the initial Installment Date) either (x) one or more Registration Statements filed pursuant
to the Registration Rights Agreement shall be effective and the prospectus contained therein shall be available on such applicable
date of determination (with, for the avoidance of doubt, any shares of Common Stock previously sold pursuant to such prospectus
deemed unavailable) for the resale of (A) with respect to any event other than a release of Restricted Principal, all shares of
Common Stock to be issued in connection with the event requiring this determination (or issuable upon conversion of the Conversion
Amount being redeemed, as applicable) or (B) with respect to any release of Restricted Principal, all shares of Common Stock then
issuable upon conversion of the Notes, exercise of the Warrants or otherwise pursuant to the terms of the Notes (each, a “Required
Minimum Securities Amount”), in each case, in accordance with the terms of the Registration Rights Agreement and there
shall not have been during such period any Grace Periods (as defined in the Registration Rights Agreement) or (y) all Registrable
Securities shall be eligible for sale pursuant to Rule 144 (as defined in the Securities Purchase Agreement) without the need
for registration under any applicable federal or state securities laws (in each case, disregarding any limitation on conversion
of the Notes, other issuance of securities with respect to the Notes and exercise of the Warrants) and no Current Information
Failure (as defined in the Registration Rights Agreement) exists or is continuing; (ii) on each day during the period beginning
thirty calendar days prior to the applicable date of determination and ending on and including the applicable date of determination
(the “Equity Conditions Measuring Period”), the Common Stock (including all Registrable Securities) is listed
or designated for quotation (as applicable) on an Eligible Market and shall not have been suspended from trading on an Eligible
Market (other than suspensions of not more than three (3) Trading Days and occurring prior to the applicable date of determination
due to business announcements by the Company) nor shall delisting or suspension by an Eligible Market have been threatened (with
a reasonable prospect of delisting occurring after giving effect to all applicable notice, appeal, compliance and hearing periods)
or reasonably likely to occur or pending as evidenced by (A) a writing by such Eligible Market or (B) the Company falling below
the minimum listing maintenance requirements of the Eligible Market on which the Common Stock is then listed or designated for
quotation (as applicable); (iii) during the Equity Conditions Measuring Period, the Company shall have delivered all shares of
Common Stock issuable upon conversion of this Note on a timely basis as set forth in Section 3 hereof and all other shares of
capital stock required to be delivered by the Company on a timely basis as set forth in the other Transaction Documents; (iv)
any shares of Common Stock to be issued in connection with the event requiring determination (or issuable upon conversion of the
Conversion Amount being redeemed in the event requiring this determination) may be issued in full without violating Section 3(d)
hereof; (v) any shares of Common Stock to be issued in connection with the event requiring determination (or issuable upon conversion
of the Conversion Amount being redeemed in the event requiring this determination (without regards to any limitations on conversion
set forth herein)) may be issued in full without violating the rules or regulations of the Eligible Market on which the Common
Stock is then listed or designated for quotation (as applicable); (vi) on each day during the Equity Conditions Measuring Period,
no public announcement of a pending, proposed or intended Fundamental Transaction shall have occurred which has not been abandoned,
terminated or consummated; (vii) the Company shall have no knowledge of any fact that would reasonably be expected to cause (1)
any Registration Statement required to be filed pursuant to the Registration Rights Agreement to not be effective or the prospectus
contained therein to not be available for the resale of the applicable Required Minimum Securities Amount of Registrable Securities
in accordance with the terms of the Registration Rights Agreement or (2) any Registrable Securities to not be eligible for sale
pursuant to Rule 144 without the need for registration under any applicable federal or state securities laws (in each case, disregarding
any limitation on conversion of the Notes, other issuance of securities with respect to the Notes and exercise of the Warrants)
and no Current Information Failure exists or is continuing; (viii) the Holder shall not be in (and no other holder of Notes shall
be in) possession of any material, non-public information provided to any of them by the Company, any of its Subsidiaries or any
of their respective affiliates, employees, officers, representatives, agents or the like; (ix) on each day during the Equity Conditions
Measuring Period, the Company otherwise shall have been in compliance with each, and shall not have breached any representation
or warranty in any material respect (other than representations or warranties subject to material adverse effect or materiality,
which may not be breached in any respect) or any covenant or other term or condition of any Transaction Document, including, without
limitation, the Company shall not have failed to timely make any payment pursuant to any Transaction Document; (x) on each Trading
Day during the Equity Conditions Measuring Period, there shall not have occurred any Volume Failure or Price Failure as of such
applicable date of determination; (xi) on the applicable date of determination (A) no Authorized Share Failure shall exist or
be continuing and the applicable Required Minimum Securities Amount of shares of Common Stock are available under the certificate
of incorporation of the Company and reserved by the Company to be issued pursuant to the Notes and (B) all shares of Common Stock
to be issued in connection with the event requiring this determination (or issuable upon conversion of the Conversion Amount being
redeemed in the event requiring this determination (without regards to any limitations on conversion set forth herein)) may be
issued in full without resulting in an Authorized Share Failure; (xii) on each day during the Equity Conditions Measuring Period,
there shall not have occurred and there shall not exist an Event of Default or an event that with the passage of time or giving
of notice would constitute an Event of Default; and (xiii) the shares of Common Stock issuable pursuant the event requiring the
satisfaction of the Equity Conditions are duly authorized and listed and eligible for trading without restriction on an Eligible
Market.
(v)
“Equity Conditions Failure” means that (i) on any day during the period commencing twenty (20) Trading Days
prior to the applicable Installment Notice Date through the later of the applicable Installment Date and the date on which the
applicable shares of Common Stock are actually delivered to the Holder, or (ii) any day during the period commencing twenty (20)
Trading Days prior to the date of the applicable Controlled Account Release Event through the date of the applicable Controlled
Account Release Event, the Equity Conditions have not been satisfied (or waived in writing by the Holder).
(w)
“Event Market Price” means, with respect to any Stock Combination Event Date, the quotient determined by dividing
(x) the sum of the VWAP of the Common Stock for each of the five (5) lowest Trading Days during the twenty (20) consecutive Trading
Day period ending and including the Trading Day immediately preceding the sixteenth (16th) Trading Day after such Stock Combination
Event Date, divided by (y) five (5).
(x)
“Excluded Securities” means (i) shares of Common Stock or standard options to purchase Common Stock issued
to consultants, attorneys, accountants, directors, officers or employees of the Company for services rendered to the Company in
their capacity as such pursuant to an Approved Stock Plan (as defined above), provided that (A) all such issuances (taking into
account the shares of Common Stock issuable upon exercise of such options) after the Subscription Date pursuant to this clause
(i) do not, in the aggregate, exceed more than 5% of the Common Stock issued and outstanding immediately prior to the Subscription
Date and (B) the exercise price of any such options is not lowered, none of such options are amended to increase the number of
shares issuable thereunder and none of the terms or conditions of any such options are otherwise materially changed in any manner
that adversely affects any of the Buyers; (ii) shares of Common Stock issued upon the conversion or exercise of Convertible Securities
(other than standard options to purchase Common Stock issued pursuant to an Approved Stock Plan that are covered by clause (i)
above) issued prior to the Subscription Date, provided that the conversion price of any such Convertible Securities (other than
standard options to purchase Common Stock issued pursuant to an Approved Stock Plan that are covered by clause (i) above) is not
lowered, none of such Convertible Securities (other than standard options to purchase Common Stock issued pursuant to an Approved
Stock Plan that are covered by clause (i) above) are amended to increase the number of shares issuable thereunder and none of
the terms or conditions of any such Convertible Securities (other than standard options to purchase Common Stock issued pursuant
to an Approved Stock Plan that are covered by clause (i) above) are otherwise materially changed in any manner that adversely
affects any of the Buyers; (iii) the shares of Common Stock issuable upon conversion of the Notes or otherwise pursuant to the
terms of the Notes; provided, that the terms of the Notes are not amended, modified or changed on or after the Subscription Date
(other than antidilution adjustments pursuant to the terms thereof in effect as of the Subscription Date), (iv) the shares of
Common Stock issuable upon exercise of the Warrants; provided, that the terms of the Warrants are not amended, modified or changed
on or after the Subscription Date (other than antidilution adjustments pursuant to the terms thereof in effect as of the Subscription
Date), (v) shares of Common Stock issued or issuable in connection with strategic alliances and strategic partnerships, provided,
that (x) the primary purpose of such issuance is not to raise capital as determined in good faith by the Required Holders, (y)
the purchaser or acquirer of the securities in such issuance solely consists of either (I) the actual operating participants in
such strategic alliance or strategic partnership or (II) the stockholders, partners or members of the foregoing Persons and (z)
the number or amount of securities issued to such Person by the Company shall not be disproportionate to such Person’s actual
participation in such strategic alliance or strategic partnership, as applicable, and (vi) unregistered shares of Common Stock
and warrants to purchase Common Stock issued by the Company in a private placement consummated on or prior to the first anniversary
of the Closing Date at a fixed price per share of Common Stock and warrant to purchase Common Stock.
(y)
“Fundamental Transaction” means (A) that the Company shall, directly or indirectly, including through subsidiaries,
Affiliates or otherwise, in one or more related transactions, (i) consolidate or merge with or into (whether or not the Company
is the surviving corporation) another Subject Entity, or (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially
all of the properties or assets of the Company or any of its “significant subsidiaries” (as defined in Rule 1-02 of
Regulation S-X) to one or more Subject Entities, or (iii) make, or allow one or more Subject Entities to make, or allow the Company
to be subject to or have its Common Stock be subject to or party to one or more Subject Entities making, a purchase, tender or
exchange offer that is accepted by the holders of at least either (x) 50% of the outstanding shares of Common Stock, (y) 50% of
the outstanding shares of Common Stock calculated as if any shares of Common Stock held by all Subject Entities making or party
to, or Affiliated with any Subject Entities making or party to, such purchase, tender or exchange offer were not outstanding;
or (z) such number of shares of Common Stock such that all Subject Entities making or party to, or Affiliated with any Subject
Entity making or party to, such purchase, tender or exchange offer, become collectively the beneficial owners (as defined in Rule
13d-3 under the 1934 Act) of at least 50% of the outstanding shares of Common Stock, or (iv) consummate a stock or share purchase
agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme
of arrangement) with one or more Subject Entities whereby all such Subject Entities, individually or in the aggregate, acquire,
either (x) at least 50% of the outstanding shares of Common Stock, (y) at least 50% of the outstanding shares of Common Stock
calculated as if any shares of Common Stock held by all the Subject Entities making or party to, or Affiliated with any Subject
Entity making or party to, such stock purchase agreement or other business combination were not outstanding; or (z) such number
of shares of Common Stock such that the Subject Entities become collectively the beneficial owners (as defined in Rule 13d-3 under
the 1934 Act) of at least 50% of the outstanding shares of Common Stock, or (v) reorganize, recapitalize or reclassify its Common
Stock, (B) that the Company shall, directly or indirectly, including through subsidiaries, Affiliates or otherwise, in one or
more related transactions, allow any Subject Entity individually or the Subject Entities in the aggregate to be or become the
“beneficial owner” (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, whether through acquisition,
purchase, assignment, conveyance, tender, tender offer, exchange, reduction in outstanding shares of Common Stock, merger, consolidation,
business combination, reorganization, recapitalization, spin-off, scheme of arrangement, reorganization, recapitalization or reclassification
or otherwise in any manner whatsoever, of either (x) at least 50% of the aggregate ordinary voting power represented by issued
and outstanding Common Stock, (y) at least 50% of the aggregate ordinary voting power represented by issued and outstanding Common
Stock not held by all such Subject Entities as of the date of this Warrant calculated as if any shares of Common Stock held by
all such Subject Entities were not outstanding, or (z) a percentage of the aggregate ordinary voting power represented by issued
and outstanding shares of Common Stock or other equity securities of the Company sufficient to allow such Subject Entities to
effect a statutory short form merger or other transaction requiring other shareholders of the Company to surrender their shares
of Common Stock without approval of the shareholders of the Company or (C) directly or indirectly, including through subsidiaries,
Affiliates or otherwise, in one or more related transactions, the issuance of or the entering into any other instrument or transaction
structured in a manner to circumvent, or that circumvents, the intent of this definition in which case this definition shall be
construed and implemented in a manner otherwise than in strict conformity with the terms of this definition to the extent necessary
to correct this definition or any portion of this definition which may be defective or inconsistent with the intended treatment
of such instrument or transaction.
(z)
“GAAP” means United States generally accepted accounting principles, consistently applied.
(aa)
“Group” means a “group” as that term is used in Section 13(d) of the 1934 Act and as defined in
Rule 13d-5 thereunder.
(bb)
“Holder Pro Rata Amount” means a fraction (i) the numerator of which is the original Principal amount of this
Note on the Closing Date and (ii) the denominator of which is the aggregate original principal amount of all Notes issued to the
initial purchasers pursuant to the Securities Purchase Agreement on the Closing Date.
(cc)
“Indebtedness” shall have the meaning ascribed to such term in the Securities Purchase Agreement.
(dd)
“Initial Installment Notice Due Date” means the earlier of (x) the Effective Date (as defined in the Registration
Rights Agreement) of the initial Registration Statement and (y) November 7, 2015.
(ee)
“Installment Amount” means the sum of (A) (i) with respect to any Installment Date other than the Maturity
Date, the lesser of (x) $400,000 and (y) the Principal amount then outstanding under this Note as of such Installment Date, and
(ii) with respect to the Installment Date that is the Maturity Date, the Principal amount then outstanding under this Note as
of such Installment Date (in each case, as any such Installment Amount may be reduced pursuant to the terms of this Note, whether
upon conversion, redemption or otherwise), (B) any Deferral Amount deferred pursuant to Section 8(d) and included in such Installment
Amount in accordance therewith, (C) and Accelerated Amount accelerated pursuant to Section 8(e) and included in such Installment
Amount in accordance therewith and (D) in each case of clauses (A) through (C) above, the sum of any accrued and unpaid Interest
as of such Installment Date under this Note, if any, and accrued and unpaid Late Charges, if any, under this Note as of such Installment
Date. In the event the Holder shall sell or otherwise transfer any portion of this Note, the transferee shall be allocated a pro
rata portion of the each unpaid Installment Amount hereunder.
(ff)
“Installment Conversion Price” means, with respect to a particular date of determination, the lowest of (i)
the Conversion Price then in effect and (ii) 80% of the quotient of (A) the sum of the VWAP of the Common Stock for each of the
three (3) lowest Trading Days during the twenty (20) consecutive Trading Day period ending and including the Trading Day immediately
prior to the applicable Installment Date, divided by (B) three (3). All such determinations to be appropriately adjusted for any
stock split, stock dividend, stock combination or other similar transaction during any such measuring period.
(gg)
“Installment Date” means (i) the twenty-first (21st) Trading Day after the Initial Installment Notice Due Date,
(ii) then, (x) if the first Trading Day of the calendar month immediately following the initial Installment Date occurs less than
twenty (20) Trading Days after the initial Installment Date, the first Trading Day of the second calendar month immediately following
the initial Installment Date or (y) otherwise, the first Trading Day of the calendar month immediately following the initial Installment
Date, (iii) thereafter, the first Trading Day of the calendar month immediately following the previous Installment Date until
the Maturity Date, and (iv) the Maturity Date.
(hh)
“Interest Date” means, with respect to any given calendar month, (x) if prior to the initial Installment Date
or after the Maturity Date, the first Trading Day of such calendar month or (y) if on or after the initial Installment Date, but
on or prior to the Maturity Date, such Installment Date, if any, in such calendar month.
(ii)
“Interest Rate” means eight percent (8%) per annum, as may be adjusted from time to time in accordance
with Section 2.
(jj)
“Investor Note” means that certain promissory note of the Holder issued to the Company at the Closing Date,
pursuant to the Securities Purchase Agreement, with an aggregate principal amount outstanding equal to the Restricted Principal
outstanding hereunder and secured by a cash amount set forth in a bank account of the Holder (or its affiliates) at least equal
to the Restricted Principal outstanding hereunder.
(kk)
“Investor Prepayment” means any Prepayment (as defined in the Investor Note) of the Investor Note.
(ll)
“Maturity Date” shall mean May 7, 2018; provided, however, the Maturity Date may be extended at the
option of the Holder (i) in the event that, and for so long as, an Event of Default shall have occurred and be continuing or any
event shall have occurred and be continuing that with the passage of time and the failure to cure would result in an Event of
Default or (ii) through the date that is twenty (20) Business Days after the consummation of a Fundamental Transaction in the
event that a Fundamental Transaction is publicly announced or a Fundamental Transaction Notice is delivered prior to the Maturity
Date, provided further that if a Holder elects to convert some or all of this Note pursuant to Section 3 hereof, and the Conversion
Amount would be limited pursuant to Section 3(d) hereunder, the Maturity Date shall automatically be extended until such time
as such provision shall not limit the conversion of this Note.
(mm)
“New Subsidiary” means, as of any date of determination, any Person in which the Company after the Subscription
Date, directly or indirectly, (i) owns or acquires any of the outstanding capital stock or holds any equity or similar interest
of such Person or (ii) controls or operates all or any part of the business, operations or administration of such Person, and
all of the foregoing, collectively, “New Subsidiaries”.
(nn)
“Options” means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible
Securities.
(oo)
“Parent Entity” of a Person means an entity that, directly or indirectly, controls the applicable Person and
whose common stock or equivalent equity security is quoted or listed on an Eligible Market, or, if there is more than one such
Person or Parent Entity, the Person or Parent Entity with the largest public market capitalization as of the date of consummation
of the Fundamental Transaction.
(pp)
“Permitted Indebtedness” means (i) Indebtedness evidenced by this Note and the Other Notes, (ii) Indebtedness
set forth on Schedule 3(s) to the Securities Purchase Agreement, as in effect as of the Subscription Date, (iii) Indebtedness
secured by Permitted Liens or unsecured but as described in clauses (iv) and (v) of the definition of Permitted Liens and (iv)
up to $500,000 of aggregate principal amount of Indebtedness incurred by the Company that is made expressly subordinate in right
of payment to the Indebtedness evidenced by this Note, as reflected in a written agreement acceptable to the Holder (the “Permitted
Subordinated Indebtedness”); provided that no Event of Default has occurred and is continuing (or with the passage of
time is reasonably expected to occur) at the time of issuance of such Permitted Subordinated Indebtedness.
(qq)
“Permitted Liens” means (i) any Lien for taxes not yet due or delinquent or being contested in good faith by
appropriate proceedings for which adequate reserves have been established in accordance with GAAP, (ii) any statutory Lien arising
in the ordinary course of business by operation of law with respect to a liability that is not yet due or delinquent, (iii) any
Lien created by operation of law, such as materialmen’s liens, mechanics’ liens and other similar liens, arising in
the ordinary course of business with respect to a liability that is not yet due or delinquent or that are being contested in good
faith by appropriate proceedings, (iv) Liens (A) upon or in any equipment acquired or held by the Company or any of its Subsidiaries
to secure the purchase price of such equipment or Indebtedness incurred solely for the purpose of financing the acquisition or
lease of such equipment, or (B) existing on such equipment at the time of its acquisition, provided that the Lien is confined
solely to the property so acquired and improvements thereon, and the proceeds of such equipment, in either case, with respect
to Indebtedness in an aggregate amount not to exceed $250,000, (v) Liens incurred in connection with the extension, renewal or
refinancing of the Indebtedness secured by Liens of the type described in clause (iv) above, provided that any extension, renewal
or replacement Lien shall be limited to the property encumbered by the existing Lien and the principal amount of the Indebtedness
being extended, renewed or refinanced does not increase, (vi) Liens in favor of customs and revenue authorities arising as a matter
of law to secure payments of custom duties in connection with the importation of goods, and (vii) Liens arising from judgments,
decrees or attachments in circumstances not constituting an Event of Default under Section 4(a)(xii).
(rr)
“Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a
trust, an unincorporated organization, any other entity or a government or any department or agency thereof.
(ss)
“Post-Installment Conversion Shares” means that number of shares of Common Stock that would be required to
be delivered pursuant to Section 8 on an applicable Installment Date without taking into account the delivery of any Pre-Installment
Conversion Shares.
(tt)
“Pre-Installment Conversion Price” means, with respect to a particular date of determination, the lower of
(i) the Conversion Price then in effect and (ii) 80% of the quotient of (A) the sum of the VWAP of the Common Stock for each of
the three (3) lowest Trading Days during the twenty (20) consecutive Trading Day period ending and including the Trading Day immediately
preceding the date of the delivery or deemed delivery of the applicable Installment Notice, divided by (B) three (3). All such
determinations to be appropriately adjusted for any stock split, stock dividend, stock combination or other similar transaction
during any such measuring period.
(uu)
“Price Failure” means, with respect to a particular date of determination, the VWAP of the Common Stock on
any Trading Day during any Trading Day during the twenty (20) Trading Day period ending on the Trading Day immediately preceding
such date of determination fails to exceed $0.25 (as adjusted for stock splits, stock dividends, stock combinations, recapitalizations
or other similar transactions occurring after the Subscription Date). All such determinations to be appropriately adjusted for
any stock splits, stock dividends, stock combinations, recapitalizations or other similar transactions during any such measuring
period.
(vv)
“Principal Market” means the OTCQB.
(ww)
“Redemption Notices” means, collectively, the Event of Default Redemption Notices, the Installment Notices
with respect to any Installment Redemption and the Change of Control Redemption Notices, and each of the foregoing, individually,
a “Redemption Notice.”
(xx)
“Redemption Premium” means 125%.
(yy)
“Redemption Prices” means, collectively, Event of Default Redemption Prices, the Change of Control Redemption
Prices, and the Installment Redemption Prices, and each of the foregoing, individually, a “Redemption Price.”
(zz)
“Registration Rights Agreement” means that certain registration rights agreement, dated as of the Closing Date,
by and among the Company and the initial holders of the Notes relating to, among other things, the registration of the resale
of the Common Stock issuable upon conversion of the Notes or otherwise pursuant to the terms of the Notes and exercise of the
Warrants, as may be amended from time to time.
(aaa)
“Restricted Principal” means, as of any given date, the difference of (i) the Purchase Price (as defined in
the Securities Purchase Agreement), less (ii) the Cash Purchase Price (as defined in the Securities Purchase Agreement), less
(iii) all cash amounts paid to the Company (or paid at the Company’s direction) in Investor Prepayments on or prior to such
given date.
(bbb)
“SEC” means the United States Securities and Exchange Commission or the successor thereto.
(ccc)
“Securities Purchase Agreement” means that certain securities purchase agreement, dated as of the Subscription
Date, by and among the Company and the initial holders of the Notes pursuant to which the Company issued the Notes, as may be
amended from time to time.
(ddd)
“Security Agreement” shall have the meaning as set forth in the Securities Purchase Agreement.
(eee)
“Subscription Date” means May 7, 2015.
(fff)
“Subsidiaries” means, as of any date of determination, collectively, all Current Subsidiaries and all New Subsidiaries,
and each of the foregoing, individually, a “Subsidiary.”
(ggg)
“Subject Entity” means any Person, Persons or Group or any Affiliate or associate of any such Person, Persons
or Group.
(hhh)
“Successor Entity” means the Person (or, if so elected by the Holder, the Parent Entity) formed by, resulting
from or surviving any Fundamental Transaction or the Person (or, if so elected by the Holder, the Parent Entity) with which such
Fundamental Transaction shall have been entered into.
(iii)
“Trading Day” means, as applicable, (x) with respect to all price or trading volume determinations relating
to the Common Stock, any day on which the Common Stock is traded on the Principal Market, or, if the Principal Market is not the
principal trading market for the Common Stock, then on the principal securities exchange or securities market on which the Common
Stock is then traded, provided that “Trading Day” shall not include any day on which the Common Stock is scheduled
to trade on such exchange or market for less than 4.5 hours or any day that the Common Stock is suspended from trading during
the final hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing
time of trading on such exchange or market, then during the hour ending at 4:00:00 p.m., New York time) unless such day is otherwise
designated as a Trading Day in writing by the Holder or (y) with respect to all determinations other than price determinations
relating to the Common Stock, any day on which The New York Stock Exchange (or any successor thereto) is open for trading of securities.
(jjj)
“Volume Failure” means, with respect to a particular date of determination, the aggregate daily dollar trading
volume (as reported on Bloomberg) of the Common Stock on the Principal Market on any Trading Days during the ten (10) Trading
Day period ending on the Trading Day immediately preceding such date of determination (such period, the “Volume Failure
Measuring Period”), is less than $75,000 (as adjusted for any stock splits, stock dividends, stock combinations, recapitalizations
or other similar transactions occurring after the Subscription Date). All such determinations to be appropriately adjusted for
any stock splits, stock dividends, stock combinations, recapitalizations or other similar transactions during such Volume Failure
Measuring Period.
(kkk)
“Voting Stock” of a Person means capital stock of such Person of the class or classes pursuant to which the
holders thereof have the general voting power to elect, or the general power to appoint, at least a majority of the board of directors,
managers, trustees or other similar governing body of such Person (irrespective of whether or not at the time capital stock of
any other class or classes shall have or might have voting power by reason of the happening of any contingency).
(lll)
“VWAP” means, for any security as of any date, the dollar volume-weighted average price for such security on
the Principal Market (or, if the Principal Market is not the principal trading market for such security, then on the principal
securities exchange or securities market on which such security is then traded) during the period beginning at 9:30:01 a.m., New
York time, and ending at 4:00:00 p.m., New York time, as reported by Bloomberg through its “HP” function (set to weighted
average) or, if the foregoing does not apply, the dollar volume-weighted average price of such security in the over-the-counter
market on the electronic bulletin board for such security during the period beginning at 9:30:01 a.m., New York time, and ending
at 4:00:00 p.m., New York time, as reported by Bloomberg, or, if no dollar volume-weighted average price is reported for such
security by Bloomberg for such hours, the average of the highest closing bid price and the lowest closing ask price of any of
the market makers for such security as reported in the “pink sheets” by OTC Markets Group Inc. (formerly Pink Sheets
LLC). If the VWAP cannot be calculated for such security on such date on any of the foregoing bases, the VWAP of such security
on such date shall be the fair market value as mutually determined by the Company and the Holder. If the Company and the Holder
are unable to agree upon the fair market value of such security, then such dispute shall be resolved in accordance with the procedures
in Section 23. All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination,
recapitalization or other similar transaction during such period.
(mmm)
“Warrants” has the meaning ascribed to such term in the Securities Purchase Agreement, and shall include all
warrants issued in exchange therefor or replacement thereof.
32.
DISCLOSURE. Upon receipt or delivery by the Company of any notice in accordance with the terms of this Note, unless the
Company has in good faith determined that the matters relating to such notice do not constitute material, non-public information
relating to the Company or any of its Subsidiaries, the Company shall within one (1) Business Day after any such receipt or delivery
publicly disclose such material, non-public information on a Current Report on Form 8-K or otherwise. In the event that the Company
believes that a notice contains material, non-public information relating to the Company or any of its Subsidiaries, the Company
so shall indicate to the Holder contemporaneously with delivery of such notice, and in the absence of any such indication, the
Holder shall be allowed to presume that all matters relating to such notice do not constitute material, non-public information
relating to the Company or any of its Subsidiaries. Nothing contained in this Section 32 shall limit any obligations of the Company,
or any rights of the Holder, under Section 4(i) of the Securities Purchase Agreement.
[signature
page follows]
IN
WITNESS WHEREOF, the Company has caused this Note to be duly executed as of the Issuance Date set out above.
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INFINITY ENERGY RESOURCES, INC. |
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By: |
/s/
Stanton E. Ross |
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Name: |
Stanton E. Ross |
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Title: |
Chairman, President & CEO |
EXHIBIT
I
INFINITY
ENERGY RESOURCES, INC.
CONVERSION NOTICE
Reference
is made to the Convertible Note (the “Note”) issued to the undersigned by Infinity Energy Resources, Inc.,
a Delaware corporation (the “Company”). In accordance with and pursuant to the Note, the undersigned hereby
elects to convert the Conversion Amount (as defined in the Note) of the Note indicated below into shares of Common Stock, $0.001
par value per share (the “Common Stock”), of the Company, as of the date specified below. Capitalized terms
not defined herein shall have the meaning as set forth in the Note.
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Aggregate Principal to be converted: |
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Aggregate accrued and unpaid Interest and accrued and unpaid Late
Charges with respect to such portion of the Aggregate Principal and such Aggregate Interest to be converted: |
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AGGREGATE
CONVERSION AMOUNT TO BE CONVERTED: |
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Please confirm the following information:
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Number of shares of Common Stock to be issued: |
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Installment Amount(s) to be reduced (and corresponding Installment
Date(s)) and amount of reduction: |
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[ ]
Check here if all or any portion of the aggregate Principal being converted includes any Restricted Principal. By checking this
box, the Holder hereby elects and agrees to effect an Investor Prepayment with respect to __________ of aggregate principal outstanding
under the Investor Note.
[ ]
If this Conversion Notice is being delivered with respect to an Alternate Conversion, check here if Holder is electing to use
the following Alternate Conversion Price:____________ [ ]
If this Conversion Notice is being delivered with respect to an Additional Installment Conversion, check here if Holder is electing
to use the following Installment Conversion Price:____________
Please issue the Common Stock into which the Note is being converted to Holder, or for its benefit, as follows:
[ ]
Check here if requesting delivery as a certificate to the following name and to the following address:
[ ] Check here if requesting delivery by Deposit/Withdrawal
at Custodian as follows: |
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Date:
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Name of Registered Holder |
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By: |
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Name: |
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Title: |
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Tax ID: |
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Facsimile: |
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E-mail Address: |
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ACKNOWLEDGMENT
The
Company hereby acknowledges this Conversion Notice and hereby directs _________________ to issue the above indicated number of
shares of Common Stock in accordance with the Transfer Agent Instructions dated _____________, 20__ from the Company and acknowledged
and agreed to by ________________________.
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INFINITY ENERGY RESOURCES, INC. |
EXHIBIT
10.49
NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT
BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM
REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD
PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH
A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES. THE NUMBER OF SHARES OF COMMON STOCK
ISSUABLE UPON EXERCISE OF THIS WARRANT MAY BE LESS THAN THE AMOUNTS SET FORTH ON THE FACE HEREOF PURSUANT TO SECTION 1(a)
OF THIS WARRANT.
Infinity
Energy Resources, Inc.
Warrant
To Purchase Common Stock
Warrant
No.: W-1
Date
of Issuance: May 7, 2015 (“Issuance Date”)
Infinity
Energy Resources, Inc., a Delaware corporation (the “Company”), hereby certifies that, for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, Hudson bay
master fund ltd, the registered holder hereof or its permitted assigns (the “Holder”), is entitled,
subject to the terms set forth below, to purchase from the Company, at the Exercise Price (as defined below) then in effect, upon
exercise of this Warrant to Purchase Common Stock (including any Warrants to Purchase Common Stock issued in exchange, transfer
or replacement hereof, the “Warrant”), at any time or times on or after the Issuance Date, but not after 11:59
p.m., New York time, on the Expiration Date (as defined below), 18,000,000 (subject to adjustment as provided herein) fully paid
and non-assessable shares of Common Stock (as defined below) (the “Warrant Shares”, and such number
of Warrant Shares, the “Warrant Number”). Except as otherwise defined herein, capitalized terms in this Warrant
shall have the meanings set forth in Section 17. This Warrant is one of the Warrants to Purchase Common Stock (the “SPA
Warrants”) issued pursuant to Section 1 of that certain Securities Purchase Agreement, dated as of May 7, 2015
(the “Subscription Date”), by and among the Company and the investors (the “Buyers”) referred
to therein, as amended from time to time (the “Securities Purchase Agreement”).
1.
EXERCISE OF WARRANT.
(a)
Mechanics of Exercise. Subject to the terms and conditions hereof (including, without limitation, the limitations set forth
in Section 1(f)), this Warrant may be exercised by the Holder on any day on or after the Issuance Date (an “Exercise
Date”), in whole or in part, by delivery (whether via facsimile or otherwise) of a written notice, in the form attached
hereto as Exhibit A (the “Exercise Notice”), of the Holder’s election to exercise this Warrant.
Within one (1) Trading Day following an exercise of this Warrant as aforesaid, the Holder shall deliver payment to the Company
of an amount equal to the Exercise Price in effect on the date of such exercise multiplied by the number of Warrant Shares as
to which this Warrant was so exercised (the “Aggregate Exercise Price”) in cash or via wire transfer of immediately
available funds if the Holder did not notify the Company in such Exercise Notice that such exercise was made pursuant to a Cashless
Exercise (as defined in Section 1(d)). The Holder shall not be required to deliver the original of this Warrant in order to effect
an exercise hereunder. Execution and delivery of an Exercise Notice with respect to less than all of the Warrant Shares shall
have the same effect as cancellation of the original of this Warrant and issuance of a new Warrant evidencing the right to purchase
the remaining number of Warrant Shares. Execution and delivery of an Exercise Notice for all of the then-remaining Warrant Shares
shall have the same effect as cancellation of the original of this Warrant after delivery of the Warrant Shares in accordance
with the terms hereof. On or before the first (1st) Trading Day following the date on which the Company has received an Exercise
Notice, the Company shall transmit by facsimile or electronic mail an acknowledgment of confirmation of receipt of such Exercise
Notice, in the form attached hereto as Exhibit B, to the Holder and the Company’s transfer agent (the “Transfer
Agent”), which confirmation shall constitute an instruction to the Transfer Agent to process such Exercise Notice in
accordance with the terms herein. On or before the third (3rd) Trading Day following the date on which the Company has received
such Exercise Notice (or such earlier date as required pursuant to the 1934 Act or other applicable law, rule or regulation for
the settlement of a trade of such Warrant Shares initiated on the applicable Exercise Date), the Company shall (X) provided that
the Transfer Agent is participating in The Depository Trust Company (“DTC”) Fast Automated Securities Transfer
Program, upon the request of the Holder, credit such aggregate number of shares of Common Stock to which the Holder is entitled
pursuant to such exercise to the Holder’s or its designee’s balance account with DTC through its Deposit/Withdrawal
at Custodian system, or (Y) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program,
upon the request of the Holder, issue and deliver (via reputable overnight courier) to the address as specified in the Exercise
Notice, a certificate, registered in the name of the Holder or its designee, for the number of shares of Common Stock to which
the Holder shall be entitled pursuant to such exercise. Upon delivery of an Exercise Notice, the Holder shall be deemed for all
corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised,
irrespective of the date such Warrant Shares are credited to the Holder’s DTC account or the date of delivery of the certificates
evidencing such Warrant Shares (as the case may be). If this Warrant is submitted in connection with any exercise pursuant to
this Section 1(a) and the number of Warrant Shares represented by this Warrant submitted for exercise is greater than the number
of Warrant Shares being acquired upon an exercise and upon surrender of this Warrant to the Company by the Holder, then, at the
request of the Holder, the Company shall as soon as practicable and in no event later than three (3) Business Days after any exercise
and at its own expense, issue and deliver to the Holder (or its designee) a new Warrant (in accordance with Section 7(d)) representing
the right to purchase the number of Warrant Shares purchasable immediately prior to such exercise under this Warrant, less the
number of Warrant Shares with respect to which this Warrant is exercised. No fractional shares of Common Stock are to be issued
upon the exercise of this Warrant, but rather the number of shares of Common Stock to be issued shall be rounded up to the nearest
whole number. The Company shall pay any and all transfer, stamp, issuance and similar taxes, costs and expenses (including, without
limitation, fees and expenses of the Transfer Agent) that may be payable with respect to the issuance and delivery of Warrant
Shares upon exercise of this Warrant. Notwithstanding the foregoing, except in the case where an exercise of this Warrant is validly
made pursuant to a Cashless Exercise), the Company’s failure to deliver Warrant Shares to the Holder on or prior to the
later of ((i) three (3) Trading Days after receipt of the applicable Exercise Notice (or such earlier date as required pursuant
to the 1934 Act or other applicable law, rule or regulation for the settlement of a trade of such Warrant Shares initiated on
the applicable Exercise Date) and (ii) one (1) Trading Day after the Company’s receipt of the Aggregate Exercise Price (or
valid notice of a Cashless Exercise (such later date, the “Share Delivery Deadline”) shall not be deemed to
be a breach of this Warrant. Notwithstanding anything to the contrary contained in this Warrant or the Registration Rights Agreement,
after the effective date of the Registration Statement (as defined in the Registration Rights Agreement) and prior to the Holder’s
receipt of the notice of a Grace Period (as defined in the Registration Rights Agreement), the Company shall cause the Transfer
Agent to deliver unlegended shares of Common Stock to the Holder (or its designee) in connection with any sale of Registrable
Securities (as defined in the Registration Rights Agreement) with respect to which the Holder has entered into a contract for
sale, and delivered a copy of the prospectus included as part of the particular Registration Statement to the extent applicable,
and for which the Holder has not yet settled.
(b) Exercise
Price. For purposes of this Warrant, “Exercise Price” means $0.50, subject to adjustment as
provided herein.
(c)
Company’s Failure to Timely Deliver Securities. If the Company shall fail, for any reason or for no reason, on or
prior to the Share Delivery Deadline, either (I) if the Transfer Agent is not participating in the DTC Fast Automated Securities
Transfer Program, to issue and deliver to the Holder (or its designee) a certificate for the number of Warrant Shares to which
the Holder is entitled and register such Warrant Shares on the Company’s share register or, if the Transfer Agent is participating
in the DTC Fast Automated Securities Transfer Program, to credit the balance account of the Holder or the Holder’s designee
with DTC for such number of Warrant Shares to which the Holder is entitled upon the Holder’s exercise of this Warrant (as
the case may be) or (II) if a Registration Statement covering the resale of the Warrant Shares that are the subject of the Exercise
Notice (the “Unavailable Warrant Shares”) is not available for the resale of such Unavailable Warrant Shares
and the Company fails to promptly, but in no event later than as required pursuant to the Registration Rights Agreement (x) so
notify the Holder and (y) deliver the Warrant Shares electronically without any restrictive legend by crediting such aggregate
number of Warrant Shares to which the Holder is entitled pursuant to such exercise to the Holder’s or its designee’s
balance account with DTC through its Deposit/Withdrawal At Custodian system (the event described in the immediately foregoing
clause (II) is hereinafter referred as a “Notice Failure” and together with the event described in clause (I)
above, a “Delivery Failure”), then, in addition to all other remedies available to the Holder, (X) the Company
shall pay in cash to the Holder on each day after the Share Delivery Date and during such Delivery Failure an amount equal to
2% of the product of (A) the sum of the number of shares of Common Stock not issued to the Holder on or prior to the Share Delivery
Deadline and to which the Holder is entitled, multiplied by (B) any trading price of the Common Stock selected by the Holder in
writing as in effect at any time during the period beginning on the applicable Exercise Date and ending on the applicable Share
Delivery Date, and (Y) the Holder, upon written notice to the Company, may void its Exercise Notice with respect to, and retain
or have returned, as the case may be, any portion of this Warrant that has not been exercised pursuant to such Exercise Notice;
provided that the voiding of an Exercise Notice shall not affect the Company’s obligations to make any payments which have
accrued prior to the date of such notice pursuant to this Section 1(c) or otherwise. In addition to the foregoing, if on or prior
to the Share Delivery Deadline either (I) the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer
Program, the Company shall fail to issue and deliver to the Holder (or its designee) a certificate and register such shares of
Common Stock on the Company’s share register or, if the Transfer Agent is participating in the DTC Fast Automated Securities
Transfer Program, the Transfer Agent shall fail to credit the balance account of the Holder or the Holder’s designee with
DTC for the number of shares of Common Stock to which the Holder is entitled upon the Holder’s exercise hereunder or pursuant
to the Company’s obligation pursuant to clause (ii) below or (II) a Notice Failure occurs, and if on or after such Share
Delivery Deadline the Holder purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction
of a sale by the Holder of all or any portion of the number of shares of Common Stock issuable upon such exercise that the Holder
anticipated receiving from the Company (a “Buy-In”), then, in addition to all other remedies available to the
Holder, the Company shall, within three (3) Business Days after the Holder’s request and in the Holder’s discretion,
either (i) pay cash to the Holder in an amount equal to the Holder’s total purchase price (including brokerage commissions
and other out-of-pocket expenses, if any) for the shares of Common Stock so purchased (including, without limitation, by any other
Person in respect, or on behalf, of the Holder) (the “Buy-In Price”), at which point the Company’s obligation
to so issue and deliver such certificate (and to issue such shares of Common Stock) or credit the balance account of such Holder
or such Holder’s designee, as applicable, with DTC for the number of Warrant Shares to which the Holder is entitled upon
the Holder’s exercise hereunder (as the case may be) (and to issue such Warrant Shares) shall terminate, or (ii) promptly
honor its obligation to so issue and deliver to the Holder a certificate or certificates representing such Warrant Shares or credit
the balance account of such Holder or such Holder’s designee, as applicable, with DTC for the number of Warrant Shares to
which the Holder is entitled upon the Holder’s exercise hereunder (as the case may be) and pay cash to the Holder in an
amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of Warrant Shares multiplied by (B)
the lowest Closing Sale Price of the Common Stock on any Trading Day during the period commencing on the date of the applicable
Exercise Notice and ending on the date of such issuance and payment under this clause (ii) (the “Buy-In Payment Amount”).
Nothing shall limit the 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 (or to electronically deliver such shares of Common Stock) upon the exercise
of this Warrant as required pursuant to the terms hereof.
(d)
Cashless Exercise. Notwithstanding anything contained herein to the contrary (other than Section 1(f) below), if at the
time of exercise hereof a Registration Statement (as defined in the Registration Rights Agreement (as defined in the Securities
Purchase Agreement)) is not effective (or the prospectus contained therein is not available for use) for the resale by the Holder
of all of the Warrant Shares, then the Holder may, in its sole discretion, exercise this Warrant in whole or in part and, in
lieu of making the cash payment otherwise contemplated to be made to the Company upon such exercise in payment of the Aggregate
Exercise Price, elect instead to receive upon such exercise the “Net Number” of Warrant Shares determined according
to the following formula (a “Cashless Exercise”):
Net
Number = (A x B) - (A x C)
D
For
purposes of the foregoing formula:
A=
the total number of shares with respect to which this Warrant is then being exercised.
B
= the quotient of (x) the sum of the VWAP of the Common Stock of each of the twenty (20) Trading Days ending at the close of
business on the Principal Market immediately prior to the time of exercise as set forth in the applicable Exercise Notice,
divided by (y) twenty (20).
C
= the Exercise Price then in effect for the applicable Warrant Shares at the time of such exercise.
D
= as applicable: (i) the Closing Sale Price of the Common Stock on the Trading Day immediately preceding the date of the applicable
Exercise Notice if such Exercise Notice is (1) both executed and delivered pursuant to Section 1(a) hereof on a day that is not
a Trading Day or (2) both executed and delivered pursuant to Section 1(a) hereof on a Trading Day prior to the opening of “regular
trading hours” (as defined in Rule 600(b)(64) of Regulation NMS promulgated under the federal securities laws) on such Trading
Day, (ii) the Bid Price of the Common Stock as of the time of the Holder’s execution of the applicable Exercise Notice if
such Exercise Notice is executed during “regular trading hours” on a Trading Day and is delivered within two (2) hours
thereafter pursuant to Section 1(a) hereof, or (iii) the Closing Sale Price of the Common Stock on the date of the applicable
Exercise Notice if the date of such Exercise Notice is a Trading Day and such Exercise Notice is both executed and delivered pursuant
to Section 1(a) hereof after the close of “regular trading hours” on such Trading Day.
For
purposes of Rule 144(d) promulgated under the 1933 Act, as in effect on the Subscription Date, it is intended that the Warrant
Shares issued in a Cashless Exercise shall be deemed to have been acquired by the Holder, and the holding period for the Warrant
Shares shall be deemed to have commenced, on the date this Warrant was originally issued pursuant to the Securities Purchase Agreement.
(e)
Disputes. In the case of a dispute as to the determination of the Exercise Price or the arithmetic calculation of the number
of Warrant Shares to be issued pursuant to the terms hereof, the Company shall promptly issue to the Holder the number of Warrant
Shares that are not disputed and resolve such dispute in accordance with Section 13.
(f)
Limitations on Exercises. The Company shall not effect the exercise of any portion of this Warrant, and the Holder shall
not have the right to exercise any portion of this Warrant, pursuant to the terms and conditions of this Warrant and any such
exercise shall be null and void and treated as if never made, to the extent that after giving effect to such exercise, the Holder
together with the other Attribution Parties collectively would beneficially own in excess of 9.99% (the “Maximum Percentage”)
of the shares of Common Stock outstanding immediately after giving effect to such exercise. For purposes of the foregoing sentence,
the aggregate number of shares of Common Stock beneficially owned by the Holder and the other Attribution Parties shall include
the number of shares of Common Stock held by the Holder and all other Attribution Parties plus the number of shares of Common
Stock issuable upon exercise of this Warrant with respect to which the determination of such sentence is being made, but shall
exclude shares of Common Stock which would be issuable upon (A) exercise of the remaining, unexercised portion of this Warrant
beneficially owned by the Holder or any of the other Attribution Parties and (B) exercise or conversion of the unexercised or
unconverted portion of any other securities of the Company (including, without limitation, any convertible notes or convertible
preferred stock or warrants, including other SPA Warrants) beneficially owned by the Holder or any other Attribution Party subject
to a limitation on conversion or exercise analogous to the limitation contained in this Section 1(f)(i). For purposes of this
Section 1(f)(i), beneficial ownership shall be calculated in accordance with Section 13(d) of the 1934 Act. For purposes of determining
the number of outstanding shares of Common Stock the Holder may acquire upon the exercise of this Warrant without exceeding the
Maximum Percentage, the Holder may rely on the number of outstanding shares of Common Stock as reflected in (x) the Company’s
most recent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K or other public filing with
the SEC, as the case may be, (y) a more recent public announcement by the Company or (z) any other written notice by the Company
or the Transfer Agent, if any, setting forth the number of shares of Common Stock outstanding (the “Reported Outstanding
Share Number”). If the Company receives an Exercise Notice from the Holder at a time when the actual number of outstanding
shares of Common Stock is less than the Reported Outstanding Share Number, the Company shall (i) notify the Holder in writing
of the number of shares of Common Stock then outstanding and, to the extent that such Exercise Notice would otherwise cause the
Holder’s beneficial ownership, as determined pursuant to this Section 1(f)(i), to exceed the Maximum Percentage, the Holder
must notify the Company of a reduced number of Warrant Shares to be acquired pursuant to such Exercise Notice (the number of shares
by which such purchase is reduced, the “Reduction Shares”) and (ii) as soon as reasonably practicable, the
Company shall return to the Holder any exercise price paid by the Holder for the Reduction Shares. For any reason at any time,
upon the written or oral request of the Holder, the Company shall within one (1) Business Day confirm orally and in writing or
by electronic mail 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 and any other Attribution Party since the date as of which the Reported Outstanding Share Number was
reported. In the event that the issuance of shares of Common Stock to the Holder upon exercise of this Warrant results in the
Holder and the other Attribution Parties being deemed to beneficially own, in the aggregate, more than the Maximum Percentage
of the number of outstanding shares of Common Stock (as determined under Section 13(d) of the 1934 Act), the number of shares
so issued by which the Holder’s and the other Attribution Parties’ aggregate beneficial ownership exceeds the Maximum
Percentage (the “Excess Shares”) shall be deemed null and void and shall be cancelled ab initio, and the Holder
shall not have the power to vote or to transfer the Excess Shares. As soon as reasonably practicable after the issuance of the
Excess Shares has been deemed null and void, the Company shall return to the Holder the exercise price paid by the Holder for
the Excess Shares. Upon delivery of a written notice to the Company, the Holder may from time to time increase (with such increase
not effective until the sixty-first (61st) day after delivery of such notice) or decrease the Maximum Percentage to any other
percentage not in excess of 9.99% as specified in such notice; provided that (i) any such increase in the Maximum Percentage will
not be effective until the sixty-first (61st) day after such notice is delivered to the Company and (ii) any such increase or
decrease will apply only to the Holder and the other Attribution Parties and not to any other holder of SPA Warrants that is not
an Attribution Party of the Holder. For purposes of clarity, the shares of Common Stock issuable pursuant to the terms of this
Warrant in excess of the Maximum Percentage shall not be deemed to be beneficially owned by the Holder for any purpose including
for purposes of Section 13(d) or Rule 16a-1(a)(1) of the 1934 Act. No prior inability to exercise this Warrant pursuant to this
paragraph shall have any effect on the applicability of the provisions of this paragraph with respect to any subsequent determination
of exercisability. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity
with the terms of this Section 1(f)(i) to the extent necessary to correct this paragraph or any portion of this paragraph which
may be defective or inconsistent with the intended beneficial ownership limitation contained in this Section 1(f)(i) or to make
changes or supplements necessary or desirable to properly give effect to such limitation. The limitation contained in this paragraph
may not be waived and shall apply to a successor holder of this Warrant.
(g)
Reservation of Shares.
(i) Required
Reserve Amount. So long as this Warrant remains outstanding, the Company shall at all times keep reserved for issuance under
this Warrant a number of shares of Common Stock at least equal to (i) if prior to the first Business Day after the
Stockholder Approval Date (as defined in the Securities Purchase Agreement), 50% or (ii) if on or after the first Business
Day after the Stockholder Approval Date, 200%, in each case, of the maximum number of shares of Common Stock as shall be
necessary to satisfy the Company’s obligation to issue shares of Common Stock under the SPA Warrants then outstanding
(without regard to any limitations on exercise) (the “Required Reserve Amount”); provided that at no
time shall the number of shares of Common Stock reserved pursuant to this Section 1(g)(i) be reduced other than
proportionally in connection with any exercise or redemption of SPA Warrants or such other event covered by Section 2(a)
below. The Required Reserve Amount (including, without limitation, each increase in the number of shares so reserved) shall
be allocated pro rata among the holders of the SPA Warrants based on number of shares of Common Stock issuable upon
exercise of SPA Warrants held by each holder on the Closing Date (without regard to any limitations on exercise) or increase
in the number of reserved shares, as the case may be (the “Authorized Share Allocation”). In the event
that a holder shall sell or otherwise transfer any of such holder’s SPA Warrants, each transferee shall be allocated a
pro rata portion of such holder’s Authorized Share Allocation. Any shares of Common Stock reserved and allocated to any
Person which ceases to hold any SPA Warrants shall be allocated to the remaining holders of SPA Warrants, pro rata based on
the number of shares of Common Stock issuable upon exercise of the SPA Warrants then held by such holders (without regard to
any limitations on exercise).
(ii)
Insufficient Authorized Shares. If, notwithstanding Section 1(g)(i) above, and not in limitation thereof, at any time while
any of the SPA Warrants remain outstanding, the Company does not have a sufficient number of authorized and unreserved shares
of Common Stock to satisfy its obligation to reserve the Required Reserve Amount (an “Authorized Share Failure”),
then the Company shall immediately take all action necessary to increase the Company’s authorized shares of Common Stock
to an amount sufficient to allow the Company to reserve the Required Reserve Amount for all the SPA Warrants then outstanding.
Without limiting the generality of the foregoing sentence, as soon as practicable after the date of the occurrence of an Authorized
Share Failure, but in no event later than ninety (90) days after the occurrence of such Authorized Share Failure, the Company
shall hold a meeting of its stockholders for the approval of an increase in the number of authorized shares of Common Stock.
In connection with such meeting, the Company shall provide each stockholder with a proxy statement and shall use its best efforts
to solicit its stockholders’ approval of such increase in authorized shares of Common Stock and to cause its board of directors
to recommend to the stockholders that they approve such proposal. In the event that the Company is prohibited from issuing shares
of Common Stock upon an exercise of this Warrant due to the failure by the Company to have sufficient shares of Common Stock available
out of the authorized but unissued shares of Common Stock (such unavailable number of shares of Common Stock, the “Authorization
Failure Shares”), in lieu of delivering such Authorization Failure Shares to the Holder, the Company shall pay cash
in exchange for the cancellation of such portion of this Warrant exercisable into such Authorized Failure Shares at a price equal
to the sum of (i) the product of (x) such number of Authorization Failure Shares and (y) the greatest Closing Sale Price of the
Common Stock on any Trading Day during the period commencing on the date the Holder delivers the applicable Exercise Notice with
respect to such Authorization Failure Shares to the Company and ending on the date of such issuance and payment under this Section
1(g); and (ii) to the extent the Holder purchases (in an open market transaction or otherwise) shares of Common Stock to deliver
in satisfaction of a sale by the Holder of Authorization Failure Shares, any Buy-In Payment Amount, brokerage commissions and
other out-of-pocket expenses, if any, of the Holder incurred in connection therewith. Nothing contained in this Section 1(g) shall
limit any obligations of the Company under any provision of the Securities Purchase Agreement.
(h)
Right of Alternate Exercise.
(i)
Eligibility for an Alternate Exercise. Notwithstanding anything herein to the contrary, at any time after the occurrence
of an Event of Default (as defined in the Notes) under the Notes (assuming, for such purpose, that the Notes remain outstanding
as of such time of determination and regardless of whether such Event of Default has been cured or if the Holder has delivered
an Event of Default Redemption Notice (as defined in the Notes) to the Company) (each, an “Alternate Exercise Eligibility
Date”), the Company shall within one (1) Business Day deliver written notice thereof via facsimile and overnight courier
(with next day delivery specified) (each, an “Alternate Exercise Eligibility Notice”) to the Holder.
(ii)
Alternate Exercise Mechanics. At any time after the occurrence of any Alternate Exercise Eligibility Date, the Holder may,
at such Holder’s option, exercise (each, a “Alternate Exercise”) all, or any part of, this Warrant (such
portion of this Warrant being exercised, the “Alternate Exercise Amount”) into Common Stock at the Alternate
Exercise Price (with “Alternate Exercise Price” replacing “Exercise Price” for all purposes hereunder
with respect to such Alternate Exercise) by designating in the Exercise Notice delivered pursuant to Section 1(a) that the Holder
is electing to use the Alternate Exercise Price for such Exercise. Notwithstanding anything to the contrary in this Section 1(h),
but subject to Section Error! Reference source not found., until the Company delivers Common Stock representing the Alternate
Exercise Amount to the Holder, such Alternate Exercise Amount may be exercised by the Holder into Common Stock pursuant to Section
1(a) without regard to this Section 1(h).
2. ADJUSTMENT
OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES. The Exercise Price and number of Warrant Shares issuable upon exercise of
this Warrant are subject to adjustment from time to time as set forth in this Section 2.
(a)
Stock Dividends and Splits. Without limiting any provision of Section 2(b) or Section 4, if the Company, at any time on
or after the Subscription Date, (i) pays a stock dividend on one or more classes of its then outstanding shares of Common Stock
or otherwise makes a distribution on any class of capital stock that is payable in shares of Common Stock, (ii) subdivides (by
any stock split, stock dividend, recapitalization or otherwise) one or more classes of its then outstanding shares of Common Stock
into a larger number of shares or (iii) combines (by combination, reverse stock split or otherwise) one or more classes of its
then outstanding shares of Common Stock into a smaller number of shares, then in each such case the Exercise Price shall be multiplied
by a fraction of which the numerator shall be the number of shares of Common Stock outstanding immediately before such event and
of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event. Any adjustment
made pursuant to clause (i) of this paragraph shall become effective immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution, and any adjustment pursuant to clause (ii) or (iii) of this paragraph
shall become effective immediately after the effective date of such subdivision or combination. If any event requiring an adjustment
under this paragraph occurs during the period that an Exercise Price is calculated hereunder, then the calculation of such Exercise
Price shall be adjusted appropriately to reflect such event.
(b)
Adjustment Upon Issuance of Shares of Common Stock. If and whenever on or after the Subscription Date, the Company issues
or sells, or in accordance with this Section 2 is deemed to have issued or sold, any shares of Common Stock (including the
issuance or sale of shares of Common Stock owned or held by or for the account of the Company, but excluding any Excluded Securities
issued or sold or deemed to have been issued or sold) for a consideration per share (the “New Issuance Price”)
less than a price equal to the 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 New Issuance Price. For all purposes of the foregoing (including, without limitation, determining the adjusted
Exercise Price and the New Issuance Price under this Section 2(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 2(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 2(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 2(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. 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 conversion or exercise prices, as applicable, in connection with an event referred
to in Section 2(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 2(b)(iii), if the terms of any Option or Convertible Security that was outstanding
as of the Subscription 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 2(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 and/or Convertible Security and/or Adjustment Right is issued in connection
with the issuance or sale or deemed issuance or sale of any other securities of the Company (as determined by the Holder, the
“Primary Security”, and such Option and/or Convertible Security and/or Adjustment Right, the “Secondary
Securities”), together comprising one integrated transaction, (or one or more transactions if such issuances or sales
or deemed issuances or sales of securities of the Company either (A) have at least one investor or purchaser in common, (B) are
consummated in reasonable proximity to each other and/or (C) are consummated under the same plan of financing) the aggregate consideration
per share of Common Stock with respect to such Primary Security shall be deemed to be equal to the difference of (x) the lowest
price per share for which one share of Common Stock was issued (or was deemed to be issued pursuant to Section 2(b)(i) or 2(b)(ii)
above, as applicable) in such integrated transaction solely with respect to such Primary Security, minus (y) with respect to such
Secondary Securities, the sum of (I) the Black Scholes Consideration Value of each such Option, if any, (II) the fair market value
(as determined by the Holde in good faith) or the Black Scholes Consideration Value, as applicable, of such Adjustment Right,
if any, and (III) the fair market value (as determined by the Holder) of such Convertible Security, if any, in each case, as determined
on a per share basis in accordance with this Section 2(b)(iv). 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 (for the purpose of determining
the consideration paid for such Common Stock, Option or Convertible Security, but not for the purpose of the calculation of the
Black Scholes Consideration Value) 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 (for the purpose of determining the consideration paid for such Common Stock, Option
or Convertible Security, but not for the purpose of the calculation of the Black Scholes Consideration Value) 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 (5) 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 (for the purpose of determining the consideration paid for such Common Stock, Option
or Convertible Security, but not for the purpose of the calculation of the Black Scholes Consideration Value) will be deemed to
be the fair value of such portion of the net assets and business of the non-surviving entity as is attributable to such shares
of Common Stock, Options or Convertible Securities (as the case may be). The fair value of any consideration other than cash or
publicly traded securities will be determined jointly by the Company and the Holder. If such parties are unable to reach agreement
within ten (10) days after the occurrence of an event requiring valuation (the “Valuation Event”), the fair
value of such consideration will be determined within five (5) Trading Days after the tenth (10th) day following such Valuation
Event by an independent, reputable appraiser jointly selected by the Company and the Holder. The determination of such appraiser
shall be final and binding upon all parties absent manifest error and the fees and expenses of such appraiser shall be borne by
the Company.
(v)
Record Date. If the Company takes a record of the holders of shares of Common Stock for the purpose of entitling them (A)
to receive a dividend or other distribution payable in shares of Common Stock, Options or in Convertible Securities or (B) to
subscribe for or purchase shares of Common Stock, Options or Convertible Securities, then such record date will be deemed to be
the date of the 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).
(c)
Number of Warrant Shares. Simultaneously with any adjustment to the Exercise Price pursuant to this Section 2, the number
of Warrant Shares that may be purchased upon exercise of this Warrant shall be increased or decreased proportionately, so that
after such adjustment the aggregate Exercise Price payable hereunder for the adjusted number of Warrant Shares shall be the same
as the aggregate Exercise Price in effect immediately prior to such adjustment (without regard to any limitations on exercise
contained herein). Upon any Investor Optional Set-Off (as defined in the Investor Note (as defined in the Securities Purchase
Agreement)), the number of Warrant Shares that may be purchased upon exercise of this Warrant shall automatically be decreased
by such aggregate number of Warrant Shares (but in no event to an aggregate number of Warrant Shares less than zero) equal to
the product of (x) the number of shares of Common Stock initially issuable upon exercise of this Warrant as of the initial Issuance
Date (as adjusted for stock splits, stock dividends, recapitalizations and similar events) and (y) the quotient of (A) such portion
of the principal of the Note issued to the Investor that is subject to such Investor Optional Set-Off, divided by (B) the aggregate
initial principal of the Note issued to the Investor as of the initial Issuance Date.
(d)
Holder’s Right of Alternative Exercise Price Following Issuance of Certain Options or Convertible Securities. In
addition to and not in limitation of the other provisions of this Section 2, if the Company in any manner issues or sells or enters
into any agreement to issue or sell, any Common Stock, Options or Convertible Securities (any such securities, “Variable
Price Securities”) after the Subscription Date that are issuable pursuant to such agreement or convertible into or exchangeable
or exercisable for shares of Common Stock at a price which varies or may vary with the market price of the Common Shares, including
by way of one or more reset(s) to a fixed price, but exclusive of such formulations reflecting customary anti-dilution provisions
(such as share splits, share combinations, share dividends and similar transactions) (each of the formulations for such variable
price being herein referred to as, the “Variable Price”), the Company shall provide written notice thereof
via facsimile and overnight courier to the Holder on the date of such agreement and the issuance of such Convertible Securities
or Options. From and after the date the Company enters into such agreement or issues any such Variable Price Securities, the Holder
shall have the right, but not the obligation, in its sole discretion to substitute the Variable Price for the Exercise Price upon
exercise of this Warrant by designating in the Exercise Notice delivered upon any exercise of this Warrant that solely for purposes
of such exercise the Holder is relying on the Variable Price rather than the Exercise Price then in effect. The Holder’s
election to rely on a Variable Price for a particular exercise of this Warrant shall not obligate the Holder to rely on a Variable
Price for any future exercises of this Warrant.
(e)
Stock Combination Event Adjustment. If at any time and from time to time on or after the Issuance Date there occurs
any stock split, stock dividend, stock combination recapitalization or other similar transaction involving the Common Stock (each,
a “Stock Combination Event”, and such date thereof, the “Stock Combination Event Date”)
and the Event Market Price is less than the Exercise Price then in effect (after giving effect to the adjustment in clause (b)
above), then on the sixteenth (16th) Trading Day immediately following such Stock Combination Event, the Exercise Price then in
effect on such sixteenth (16th) Trading Day (after giving effect to the adjustment in clause (b) above) shall be reduced (but
in no event increased) to the Event Market Price. For the avoidance of doubt, if the adjustment in the immediately preceding sentence
would otherwise result in an increase in the Exercise Price hereunder, no adjustment shall be made.
(f)
Other Events. In the event that the Company (or any Subsidiary (as defined in the Securities Purchase Agreement)) shall
take any action to which the provisions hereof are not strictly applicable, or, if applicable, would not operate to protect the
Holder from dilution or if any event occurs of the type contemplated by the provisions of this Section 2 but not expressly provided
for by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other
rights with equity features), then the Company’s board of directors shall in good faith determine and implement an appropriate
adjustment in the Exercise Price and the number of Warrant Shares (if applicable) so as to protect the rights of the Holder, provided
that no such adjustment pursuant to this Section 2(e) will increase the Exercise Price or decrease the number of Warrant Shares
as otherwise determined pursuant to this Section 2, provided further that if the Holder does not accept such adjustments as appropriately
protecting its interests hereunder against such dilution, then the Company’s board of directors and the Holder shall agree,
in good faith, upon an independent investment bank of nationally recognized standing to make such appropriate adjustments, whose
determination shall be final and binding absent manifest error and whose fees and expenses shall be borne by the Company.
(g)
Calculations. All calculations under this Section 2 shall be made by rounding to the nearest cent or the nearest 1/100th
of a share, as applicable. The number of shares of Common Stock outstanding at any given time shall not include shares owned or
held by or for the account of the Company, and the disposition of any such shares shall be considered an issuance or sale of Common
Stock.
(h)
Voluntary Adjustment By Company. The Company may at any time during the term of this Warrant, with the prior written consent
of the Required Holders (as defined in the Securities Purchase Agreement), reduce the then current Exercise Price to any amount
and for any period of time deemed appropriate by the board of directors of the Company.
3.
RIGHTS UPON DISTRIBUTION OF ASSETS. In addition to any adjustments pursuant to Section 2 above, if the Company shall
declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of
Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or
other securities, property, options, evidence of indebtedness or any other assets by way of a dividend, spin off,
reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a
“Distribution”), at any time after the issuance of this Warrant, then, in each such case, the Holder shall
be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the
Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any
limitations or restrictions on exercise of this Warrant, including without limitation, the Maximum Percentage) immediately
before the date on which a record is taken for such Distribution, or, if no such record is taken, the date as of which the
record holders of shares of Common Stock are to be determined for the participation in such Distribution (provided, however,
that to the extent that the Holder’s right to participate in any such Distribution would result in the Holder and the
other Attribution Parties exceeding the Maximum Percentage, then the Holder shall not be entitled to participate in such
Distribution to such extent (and shall not be entitled to beneficial ownership of such shares of Common Stock as a result of
such Distribution (and beneficial ownership) to such extent) and the portion of such Distribution shall be held in
abeyance for the benefit of the Holder until such time or times, if ever, as its right thereto would not result in the Holder
and the other Attribution Parties exceeding the Maximum Percentage, at which time or times the Holder shall be granted such
Distribution (and any Distributions declared or made on such initial Distribution or on any subsequent Distribution held
similarly in abeyance) to the same extent as if there had been no such limitation).
4.
PURCHASE RIGHTS; FUNDAMENTAL TRANSACTIONS.
(a)
Purchase Rights. In addition to any adjustments pursuant to Section 2 above, if at any time the Company grants, issues
or sells any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property pro rata to the
record holders of any class of Common Stock (the “Purchase Rights”), then the Holder will be entitled
to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired
if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard
to any limitations or restrictions on exercise of this Warrant, including without limitation, the Maximum Percentage) 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, issuance or sale of such
Purchase Rights (provided, however, that to the extent that the Holder’s right to participate in any such Purchase Right
would result in the Holder and the other Attribution Parties exceeding the Maximum Percentage, then the Holder shall not be entitled
to participate in such Purchase Right to such extent (and shall not be entitled to beneficial ownership of such shares of Common
Stock as a result of such Purchase Right (and beneficial ownership) to such extent) and such Purchase Right to such extent shall
be held in abeyance for the benefit of the Holder until such time or times, if ever, as its right thereto would not result in
the Holder and the other Attribution Parties exceeding the Maximum Percentage, at which time or times the Holder shall be granted
such right (and any Purchase Right granted, issued or sold on such initial Purchase Right or on any subsequent Purchase Right
held similarly in abeyance) to the same extent as if there had been no such limitation).
(b)
Fundamental Transactions. The Company shall not enter into or be party to a Fundamental Transaction unless (i) the Successor
Entity assumes in writing all of the obligations of the Company under this Warrant and the other Transaction Documents (as defined
in the Securities Purchase Agreement) in accordance with the provisions of this Section 4(b) pursuant to written agreements in
form and substance satisfactory to the Holder and approved by the Holder prior to such Fundamental Transaction, including agreements
to deliver to 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, including, without limitation, which is exercisable for a corresponding number
of shares of capital stock equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant (without
regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction, 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 adjustments to the
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 (ii) the Successor Entity (including its Parent Entity)
is a publicly traded corporation whose common stock is quoted on or listed for trading on an Eligible Market. Upon the consummation
of each Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date
of the applicable 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. Upon consummation of each Fundamental Transaction, the Successor
Entity shall deliver to the Holder confirmation that there shall be issued upon exercise of this Warrant at any time after the
consummation of the applicable Fundamental Transaction, in lieu of the shares of Common Stock (or other securities, cash, assets
or other property (except such items still issuable under Sections 3 and 4(a) above, which shall continue to be receivable thereafter))
issuable upon the exercise of this Warrant prior to the applicable Fundamental Transaction, such shares of publicly traded common
stock (or its equivalent) of the Successor Entity (including its Parent Entity) which the Holder would have been entitled to receive
upon the happening of the applicable Fundamental Transaction had this Warrant been exercised immediately prior to the applicable
Fundamental Transaction (without regard to any limitations on the exercise of this Warrant), as adjusted in accordance with the
provisions of this Warrant. Notwithstanding the foregoing, and without limiting Section 1(f) hereof, the Holder may elect, at
its sole option, by delivery of written notice to the Company to waive this Section 4(b) to permit the Fundamental Transaction
without the assumption of this Warrant. In addition to and not in substitution for any other rights hereunder, prior to the consummation
of each Fundamental Transaction pursuant to which holders of shares of Common Stock are entitled to receive securities or other
assets with respect to or in exchange for shares of Common Stock (a “Corporate Event”), the Company shall make
appropriate provision to insure that the Holder will thereafter have the right to receive upon an exercise of this Warrant at
any time after the consummation of the applicable Fundamental Transaction but prior to the Expiration Date, in lieu of the shares
of the Common Stock (or other securities, cash, assets or other property (except such items still issuable under Sections 3 and
4(a) above, which shall continue to be receivable thereafter)) issuable upon the exercise of the Warrant prior to such Fundamental
Transaction, such shares of stock, securities, cash, assets or any other property whatsoever (including warrants or other purchase
or subscription rights) which the Holder would have been entitled to receive upon the happening of the applicable Fundamental
Transaction had this Warrant been exercised immediately prior to the applicable Fundamental Transaction (without regard to any
limitations on the exercise of this Warrant). Provision made pursuant to the preceding sentence shall be in a form and substance
reasonably satisfactory to the Holder.
(c)
Black Scholes Value.
(i)
Fundamental Transaction Redemption. Notwithstanding the foregoing and the provisions of Section 4(b) above, at the request
of the Holder delivered at any time commencing on the earliest to occur of (x) the public disclosure of any Fundamental Transaction,
(y) the consummation of any Fundamental Transaction and (z) the Holder first becoming aware of any Fundamental Transaction through
the date that is ninety (90) days after the public disclosure of the consummation of such Fundamental Transaction by the Company
pursuant to a Current Report on Form 8-K filed with the SEC, the Company or the Successor Entity (as the case may be) shall purchase
this Warrant from the Holder on the date of such request by paying to the Holder cash in an amount equal to the Black Scholes
Value.
(ii)
Event of Default Redemption. Notwithstanding the foregoing and the provisions of Section 4(b) above, at the request of
the Holder delivered at any time after the occurrence of an Event of Default (as defined in the Notes)(assuming for such purpose
that the Notes remain outstanding), the Company or the Successor Entity (as the case may be) shall purchase this Warrant from
the Holder on the date of such request by paying to the Holder cash in an amount equal to the Event of Default Black Scholes Value.
(d)
Application. The provisions of this Section 4 shall apply similarly and equally to successive Fundamental Transactions
and Corporate Events and shall be applied as if this Warrant (and any such subsequent warrants) were fully exercisable and without
regard to any limitations on the exercise of this Warrant (provided that the Holder shall continue to be entitled to the benefit
of the Maximum Percentage, applied however with respect to shares of capital stock registered under the 1934 Act and thereafter
receivable upon exercise of this Warrant (or any such other warrant)).
5.
NONCIRCUMVENTION. The Company hereby covenants and agrees that the Company will not, by amendment of its Certificate of
Incorporation (as defined in the Securities Purchase Agreement), Bylaws (as defined in the Securities Purchase Agreement) or through
any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issuance or sale of securities,
or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, and will
at all times in good faith carry out all the provisions of this Warrant and take all action as may be required to protect the
rights of the Holder. Without limiting the generality of the foregoing, the Company (a) shall not increase the par value of any
shares of Common Stock receivable upon the exercise of this Warrant above the Exercise Price then in effect, and (b) shall take
all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and non-assessable
shares of Common Stock upon the exercise of this Warrant. Notwithstanding anything herein to the contrary, if after the sixty
(60) calendar day anniversary of the Issuance Date, the Holder is not permitted to exercise this Warrant in full for any reason
(other than pursuant to restrictions set forth in Section 1(f) hereof), the Company shall use its best efforts to promptly remedy
such failure, including, without limitation, obtaining such consents or approvals as necessary to permit such exercise into shares
of Common Stock.
6. WARRANT
HOLDER NOT DEEMED A STOCKHOLDER. Except as otherwise specifically provided herein, the Holder, solely in its capacity as
a holder of this Warrant, shall not be entitled to vote or receive dividends or be deemed the holder of share capital of the
Company for any purpose, nor shall anything contained in this Warrant be construed to confer upon the Holder, solely in its
capacity as the Holder of this Warrant, any of the rights of a stockholder of the Company or any right to vote, give or
withhold consent to any corporate action (whether any reorganization, issue of stock, reclassification of stock,
consolidation, merger, conveyance or otherwise), receive notice of meetings, receive dividends or subscription rights, or
otherwise, prior to the issuance to the Holder of the Warrant Shares which it is then entitled to receive upon the due
exercise of this Warrant. In addition, nothing contained in this Warrant shall be construed as imposing any liabilities on
the Holder to purchase any securities (upon exercise of this Warrant or otherwise) or as a stockholder of the Company,
whether such liabilities are asserted by the Company or by creditors of the Company. Notwithstanding this Section 6, the
Company shall provide the Holder with copies of the same notices and other information given to the stockholders of the
Company generally, contemporaneously with the giving thereof to the stockholders.
7.
REISSUANCE OF WARRANTS.
(a)
Transfer of Warrant. If this Warrant is to be transferred, the Holder shall surrender this Warrant to the Company, whereupon
the Company will forthwith issue and deliver upon the order of the Holder a new Warrant (in accordance with Section 7(d)), registered
as the Holder may request, representing the right to purchase the number of Warrant Shares being transferred by the Holder and,
if less than the total number of Warrant Shares then underlying this Warrant is being transferred, a new Warrant (in accordance
with Section 7(d)) to the Holder representing the right to purchase the number of Warrant Shares not being transferred.
(b)
Lost, Stolen or Mutilated Warrant. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the
loss, theft, destruction or mutilation of this Warrant (as to which a written certification and the indemnification contemplated
below shall suffice as such evidence), and, in the case of loss, theft or destruction, of any indemnification undertaking by the
Holder to the Company in customary and reasonable form and, in the case of mutilation, upon surrender and cancellation of this
Warrant, the Company shall execute and deliver to the Holder a new Warrant (in accordance with Section 7(d)) representing the
right to purchase the Warrant Shares then underlying this Warrant.
(c)
Exchangeable for Multiple Warrants. This Warrant is exchangeable, upon the surrender hereof by the Holder at the principal
office of the Company, for a new Warrant or Warrants (in accordance with Section 7(d)) representing in the aggregate the right
to purchase the number of Warrant Shares then underlying this Warrant, and each such new Warrant will represent the right to purchase
such portion of such Warrant Shares as is designated by the Holder at the time of such surrender; provided, however, no warrants
for fractional shares of Common Stock shall be given.
(d)
Issuance of New Warrants. Whenever the Company is required to issue a new Warrant pursuant to the terms of this Warrant,
such new Warrant (i) shall be of like tenor with this Warrant, (ii) shall represent, as indicated on the face of such new Warrant,
the right to purchase the Warrant Shares then underlying this Warrant (or in the case of a new Warrant being issued pursuant to
Section 7(a) or Section 7(c), the Warrant Shares designated by the Holder which, when added to the number of shares of Common
Stock underlying the other new Warrants issued in connection with such issuance, does not exceed the number of Warrant Shares
then underlying this Warrant), (iii) shall have an issuance date, as indicated on the face of such new Warrant which is the same
as the Issuance Date, and (iv) shall have the same rights and conditions as this Warrant.
8.
NOTICES. Whenever notice is required to be given under this Warrant, unless otherwise provided herein, such notice shall
be given in accordance with Section 9(f) of the Securities Purchase Agreement. The Company shall provide the Holder with prompt
written notice of all actions taken pursuant to this Warrant (other than the issuance of shares of Common Stock upon exercise
in accordance with the terms hereof), including in reasonable detail a description of such action and the reason therefor. Without
limiting the generality of the foregoing, the Company will give written notice to the Holder (i) immediately upon each adjustment
of the Exercise Price and the number of Warrant Shares, setting forth in reasonable detail, and certifying, the calculation of
such adjustment(s), (ii) at least fifteen (15) days prior to the date on which the Company closes its books or takes a record
(A) with respect to any dividend or distribution upon the shares of Common Stock, (B) with respect to any grants, issuances or
sales of any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property to holders of
shares of Common Stock or (C) for determining rights to vote with respect to any Fundamental Transaction, dissolution or liquidation,
provided in each case that such information shall be made known to the public prior to or in conjunction with such notice being
provided to the Holder, (iii) at least ten (10) Trading Days prior to the consummation of any Fundamental Transaction and (iv)
within one (1) Business Day of the occurrence of an Event of Default (as defined in the Notes), setting forth in reasonable detail
any material events with respect to such Event of Default and any efforts by the Company to cure such Event of Default. To the
extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or
any of its Subsidiaries, the Company shall simultaneously file such notice with the SEC (as defined in the Securities Purchase
Agreement) pursuant to a Current Report on Form 8-K. It is expressly understood and agreed that the time of execution specified
by the Holder in each Exercise Notice shall be definitive and may not be disputed or challenged by the Company.
9.
AMENDMENT AND WAIVER. Except as otherwise provided herein, the provisions of this Warrant (other than Section 1(f)) may
be amended and the Company may take any action herein prohibited, or omit to perform any act herein required to be performed by
it, only if the Company has obtained the written consent of the Holder. No waiver shall be effective unless it is in writing and
signed by an authorized representative of the waiving party.
10.
SEVERABILITY. If any provision of this Warrant is prohibited by law or otherwise determined to be invalid or unenforceable
by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed
amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such
provision shall not affect the validity of the remaining provisions of this Warrant so long as this Warrant as so modified continues
to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited
nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations
or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the
parties. The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s)
with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable
provision(s).
11. GOVERNING
LAW. This Warrant shall be governed by and construed and enforced in accordance with, and all questions concerning the construction,
validity, interpretation and performance of this Warrant shall be governed by, the internal laws of the State of New York, without
giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than the State of New York. The Company hereby irrevocably
waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy
thereof to the Company at the address set forth in Section 9(f) of the Securities Purchase Agreement and agrees that such service
shall constitute good and sufficient service of process and notice thereof. The Company hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in The City of New York, Borough of Manhattan, for the adjudication of any
dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction
of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action
or proceeding is improper. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner
permitted by law. Nothing contained herein shall be deemed or operate to preclude the Holder from bringing suit or taking other
legal action against the Company in any other jurisdiction to collect on the Company’s obligations to the Holder, to realize
on any collateral or any other security for such obligations, or to enforce a judgment or other court ruling in favor of the Holder.
THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION
OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS WARRANT OR ANY TRANSACTION CONTEMPLATED HEREBY.
12. CONSTRUCTION;
HEADINGS. This Warrant shall be deemed to be jointly drafted by the Company and the Holder and shall not be construed against
any Person as the drafter hereof. The headings of this Warrant are for convenience of reference and shall not form part of, or
affect the interpretation of, this Warrant. Terms used in this Warrant but defined in the other Transaction Documents shall have
the meanings ascribed to such terms on the Closing Date (as defined in the Securities Purchase Agreement) in such other Transaction
Documents unless otherwise consented to in writing by the Holder.
13 .DISPUTE
RESOLUTION.
(a)
Submission to Dispute Resolution.
(i)
In the case of a dispute relating to the Exercise Price, the Closing Sale Price, the Bid Price, Black Scholes Consideration Value,
Event of Default Black Scholes Value, Black Scholes Value or fair market value or the arithmetic calculation of the number of
Warrant Shares (as the case may be) (including, without limitation, a dispute relating to the determination of any of the foregoing),
the Company or the Holder (as the case may be) shall submit the dispute to the other party via facsimile (A) if by the Company,
within two (2) Business Days after the occurrence of the circumstances giving rise to such dispute or (B) if by the Holder, at
any time after the Holder learned of the circumstances giving rise to such dispute. If the Holder and the Company are unable to
promptly resolve such dispute relating to such Exercise Price, such Closing Sale Price, such Bid Price, such Black Scholes Consideration
Value, Event of Default Black Scholes Value, Black Scholes Value or such fair market value or such arithmetic calculation of the
number of Warrant Shares (as the case may be), at any time after the second (2nd) Business Day following such initial notice by
the Company or the Holder (as the case may be) of such dispute to the Company or the Holder (as the case may be), then the Holder
may, at its sole option, select an independent, reputable investment bank to resolve such dispute.
(ii)
The Holder and the Company shall each deliver to such investment bank (A) a copy of the initial dispute submission so delivered
in accordance with the first sentence of this Section 13 and (B) written documentation supporting its position with respect to
such dispute, in each case, no later than 5:00 p.m. (New York time) by the fifth (5th) Business Day immediately following the
date on which the Holder selected such investment bank (the “Dispute Submission Deadline”) (the documents
referred to in the immediately preceding clauses (A) and (B) are collectively referred to herein as the “Required Dispute
Documentation”) (it being understood and agreed that if either the Holder or the Company fails to so deliver all of
the Required Dispute Documentation by the Dispute Submission Deadline, then the party who fails to so submit all of the Required
Dispute Documentation shall no longer be entitled to (and hereby waives its right to) deliver or submit any written documentation
or other support to such investment bank with respect to such dispute and such investment bank shall resolve such dispute based
solely on the Required Dispute Documentation that was delivered to such investment bank prior to the Dispute Submission Deadline).
Unless otherwise agreed to in writing by both the Company and the Holder or otherwise requested by such investment bank, neither
the Company nor the Holder shall be entitled to deliver or submit any written documentation or other support to such investment
bank in connection with such dispute (other than the Required Dispute Documentation).
(iii)
The Company and the Holder shall cause such investment bank to determine the resolution of such dispute and notify the Company
and the Holder of such resolution no later than ten (10) Business Days immediately following the Dispute Submission Deadline.
The fees and expenses of such investment bank shall be borne solely by the Company, and such investment bank’s resolution
of such dispute shall be final and binding upon all parties absent manifest error.
(b)
Miscellaneous. The Company expressly acknowledges and agrees that (i) this Section 13 constitutes an agreement to arbitrate
between the Company and the Holder (and constitutes an arbitration agreement) under the rules then in effect under § 7501,
et seq. of the New York Civil Practice Law and Rules (“CPLR”) and that the Holder is authorized to apply for
an order to compel arbitration pursuant to CPLR § 7503(a) in order to compel compliance with this Section 13, (ii) a dispute
relating to the Exercise Price includes, without limitation, disputes as to (A) whether an issuance or sale or deemed issuance
or sale of Common Stock occurred under Section 2(b), (B) the consideration per share at which an issuance or deemed issuance of
Common Stock occurred, (C) whether any issuance or sale or deemed issuance or sale of Common Stock was an issuance or sale or
deemed issuance or sale of Excluded Securities, (D) whether an agreement, instrument, security or the like constitutes and Option
or Convertible Security and (E) whether a Dilutive Issuance occurred, (iii) the terms of this Warrant and each other applicable
Transaction Document shall serve as the basis for the selected investment bank’s resolution of the applicable dispute, such
investment bank shall be entitled (and is hereby expressly authorized) to make all findings, determinations and the like that
such investment bank determines are required to be made by such investment bank in connection with its resolution of such dispute
(including, without limitation, determining (A) whether an issuance or sale or deemed issuance or sale of Common Stock occurred
under Section 2(b), (B) the consideration per share at which an issuance or deemed issuance of Common Stock occurred, (C) whether
any issuance or sale or deemed issuance or sale of Common Stock was an issuance or sale or deemed issuance or sale of Excluded
Securities, (D) whether an agreement, instrument, security or the like constitutes and Option or Convertible Security and (E)
whether a Dilutive Issuance occurred) and in resolving such dispute such investment bank shall apply such findings, determinations
and the like to the terms of this Warrant and any other applicable Transaction Documents, (iv) the Holder (and only the Holder),
in its sole discretion, shall have the right to submit any dispute described in this Section 13 to any state or federal court
sitting in The City of New York, Borough of Manhattan in lieu of utilizing the procedures set forth in this Section 13 and (v)
nothing in this Section 13 shall limit the Holder from obtaining any injunctive relief or other equitable remedies (including,
without limitation, with respect to any matters described in this Section 13).
14. REMEDIES,
CHARACTERIZATION, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF. The remedies provided in this Warrant shall be cumulative
and in addition to all other remedies available under this Warrant and 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 right of the Holder to pursue
actual and consequential damages for any failure by the Company to comply with the terms of this Warrant. 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, exercises and the like (and the computation thereof) shall be the amounts
to be received by the Holder and shall not, except as expressly provided herein, be subject to any other obligation of the Company
(or the performance thereof). The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable
harm to the Holder and that the remedy at law for any such breach may be inadequate. The Company therefore agrees that, in the
event of any such breach or threatened breach, the holder of this Warrant shall be entitled, in addition to all other available
remedies, to an injunction restraining any breach, without the necessity of showing economic loss and without any bond or other
security being required. 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 Warrant (including, without
limitation, compliance with Section 2 hereof). The issuance of shares and certificates for shares as contemplated hereby upon
the exercise of this Warrant shall be made without charge to the Holder or such shares for any issuance tax or other costs in
respect thereof, provided that the Company shall not be required to pay any tax which may be payable in respect of any transfer
involved in the issuance and delivery of any certificate in a name other than the Holder or its agent on its behalf.
15.
PAYMENT OF COLLECTION, ENFORCEMENT AND OTHER COSTS. If (a) this Warrant is placed in the hands of an attorney for collection
or enforcement or is collected or enforced through any legal proceeding or the holder otherwise takes action to collect amounts
due under this Warrant or to enforce the provisions of this Warrant or (b) there occurs any bankruptcy, reorganization, receivership
of the company or other proceedings affecting company creditors’ rights and involving a claim under this Warrant, then the
Company shall pay the costs incurred by the Holder for such collection, enforcement or action or in connection with such bankruptcy,
reorganization, receivership or other proceeding, including, without limitation, attorneys’ fees and disbursements.
16.
TRANSFER. This Warrant may be offered for sale, sold, transferred or assigned without the consent of the Company, except
as may otherwise be required by Section 2(f) of the Securities Purchase Agreement.
17.
CERTAIN DEFINITIONS. For purposes of this Warrant, the following terms shall have the following meanings:
(a)
“1933 Act” means the Securities Act of 1933, as amended, and the rules and regulations thereunder.
(b)
“1934 Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.
(c)
“Adjustment Right” means any right granted with respect to any securities issued in connection with, or with
respect to, any issuance or sale (or deemed issuance or sale in accordance with Section 2) of shares of Common Stock (other than
rights of the type described in Section 3 and 4 hereof) that could result in a decrease in the net consideration received by the
Company in connection with, or with respect to, such securities (including, without limitation, any cash settlement rights, cash
adjustment or other similar rights).
(d)
“Affiliate” means, with respect to any Person, any other Person that directly or indirectly controls, is controlled
by, or is under common control with, such Person, it being understood for purposes of this definition that “control”
of a Person means the power directly or indirectly either to vote 10% or more of the stock having ordinary voting power for the
election of directors of such Person or direct or cause the direction of the management and policies of such Person whether by
contract or otherwise.
(e)
“Alternate Exercise Price” means, with respect to any Alternate Exercise that price which shall be the lower
of (i) the applicable Exercise Price as in effect on the applicable Exercise Date of the applicable Alternate Exercise and (ii)
80% of the lowest VWAP of the Common Stock during the eight (8) consecutive Trading Day period ending and including the Trading
Day immediately preceding the delivery or deemed delivery of the applicable Exercise Notice (such period, the “Alternate
Exercise Measuring Period”). All such determinations to be appropriately adjusted for any stock dividend, stock split,
stock combination, reclassification or similar transaction that proportionately decreases or increases the Common Stock during
such Alternate Exercise Measuring Period.
(f)
“Approved Stock Plan” means any employee benefit plan which has been approved by the board of directors of
the Company prior to or subsequent to the Subscription Date pursuant to which shares of Common Stock and standard options to purchase
Common Stock may be issued to any consultant, attorney, accountant, employee, officer or director for services provided to the
Company in their capacity as such.
(g)
“Attribution Parties” means, collectively, the following Persons and entities: (i) any investment vehicle,
including, any funds, feeder funds or managed accounts, currently, or from time to time after the Issuance Date, directly or indirectly
managed or advised by the Holder’s investment manager or any of its Affiliates or principals, (ii) any direct or indirect
Affiliates of the Holder or any of the foregoing, (iii) any Person acting or who could be deemed to be acting as a Group together
with the Holder or any of the foregoing and (iv) any other Persons whose beneficial ownership of the Company’s Common Stock
would or could be aggregated with the Holder’s and the other Attribution Parties for purposes of Section 13(d) of the 1934
Act. For clarity, the purpose of the foregoing is to subject collectively the Holder and all other Attribution Parties to the
Maximum Percentage.
(h)
“Bid Price” means, for any security as of the particular time of determination, the bid price for such security
on the Principal Market as reported by Bloomberg as of such time of determination, or, if the Principal Market is not the principal
securities exchange or trading market for such security, the bid price of such security on the principal securities exchange or
trading market where such security is listed or traded as reported by Bloomberg as of such time of determination, or if the foregoing
does not apply, the bid price of such security in the over-the-counter market on the electronic bulletin board for such security
as reported by Bloomberg as of such time of determination, or, if no bid price is reported for such security by Bloomberg as of
such time of determination, the average of the bid prices of any market makers for such security as reported in the “pink
sheets” by OTC Markets Group Inc. (formerly Pink Sheets LLC) as of such time of determination. If the Bid Price cannot be
calculated for a security as of the particular time of determination on any of the foregoing bases, the Bid Price of such security
as of such time of determination shall be the fair market value as mutually determined by the Company and the Holder. If the Company
and the Holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved in accordance
with the procedures in Section 13. All such determinations shall be appropriately adjusted for any stock dividend, stock split,
stock combination or other similar transaction during such period.
(i)
“Black Scholes Consideration Value” means the value of the applicable Option, Convertible Security or Adjustment
Right (as the case may be) as of the date of issuance thereof calculated using the Black Scholes Option Pricing Model obtained
from the “OV” function on Bloomberg utilizing (i) an underlying price per share equal to the Closing Sale Price of
the Common Stock on the Trading Day immediately preceding the public announcement of the execution of definitive documents with
respect to the issuance of such Option or Convertible Security (as the case may be), (ii) a risk-free interest rate corresponding
to the U.S. Treasury rate for a period equal to the remaining term of such Option, Convertible Security or Adjustment Right (as
the case may be) as of the date of issuance of such Option, Convertible Security or Adjustment Right (as the case may be), (iii)
a zero cost of borrow and (iv) an expected volatility equal to the greater of 100% and the 30 day volatility obtained from the
“HVT” function on Bloomberg (determined utilizing a 365 day annualization factor) as of the Trading Day immediately
following the date of issuance of such Option, Convertible Security or Adjustment Right (as the case may be).
(j)
“Black Scholes Value” means the value of the unexercised portion of this Warrant remaining on the date of the
Holder’s request pursuant to Section 4(c)(i), which value is calculated using the Black Scholes Option Pricing Model obtained
from the “OV” function on Bloomberg utilizing (i) an underlying price per share equal to the greater of (1) the highest
Closing Sale Price of the Common Stock during the period beginning on the Trading Day immediately preceding the announcement of
the applicable Fundamental Transaction (or the consummation of the applicable Fundamental Transaction, if earlier) and ending
on the Trading Day of the Holder’s request pursuant to Section 4(c)(i) and (2) the sum of the price per share being offered
in cash in the applicable Fundamental Transaction (if any) plus the value of the non-cash consideration being offered in the applicable
Fundamental Transaction (if any), (ii) a strike price equal to the Exercise Price in effect on the date of the Holder’s
request pursuant to Section 4(c)(i), (iii) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal
to the greater of (1) the remaining term of this Warrant as of the date of the Holder’s request pursuant to Section 4(c)(i)
and (2) the remaining term of this Warrant as of the date of consummation of the applicable Fundamental Transaction or as of the
date of the Holder’s request pursuant to Section 4(c)(i) if such request is prior to the date of the consummation of the
applicable Fundamental Transaction, (iv) a zero cost of borrow and (v) an expected volatility equal to the greater of 100% and
the 30 day volatility obtained from the “HVT” function on Bloomberg (determined utilizing a 365 day annualization
factor) as of the Trading Day immediately following the earliest to occur of (A) the public disclosure of the applicable Fundamental
Transaction, (B) the consummation of the applicable Fundamental Transaction and (C) the date on which the Holder first became
aware of the applicable Fundamental Transaction.
(k)
“Bloomberg” means Bloomberg, L.P.
(l)
“Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City
of New York are authorized or required by law to remain closed.
(m)
“Closing Sale Price” means, for any security as of any date, the last closing trade price for such security
on the Principal Market, as reported by Bloomberg, or, if the Principal Market begins to operate on an extended hours basis and
does not designate the closing trade price, then the last trade price of such security prior to 4:00:00 p.m., New York time, as
reported by Bloomberg, or, if the Principal Market is not the principal securities exchange or trading market for such security,
the last trade price of such security on the principal securities exchange or trading market where such security is listed or
traded as reported by Bloomberg, or if the foregoing does not apply, the last trade price of such security in the over-the-counter
market on the electronic bulletin board for such security as reported by Bloomberg, or, if no last trade price is reported for
such security by Bloomberg, the average of the ask prices of any market makers for such security as reported in the “pink
sheets” by OTC Markets Group Inc. (formerly Pink Sheets LLC). If the Closing Sale Price cannot be calculated for a security
on a particular date on any of the foregoing bases, the Closing Sale Price of such security on such date shall be the fair market
value as mutually determined by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market
value of such security, then such dispute shall be resolved in accordance with the procedures in Section 13. All such determinations
shall be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during such
period.
(n)
“Common Stock” means (i) the Company’s shares of common stock, $0.0001 par value per share, and (ii)
any capital stock into which such common stock shall have been changed or any share capital resulting from a reclassification
of such common stock.
(o)
“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.
(p)
“Eligible Market” means The New York Stock Exchange, the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global
Select Market, the Nasdaq Global Market or the Principal Market.
(q)
“Event Market Price” means, with respect to any Stock Combination Event Date, the quotient determined by dividing
(x) the sum of the VWAP of the Common Stock for each of the five (5) lowest Trading Days during the twenty (20) consecutive Trading
Day period ending and including the Trading Day immediately preceding the sixteenth (16th) Trading Day after such Stock Combination
Event Date, divided by (y) five (5).
(r)
“Event of Default Black Scholes Value” means the value of the unexercised portion of this Warrant remaining
on the date of the Holder’s request pursuant to Section 4(c)(ii), which value is calculated using the Black Scholes Option
Pricing Model obtained from the “OV” function on Bloomberg utilizing (i) an underlying price per share equal to the
highest Closing Sale Price of the Common Stock during the period beginning on the date of the occurrence of the Event of Default
through the date all Events of Default have been cured (assuming for such purpose that the Notes remain outstanding) or, if earlier,
the Trading Day of the Holder’s request pursuant to Section 4(c)(ii), (ii) a strike price equal to the Alternate Exercise
Price in effect on the date of the Holder’s request pursuant to Section 4(c)(ii), (iii) a risk-free interest rate corresponding
to the U.S. Treasury rate for a period equal to the greater of (1) the remaining term of this Warrant as of the date of the Holder’s
request pursuant to Section 4(c)(ii) and (2) the remaining term of this Warrant as of the date of the occurrence of such Event
of Default, (iv) a zero cost of borrow and (v) an expected volatility equal to the greater of 100% and the 30 day volatility obtained
from the “HVT” function on Bloomberg (determined utilizing a 365 day annualization factor) as of the Trading Day immediately
following later of (x) the date of the occurrence of such Event of Default and (y) the date of the public announcement of such
Event of Default.
(s)
“Excluded Securities” means (i) shares of Common Stock or standard options to purchase Common Stock issued
to consultants, attorneys, accountants, directors, officers or employees of the Company for services rendered to the Company in
their capacity as such pursuant to an Approved Stock Plan (as defined above), provided that (A) all such issuances (taking into
account the shares of Common Stock issuable upon exercise of such options) after the Subscription Date pursuant to this clause
(i) do not, in the aggregate, exceed more than 5% of the Common Stock issued and outstanding immediately prior to the Subscription
Date and (B) the exercise price of any such options is not lowered, none of such options are amended to increase the number of
shares issuable thereunder and none of the terms or conditions of any such options are otherwise materially changed in any manner
that adversely affects any of the Buyers; (ii) shares of Common Stock issued upon the conversion or exercise of Convertible Securities
(other than standard options to purchase Common Stock issued pursuant to an Approved Stock Plan that are covered by clause (i)
above) issued prior to the Subscription Date, provided that the conversion price of any such Convertible Securities (other than
standard options to purchase Common Stock issued pursuant to an Approved Stock Plan that are covered by clause (i) above) is not
lowered, none of such Convertible Securities (other than standard options to purchase Common Stock issued pursuant to an Approved
Stock Plan that are covered by clause (i) above) are amended to increase the number of shares issuable thereunder and none of
the terms or conditions of any such Convertible Securities (other than standard options to purchase Common Stock issued pursuant
to an Approved Stock Plan that are covered by clause (i) above) are otherwise materially changed in any manner that adversely
affects any of the Buyers; (iii) the shares of Common Stock issuable upon conversion of the Notes or otherwise pursuant to the
terms of the Notes; provided, that the terms of the Notes are not amended, modified or changed on or after the Subscription Date
(other than antidilution adjustments pursuant to the terms thereof in effect as of the Subscription Date),(iv) the shares of Common
Stock issuable upon exercise of the SPA Warrants; provided, that the terms of the SPA Warrant are not amended, modified or changed
on or after the Subscription Date (other than antidilution adjustments pursuant to the terms thereof in effect as of the Subscription
Date), (v) shares of Common Stock issued or issuable in connection with strategic alliances and strategic partnerships, provided,
that (x) the primary purpose of such issuance is not to raise capital as determined in good faith by the Required Holders, (y)
the purchaser or acquirer of the securities in such issuance solely consists of either (I) the actual operating participants in
such strategic alliance or strategic partnership or (II) the stockholders, partners or members of the foregoing Persons and (z)
the number or amount of securities issued to such Person by the Company shall not be disproportionate to such Person’s actual
participation in such strategic alliance or strategic partnership, as applicable, and (vi) unregistered shares of Common Stock
and warrants to purchase Common Stock issued by the Company in a private placement consummated on or prior to the first anniversary
of the Closing Date at a fixed price per share of Common Stock and warrant to purchase Common Stock.
(t)
“Expiration Date” means the date that is the seventh (7th) anniversary of the Issuance Date or, if such date
falls on a day other than a Business Day or on which trading does not take place on the Principal Market (a “Holiday”),
the next date that is not a Holiday.
(u)
“Fundamental Transaction” means (A) that the Company shall, directly or indirectly, including through subsidiaries,
Affiliates or otherwise, in one or more related transactions, (i) consolidate or merge with or into (whether or not the Company
is the surviving corporation) another Subject Entity, or (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially
all of the properties or assets of the Company or any of its “significant subsidiaries” (as defined in Rule 1-02 of
Regulation S-X) to one or more Subject Entities, or (iii) make, or allow one or more Subject Entities to make, or allow the Company
to be subject to or have its Common Stock be subject to or party to one or more Subject Entities making, a purchase, tender or
exchange offer that is accepted by the holders of at least either (x) 50% of the outstanding shares of Common Stock, (y) 50% of
the outstanding shares of Common Stock calculated as if any shares of Common Stock held by all Subject Entities making or party
to, or Affiliated with any Subject Entities making or party to, such purchase, tender or exchange offer were not outstanding;
or (z) such number of shares of Common Stock such that all Subject Entities making or party to, or Affiliated with any Subject
Entity making or party to, such purchase, tender or exchange offer, become collectively the beneficial owners (as defined in Rule
13d-3 under the 1934 Act) of at least 50% of the outstanding shares of Common Stock, or (iv) consummate a stock or share purchase
agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme
of arrangement) with one or more Subject Entities whereby all such Subject Entities, individually or in the aggregate, acquire,
either (x) at least 50% of the outstanding shares of Common Stock, (y) at least 50% of the outstanding shares of Common Stock
calculated as if any shares of Common Stock held by all the Subject Entities making or party to, or Affiliated with any Subject
Entity making or party to, such stock purchase agreement or other business combination were not outstanding; or (z) such number
of shares of Common Stock such that the Subject Entities become collectively the beneficial owners (as defined in Rule 13d-3 under
the 1934 Act) of at least 50% of the outstanding shares of Common Stock, or (v) reorganize, recapitalize or reclassify its Common
Stock, (B) that the Company shall, directly or indirectly, including through subsidiaries, Affiliates or otherwise, in one or
more related transactions, allow any Subject Entity individually or the Subject Entities in the aggregate to be or become the
“beneficial owner” (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, whether through acquisition,
purchase, assignment, conveyance, tender, tender offer, exchange, reduction in outstanding shares of Common Stock, merger, consolidation,
business combination, reorganization, recapitalization, spin-off, scheme of arrangement, reorganization, recapitalization or reclassification
or otherwise in any manner whatsoever, of either (x) at least 50% of the aggregate ordinary voting power represented by issued
and outstanding Common Stock, (y) at least 50% of the aggregate ordinary voting power represented by issued and outstanding Common
Stock not held by all such Subject Entities as of the date of this Warrant calculated as if any shares of Common Stock held by
all such Subject Entities were not outstanding, or (z) a percentage of the aggregate ordinary voting power represented by issued
and outstanding shares of Common Stock or other equity securities of the Company sufficient to allow such Subject Entities to
effect a statutory short form merger or other transaction requiring other shareholders of the Company to surrender their shares
of Common Stock without approval of the shareholders of the Company or (C) directly or indirectly, including through subsidiaries,
Affiliates or otherwise, in one or more related transactions, the issuance of or the entering into any other instrument or transaction
structured in a manner to circumvent, or that circumvents, the intent of this definition in which case this definition shall be
construed and implemented in a manner otherwise than in strict conformity with the terms of this definition to the extent necessary
to correct this definition or any portion of this definition which may be defective or inconsistent with the intended treatment
of such instrument or transaction.
(v)
“Group” means a “group” as that term is used in Section 13(d) of the 1934 Act and as defined in
Rule 13d-5 thereunder.
(w)
“Notes” has the meaning ascribed to such term in the Securities Purchase Agreement, and shall include all notes
issued in exchange therefor or replacement thereof.
(x)
“Options” means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible
Securities.
(y)
“Parent Entity” of a Person means an entity that, directly or indirectly, controls the applicable Person and
whose common stock or equivalent equity security is quoted or listed on an Eligible Market, or, if there is more than one such
Person or Parent Entity, the Person or Parent Entity with the largest public market capitalization as of the date of consummation
of the Fundamental Transaction.
(z)
“Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a
trust, an unincorporated organization, any other entity or a government or any department or agency thereof.
(aa)
“Principal Market” means the OTCQB.
(bb)
“Registration Rights Agreement” means that certain registration rights agreement, dated as of the Closing Date,
by and among the Company and the initial holders of the Notes relating to, among other things, the registration of the resale
of the Common Stock issuable upon conversion of the Notes or otherwise pursuant to the terms of the Notes and exercise of the
SPA Warrants, as may be amended from time to time.
(cc)
“SEC” means the United States Securities and Exchange Commission or the successor thereto.
(dd)
“Subject Entity” means any Person, Persons or Group or any Affiliate or associate of any such Person, Persons
or Group.
(ee)
“Successor Entity” means the Person (or, if so elected by the Holder, the Parent Entity) formed by, resulting
from or surviving any Fundamental Transaction or the Person (or, if so elected by the Holder, the Parent Entity) with which such
Fundamental Transaction shall have been entered into.
(ff)
“Trading Day” means, as applicable, (x) with respect to all price or trading volume determinations relating
to the Common Stock, any day on which the Common Stock is traded on the Principal Market, or, if the Principal Market is not the
principal trading market for the Common Stock, then on the principal securities exchange or securities market on which the Common
Stock is then traded, provided that “Trading Day” shall not include any day on which the Common Stock is scheduled
to trade on such exchange or market for less than 4.5 hours or any day that the Common Stock is suspended from trading during
the final hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing
time of trading on such exchange or market, then during the hour ending at 4:00:00 p.m., New York time) unless such day is otherwise
designated as a Trading Day in writing by the Holder or (y) with respect to all determinations other than price determinations
relating to the Common Stock, any day on which The New York Stock Exchange (or any successor thereto) is open for trading of securities.
(gg)
“VWAP” means, for any security as of any date, the dollar volume-weighted average price for such security on
the Principal Market (or, if the Principal Market is not the principal trading market for such security, then on the principal
securities exchange or securities market on which such security is then traded) during the period beginning at 9:30:01 a.m., New
York time, and ending at 4:00:00 p.m., New York time, as reported by Bloomberg through its “HP” function (set to weighted
average) or, if the foregoing does not apply, the dollar volume-weighted average price of such security in the over-the-counter
market on the electronic bulletin board for such security during the period beginning at 9:30:01 a.m., New York time, and ending
at 4:00:00 p.m., New York time, as reported by Bloomberg, or, if no dollar volume-weighted average price is reported for such
security by Bloomberg for such hours, the average of the highest closing bid price and the lowest closing ask price of any of
the market makers for such security as reported in the “pink sheets” by OTC Markets Group Inc. (formerly Pink Sheets
LLC). If the VWAP cannot be calculated for such security on such date on any of the foregoing bases, the VWAP of such security
on such date shall be the fair market value as mutually determined by the Company and the Holder. If the Company and the Holder
are unable to agree upon the fair market value of such security, then such dispute shall be resolved in accordance with the procedures
in Section 13. All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination,
recapitalization or other similar transaction during such period.
[signature
page follows]
IN
WITNESS WHEREOF, the Company has caused this Warrant to Purchase Common Stock to be duly executed as of the Issuance Date
set out above.
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Infinity Energy
Resources, Inc. |
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By: |
/s/
Stanton E. Ross |
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Name: |
Stanton E. Ross
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Title: |
Chairman, President & CEO |
EXHIBIT
A
EXERCISE
NOTICE
TO
BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS
WARRANT TO PURCHASE COMMON STOCK
INFINITY
ENERGY RESOURCES, INC.
The
undersigned holder hereby exercises the right to purchase _________________ of the shares of Common Stock (“Warrant Shares”)
of Infinity Energy Resources, Inc., a Delaware corporation (the “Company”), evidenced by Warrant to Purchase
Common Stock No. _______ (the “Warrant”). Capitalized terms used herein and not otherwise defined shall have
the respective meanings set forth in the Warrant.
1.
Form of Exercise Price. The Holder intends that payment of the Aggregate Exercise Price shall be made as:
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a “Cash Exercise”
with respect to _________________ Warrant Shares; and/or |
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a “Cashless Exercise” with respect to _______________ Warrant Shares. |
In
the event that the Holder has elected a Cashless Exercise with respect to some or all of the Warrant Shares to be issued pursuant
hereto, the Holder hereby represents and warrants that (i) this Exercise Notice was executed by the Holder at __________ [a.m.][p.m.]
on the date set forth below and (ii) if applicable, the Bid Price as of such time of execution of this Exercise Notice was $________.
[ ]
If this Exercise Notice is being delivered after the Alternate Exercise Eligibility Date, check here if Holder is electing to
use the following Alternate Exercise Price in this exercise:____________.
2.
Payment of Exercise Price. In the event that the Holder has elected a Cash Exercise with respect to some or all of the
Warrant Shares to be issued pursuant hereto, the Holder shall pay the Aggregate Exercise Price in the sum of $___________________
to the Company in accordance with the terms of the Warrant.
3.
Delivery of Warrant Shares. The Company shall deliver to Holder, or its designee or agent as specified below, __________
Warrant Shares in accordance with the terms of the Warrant. Delivery shall be made to Holder, or for its benefit, as follows:
[ ]
Check here if requesting delivery as a certificate to the following name and to the following address:
[ ]
Check here if requesting delivery by Deposit/Withdrawal at Custodian as follows:
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EXHIBIT
B
ACKNOWLEDGMENT
The
Company hereby acknowledges this Exercise Notice and hereby directs ______________ to issue the above indicated number of shares
of Common Stock in accordance with the Transfer Agent Instructions dated _________, 201_, from the Company and acknowledged and
agreed to by _______________.
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INFINITY ENERGY RESOURCES, INC. |
EXHIBIT
10.50
SECURITY
AND PLEDGE AGREEMENT
SECURITY
AND PLEDGE AGREEMENT, dated as of May 7, 2015 (this “Agreement”), made by Infinity Energy Resources, Inc.,
a Delaware corporation, with offices located at 11900 College Blvd., Suite 310, Overland Park KS 66210 (the “Company”),
and each of the undersigned direct and indirect Domestic Subsidiaries of the Company from time to time, if any (each a “Grantor”
and together with the Company, collectively, the “Grantors”), in favor of Hudson Bay Master Fund Ltd,
in its capacity as collateral agent (in such capacity, the “Collateral Agent” as hereinafter further defined)
for the Noteholders (as defined below) party to the Securities Purchase Agreement, dated as of May 7, 2015 (as amended, modified,
supplemented, extended, renewed, restated or replaced from time to time, the “Securities Purchase Agreement”).
W
I T N E S S E T H:
WHEREAS,
the Company and each party listed as a “Buyer” on the Schedule of Buyers attached to the Securities Purchase Agreement
(each a “Buyer” and collectively, the “Buyers”) are parties to the Securities Purchase Agreement,
pursuant to which the Company shall be required to sell, and the Buyers shall purchase or have the right to purchase, the “Notes”
issued pursuant thereto (as such Notes may be amended, modified, supplemented, extended, renewed, restated or replaced from time
to time in accordance with the terms thereof, collectively, the “Notes”);
WHEREAS,
certain Grantors (other than the Company) from time to time (each a “Guarantor” and collectively, the “Guarantors”)
may execute and deliver one or more guarantees (each, a “Guaranty” and collectively, the “Guaranties”)
in form and substance acceptable to and in favor of the Collateral Agent, for the benefit of itself and the Noteholders (as defined
below), with respect to the Company’s obligations under the Securities Purchase Agreement, the Notes and the other “Transaction
Documents” (as defined below);
WHEREAS,
it is a condition precedent to the Buyers’ obligation to purchase the Notes issued pursuant to the Securities Purchase Agreement
that the Grantors shall have executed and delivered to the Collateral Agent this Agreement providing for the grant to the Collateral
Agent, for the benefit of the Noteholders, of a valid, enforceable, and perfected security interest in all personal property of
each Grantor to secure all of the Company’s obligations under the Transaction Documents and the Guarantors’ obligations
under the Guaranties, as applicable; and
WHEREAS,
each Grantor has determined that the execution, delivery and performance of this Agreement directly benefits, and is in the best
interest of, such Grantor.
NOW,
THEREFORE, in consideration of the premises and the agreements herein and in order to induce the Buyers to perform under the Securities
Purchase Agreement, each Grantor agrees with the Collateral Agent, for the benefit of the Collateral Agent and the Noteholders,
as follows:
Section
1. Definitions.
(a)
Reference is hereby made to the Securities Purchase Agreement and the Notes for a statement of the terms thereof. All terms used
in this Agreement and the recitals hereto which are defined in the Securities Purchase Agreement, the Notes or in the Code, and
which are not otherwise defined herein shall have the same meanings herein as set forth therein; provided that terms used
herein which are defined in the Code on the date hereof shall continue to have the same meaning notwithstanding any replacement
or amendment of the Code except as the Collateral Agent may otherwise determine.
(b)
The following terms shall have the respective meanings provided for in the Code: “Accounts”, “Account Debtor”,
“Cash Proceeds”, “Certificate of Title”, “Chattel Paper”, “Commercial Tort Claim”,
“Commodity Account”, “Commodity Contracts”, “Deposit Account”, “Documents”, “Electronic
Chattel Paper”, “Equipment”, “Fixtures”, “General Intangibles”, “Goods”,
“Instruments”, “Inventory”, “Investment Property”, “Letter-of-Credit Rights”,
“Payment Intangibles”, “Proceeds”, “Promissory Notes”, “Security”, “Record”,
“Security Account”, “Software”, and “Supporting Obligations”.
(c)
As used in this Agreement, the following terms shall have the respective meanings indicated below, such meanings to be applicable
equally to both the singular and plural forms of such terms:
“Affiliate”
of any Person means any other Person which, directly or indirectly, controls or is controlled by or is under common control with
such Person and any officer or director of such Person. A Person shall be deemed to be “controlled by” any other Person
if such Person possesses, directly or indirectly, power to vote 10% or more of the securities (on a fully diluted basis) having
ordinary voting power for the election of directors or managers or power to direct or cause the direction of the management and
policies of such Person, whether by contract or otherwise.
“Bankruptcy
Code” means Chapter 11 of Title 11 of the United States Code, 11 U.S.C §§ 101 et seq. (or other applicable
bankruptcy, insolvency or similar laws).
“Business
Day” means any day other than Saturday, Sunday or other day on which commercial banks in New York City are authorized
or required by law to remain closed.
“Buyer”
or “Buyers” shall have the meaning set forth in the recitals hereto.
“Capital
Stock” means (i) with respect to any Person that is a corporation, any and all shares, interests, participations or
other equivalents (however designated and whether or not voting) of corporate stock (including, without limitation, any warrants,
options, rights or other securities exercisable or convertible into equity interests or securities of such Person), and (ii) with
respect to any Person that is not a corporation, any and all partnership, membership or other equity interests of such Person.
“Closing
Date” means the date the Company initially issues the Notes pursuant to the terms of the Securities Purchase Agreement.
“Code”
means Articles 8 or 9 of the Uniform Commercial Code as in effect from time to time in the State of New York; provided
that, if perfection or the effect of perfection or non-perfection or the priority of any security interest in any Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, “Code” means
the Uniform Commercial Code as in effect from time to time in such other jurisdiction for purposes of the provisions hereof relating
to such perfection, effect of perfection or non-perfection or priority.
“Collateral”
shall have the meaning set forth in Section 2(a) of this Agreement.
“Collateral
Agent” shall have the meaning set forth in the preamble hereto.
“Company”
shall have the meaning set forth in the preamble hereto.
“Controlled
Account Agreement” means a deposit account control agreement or securities account control agreement with respect to
a Pledged Account, in form and substance satisfactory to the Collateral Agent, as the same may be amended, modified, supplemented,
extended, renewed, restated or replaced from time to time.
“Controlled
Accounts” means the Deposit Accounts, Commodity Accounts, Securities Accounts, and/or Foreign Currency Controlled Account
of the Grantors listed on Schedule IV attached hereto.
“Copyright
Licenses” means all licenses, contracts or other agreements, whether written or oral, naming any Grantor as licensee
or licensor and providing for the grant of any right to use or sell any works covered by any Copyright (including, without limitation,
all Copyright Licenses set forth in Schedule II hereto).
“Copyrights”
means all domestic and foreign copyrights, whether registered or not, including, without limitation, all copyright rights throughout
the universe (whether now or hereafter arising) in any and all media (whether now or hereafter developed), in and to all original
works of authorship fixed in any tangible medium of expression, acquired or used by any Grantor (including, without limitation,
all copyrights described in Schedule II hereto), all applications, registrations and recordings thereof (including, without
limitation, applications, registrations and recordings in the United States Copyright Office or in any similar office or agency
of the United States or any other country or any political subdivision thereof), and all reissues, divisions, continuations, continuations
in part and extensions or renewals thereof.
“Domestic
Subsidiary” means any Subsidiary other than a Foreign Subsidiary.
“Event
of Default” shall have the meaning set forth in Section 4(a) of the Notes.
“Excluded
Collateral” means (i) the voting Capital Stock of any Foreign Subsidiary to the extent that (x) such Capital Stock represents
more than 65% of the issued and outstanding voting Capital Stock of such Foreign Subsidiary and (y) pledging more than 65% of
the total outstanding voting Capital Stock of such Foreign Subsidiary would result in a material adverse tax consequence to a
Grantor and (ii) the Company’s Perlas and Tyra concession blocks offshore Nicaragua in the Caribbean Sea as more particularly
described in the following exhibits to Amendments to the Form 10 the Company originally filed with the Securities and Exchange
Commission on May 13, 2011:
Exhibit
10.8 |
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Nicaraguan Concession - Perlas Prospect
and |
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Exhibit
10.9 |
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Nicaraguan Concession - Tyra Prospect,
both filed as exhibits to Amendment
No. 2 on April 5, 2012 |
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Exhibit
10.27 |
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Map: Nicaraguan Concessions filed as
an exhibit to Amendment
No. 1 to Form 10 by the Company on July 1, 2011 |
“Foreign
Currency Controlled Accounts” means any Controlled Account of the Company or its Subsidiaries holding non-United States
dollar deposits.
“Foreign
Subsidiary” means any Subsidiary of a Grantor organized under the laws of a jurisdiction other than the United States,
any of the states thereof, Puerto Rico or the District of Columbia.
“GAAP”
means U.S. generally accepted accounting principles consistently applied.
“Governmental
Authority” means any nation or government, any Federal, state, city, town, municipality, county, local, foreign or other
political subdivision thereof or thereto and any department, commission, board, bureau, instrumentality, agency or other entity
exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.
“Guaranteed
Obligations” shall have the meaning set forth in Section 2 of each Guaranty.
“Guarantor”
or “Guarantors” shall have the meaning set forth in the recitals hereto.
“Guaranty”
or “Guaranties” shall have the meaning set forth in the recitals hereto.
“Insolvency
Proceeding” means any proceeding commenced by or against any Person under any provision of the Bankruptcy Code or under
any other bankruptcy or insolvency law, assignments for the benefit of creditors, formal or informal moratoria, compositions,
or extensions generally with creditors, or proceedings seeking reorganization, arrangement, or other similar relief.
“Intellectual
Property” means, collectively, the Copyrights, Trademarks and Patents.
“Intellectual
Property Security Agreement” means the Intellectual Property Security Agreement required to be delivered pursuant to
Section 5(h)(i) of this Agreement, in the form attached hereto as Exhibit A.
“Licenses”
means, collectively, the Copyright Licenses, the Trademark Licenses and the Patent Licenses.
“Lien”
means any mortgage, lien, pledge, charge, security interest, adverse claim or other encumbrance upon or in any property or assets.
“Notes”
shall have the meaning set forth in the recitals hereto.
“Noteholders”
means, at any time, the holders of the Notes at such time.
“Obligations”
shall have the meaning set forth in Section 3 of this Agreement.
“Paid
in Full” or “Payment in Full” means the indefeasible payment in full in cash of all of the Obligations.
“Patent
Licenses” means all licenses, contracts or other agreements, whether written or oral, naming any Grantor as licensee
or licensor and providing for the grant of any right to manufacture, use or sell any invention covered by any Patent (including,
without limitation, all Patent Licenses set forth in Schedule II hereto).
“Patents”
means all domestic and foreign letters patent, design patents, utility patents, industrial designs, inventions, trade secrets,
ideas, concepts, methods, techniques, processes, proprietary information, technology, know-how, formulae, rights of publicity
and other general intangibles of like nature, now existing or hereafter acquired (including, without limitation, all domestic
and foreign letters patent, design patents, utility patents, industrial designs, inventions, trade secrets, ideas, concepts, methods,
techniques, processes, proprietary information, technology, know-how and formulae described in Schedule II hereto), all
applications, registrations and recordings thereof (including, without limitation, applications, registrations and recordings
in the United States Patent and Trademark Office, or in any similar office or agency of the United States or any other country
or any political subdivision thereof), and all reissues, reexaminations, divisions, continuations, continuations in part and extensions
or renewals thereof.
“Perfection
Requirement” or “Perfection Requirements” shall have the meaning set forth in Section 4(j) of this
Agreement.
“Person”
means an individual, corporation, limited liability company, partnership, association, joint-stock company, trust, unincorporated
organization, joint venture or other enterprise or entity or Governmental Authority.
“Pledged
Accounts” means all of each Grantor’s right, title and interest in all of its Deposit Accounts, Commodity Accounts
and Securities Accounts (in all cases, including, without limitation, all Controlled Accounts and Foreign Currency Control Accounts).
“Pledged
Entity” means, each Person listed from time to time on Schedule IV hereto as a “Pledged Entity,”
together with each other Person, any right in or interest in or to all or a portion of whose Capital Stock is acquired or otherwise
owned by a Grantor after the date hereof.
“Pledged
Equity” means all of each Grantor’s right, title and interest in and to all of the Securities and Capital Stock
now or hereafter owned by such Grantor, regardless of class or designation, including all substitutions therefor and replacements
thereof, all proceeds thereof and all rights relating thereto, also including any certificates representing the Securities and/or
Capital Stock, the right to receive any certificates representing any of the Securities and/or Capital Stock, all warrants, options,
share appreciation rights and other rights, contractual or otherwise, in respect thereof, and the right to receive dividends,
distributions of income, profits, surplus, or other compensation by way of income or liquidating distributions, in cash or in
kind, and cash, instruments, and other property from time to time received, receivable, or otherwise distributed in respect of
or in addition to, in substitution of, on account of, or in exchange for any or all of the foregoing.
“Pledged
Operating Agreements” means all of each Grantor’s rights, powers and remedies under the limited liability company
operating agreements of each of the Pledged Entities that are limited liability companies, as may be amended, modified, supplemented,
extended, renewed, restated or replaced from time to time.
“Pledged
Partnership Agreements” means all of each Grantor’s rights, powers, and remedies under the partnership agreements
of each of the Pledged Entities that are partnerships, as may be amended, modified, supplemented, extended, renewed, restated
or replaced from time to time.
“Securities
Purchase Agreement” shall have the meaning set forth in the recitals hereto.
“Subsidiary”
means any Person in which a Grantor directly or indirectly, (i) owns any of the outstanding Capital Stock or holds any equity
or similar interest of such Person or (ii) controls or operates all or any part of the business, operations or administration
of such Person, and all of the foregoing, collectively, “Subsidiaries”.
“Trademark
Licenses” means all licenses, contracts or other agreements, whether written or oral, naming any Grantor as licensor
or licensee and providing for the grant of any right concerning any Trademark, together with any goodwill connected with and symbolized
by any such licenses, contracts or agreements and the right to prepare for sale or lease and sell or lease any and all Inventory
now or hereafter owned by any Grantor and now or hereafter covered by such licenses, contracts or agreements (including, without
limitation, all Trademark Licenses described in Schedule II hereto).
“Trademarks”
means all domestic and foreign trademarks, service marks, collective marks, certification marks, trade names, business names,
d/b/a’s, assumed names, Internet domain names, trade styles, designs, logos and other source or business identifiers and
all general intangibles of like nature, now or hereafter owned, adopted, acquired or used by any Grantor (including, without limitation,
all domestic and foreign trademarks, service marks, collective marks, certification marks, trade names, business names, d/b/a’s,
assumed names, Internet domain names, trade styles, designs, logos and other source or business identifiers described in Schedule
II hereto), all applications, registrations and recordings thereof (including, without limitation, applications, registrations
and recordings 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), and all reissues, extensions or renewals thereof, together
with all goodwill of the business symbolized by such marks and all customer lists, formulae and other Records of any Grantor relating
to the distribution of products and services in connection with which any of such marks are used.
SECTION
2. Grant of Security Interest.
(a)
As collateral security for the due and punctual payment and performance all of the Obligations, as and when due, each Grantor
hereby pledges and assigns to the Collateral Agent, for itself and for the benefit of the Noteholders, and grants to the Collateral
Agent, for itself and for the benefit of the Noteholders, a continuing security interest in, all personal property and assets
of such Grantor, wherever located and whether now or hereafter existing and whether now owned or hereafter acquired, of every
kind, nature and description, whether tangible or intangible (collectively, the “Collateral”), including, without
limitation, the following:
(i)
all Accounts;
(ii)
all Chattel Paper (whether tangible or Electronic Chattel Paper);
(iii)
all Commercial Tort Claims, including, without limitation, those specified on Schedule VI hereto;
(iv)
all Documents;
(v)
all Equipment;
(vi)
all Fixtures;
(vii)
all General Intangibles (including, without limitation, all Payment Intangibles);
(viii)
all Goods;
(ix)
all Instruments (including, without limitation, all Promissory Notes, each Investor Note (as defined in the Securities Purchase
Agreement), and each certificated Security);
(x)
all Inventory;
(xi)
all Investment Property (and, regardless of whether classified as Investment Property under the Code, all Pledged Equity, Pledged
Operating Agreements and Pledged Partnership Agreements);
(xii)
all Intellectual Property and all Licenses;
(xiii)
all Letter-of-Credit Rights;
(xiv)
all Pledged Accounts, all cash and other property from time to time deposited therein, and all monies and property in the possession
or under the control of the Collateral Agent or any Noteholder or any Affiliate, representative, agent or correspondent of the
Collateral Agent or any such Noteholder;
(xv)
all Supporting Obligations;
(xvi)
all other tangible and intangible personal property of each Grantor (whether or not subject to the Code), including, without limitation,
all Deposit Accounts and other accounts and all cash and all investments therein, all proceeds, products, offspring, accessions,
rents, profits, income, benefits, substitutions and replacements of and to any of the property of any Grantor described in the
preceding clauses of this Section 2(a) (including, without limitation, any proceeds of insurance thereon and all causes
of action, claims and warranties now or hereafter held by each Grantor in respect of any of the items listed above), and all books,
correspondence, files and other Records, including, without limitation, all tapes, desks, cards, Software, data and computer programs
in the possession or under the control of any Grantor or any other Person from time to time acting for any Grantor, in each case,
to the extent of such Grantor’s rights therein, that at any time evidence or contain information relating to any of the
property described in the preceding clauses of this Section 2(a) or are otherwise necessary or helpful in the collection
or realization thereof; and
(xvii)
all Proceeds, including all Cash Proceeds and Noncash Proceeds, and products of any and all of the foregoing Collateral;
in
each case howsoever any Grantor’s interest therein may arise or appear (whether by ownership, security interest, claim or
otherwise).
(b)
Notwithstanding anything herein to the contrary, the term “Collateral” shall not include any Excluded Collateral.
(c)
Each Grantor agrees not to further encumber, or permit any other Lien to exist that encumbers, any of its Copyrights, Copyright
applications, Copyright registrations and like protections in each work of authorship and derivative work, whether published or
unpublished, any Licenses, Patents, Patent applications and like protections, including improvements, divisions, continuations,
renewals, reissues, extensions, and continuations-in-part of the same, Trademarks, service marks and, to the extent permitted
under applicable law, any applications therefor, whether registered or not, and the goodwill of the business of such Grantor connected
with and symbolized thereby, know-how, operating manuals, trade secret rights, rights to unpatented inventions, and any claims
for damage by way of any past, present, or future infringement of any of the foregoing, in each case without the Collateral Agent’s
prior written consent (which consent may be withheld or given in the Collateral Agent’s sole discretion).
(d)
The Grantors agree that the pledge of the shares of Capital Stock acquired by a Grantor of any and all Persons now or hereafter
existing who is a Foreign Subsidiary may be supplemented by one or more separate pledge agreements, deeds of pledge, share charges
or other similar agreements or instruments, executed and delivered by the relevant Grantors in favor of the Collateral Agent,
which pledge agreements will provide for the pledge of such shares of Capital Stock in accordance with the laws of the applicable
foreign jurisdiction. With respect to such shares of Capital Stock, the Collateral Agent may, at any time and from time to time,
in its sole discretion, take such actions in such foreign jurisdictions that will result in the perfection of the Lien created
in such shares of Capital Stock.
(e)
In addition, to secure the prompt and complete payment, performance and observance of the Obligations and in order to induce the
Buyers as aforesaid, each Grantor hereby grants to the Collateral Agent, for itself and for the ratable benefit of the Noteholders,
a right of set-off against the property of such Grantor held by the Collateral Agent, for itself and for the ratable benefit of
the Noteholders, consisting of property described above in Section 2(a) now or hereafter in the possession or custody of or in
transit to the Collateral Agent, for any purpose, including safekeeping, collection or pledge, for the account of such Grantor,
or as to which such Grantor may have any right or power; provided that such right shall only to be exercised after an Event of
Default has occurred and is continuing.
SECTION
3. Security for Obligations. The security interest created hereby in the Collateral constitutes continuing collateral
security for all of the following obligations, whether direct or indirect, absolute or contingent, and whether now existing
or hereafter incurred (collectively, the “Obligations”):
(a)
(i) the payment by the Company and each other Grantor, as and when due and payable (by scheduled maturity, required prepayment,
acceleration, demand or otherwise), of all amounts from time to time owing by it in respect of the Securities Purchase Agreement,
this Agreement, the Notes and the other Transaction Documents, and (ii) in the case of the Guarantors, the payment by such Guarantors,
as and when due and payable of all Guaranteed Obligations under the Guaranties, including, without limitation, in both cases,
(A) all principal of, interest, make-whole and other amounts on the Notes (including, without limitation, all interest, make-whole
and other amounts that accrues after the commencement of any Insolvency Proceeding of any Grantor, whether or not the payment
of such interest is enforceable or is allowable in such Insolvency Proceeding), and (B) all fees, interest, premiums, penalties,
contract causes of action, costs, commissions, expense reimbursements, indemnifications and all other amounts due or to become
due under this Agreement or any of the Transaction Documents; and
(b)
the due performance and observance by each Grantor of all of its other obligations from time to time existing in respect of any
of the Transaction Documents, including without limitation, with respect to any conversion or redemption rights of the Noteholders
under the Notes.
SECTION
4. Representations and Warranties. Each Grantor represents and warrants as follows:
(a)
Schedule I hereto sets forth (i) the exact legal name of each Grantor, and (ii) the state of incorporation, organization
or formation and the organizational identification number of each Grantor in such state. The information set forth in Schedule
I hereto with respect to such Grantor is true and accurate in all respects. Such Grantor has not previously changed its name
(or operated under any other name), jurisdiction of organization or organizational identification number from those set forth
in Schedule I hereto except as disclosed in Schedule I hereto.
(b)
There is no pending or, to its knowledge, written notice threatening any action, suit, proceeding or claim affecting any Grantor
before any Governmental Authority or any arbitrator, or any order, judgment or award issued by any Governmental Authority or arbitrator,
in each case, that may adversely affect the grant by any Grantor, or the perfection, of the security interest purported to be
created hereby in the Collateral, or the exercise by the Collateral Agent of any of its rights or remedies hereunder.
(c)
All Federal, state and local tax returns and other reports required by applicable law to be filed by any Grantor have been filed,
or extensions have been obtained, and all taxes, assessments and other governmental charges imposed upon any Grantor or any property
of any Grantor (including, without limitation, all federal income and social security taxes on employees’ wages) and which
have become due and payable on or prior to the date hereof have been paid, except to the extent contested in good faith by proper
proceedings which stay the imposition of any penalty, fine or Lien resulting from the non-payment thereof and with respect to
which adequate reserves have been set aside for the payment thereof in accordance with GAAP.
(d)
All Equipment, Fixtures, Goods and Inventory of each Grantor now existing are, and all Equipment, Fixtures, Goods and Inventory
of each Grantor hereafter existing will be, located and/or based at the addresses specified therefor in Schedule III hereto,
except that each Grantor will give the Collateral Agent written notice of any change in the location of any such Collateral within
20 days of such change, other than to locations set forth on Schedule III hereto (and with respect to which the Collateral Agent
has filed financing statements and otherwise fully perfected its Liens thereon. Each Grantor’s principal place of business
and chief executive office, the place where each Grantor keeps its Records concerning the Collateral and all originals of all
Chattel Paper are located and will continue to be located at the addresses specified therefor in Schedule III hereto. None
of the Accounts is or will be evidenced by Promissory Notes or other Instruments.
(e)
Set forth in Schedule IV hereto is a complete and accurate list, as of the date of this Agreement, of (i) each Promissory
Note, Security and other Instrument owned by each Grantor, (ii) each Pledged Account of each Grantor, together with the name and
address of each institution at which each such Pledged Account is maintained, the account number for each such Pledged Account
and a description of the purpose of each such Pledged Account and (iii) the name of each Foreign Currency Controlled Account,
together with the name and address of each institution at which each such Foreign Currency Controlled Account is maintained and
the amount of cash or cash equivalents held in each such Foreign Currency Controlled Account. Set forth in Schedule II
hereto is a complete and correct list of each trade name used by each Grantor and the name of, and each trade name used by, each
Person from which each Grantor has acquired any substantial part of the Collateral.
(f)
Each Grantor has delivered to the Collateral Agent complete and correct copies of each License described in Schedule II
hereto, including all schedules and exhibits thereto, which represent all of the Licenses of the Grantors existing on the date
of this Agreement. Each such License sets forth the entire agreement and understanding of the parties thereto relating to the
subject matter thereof, and there are no other agreements, arrangements or understandings, written or oral, relating to the matters
covered thereby or the rights of such Grantor or any of its Affiliates in respect thereof. Each material License now existing
is, and any material License entered into in the future will be, the legal, valid and binding obligation of the parties thereto,
enforceable against such parties in accordance with its terms. No default under any material License by any such party has occurred,
nor does any defense, offset, deduction or counterclaim exist thereunder in favor of any such party.
(g)
Each Grantor owns and controls, or otherwise possesses adequate rights to use, all of its Intellectual Property, which is the
only Intellectual Property necessary to conduct its business in substantially the same manner as conducted as of the date hereof.
Schedule II hereto sets forth a true and complete list of all Intellectual Property and Licenses owned or used by each
Grantor as of the date hereof, and applications for grant or registration of Intellectual Property. To the knowledge of each Grantor,
all such Intellectual Property of such Grantor is subsisting and in full force and effect, has not been adjudged invalid or unenforceable,
is valid and enforceable and has not been abandoned in whole or in part. Except as set forth in Schedule II, no such Intellectual
Property is the subject of any licensing or franchising agreement. Except as set forth in Schedule II, no Grantor has any
knowledge of any infringement upon or conflict with the Patent, Trademark, Copyright, trade secret rights of others and, each
Grantor is not now infringing or in conflict with any Patent, Trademark, Copyright, trade secret or similar rights of others,
and to the knowledge of each Grantor, no other Person is now infringing or in conflict in any material respect with any such properties,
assets and rights owned or used by each Grantor. No Grantor has received any notice that it is violating or has violated the Trademarks,
Patents, Copyrights, inventions, trade secrets, proprietary information and technology, know-how, formulae, rights of publicity
or other intellectual property rights of any third party.
(h)
Each Grantor is and will be at all times the sole and exclusive owner of the Collateral pledged by such Grantor hereunder free
and clear of any Liens, except for (i) Permitted Liens thereon and (ii) certain Intellectual Property rights of the Company which
is jointly owned by the Company with certain third parties as described in Schedule II hereto. No effective financing statement
or other instrument similar in effect covering all or any part of the Collateral is on file in any recording or filing office
except such as (i) may have been filed in favor of the Collateral Agent and/or the Noteholders relating to this Agreement or the
other Transaction Documents, and (ii) are securing Permitted Liens as of the date hereof and disclosed on Schedule VII
hereto.
(i)
The exercise by the Collateral Agent of any of its rights and remedies hereunder will not contravene any law or any contractual
restriction binding on or otherwise affecting each Grantor or any of its properties and will not result in or require the creation
of any Lien, upon or with respect to any of its properties.
(j)
No authorization or approval or other action by, and no notice to or filing with, any Governmental Authority, is required for
(i) the grant by each Grantor, or the perfection, of the security interest purported to be created hereby in the Collateral, or
(ii) the exercise by the Collateral Agent of any of its rights and remedies hereunder, except for (A) the filing under the Code
as in effect in the applicable jurisdiction of the financing statements described in Schedule V hereto, all of which financing
statements have been duly filed and are in full force and effect, (B) with respect to all Pledged Accounts, and all cash and other
property from time to time deposited therein, the execution of a Controlled Account Agreement with the depository or other institution
with which the applicable Pledged Accounts are maintained, as provided in Section 5(h)(i), (C) with respect to Commodity
Contracts, the execution of a control agreement with the commodity intermediary with which such Commodity Contract is carried,
as provided in Section 5(h)(i), (D) with respect to the perfection of the security interest created hereby in the United
States Intellectual Property and Licenses, the recording of the appropriate Intellectual Property Security Agreement in the United
States Patent and Trademark Office or the United States Copyright Office, as applicable, (E) with respect to the perfection of
the security interest created hereby in foreign Intellectual Property and Licenses, registrations and filings in jurisdictions
located outside of the United States and covering rights in such jurisdictions relating to such foreign Intellectual Property
and Licenses, (F) with respect to the perfection of the security interest created hereby in any Letter-of-Credit Rights, the consent
of the issuer of the applicable letter of credit to the assignment of proceeds as provided in the Code as in effect in the applicable
jurisdiction, (G) with respect to Investment Property constituting uncertificated securities, the applicable Grantor causing the
issuer thereof either (i) to register the Collateral Agent as the registered owner of such securities or (ii) to agree in an authenticated
record with such Grantor and the Collateral Agent that such issuer will comply with instructions with respect to such securities
originated by the Collateral Agent without further consent of such Grantor, such authenticated record to be in form and substance
satisfactory to the Collateral Agent, (H) with respect to Investment Property constituting certificated securities or instruments,
such items to be delivered to and held by or on behalf of the Collateral Agent pursuant hereto in suitable form for transfer by
delivery or accompanied by duly executed instruments of transfer or assignment in blank, all in form and substance satisfactory
to the Collateral Agent, (I) with respect to any action that may be necessary to obtain control of Collateral constituting Commodity
Contracts, Electronic Chattel Paper or Letter of Credit Rights, the taking of such actions, and (J) the Collateral Agent having
possession of all Documents, Chattel Paper, Instruments and cash constituting Collateral (subclauses (A) through (J) each a “Perfection
Requirement” and collectively, the “Perfection Requirements”).
(k)
This Agreement creates in favor of the Collateral Agent a legal, valid and enforceable security interest in the Collateral, as
security for the Obligations. The performance of the Perfection Requirements results in the perfection of such security interest
in the Collateral. Such security interest is (or in the case of Collateral in which each Grantor obtains rights after the date
hereof, will be), subject only to Permitted Liens and the Perfection Requirements, a first priority, valid, enforceable and perfected
security interests in all personal property of each Grantor (other than Excluded Collateral). Such recordings and filings and
all other action necessary to perfect and protect such security interest have been duly taken (and, in the case of Collateral
in which any Grantor obtains rights after the date hereof, will be duly taken), except for the Collateral Agent’s having
possession of all Documents, Chattel Paper, Instruments and cash constituting Collateral after the date hereof and the other actions,
filings and recordations described above, including the Perfection Requirements.
(l)
As of the date hereof, no Grantor holds any Commercial Tort Claims or has knowledge of any pending Commercial Tort Claims, except
for the Commercial Tort Claims described in Schedule VI.
(m)
All of the Pledged Equity is presently owned by the applicable Grantor as set forth in Schedule IV, and is presently represented
by the certificates listed on Schedule IV hereto (if applicable). As of the date hereof, there are no existing options,
warrants, calls or commitments of any character whatsoever relating to the Pledged Equity other than as contemplated and permitted
by the Transaction Documents. Each Grantor is the sole holder of record and the sole beneficial owner of the Pledged Equity, as
applicable. None of the Pledged Equity has been issued or transferred in violation of the securities registration, securities
disclosure or similar laws of any jurisdiction to which such issuance or transfer may be subject. The Pledged Equity constitutes
100% or such other percentage as set forth on Schedule IV of the issued and outstanding shares of Capital Stock of the
applicable Pledged Entity.
(n)
Such Grantor (i) is a corporation, limited liability company or limited partnership, as applicable, duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation, organization or formation, (ii) has all requisite
corporate, limited liability company or limited partnership power and authority to conduct its business as now conducted and as
presently contemplated and to execute and deliver this Agreement and each other Transaction Document to which such Grantor is
a party, and to consummate the transactions contemplated hereby and thereby and (iii) is duly qualified to do business and is
in good standing in each jurisdiction in which the character of the properties owned or leased by it or in which the transaction
of its business makes such qualification necessary, except where the failure to be so qualified would not result in a Material
Adverse Effect.
(o)
The execution, delivery and performance by each Grantor of this Agreement and each other Transaction Document to which such Grantor
is a party (i) have been duly authorized by all necessary corporate, limited liability company or limited partnership action,
(ii) do not and will not contravene its charter or by-laws, limited liability company or operating agreement, certificate of partnership
or partnership agreement, as applicable, or any applicable law or any contractual restriction binding on such Grantor or its properties,
(iii) do not and will not result in or require the creation of any Lien (other than pursuant to any Transaction Document) upon
or with respect to any of its assets or properties, and (iv) do not and will not result in any default, noncompliance, suspension,
revocation, impairment, forfeiture or nonrenewal of any material permit, license, authorization or approval applicable to it or
its operations or any of its assets or properties.
(p)
This Agreement and each of the other Transaction Documents to which any Grantor is or will be a party, when delivered, will be,
a legal, valid and binding obligation of such Grantor, enforceable against such Grantor in accordance with its terms, except as
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, suretyship or other similar
laws and equitable principles (regardless of whether enforcement is sought in equity or at law).
(q)
There are no conditions precedent to the effectiveness of this Agreement that have not been satisfied or waived.
SECTION
5. Covenants as to the Collateral. So long as any of the Obligations shall remain outstanding, unless the Collateral
Agent shall otherwise consent in writing:
(a) Further
Assurances. Each Grantor will, at its expense, at any time and from time to time, promptly execute and deliver all
further instruments and documents and take all further action that the Collateral Agent may reasonably request in order to:
(i) perfect and protect the security interest of the Collateral Agent created hereby; (ii) enable the Collateral Agent to
exercise and enforce its rights and remedies hereunder in respect of the Collateral, including, without limitation, the
Controlled Accounts; or (iii) otherwise effect the purposes of this Agreement, including, without limitation: (A) marking
conspicuously all Chattel Paper and each License and, at the request of the Collateral Agent, each of its Records pertaining
to the Collateral with a legend, in form and substance satisfactory to the Collateral Agent, indicating that such Chattel
Paper, License or Collateral is subject to the security interest created hereby, (B) delivering and pledging to the
Collateral Agent each Promissory Note, Security (subject to the limitations set forth in Section 2), Chattel Paper or
other Instrument, now or hereafter owned by any Grantor, duly endorsed and accompanied by executed instruments of transfer or
assignment, all in form and substance satisfactory to the Collateral Agent, (C) executing and filing (to the extent, if any,
that any Grantor’s signature is required thereon) or authenticating the filing of, such financing or continuation
statements, or amendments thereto, as may be necessary or that the Collateral Agent may reasonably request in order to
perfect and preserve the security interest created hereby, (D) furnishing to the Collateral Agent from time to time
statements and schedules further identifying and describing the Collateral and such other reports in connection with the
Collateral in each case as the Collateral Agent may reasonably request, all in reasonable detail, (E) if any Collateral shall
be in the possession of a third party, notifying such Person of the Collateral Agent’s security interest created
hereby and obtaining a written acknowledgment from such Person, in form and substance reasonably satisfactory to the
Collateral Agent, that such Person holds possession of the Collateral for the benefit of the Collateral Agent (for the
benefit the Noteholders), (F) if at any time after the date hereof, any Grantor acquires or holds any Commercial Tort Claim,
promptly notifying the Collateral Agent in a writing signed by such Grantor setting forth a brief description of such
Commercial Tort Claim and granting to the Collateral Agent a security interest therein and in the proceeds thereof, which
writing shall incorporate the provisions hereof and shall be in form and substance satisfactory to the Collateral Agent, (G)
upon the acquisition after the date hereof by any Grantor of any motor vehicle or other Equipment subject to a certificate of
title or ownership (other than a motor vehicle or Equipment that is subject to a purchase money security interest), causing
the Collateral Agent to be listed as the lienholder on such certificate of title or ownership and delivering evidence of the
same to the Collateral Agent in accordance with Section 5(j) hereof; and (H) taking all actions required by the Code
or by other law, as applicable, in any relevant Code jurisdiction, or by other law as applicable in any foreign
jurisdiction.
(b)
Location of Collateral. Each Grantor will keep the Collateral (i) at the locations specified therefor on Schedule III
hereto, or (ii) at such other locations set forth on Schedule III and with respect to which the Collateral Agent has
filed financing statements and otherwise fully perfected its Liens thereon, or (iii) at such other locations in the United States,
provided that 30 days prior to any change in the location of any Collateral to such other location, or upon the acquisition of
any Collateral to be kept at such other locations, the Grantors shall give the Collateral Agent written notice thereof and deliver
to the Collateral Agent a new Schedule III indicating such new locations and such other written statements and schedules
as the Collateral Agent may require.
(c)
Condition of Equipment. Each Grantor will maintain or cause to be maintained and preserved in good condition, repair and
working order, ordinary wear and tear excepted, the Equipment (necessary or useful to its business) and will forthwith, or in
the case of any loss or damage to any Equipment of any Grantor within a commercially reasonable time after the occurrence thereof,
make or cause to be made all repairs, replacements and other improvements in connection therewith which are necessary or desirable,
consistent with past practice, or which the Collateral Agent may request to such end. Any Grantor will promptly furnish to the
Collateral Agent a statement describing in reasonable detail any such loss or damage in excess of $25,000 per occurrence
to any Equipment.
(d) Taxes,
Etc. Each Grantor agrees to pay promptly when due all property and other taxes, assessments and governmental charges or levies
imposed upon, and all claims (including claims for labor, materials and supplies) against, the Equipment and Inventory, except
to the extent the validity thereof is being contested in good faith by proper proceedings which stay the imposition of any penalty,
fine or Lien resulting from the non-payment thereof and with respect to which adequate reserves in accordance with GAAP have been
set aside for the payment thereof.
(e)
Insurance.
(i)
Each Grantor will, at its own expense, maintain insurance (including, without limitation, comprehensive general liability, hazard,
rent and business interruption insurance) with respect to its properties (including all real properties leased or owned by it)
and business, in such amounts and covering such risks, in such form and with responsible and reputable insurance companies or
associations as is required by any Governmental Authority having jurisdiction with respect thereto or as is carried generally
in accordance with sound business practice by companies in similar businesses similarly situated and in any event, in amount,
adequacy and scope reasonably satisfactory to the Collateral Agent.
(ii)
To the extent requested by the Collateral Agent at any time and from time to time, each such policy for liability insurance shall
provide for all losses to be paid on behalf of the Collateral Agent and any Grantor as their respective interests may appear,
and each policy for property damage insurance shall provide for all losses to be adjusted with, and paid directly to, the Collateral
Agent. In addition to and without limiting the foregoing, to the extent requested by the Collateral Agent at any time and from
time to time, each such policy shall in addition (A) name the Collateral Agent as an additional insured party and/or loss payee,
as applicable, thereunder (without any representation or warranty by or obligation upon the Collateral Agent) as its interests
may appear, (B) contain an agreement by the insurer that any loss thereunder shall be payable to the Collateral Agent on its own
account notwithstanding any action, inaction or breach of representation or warranty by any Grantor, (C) provide that there shall
be no recourse against the Collateral Agent for payment of premiums or other amounts with respect thereto, and (D) provide that
at least 30 days’ prior written notice of cancellation, lapse, expiration or other adverse change shall be given to the
Collateral Agent by the insurer. Any Grantor will, if so requested by the Collateral Agent, deliver to the Collateral Agent original
or duplicate policies of such insurance (including certificates demonstrating compliance with this Section 5(e)) and, as often
as the Collateral Agent may reasonably request, a report of a reputable insurance broker with respect to such insurance. Any Grantor
will also, at the request of the Collateral Agent, execute and deliver instruments of assignment of such insurance policies and
cause the respective insurers to acknowledge notice of such assignment.
(iii)
Reimbursement under any liability insurance maintained by any Grantor pursuant to this Section 5(e) may be paid directly
to the Person who shall have incurred liability covered by such insurance. In the case of any loss involving damage to Equipment
or Inventory, to the extent paragraph (iv) of this Section 5(e) is not applicable, any proceeds of insurance involving
such damage shall be paid to the Collateral Agent, and any Grantor will make or cause to be made the necessary repairs to or replacements
of such Equipment or Inventory, and any proceeds of insurance maintained by any Grantor pursuant to this Section 5(e) (except
as otherwise provided in paragraph (iv) in this Section 5(e)) shall be paid by the Collateral Agent to any Grantor as reimbursement
for the reasonable costs of such repairs or replacements.
(iv)
Notwithstanding anything to the contrary in subsection 5(e)(iii) above, following and during the continuance of an Event of Default,
all insurance payments in respect of each Grantor’s properties and business shall be paid to the Collateral Agent and applied
as specified in Section 7(b) hereof.
(f)
Provisions Concerning the Accounts and the Licenses.
(i)
Each Grantor will (A) give the Collateral Agent at least 30 days’ prior written notice of any change in such Grantor’s
name, identity or organizational structure, (B) maintain its jurisdiction of incorporation, organization or formation as set forth
in Schedule I hereto, (C) immediately notify the Collateral Agent upon obtaining an organizational identification number, if on
the date hereof such Grantor did not have such identification number, and (D) keep adequate records concerning the Collateral
and permit representatives of the Collateral Agent during normal business hours on reasonable notice to such Grantor, to inspect
and make abstracts from such records.
(ii)
Each Grantor will (except as otherwise provided in this subsection (f)), continue to collect, at its own expense, all amounts
due or to become due under the Accounts. In connection with such collections, any Grantor may (and, at the Collateral Agent’s
direction, will) take such action as any Grantor or the Collateral Agent may deem necessary or advisable to enforce collection
or performance of the Accounts; provided, however, that the Collateral Agent shall have the right at any time following
the occurrence and during the continuance of an Event of Default to notify the Account Debtors or obligors under any Accounts
of the assignment of such Accounts to the Collateral Agent and to direct such Account Debtors or obligors to make payment of all
amounts due or to become due to any Grantor thereunder directly to the Collateral Agent or its designated agent and, upon such
notification and at the expense of any Grantor and to the extent permitted by applicable law, to enforce collection of any such
Accounts and to adjust, settle or compromise the amount or payment thereof, in the same manner and to the same extent as any Grantor
might have done. After receipt by any Grantor of a notice from the Collateral Agent that the Collateral Agent has notified, intends
to notify, or has enforced or intends to enforce any Grantor’s rights against the Account Debtors or obligors under any
Accounts as referred to in the proviso to the immediately preceding sentence, (A) all amounts and proceeds (including Instruments)
received by any Grantor in respect of the Accounts shall be received in trust for the benefit of the Collateral Agent hereunder
(for the benefit the Noteholders), shall be segregated from other funds of any Grantor and shall be forthwith paid over to the
Collateral Agent in the same form as so received (with any necessary endorsement) to be applied as specified in Section 7(b)
hereof, and (B) no Grantor will adjust, settle or compromise the amount or payment of any Account or release wholly or partly
any Account Debtor or obligor thereof or allow any credit or discount thereon. In addition, upon the occurrence and during the
continuance of an Event of Default, the Collateral Agent may (in its sole and absolute discretion) direct any or all of the banks
and financial institutions with which any Grantor either maintains a Deposit Account or a lockbox (including, without limitation,
any Controlled Account) or deposits the proceeds of any Accounts to send immediately to the Collateral Agent by wire transfer
(to such deposit account as the Collateral Agent shall specify, or in such other manner as the Collateral Agent shall direct)
all or a portion of such securities, cash, investments and other items held by such institution. Any such securities, cash, investments
and other items so received by the Collateral Agent shall be applied as specified in accordance with Section 7(b) hereof
.
(iii)
Upon the occurrence and during the continuance of any breach or default under any material License referred to in Schedule
II hereto by any party thereto other than any Grantor, each Grantor party thereto will, promptly after obtaining knowledge
thereof, give the Collateral Agent written notice of the nature and duration thereof, specifying what action, if any, it has taken
and proposes to take with respect thereto and thereafter will take reasonable steps to protect and preserve its rights and remedies
in respect of such breach or default, or will obtain or acquire an appropriate substitute License.
(iv)
Each Grantor will, at its expense, promptly deliver to the Collateral Agent a copy of each notice or other communication received
by it by which any other party to any material License referred to in Schedule II hereto purports to exercise any of its
rights or affect any of its obligations thereunder, together with a copy of any reply by such Grantor thereto.
(v)
Each Grantor will exercise promptly and diligently each and every right which it may have under each material License (other than
any right of termination) and will duly perform and observe in all respects all of its obligations under each material License
and will take all action reasonably necessary to maintain such Licenses in full force and effect. No Grantor will, without the
prior written consent of the Collateral Agent, cancel, terminate, amend or otherwise modify in any respect, or waive any provision
of, any material License referred to in Schedule II hereto.
(g)
Transfers and Other Liens.
(i)
Except as otherwise expressly permitted in the other Transaction Documents, no Grantor shall, directly or indirectly, sell, lease,
license, assign, transfer, spin-off, split-off, close, convey or otherwise dispose of any Collateral whether in a single transaction
or a series of related transactions, other than (A) sales, leases, licenses, assignments, transfers, conveyances and other dispositions
of such assets or rights by such Grantor for value in the ordinary course of business consistent with past practices and (B) sales
of Inventory and product in the ordinary course of business.
(ii)
Except as permitted under Section 14(e) of the Notes, no Grantor shall, directly or indirectly, redeem, repurchase or declare
or pay any cash dividend or distribution on any of its Capital Stock.
(iii)
No Grantor shall, directly or indirectly, without the prior written consent of the Required Holders, (A) issue any Notes (other
than as contemplated by the Securities Purchase Agreement and the Notes) or (B) issue any other securities that would cause a
breach or default under the Notes.
(iv)
No Grantor shall enter into, renew, extend or be a party to, any transaction or series of related transactions (including, without
limitation, the purchase, sale, lease, transfer or exchange of property or assets of any kind or the rendering of services of
any kind) with any Affiliate, except in the ordinary course of business in a manner and to an extent consistent with past practice
and necessary or desirable for the prudent operation of its business, for fair consideration and on terms no less favorable to
it than would be obtainable in a comparable arm’s length transaction with a Person that is not an Affiliate thereof.
(v)
No Grantor will create, suffer to exist or grant any Lien upon or with respect to any Collateral other than a Permitted Lien.
(h)
Intellectual Property.
(i)
If applicable, each Grantor shall duly execute and deliver the applicable Intellectual Property Security Agreement. Each Grantor
(either itself or through licensees) will, and will cause each licensee thereof to, take all action necessary to maintain all
of the Intellectual Property in full force and effect, including, without limitation, using the proper statutory notices, numbers
and markings (relating to patent, trademark and copyright rights) and using the Trademarks on each applicable trademark class
of goods in order to so maintain the Trademarks in full force and free from any claim of abandonment for non-use, and each Grantor
will not (nor permit any licensee thereof to) do any act or knowingly omit to do any act whereby any Intellectual Property may
become abandoned, cancelled or invalidated; provided, however, that so long as no Event of Default has occurred
and is continuing, no Grantor shall have an obligation to use or to maintain any Intellectual Property (A) that relates solely
to any product or work, that is no longer necessary or material and has been, or is in the process of being, discontinued, abandoned
or terminated in the ordinary course of business and consistent with the exercise of reasonable business judgment, (B) that is
being replaced with Intellectual Property substantially similar to the Intellectual Property that may be abandoned or otherwise
become invalid, so long as the failure to use or maintain such Intellectual Property does not materially adversely affect the
validity of such replacement Intellectual Property and so long as such replacement Intellectual Property is subject to the Lien
created by this Agreement and does not have a material adverse effect on the business of any Grantor or (C) that is substantially
the same as another Intellectual Property that is in full force, so long the failure to use or maintain such Intellectual Property
does not materially adversely affect the validity of such replacement Intellectual Property and so long as such other Intellectual
Property is subject to the Lien and security interest created by this Agreement and does not have a material adverse effect on
the business of any Grantor. Each Grantor will cause to be taken all necessary steps in any proceeding before the United States
Patent and Trademark Office and the United States Copyright Office or any similar office or agency in any other country or political
subdivision thereof to maintain each registration of the Intellectual Property and application for registration of Intellectual
Property (other than the Intellectual Property described in the proviso to the immediately preceding sentence), including, without
limitation, filing of renewals, affidavits of use, affidavits of incontestability and opposition, interference and cancellation
proceedings and payment of maintenance fees, filing fees, taxes or other governmental fees. If any Intellectual Property (other
than Intellectual Property described in the proviso to the second sentence of subsection (i) of this clause (h)) is infringed,
misappropriated, diluted or otherwise violated in any material respect by a third party, each Grantor shall (x) upon learning
of such infringement, misappropriation, dilution or other violation, promptly notify the Collateral Agent and (y) promptly sue
for infringement, misappropriation, dilution or other violation, seek injunctive relief where appropriate and recover any and
all damages for such infringement, misappropriation, dilution or other violation, or take such other actions as such Grantor shall
deem appropriate under the circumstances to protect such Intellectual Property. Each Grantor shall furnish to the Collateral Agent
from time to time upon its request statements and schedules further identifying and describing the Intellectual Property and Licenses
and such other reports in connection with the Intellectual Property and Licenses as the Collateral Agent may reasonably request,
all in reasonable detail and promptly upon request of the Collateral Agent, following receipt by the Collateral Agent of any such
statements, schedules or reports, each Grantor shall modify this Agreement by amending Schedule II hereto, as the case
may be, to include any Intellectual Property and License, as the case may be, which is or hereafter becomes part of the Collateral
under this Agreement and shall execute and authenticate such documents and do such acts as shall be necessary or, in the reasonable
judgment of the Collateral Agent, desirable to subject such Intellectual Property and Licenses to the Lien and security interest
created by this Agreement. Notwithstanding anything herein to the contrary, upon the occurrence and during the continuance of
an Event of Default, no Grantor may abandon, surrender or otherwise permit any Intellectual Property to become abandoned, cancelled
or invalid without the prior written consent of the Collateral Agent, and if any Intellectual Property is infringed, misappropriated,
diluted or otherwise violated in any material respect by a third party, each Grantor will take such reasonable action as the Collateral
Agent shall deem appropriate under the circumstances to protect such Intellectual Property.
(ii)
In no event shall any Grantor, either itself or through any agent, employee, licensee or designee, file an application for the
registration of any Patent, Trademark or Copyright or the United States Copyright Office or the United States Patent and Trademark
Office, as applicable, or in any similar office or agency of the United States or any country or any political subdivision thereof
unless it gives the Collateral Agent prior written notice thereof. Upon request of the Collateral Agent, any Grantor shall execute,
authenticate and deliver any and all assignments, agreements, instruments, documents and papers as the Collateral Agent may reasonably
request to evidence the Collateral Agent’s security interest hereunder in such Intellectual Property and the General Intangibles
of any Grantor relating thereto or represented thereby, and each Grantor hereby appoints the Collateral Agent its attorney-in-fact
to execute and/or authenticate and file all such writings for the foregoing purposes, all acts of such attorney being hereby ratified
and confirmed, and such power (being coupled with an interest) shall be irrevocable until all Obligations are Paid in Full.
(i) Pledged
Accounts.
(A)
Each Grantor shall cause each bank and other financial institution which maintains a Controlled Account (each a “Controlled
Account Bank”) to execute and deliver to the Collateral Agent, in form and substance satisfactory to the Collateral
Agent, a Controlled Account Agreement with respect to such Controlled Account, duly executed by each Grantor and such Controlled
Account Bank, pursuant to which such Controlled Account Bank among other things shall irrevocably agree, with respect to such
Controlled Account, that (i) at any time after any Grantor, the Collateral Agent or any Buyer shall have notified such Controlled
Account Bank that an Event of Default has occurred or is continuing, such Controlled Account Bank will comply with any and all
instructions originated by the Collateral Agent directing the disposition of the funds in such Controlled Account without further
consent by such Grantor, (ii) such Controlled Account Bank shall waive, subordinate or agree not to exercise any rights of setoff
or recoupment or any other claim against the applicable Controlled Account other than for payment of its service fees and other
charges directly related to the administration of such Controlled Account and for returned checks or other items of payment, (iii
at any time after any Grantor, the Collateral Agent or any Buyer shall have notified such Controlled Account Bank that an Event
of Default has occurred or is continuing, with respect to each such Controlled Account, such Controlled Account Bank shall not
comply with any instructions, directions or orders of any form with respect to such Controlled Accounts other than instructions,
directions or orders originated by the Collateral Agent, (iv) all funds deposited by any Grantor with such Controlled Account
Bank shall be subject to a perfected, first priority security interest in favor of the Collateral Agent, and (v) upon receipt
of written notice from the Collateral Agent during the continuance of an Event of Default, such Controlled Account Bank shall
immediately send to the Collateral Agent by wire transfer (to such account as the Collateral Agent shall specify, or in such other
manner as the Collateral Agent shall direct) all such funds and other items held by it. No Grantor shall create or maintain any
Pledged Account without the prior written consent of the Collateral Agent and complying with the terms of this Agreement.
(B)
If at any time after the Closing Date, the average daily balance of any Account that is not subject to a Controlled Account Agreement
exceeds $25,000 during any calendar month (including the calendar month in which the Closing Date occurs), the Company shall,
either (x) within two (2) Business Days following such date, transfer to a Controlled Account an amount sufficient to reduce the
total aggregate amount of the cash in such Account to an amount not in excess of $25,000 or (y) within twenty-one (21) calendar
days following the last day of such calendar month, deliver to the Collateral Agent a Controlled Account Agreement with respect
to such Account, duly executed by such Grantor and the depositary bank in which such Account is maintained.
(C)
Notwithstanding anything to the contrary contained in Section 5(i)(B) above, and without limiting any of the foregoing, if at
any time on or after the date that is twenty-one (21) calendar days following the Closing Date, the total aggregate amount of
the cash of the Company and any of its Subsidiaries, in the aggregate, that is not held in a Controlled Account exceeds $50,000
(the “Maximum Free Cash Amount”), the Company shall within two (2) Business Days following such date, either
(x) transfer to a Controlled Account an amount sufficient to reduce the total aggregate amount of the cash that is not held in
a Controlled Account to an amount not in excess of the Maximum Free Cash Amount or (y) deliver to the Collateral Agent a Controlled
Account Agreement with respect to such Account (or Accounts), duly executed by such Grantor and the depositary bank in which such
Account (or Accounts) is maintained, as necessary to reduce the total aggregate amount of the cash that is not held in a Controlled
Account to an amount not in excess of the Maximum Free Cash Amount.
(j)
Motor Vehicles.
(i)
Upon the Collateral Agent’s written request, each Grantor shall deliver to the Collateral Agent originals of the certificates
of title or ownership for each motor vehicle with a value in excess of $10,000 owned by it, with the Collateral Agent listed as
lienholder, for the benefit of the Noteholders.
(ii)
Each Grantor hereby appoints the Collateral Agent as its attorney-in-fact, effective the date hereof and terminating upon the
termination of this Agreement, for the purpose of (A) executing on behalf of such Grantor title or ownership applications for
filing with appropriate Governmental Authorities to enable motor vehicles now owned or hereafter acquired by such Grantor to be
retitled and the Collateral Agent listed as lienholder thereof, (B) filing such applications with such Governmental Authorities,
and (C) executing such other agreements, documents and instruments on behalf of, and taking such other action in the name of,
such Grantor as the Collateral Agent may deem necessary or advisable to accomplish the purposes hereof (including, without limitation,
for the purpose of creating in favor of the Collateral Agent a perfected Lien on the motor vehicles and exercising the rights
and remedies of the Collateral Agent hereunder). This appointment as attorney-in-fact is coupled with an interest and is irrevocable
until all of the Obligations are Paid in Full.
(iii)
Any certificates of title or ownership delivered pursuant to the terms hereof shall be accompanied by odometer statements for
each motor vehicle covered thereby.
(iv)
So long as no Event of Default shall have occurred and be continuing, upon the request of any Grantor, the Collateral Agent shall
execute and deliver to any Grantor such instruments as such Grantor shall reasonably request to remove the notation of the Collateral
Agent as lienholder on any certificate of title for any motor vehicle; provided, however, that any such instruments
shall be delivered, and the release effective, only upon receipt by the Collateral Agent of a certificate from any Grantor stating
that such motor vehicle is to be sold or has suffered a casualty loss (with title thereto in such case passing to the casualty
insurance company therefor in settlement of the claim for such loss) and the amount that any Grantor will receive as sale proceeds
or insurance proceeds. Any proceeds of such sale or casualty loss shall be paid to the Collateral Agent hereunder immediately
upon receipt, to be applied to the Obligations then outstanding.
(k)
Control. Each Grantor hereby agrees to take any or all action that may be necessary or that the Collateral Agent may reasonably
request in order for the Collateral Agent to obtain “control” in accordance with Sections 9-105 through 9-107 of the
Code with respect to the following Collateral: (i) Electronic Chattel Paper, (ii) Investment Property, and (iii) Letter-of-Credit
Rights.
(l)
Inspection and Reporting. Each Grantor shall permit the Collateral Agent, or any agent or representatives thereof or such
professionals or other Persons as the Collateral Agent may designate (at Grantors’ sole cost and expense) (i) to examine
and make copies of and abstracts from any Grantor’s records and books of account, (ii) to visit and inspect its properties,
(iii) to verify materials, leases, Instruments, Accounts, Inventory and other assets of any Grantor from time to time, and (iv)
to conduct audits, physical counts, appraisals and/or valuations, examinations at the locations of any Grantor. Each Grantor shall
also permit the Collateral Agent, or any agent or representatives thereof or such attorneys, accountants or other professionals
or other Persons as the Collateral Agent may designate to discuss such Grantor’s affairs, finances and accounts with any
of its directors, officers, managerial employees, independent accountants or any of its other representatives. Without limiting
the foregoing, the Collateral Agent may, at any time, in the Collateral Agent’s own name, in the name of a nominee of the
Collateral Agent, or in the name of any Grantor communicate (by mail, telephone, facsimile or otherwise) with the Account Debtors
of such Grantor, parties to contracts with such Grantor and/or obligors in respect of Instruments of such Grantor to verify with
such Persons, to the Collateral Agent’s satisfaction, the existence, amount, terms of, and any other matter relating to,
Accounts, Instruments, Chattel Paper, payment intangibles and/or other receivables.
(m)
Future Subsidiaries. If any Grantor hereafter creates or acquires any Subsidiary, simultaneously with the creation or acquisition
of such Subsidiary, such Grantor shall (i) if such Subsidiary is a Domestic Subsidiary, cause such Subsidiary to become a party
to this Agreement as an additional “Grantor” hereunder, (ii) deliver to the Collateral Agent updated Schedules to
this Agreement, as appropriate (including, without limitation, an updated Schedule IV to reflect the grant by such Grantor of
a Lien on all Pledged Equity now or hereafter owned by such Grantor), (iii) if such Subsidiary is a Domestic Subsidiary, cause
such Subsidiary to duly execute and deliver a guaranty of the Obligations in favor of the Collateral Agent in form and substance
acceptable to the Collateral Agent, (iv) deliver to the Collateral Agent the stock certificates representing all of the Capital
Stock of such Subsidiary, along with undated stock powers for each such certificates, executed in blank (or, if any such shares
of Capital Stock are uncertificated, confirmation and evidence reasonably satisfactory to the Collateral Agent that the security
interest in such uncertificated securities has been transferred to and perfected by the Collateral Agent, in accordance with Sections
8-313, 8-321 and 9-115 of the Code or any other similar or local or foreign law that may be applicable), and (v) duly execute
and/or cause to be delivered to the Collateral Agent, in form and substance acceptable to the Collateral Agent, such opinions
of counsel and other documents as the Collateral Agent shall request with respect thereto; provided, however, that no Grantor
shall be required to pledge any Excluded Collateral. Each Grantor hereby authorizes the Collateral Agent to attach such updated
Schedules to this Agreement and agrees that all Pledged Equity listed on any updated Schedule delivered to the Collateral Agent
shall for all purposes hereunder be considered Collateral. The Grantors agree that the pledge of the shares of Capital Stock acquired
by a Grantor of Foreign Subsidiary may be supplemented by one or more separate pledge agreements, deeds of pledge, share charges,
or other similar agreements or instruments, executed and delivered by the relevant Grantor in favor of the Collateral Agent, which
pledge agreements will provide for the pledge of such shares of Capital Stock in accordance with the laws of the applicable foreign
jurisdiction. With respect to such shares of Capital Stock, the Collateral Agent may, at any time and from time to time, in its
sole discretion, take actions in such foreign jurisdictions that will result in the perfection of the Lien created in such shares
of Capital Stock.
Section
6. Additional Provisions Concerning the Collateral.
(a)
To the maximum extent permitted by applicable law, and for the purpose of taking any action that the Collateral Agent may deem
necessary or advisable to accomplish the purposes of this Agreement, each Grantor hereby (i) authorizes the Collateral Agent to
execute any such agreements, instruments or other documents in such Grantor’s name and to file such agreements, instruments
or other documents in such Grantor’s name and in any appropriate filing office, (ii) authorizes the Collateral Agent at
any time and from time to time to file, one or more financing or continuation statements, and amendments thereto, relating to
the Collateral (including, without limitation, any such financing statements that (A) describe the Collateral as “all assets”
or “all personal property” (or words of similar effect) or that describe or identify the Collateral by type or in
any other manner as the Collateral Agent may determine regardless of whether any particular asset of such Grantor falls within
the scope of Article 9 of the Code or whether any particular asset of such Grantor constitutes part of the Collateral, and (B)
contain any other information required by Part 5 of Article 9 of the Code for the sufficiency or filing office acceptance of any
financing statement, continuation statement or amendment, including, without limitation, whether such Grantor is an organization,
the type of organization and any organizational identification number issued to such Grantor) and (iii) ratifies such authorization
to the extent that the Collateral Agent has filed any such financing or continuation statements, or amendments thereto, prior
to the date hereof. A photocopy or other reproduction of this Agreement or any financing statement covering the Collateral or
any part thereof shall be sufficient as a financing statement where permitted by law.
(b)
Each Grantor hereby irrevocably appoints the Collateral Agent as its attorney-in-fact and proxy, with full authority in the place
and stead of such Grantor and in the name of such Grantor or otherwise, from time to time in the Collateral Agent’s discretion,
to take any action and to execute any instrument which the Collateral Agent may deem necessary or advisable to accomplish the
purposes of this Agreement, including, without limitation, (i) to obtain and adjust insurance required to be paid to the Collateral
Agent pursuant to Section 5(e) hereof, (ii) to ask, demand, collect, sue for, recover, compound, receive and give acquittance
and receipts for moneys due and to become due under or in respect of any Collateral, (iii) to receive, endorse, and collect any
drafts or other instruments, documents and chattel paper in connection with clause (i) or (ii) above, (iv) to file any claims
or take any action or institute any proceedings which the Collateral Agent may deem necessary or desirable for the collection
of any Collateral or otherwise to enforce the rights of the Collateral Agent and the Noteholders with respect to any Collateral,
(v) to execute assignments, licenses and other documents to enforce the rights of the Collateral Agent and the Noteholders with
respect to any Collateral, and (vi) to verify any and all information with respect to any and all Accounts. This power is coupled
with an interest and is irrevocable until all of the Obligations are Paid in Full.
(c)
For the purpose of enabling the Collateral Agent to exercise rights and remedies hereunder, at such time as the Collateral Agent
shall be lawfully entitled to exercise such rights and remedies, and for no other purpose, each Grantor hereby grants to the Collateral
Agent, to the extent assignable, an irrevocable, non-exclusive license (exercisable without payment of royalty or other compensation
to any Grantor) to use, assign, license or sublicense any Intellectual Property now owned or hereafter acquired by such Grantor,
wherever the same may be located, including in such license reasonable access to all media in which any of the licensed items
may be recorded or stored and to all computer programs used for the compilation or printout thereof. Notwithstanding anything
contained herein to the contrary, but subject to the provisions of the Securities Purchase Agreement that limit the right of any
Grantor to dispose of its property, and Section 5(g) and Section 5(h) hereof, so long as no Event of Default shall
have occurred and be continuing, any Grantor may exploit, use, enjoy, protect, license, sublicense, assign, sell, dispose of or
take other actions with respect to the Intellectual Property in the ordinary course of its business and as otherwise expressly
permitted by any of the other Transaction Documents. In furtherance of the foregoing, unless an Event of Default shall have occurred
and be continuing, the Collateral Agent shall from time to time, upon the request of any Grantor, execute and deliver any instruments,
certificates or other documents, in the form so requested, which such Grantor shall have certified are appropriate (in such Grantor’s
judgment) to allow it to take any action permitted above (including relinquishment of the license provided pursuant to this clause
(c) as to any Intellectual Property). Further, upon the Payment in Full of all of the Obligations, the Collateral Agent (subject
to Section 10(e) hereof) shall release and reassign to any Grantor all of the Collateral Agent’s right, title and
interest in and to the Intellectual Property, and the Licenses, all without recourse, representation or warranty whatsoever. The
exercise of rights and remedies hereunder by the Collateral Agent shall not terminate the rights of the holders of any licenses
or sublicenses theretofore granted by each Grantor in accordance with the second sentence of this clause (c). Each Grantor hereby
releases the Collateral Agent from any claims, causes of action and demands at any time arising out of or with respect to any
actions taken or omitted to be taken by the Collateral Agent under the powers of attorney granted herein other than actions taken
or omitted to be taken through the Collateral Agent’s gross negligence or willful misconduct, as determined by a final determination
of a court of competent jurisdiction.
(d)
If any Grantor fails to perform any agreement or obligation contained herein, the Collateral Agent may itself perform, or cause
performance of, such agreement or obligation, in the name of such Grantor or the Collateral Agent, and the expenses of the Collateral
Agent incurred in connection therewith shall be payable by such Grantor pursuant to Section 8 hereof and shall be secured
by the Collateral.
(e)
The powers conferred on the Collateral Agent hereunder are solely to protect its interest in the Collateral and shall not impose
any duty upon it to exercise any such powers. Except for the safe custody of any Collateral in its possession and the accounting
for moneys actually received by it hereunder, the Collateral Agent shall have no duty as to any Collateral or as to the taking
of any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral.
(f)
Anything herein to the contrary notwithstanding (i) each Grantor shall remain liable under the Licenses and otherwise with respect
to any of the Collateral to the extent set forth therein to perform all of its obligations thereunder to the same extent as if
this Agreement had not been executed, (ii) the exercise by the Collateral Agent of any of its rights hereunder shall not release
any Grantor from any of its obligations under the Licenses or otherwise in respect of the Collateral, and (iii) the Collateral
Agent shall not have any obligation or liability by reason of this Agreement under the Licenses or with respect to any of the
other Collateral, nor shall the Collateral Agent be obligated to perform any of the obligations or duties of any Grantor thereunder
or to take any action to collect or enforce any claim for payment assigned hereunder.
(g)
As long as no Event of Default shall have occurred and be continuing and until written notice shall be given to the applicable
Grantor:
(i)
Each Grantor shall have the right, from time to time, to vote and give consents with respect to the Pledged Equity, or any part
thereof for all purposes not inconsistent with the provisions of this Agreement, the Securities Purchase Agreement or any other
Transaction Document; provided, however, that no vote shall be cast, and no consent shall be given or action taken, which would
have the effect of impairing the position or interest of the Collateral Agent in respect of the Pledged Equity or which would
authorize, effect or consent to (unless and to the extent expressly permitted by the Securities Purchase Agreement):
(A)
the dissolution or liquidation, in whole or in part, of a Pledged Entity;
(B)
the consolidation or merger of a Pledged Entity with any other Person;
(C)
the sale, disposition or encumbrance of all or substantially all of the assets of a Pledged Entity, except for Liens in favor
of the Collateral Agent;
(D)
any change in the authorized number of shares, the stated capital or the authorized share capital of a Pledged Entity or the issuance
of any additional shares of its Capital Stock; or
(E)
the alteration of the voting rights with respect to the Capital Stock of a Pledged Entity.
(h)
(i) Each Grantor shall be entitled, from time to time, to collect and receive for its own use all cash dividends and interest
paid in respect of the Pledged Equity to the extent not in violation of the Securities Purchase Agreement other than any and all:
(A) dividends and interest paid or payable other than in cash in respect of any Pledged Equity, and instruments and other property
received, receivable or otherwise distributed in respect of, or in exchange for, any Pledged Equity; (B) dividends and other distributions
paid or payable in cash in respect of any Pledged Equity in connection with a partial or total liquidation or dissolution or in
connection with a reduction of capital, capital surplus or paid-in capital of a Pledged Entity; and (C) cash paid, payable or
otherwise distributed, in respect of principal of, or in redemption of, or in exchange for, any Pledged Equity; provided, however,
that until actually paid all rights to such distributions shall remain subject to the Lien created by this Agreement; and
(ii)
all dividends and interest (other than such cash dividends and interest as are permitted to be paid to any Grantor in accordance
with clause (i) above) and all other distributions in respect of any of the Pledged Equity, whenever paid or made, shall be delivered
to the Collateral Agent to hold as Pledged Equity and shall, if received by any Grantor, be received in trust for the benefit
of the Collateral Agent (for the benefit the Noteholders), be segregated from the other property or funds of such Grantor, and
be forthwith delivered to the Collateral Agent as Pledged Equity in the same form as so received (with any necessary endorsement).
SECTION 7. Remedies
Upon Event of Default; Application of Proceeds. If any Event of Default shall have occurred and be continuing:
(a)
The Collateral Agent may exercise in respect of the Collateral, in addition to any other rights and remedies provided for herein,
in any other Transaction Document or otherwise available to it, all of the rights and remedies of a secured party upon default
under the Code (whether or not the Code applies to the affected Collateral), and also may (i) take absolute control of the Collateral,
including, without limitation, transfer into the Collateral Agent’s name or into the name of its nominee or nominees (to
the extent the Collateral Agent has not theretofore done so) and thereafter receive, for the benefit of the Noteholders, all payments
made thereon, give all consents, waivers and ratifications in respect thereof and otherwise act with respect thereto as though
it were the outright owner thereof, (ii) require each Grantor to, and each Grantor hereby agrees that it will at its expense and
upon request of the Collateral Agent forthwith, assemble all or part of its respective Collateral as directed by the Collateral
Agent and make it available to the Collateral Agent at a place or places to be designated by the Collateral Agent that is reasonably
convenient to both parties, and the Collateral Agent may enter into and occupy any premises owned or leased by any Grantor where
the Collateral or any part thereof is located or assembled for a reasonable period in order to effectuate the Collateral Agent’s
rights and remedies hereunder or under law, without obligation to any Grantor in respect of such occupation, and (iii) without
notice except as specified below and without any obligation to prepare or process the Collateral for sale, (A) sell the Collateral
or any part thereof in one or more parcels at public or private sale (including, without limitation, by credit bid), at any of
the Collateral Agent’s offices or elsewhere, for cash, on credit or for future delivery, and at such price or prices and
upon such other terms as the Collateral Agent may deem commercially reasonable and/or (B) lease, license or dispose of the Collateral
or any part thereof upon such terms as the Collateral Agent may deem commercially reasonable. Each Grantor agrees that, to the
extent notice of sale or any other disposition of its respective Collateral shall be required by law, at least ten (10) days’
notice to any Grantor of the time and place of any public sale or the time after which any private sale or other disposition of
its respective Collateral is to be made shall constitute reasonable notification. The Collateral Agent shall not be obligated
to make any sale or other disposition of any Collateral regardless of notice of sale having been given. The Collateral Agent may
adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was so adjourned. Each Grantor hereby waives any claims against
the Collateral Agent and the Noteholders arising by reason of the fact that the price at which its respective Collateral may have
been sold at a private sale was less than the price which might have been obtained at a public sale or was less than the aggregate
amount of the Obligations, even if the Collateral Agent accepts the first offer received and does not offer such Collateral to
more than one offeree, and waives all rights that any Grantor may have to require that all or any part of such Collateral be marshaled
upon any sale (public or private) thereof. Each Grantor hereby acknowledges that (i) any such sale of its respective Collateral
by the Collateral Agent shall be made without warranty, (ii) the Collateral Agent may specifically disclaim any warranties of
title, possession, quiet enjoyment or the like, and (iii) such actions set forth in clauses (i) and (ii) above shall not adversely
affect the commercial reasonableness of any such sale of Collateral. In addition to the foregoing, (1) upon written notice to
any Grantor from the Collateral Agent after and during the continuance of an Event of Default, such Grantor shall cease any use
of the Intellectual Property or any trademark, patent or copyright similar thereto for any purpose described in such notice; (2)
the Collateral Agent may, at any time and from time to time after and during the continuance of an Event of Default, upon 10 days’
prior notice to such Grantor, license, whether general, special or otherwise, and whether on an exclusive or non-exclusive basis,
any of the Intellectual Property, throughout the universe for such term or terms, on such conditions, and in such manner, as the
Collateral Agent shall in its sole discretion determine; and (3) the Collateral Agent may, at any time, pursuant to the authority
granted in Section 6 hereof or otherwise (such authority being effective upon the occurrence and during the continuance of an
Event of Default), execute and deliver on behalf of such Grantor, one or more instruments of assignment of the Intellectual Property
(or any application or registration thereof), in form suitable for filing, recording or registration in any country.
(b)
Any cash held by the Collateral Agent as Collateral and all Cash Proceeds received by the Collateral Agent in respect of any sale
or disposition of or collection from, or other realization upon, all or any part of the Collateral shall be applied as follows
(subject to the provisions of the Securities Purchase Agreement): first, to pay any fees, indemnities or expense reimbursements
then due to the Collateral Agent (including those described in Section 8 hereof); second, to pay any fees, indemnities
or expense reimbursements then due to the Noteholders, on a pro rata basis; third to pay interest due under the Notes owing
to the Noteholders, on a pro rata basis; fourth, to pay or prepay principal in respect of the Notes, whether or not then
due, owing to the Noteholders, on a pro rata basis; fifth, to pay or prepay any other Obligations, whether or not then
due, in such order and manner as the Collateral Agent shall elect, consistent with the provisions of the Securities Purchase Agreement.
Any surplus of such cash or Cash Proceeds held by the Collateral Agent and remaining after the Payment in Full of all of the Obligations
shall be paid over to whomsoever shall be lawfully entitled to receive the same or as a court of competent jurisdiction shall
direct.
(c)
In the event that the proceeds of any such sale, disposition, collection or realization are insufficient to pay all amounts to
which the Collateral Agent and the Noteholders are legally entitled, each Grantor shall be, jointly and severally, liable for
the deficiency, together with interest thereon at the highest rate specified in the Notes for interest on overdue principal thereof
or such other rate as shall be fixed by applicable law, together with the costs of collection and the reasonable fees, costs,
expenses and other charges of any attorneys employed by the Collateral Agent to collect such deficiency.
(d)
To the extent that applicable law imposes duties on the Collateral Agent to exercise remedies in a commercially reasonable manner,
each Grantor acknowledges and agrees that it is commercially reasonable for the Collateral Agent (i) to fail to incur expenses
deemed significant by the Collateral Agent to prepare Collateral for disposition or otherwise to transform raw material or work
in process into finished goods or other finished products for disposition, (ii) to fail to obtain third party consents for access
to Collateral to be disposed of, or to obtain or, if not required by other law, to fail to obtain governmental or third party
consents for the collection or disposition of Collateral to be collected or disposed of, (iii) to fail to exercise collection
remedies against Account Debtors or other Persons obligated on Collateral or to remove Liens on or any adverse claims against
Collateral, (iv) to exercise collection remedies against Account Debtors and other Persons obligated on Collateral directly or
through the use of collection agencies and other collection specialists, (v) to advertise dispositions of Collateral through publications
or media of general circulation, whether or not the Collateral is of a specialized nature, (vi) to contact other Persons, whether
or not in the same business as any Grantor, for expressions of interest in acquiring all or any portion of such Collateral, (vii)
to hire one or more professional auctioneers to assist in the disposition of Collateral, whether or not the Collateral is of a
specialized nature, (viii) to dispose of Collateral by utilizing internet sites that provide for the auction of assets of the
types included in the Collateral or that have the reasonable capacity of doing so, or that match buyers and sellers of assets,
(ix) to dispose of assets in wholesale rather than retail markets, (x) to disclaim disposition warranties, such as title, possession
or quiet enjoyment, (xi) to purchase insurance or credit enhancements to insure the Collateral Agent against risks of loss, collection
or disposition of Collateral or to provide to the Collateral Agent a guaranteed return from the collection or disposition of Collateral,
or (xii) to the extent deemed appropriate by the Collateral Agent, to obtain the services of brokers, investment bankers, consultants,
attorneys and other professionals to assist the Collateral Agent in the collection or disposition of any of the Collateral. Each
Grantor acknowledges that the purpose of this section is to provide non-exhaustive indications of what actions or omissions by
the Collateral Agent would be commercially reasonable in the Collateral Agent’s exercise of remedies against the Collateral
and that other actions or omissions by the Collateral Agent shall not be deemed commercially unreasonable solely on account of
not being indicated in this section. Without limitation upon the foregoing, nothing contained in this section shall be construed
to grant any rights to any Grantor or to impose any duties on the Collateral Agent that would not have been granted or imposed
by this Agreement or by applicable law in the absence of this section.
(e)
The Collateral Agent shall not be required to marshal any present or future collateral security (including, but not limited to,
this Agreement and the Collateral) for, or other assurances of payment of, the Obligations or any of them or to resort to such
collateral security or other assurances of payment in any particular order, and all of the Collateral Agent’s rights hereunder
and in respect of such collateral security and other assurances of payment shall be cumulative and in addition to all other rights,
however existing or arising. To the extent that any Grantor lawfully may, each Grantor hereby agrees that it will not invoke any
law relating to the marshaling of collateral which might cause delay in or impede the enforcement of the Collateral Agent’s
rights under this Agreement or under any other instrument creating or evidencing any of the Obligations or under which any of
the Obligations is outstanding or by which any of the Obligations is secured or payment thereof is otherwise assured, and, to
the extent that it lawfully may, each Grantor hereby irrevocably waives the benefits of all such laws.
Section
8. Indemnity and Expenses.
(a)
Each Grantor agrees, jointly and severally, to defend, protect, indemnify and hold the Collateral Agent and each of the Noteholders
harmless from and against any and all claims, damages, losses, liabilities, obligations, penalties, fees, costs and expenses (including,
without limitation, reasonable legal fees, costs, expenses, and disbursements of such Person’s counsel) to the extent that
they arise out of or otherwise result from this Agreement (including, without limitation, enforcement of this Agreement), except
to the extent resulting from such Person’s gross negligence or willful misconduct, as determined by a final judgment of
a court of competent jurisdiction no longer subject to appeal.
(b)
Each Grantor agrees, jointly and severally, to pay to the Collateral Agent upon demand the amount of any and all costs and expenses,
including the reasonable fees, costs, expenses and disbursements of counsel for the Collateral Agent and of any experts and agents
(including, without limitation, any collateral trustee which may act as agent of the Collateral Agent), which the Collateral Agent
may incur in connection with (i) the preparation, negotiation, execution, delivery, recordation, administration, amendment, waiver
or other modification or termination of this Agreement, (ii) the custody, preservation, use or operation of, or the sale of, collection
from, or other realization upon, any Collateral, (iii) the exercise or enforcement of any of the rights of the Collateral Agent
hereunder, or (iv) the failure by any Grantor to perform or observe any of the provisions hereof.
SECTION
9. Notices, Etc. All notices and other communications provided for hereunder shall be in writing and shall be mailed (by
certified mail, first-class postage prepaid and return receipt requested), telecopied, e-mailed or delivered, if to any Grantor,
to the Company’s address, or if to the Collateral Agent or any Noteholder, to it at its respective address, each as set
forth in Section 9(f) of the Securities Purchase Agreement; or as to any such Person, at such other address as shall be designated
by such Person in a written notice to all other parties hereto complying as to delivery with the terms of this Section 9.
All such notices and other communications shall be effective (a) if sent by certified mail, return receipt requested, when received
or three Business Days after deposited in the mails, whichever occurs first, (b) if telecopied or e-mailed, when transmitted (during
normal business hours) and confirmation is received, and otherwise, the day after the notice or communication was transmitted
and confirmation is received, or (c) if delivered in person, upon delivery. For the avoidance of doubt, all Foreign Subsidiaries,
as Grantors, hereby appoint the Company as its agent for receipt of service of process and all notices and other communications
in the United States at the address specified below.
Section
10. Miscellaneous.
(a)
No amendment of any provision of this Agreement shall be effective unless it is in writing and signed by each Grantor and the
Collateral Agent (and approved by the Required Holders), and no waiver of any provision of this Agreement, and no consent to any
departure by each Grantor therefrom, shall be effective unless it is in writing and signed by each Grantor and the Collateral
Agent (and approved by the Required Holders), and then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given. No amendment, modification or waiver of this Agreement shall be effective to the
extent that it (1) applies to fewer than all of the holders of Notes or (2) imposes any obligation or liability on any holder
of Notes without such holder’s prior written consent (which may be granted or withheld in such holder’s sole discretion).
(b)
No failure on the part of the Collateral Agent to exercise, and no delay in exercising, any right reasonably hereunder or under
any of the other Transaction Documents shall operate as a waiver thereof; nor shall any single or partial exercise of any such
right reasonably preclude any other or further exercise thereof or the exercise of any other right. The rights and remedies of
the Collateral Agent or any Noteholder provided herein and in the other Transaction Documents are cumulative and are in addition
to, and not exclusive of, any rights or remedies provided by law. The rights of the Collateral Agent or any Noteholder under any
of the other Transaction Documents against any party thereto are not conditional or contingent on any attempt by such Person to
exercise any of its rights under any of the other Transaction Documents against such party or against any other Person, including
but not limited to, any Grantor.
(c)
Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the remaining portions hereof or thereof or affecting
the validity or enforceability of such provision in any other jurisdiction.
(d)
This Agreement shall create a continuing security interest in the Collateral and shall (i) remain in full force and effect until
Payment in Full of the Obligations, and (ii) be binding on each Grantor and all other Persons who become bound as debtor to this
Agreement in accordance with Section 9-203(d) of the Code and shall inure, together with all rights and remedies of the Collateral
Agent and the Noteholders hereunder, to the benefit of the Collateral Agent and the Noteholders and their respective permitted
successors, transferees and assigns. Without limiting the generality of clause (ii) of the immediately preceding sentence, without
notice to any Grantor, the Collateral Agent and the Noteholders may assign or otherwise transfer their rights and obligations
under this Agreement and any of the other Transaction Documents, to any other Person and such other Person shall thereupon become
vested with all of the benefits in respect thereof granted to the Collateral Agent and the Noteholders herein or otherwise. Upon
any such assignment or transfer, all references in this Agreement to the Collateral Agent or any such Noteholder shall mean the
assignee of the Collateral Agent or such Noteholder. None of the rights or obligations of any Grantor hereunder may be assigned
or otherwise transferred without the prior written consent of the Collateral Agent, and any such assignment or transfer without
such consent of the Collateral Agent shall be null and void.
(e)
Upon the Payment in Full of the Obligations, (i) this Agreement and the security interests created hereby shall terminate and
all rights to the Collateral shall revert to the respective Grantor that granted such security interests hereunder, and (ii) the
Collateral Agent will, upon any Grantor’s request and at such Grantor’s expense, (A) return to such Grantor such of
the Collateral as shall not have been sold or otherwise disposed of or applied pursuant to the terms hereof and (B) execute and
deliver to such Grantor such documents as such Grantor shall reasonably request to evidence such termination, all without any
representation, warranty or recourse whatsoever.
(f)
Governing Law; Jurisdiction; Jury Trial.
(i)
All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the
internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether
of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than
the State of New York.
(ii)
Each Grantor 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 under any of the other
Transaction Documents or with any transaction contemplated hereby or thereby, and hereby irrevocably waives, and agrees not to
assert in any suit, action or proceeding, any claim, defense or objection that it is not personally subject to the jurisdiction
of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action
or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served
in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under Section
9(f) of the Securities Purchase 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. Nothing contained herein shall be deemed or operate to preclude the Collateral Agent or the Noteholders from bringing
suit or taking other legal action against any Grantor in any other jurisdiction to collect on a Grantor’s obligations or
to enforce a judgment or other court ruling in favor of the Collateral Agent or a Noteholder.
(iii)
WAIVER OF JURY TRIAL, ETC. EACH GRANTOR IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY
TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR UNDER ANY OTHER TRANSACTION DOCUMENT OR IN CONNECTION WITH OR ARISING OUT
OF THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY.
(iv)
Each Grantor irrevocably and unconditionally waives any right it may have to claim or recover in any legal action, suit or proceeding
referred to in this Section any special, exemplary, indirect, incidental, punitive or consequential damages.
(g)
Section headings herein are included for convenience of reference only and shall not constitute a part of this Agreement for any
other purpose.
(h)
This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of
which shall be deemed to be an original, but all of which taken together constitute one and the same Agreement. Delivery of any
executed counterpart of a signature page of this Agreement by pdf, facsimile or other electronic transmission shall be effective
as delivery of a manually executed counterpart of this Agreement.
(i)
This Agreement shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Obligations
is rescinded or must otherwise be returned by the Collateral Agent, any Noteholder or any other Person (upon (i) the occurrence
of any Insolvency Proceeding of any of the Company or any Grantor or (ii) otherwise, in all cases as though such payment had not
been made).
SECTION
11. Material Non-Public Information. Upon receipt or delivery by the Company of any notice in accordance with the terms
of this Agreement, unless the Company has in good faith determined that the matters relating to such notice do not constitute
material, non-public information relating to the Company or any of its Subsidiaries, the Company shall within one (1) Business
Day after any such receipt or delivery publicly disclose such material, non-public information on a Current Report on Form 8-K
or otherwise. In the event that the Company believes that a notice contains material, non-public information relating to the Company
or any of its Subsidiaries, the Company so shall indicate to the Collateral Agent and any applicable Noteholder contemporaneously
with delivery of such notice, and in the absence of any such indication, the Collateral Agent and each Noteholder shall be allowed
to presume that all matters relating to such notice do not constitute material, non-public information relating to the Company
or its Subsidiaries. Nothing contained in this Section 11 shall limit any obligations of the Company, or any rights of
the Collateral Agent or any Noteholder, under Section [4(i)] of the Securities Purchase Agreement.
[REMAINDER
OF THIS PAGE INTENTIONALLY LEFT BLANK]
IN
WITNESS WHEREOF, each Grantor has caused this Agreement to be executed and delivered by its officer thereunto duly authorized,
as of the date first above written.
|
GRANTORS: |
|
|
|
Infinity Energy Resources, Inc. |
ACCEPTED
BY: |
|
|
|
HUDSON BAY
MASTER FUND LTD, as Collateral Agent |
EXHIBIT
A
FORM
OF INTELLECTUAL PROPERTY SECURITY AGREEMENT
INTELLECTUAL
PROPERTY SECURITY AGREEMENT
This
INTELLECTUAL PROPERTY SECURITY AGREEMENT (as amended, modified, supplemented, renewed, restated or replaced from time to time,
this “IP Security Agreement”), dated May 7, 2015, is made by the Persons listed on the signature pages hereof
(collectively, the “Grantors”) in favor of Hudson Bay Master Fund Ltd, in its capacity as collateral agent
(the “Collateral Agent”) for the Noteholders. All capitalized terms not otherwise defined herein shall have
the meanings respectively ascribed thereto in the Security Agreement (as defined below).
WHEREAS,
Infinity Energy Resources, Inc., a Delaware corporation (the “Company”), and each party listed as a “Buyer”
therein (collectively, the “Buyers”) are parties to that certain Securities Purchase Agreement, dated May 7,
2015, pursuant to which the Company shall be required to sell, and the Buyers shall purchase or have the right to purchase, the
“Notes” (as defined therein) issued pursuant thereto (as such Notes may be amended, modified, supplemented, renewed,
restated or replaced from time to time in accordance with the terms thereof, collectively, the “Notes”);
WHEREAS,
it is a condition precedent to the purchase of the Notes under the Securities Purchase Agreement that each Grantor has executed
and delivered that certain Security and Pledge Agreement, dated May 7, 2015, made by the Grantors to the Collateral Agent (as
amended, modified, supplemented, renewed, restated or replaced from time to time, the “Security Agreement”);
and
WHEREAS,
under the terms of the Security Agreement, the Grantors have granted to the Collateral Agent, for the ratable benefit of the Collateral
Agent and the Noteholders, a security interest in, among other property, certain intellectual property of the Grantors, and have
agreed as a condition thereof to execute this IP Security Agreement for recording with the U.S. Patent and Trademark Office, the
United States Copyright Office and other governmental authorities.
WHEREAS,
the Grantors have determined that the execution, delivery and performance of this IP Security Agreement directly benefits, and
is in the best interest of, the Grantors.
NOW,
THEREFORE, in consideration of the premises and the agreements herein and in order to induce the Buyers to perform under the Securities
Purchase Agreement, each Grantor agrees with the Collateral Agent, for the benefit of the Noteholders, as follows
SECTION
1. Grant of Security. Each Grantor hereby grants to the Collateral Agent for the ratable benefit of the Collateral Agent
and the Noteholders a security interest in all of such Grantor’s right, title and interest in and to the following (the
“Collateral”):
(i)
the Patents and Patent applications set forth in Schedule A hereto;
(ii)
the Trademark and service mark registrations and applications set forth in Schedule B hereto (provided that no security interest
shall be granted in United States intent-to-use trademark applications to the extent that, and solely during the period in which,
the grant of a security interest therein would impair the validity or enforceability of such intent-to-use trademark applications
under applicable federal law), together with the goodwill symbolized thereby;
(iii)
all Copyrights, whether registered or unregistered, now owned or hereafter acquired by such Grantor, including, without limitation,
the copyright registrations and applications and exclusive copyright licenses set forth in Schedule C hereto;
(iv)
all reissues, divisions, continuations, continuations-in-part, extensions, renewals and reexaminations of any of the foregoing,
all rights in the foregoing provided by international treaties or conventions, all rights corresponding thereto throughout the
world and all other rights of any kind whatsoever of such Grantor accruing thereunder or pertaining thereto;
(v)
any and all claims for damages and injunctive relief for past, present and future infringement, dilution, misappropriation, violation,
misuse or breach with respect to any of the foregoing, with the right, but not the obligation, to sue for and collect, or otherwise
recover, such damages; and
(vi)
any and all proceeds of, collateral for, income, royalties and other payments now or hereafter due and payable with respect to,
and supporting obligations relating to, any and all of the Collateral of or arising from any of the foregoing.
SECTION
2. Security for Obligations. The grant of a security interest in, the Collateral by each Grantor under this IP Security
Agreement secures the payment of all Obligations of such Grantor now or hereafter existing under or in respect of the Notes and
the Transaction Documents, whether direct or indirect, absolute or contingent, and whether for principal, reimbursement obligations,
interest, premiums, penalties, fees, indemnifications, contract causes of action, costs, expenses or otherwise.
SECTION
3. Recordation. Each Grantor authorizes and requests that the Register of Copyrights, the Commissioner for Patents and
the Commissioner for Trademarks and any other applicable government officer record this IP Security Agreement.
SECTION
4. Execution in Counterparts. This IP Security 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.
SECTION
5. Grants, Rights and Remedies. This IP Security Agreement has been entered into in conjunction with the provisions of
the Security Agreement. Each Grantor does hereby acknowledge and confirm that the grant of the security interest hereunder to,
and the rights and remedies of, the Collateral Agent with respect to the Collateral are more fully set forth in the Security Agreement,
the terms and provisions of which are incorporated herein by reference as if fully set forth herein.
SECTION
6. Governing Law; Jurisdiction; Jury Trial.
(i)
All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the
internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether
of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than
the State of New York.
(ii)
Each Grantor 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 under any of the other
Transaction Documents or with any transaction contemplated hereby or thereby, and hereby irrevocably waives, and agrees not to
assert in any suit, action or proceeding, any claim, defense or objection that it is not personally subject to the jurisdiction
of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action
or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served
in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under Section
9(f) of the Securities Purchase 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. Nothing contained herein shall be deemed or operate to preclude the Collateral Agent or the Noteholders from bringing
suit or taking other legal action against any Grantor in any other jurisdiction to collect on a Grantor’s obligations or
to enforce a judgment or other court ruling in favor of the Collateral Agent or a Noteholder.
(iii)
WAIVER OF JURY TRIAL, ETC. EACH GRANTOR IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY
TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR UNDER ANY OTHER TRANSACTION DOCUMENT OR IN CONNECTION WITH OR ARISING OUT
OF THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY.
(iv)
Each Grantor irrevocably and unconditionally waives any right it may have to claim or recover in any legal action, suit or proceeding
referred to in this Section any special, exemplary, indirect, incidental, punitive or consequential damages.
[The
remainder of the page is intentionally left blank]
IN
WITNESS WHEREOF, each Grantor has caused this Agreement to be duly executed and delivered by its officer thereunto duly authorized
as of the date first above written.
|
INFINITY ENERGY RESOURCES, INC. |
|
|
|
|
By: |
/s/
Stanton E. Ross |
|
Name: |
Stanton
E. Ross |
|
Title: |
Chairman,
President & CEO |
|
|
|
|
Address for Notices: |
|
|
|
|
11900 College Blvd. |
|
Suite 310
Overland Park KS 66210 |
Schedule
A
Patents
Grantor |
|
Country |
|
Title |
|
Application
or
Patent No. |
|
Application
or
Registration Date |
|
Assignees |
|
|
|
|
|
|
|
|
|
|
|
Schedule
B
Trademarks
Grantor |
|
Country |
|
Trademark |
|
Application
or
Registration No. |
|
Application
or
Registration Date |
|
Assignees |
|
|
|
|
|
|
|
|
|
|
|
Schedule
C
Copyrights
Grantor |
|
Country |
|
Title |
|
Type of Work |
|
Application or
Registration
No. |
|
Issue Date |
|
Assignees |
|
|
|
|
|
|
|
|
|
|
|
|
|
SCHEDULE
I
Legal
Names; Organizational Identification Numbers;
States or Jurisdiction of Organization
Grantor’s
Name |
|
State of Organization |
|
Federal
Employer I.D. |
|
Organizational
I.D. |
|
|
|
|
|
|
|
SCHEDULE
II
Intellectual
Property
Patents
Grantor |
|
Country |
|
Title |
|
Application
or
Patent No. |
|
Application
or Registration Date
|
|
Assignees |
|
|
|
|
|
|
|
|
|
|
|
Trademarks
Grantor |
|
Country |
|
Trademark |
|
Application
or Registration No. |
|
Application
or Registration Date
|
|
Assignees |
|
|
|
|
|
|
|
|
|
|
|
Copyrights
Grantor |
|
Country |
|
Title |
|
Type of Work |
|
Application
or Registration No.
|
|
Issue Date |
|
Assignees |
|
|
|
|
|
|
|
|
|
|
|
|
|
Licenses
Licensor |
|
Licensee |
|
Type |
|
Scope |
|
Term |
|
|
|
|
|
|
|
|
|
SCHEDULE
III
Locations
Grantor’s
Name |
|
Chief
Executive
Office |
|
Chief
Place of
Business |
|
Books
and Records |
|
Inventory,
Equipment, Etc. |
|
|
|
|
|
|
|
|
|
SCHEDULE
IV
Promissory
Notes, Securities, Deposit Accounts,
Securities Accounts and Commodities Accounts
Securities
Grantor |
|
Name
of Issuer /
Pledged
Entity |
|
Description |
|
Class |
|
Certificate
No.(s) |
Infinity Energy Resources, Inc. |
|
Hudson Bay Master Fund Ltd |
|
Investor
Note issued by Hudson Bay Master Fund Ltd on the Closing Date |
|
N/A |
|
N/A |
|
|
|
|
|
|
|
|
|
Deposit
Accounts, Securities Accounts and Commodities Accounts
Grantor |
|
Name
and Address of
Institution |
|
Purpose
of the
Account |
|
Account
No. |
|
|
|
|
|
|
|
Foreign
Currency Controlled Accounts
Entity |
|
Name
and Address of
Institution |
|
Amount
Held in Account |
|
|
|
|
|
SCHEDULE
V
Financing
Statements
Grantor |
|
Jurisdiction
for Filing Financing Statement |
|
|
|
SCHEDULE
VI
Commercial
Tort Claims
SCHEDULE
VII
Permitted
Liens
Schedule
A
Patents
Grantor |
|
Country |
|
Title |
|
Application
or Patent No. |
|
Application
or
Registration Date
|
|
Assignees |
|
|
|
|
|
|
|
|
|
|
|
NONE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Schedule
B
Trademarks
Grantor |
|
Country |
|
Trademark |
|
Application
or
Registration No. |
|
Application
or
Registration Date |
|
Assignees |
|
|
|
|
|
|
|
|
|
|
|
NONE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Schedule
C
Copyrights
Grantor |
|
Country |
|
Title |
|
Type
of Work |
|
Application
or
Registration No. |
|
Issue
Date |
|
Assignees |
|
|
|
|
|
|
|
|
|
|
|
|
|
NONE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SCHEDULE
I
Legal
Names; Organizational Identification Numbers;
States or Jurisdiction of Organization
Grantor’s
Name |
|
State
of Organization |
|
Federal
Employer I.D. |
|
Organizational
I.D. |
|
|
|
|
|
|
|
INFINITY ENERGY RESOURCES, INC. |
|
DELAWARE |
|
20-31264427 |
|
3944450 |
|
|
|
|
|
|
|
SCHEDULE
II
Intellectual
Property
Patents
Grantor |
|
Country |
|
Title |
|
Application
or
Patent No. |
|
Application
or
Registration Date
|
|
Assignees |
|
|
|
|
|
|
|
|
|
|
|
NONE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trademarks
Grantor |
|
Country |
|
Trademark |
|
Application
or Registration No. |
|
Application
or Registration Date
|
|
Assignees |
|
|
|
|
|
|
|
|
|
|
|
NONE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Copyrights
Grantor |
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Country |
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Title |
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Type
of Work |
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Application
or
Registration No.
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Issue
Date |
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Assignees |
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NONE |
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Licenses
Licensor |
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Licensee |
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Type |
|
Scope |
|
Term |
NICARAUAN
GOVERNMENT |
|
INFINITY ENERGY
RESOURCES, INC. |
|
OIL & GAS
CONCESSIONS –
PERLAS & TYRA
BLOCKS OFFSHORE
NICARAGUA |
|
See [a] |
|
See [a] |
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Schedule
[a]
Minimum
Work Program – Perlas
Block Perlas – Exploration Minimum Work Commitment and Relinquishments
Exploration Period (6 Years) | | |
| Duration (Years) | | |
Work Commitment | |
| Relinquishment | | |
| Irrevocable Guarantee | |
Sub-Period1 | | |
| 2 | | |
- Environmental Impact Study - Acquisition & interpretation of 333km of new 2D seismic - Acquisition, processing & interpretation of 667km of new 2D seismic (or equivalent in 3D) | |
| 26km2 | | |
$ | 443,100 | |
| | |
| | | |
| |
| | | |
| | |
Sub-Period
2 Optional | | |
| 1 | | |
- Acquisition, processing & interpretation of 200km2 of 3D seismic | |
| 53km2 | | |
$ | 1,356,227 | |
| | |
| | | |
| |
| | | |
| | |
Sub-Period
3 Optional | | |
| 1 | | |
- Drilling of one exploration well to the Cretaceous or 3,500m, whichever is shallower | |
| 80km2 | | |
$ | 10,220,168 | |
| | |
| | | |
| |
| | | |
| | |
Sub-Period
4 Optional | | |
| 2 | | |
- Drilling of one exploration well to the Cretaceous or 3,500m, whichever is shallower - Geochemical analysis | |
| All
acreage except areas with discoveries | | |
$ | 10,397,335 | |
Minimum
Work Program - Tyra
Block Tyra – Exploration Minimum Work Commitment and Relinquishments
Exploration Period (6 Years) | | |
Duration (Years) | | |
Work Commitment | |
Relinquishment | | |
Irrevocable Guarantee | |
| | |
| | |
| |
| | |
| |
Sub-Period1 | | |
| 1.5 | | |
- Environmental Impact Study - Acquisition & interpretation of 667km of existing 2D seismic - Acquisition of 667km of new 2D seismic (or equivalent in 3D) | |
| 26km2 | | |
$ | 408,450 | |
| | |
| | | |
| |
| | | |
| | |
Sub-Period 2 Optional | | |
| 0.5 | | |
- Processing & interpretation of the 667km 2D sismic (or equivalent in 3D) acquired in the previous sub-period | |
| 40km2 | | |
$ | 278,450 | |
| | |
| | | |
| |
| | | |
| | |
Sub-Period 3 Optional | | |
| 2 | | |
- Acquisition, processing & interpretation of 250km2 of new 3D seismic | |
| 160km2 | | |
$ | 1,818,667 | |
| | |
| | | |
| |
| | | |
| | |
Sub-Period 4 Optional | | |
| 2 | | |
- Drilling of one exploration well to the Cretaceous or 3,500m, whichever is shallower - Geochemical analysis | |
| All acreage except areas with discoveries | | |
$ | 10,418,667 | |
Contractual
and Fiscal Terms
Training Program |
|
US $50,000 per year, per block |
Area Fee |
|
Years
1-3
Years
4-7
Year
8 forward |
|
$0.05/hectare
$0.10/hectare
$0.15/hectare |
|
|
|
|
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Royalties |
|
Recovery
Factor
0
– 1.5
1.5
– 3.0
>3.0 |
|
Percentage
5%
10%
15% |
Natural Gas Royalties |
|
Market value at production |
|
5% |
Corporate Tax |
|
Rate no higher than 30% |
|
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Social Contribution |
|
3% of the net profit (1.5% for each autonomous region) |
|
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Investment Protection |
|
ICSID
arbitration OPIC insurance |
|
|
SCHEDULE
III
Locations
Grantor’s
Name |
|
Chief
Executive
Office |
|
Chief
Place of
Business |
|
Books
and Records |
|
Inventory,
Equipment, Etc. |
|
|
|
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|
|
INFINITY
ENERGY RESOURCES,
INC. |
|
11900
COLLEGE BLVD,
SUITE 310 OVERLAND PARK, KS 66210 |
|
11900
COLLEGE BLVD, SUITE 310 OVERLAND PARK, KS 66210 |
|
11900
COLLEGE BLVD, SUITE 310 OVERLAND PARK, KS 66210 |
|
OIL
& GAS
CONCESSIONS OFFSHORE IN NICARAGUAN TERRITORIAL
WATERS |
|
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SCHEDULE
IV
Promissory
Notes, Securities, Deposit Accounts,
Securities Accounts and Commodities Accounts
Securities
Grantor |
|
Name
of Issuer /
Pledged
Entity |
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Number
of Shares |
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Class |
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Certificate
No.(s) |
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NONE |
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Deposit
Accounts, Securities Accounts and Commodities Accounts
SCHEDULE
V
Financing
Statements
Grantor |
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Jurisdiction
for Filing Financing Statement |
|
|
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NONE |
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SCHEDULE
VI
Commercial
Tort Claims
NONE
SCHEDULE
VII
Permitted
Liens
LIENS
AND JUDGMENTS SET FORTH IN REPORTS OF CAPITOL CORPORATE SERVICES, INC. DELIVERED TO NOTEHOLDERS
EXHIBIT
10.51
THIS
NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE APPLICABLE STATE SECURITIES
LAWS, AND MAY NOT BE OFFERED OR SOLD IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND SUCH STATE SECURITIES
LAWS, OR AN EXEMPTION FROM REGISTRATION THEREUNDER, IN EACH CASE, TO THE EXTENT APPLICABLE HERETO.
PROMISSORY
NOTE
|
|
New
York, New York |
|
$9,550,000 |
May 7, 2015 |
FOR
VALUE RECEIVED, Hudson Bay Master Fund Ltd (the “Investor”) hereby promises to pay to Infinity Energy Resources,
Inc., a Delaware corporation (the “Company”), on the date set forth below, (i) the principal amount of Nine
Million, Five Hundred and Fifty Thousand Dollars ($9,550,000) and (ii) interest on the unpaid principal balance hereof at the
rate set forth herein (collectively, the “Obligations”). This Promissory Note (this “Note”)
is issued as payment, in part, of the purchase price of that certain Senior Secured Convertible Note of the Company, with an initial
aggregate principal amount of $12,000,000 (as such note may be amended, modified, supplemented, extended, renewed, restated or
replaced from time to time in accordance with the terms thereof, the “Convertible Note”), issued pursuant to
that certain Securities Purchase Agreement, dated as of May 7, 2015, by and among the Company and the investors party thereto
(as amended, modified, supplemented, extended, renewed, restated or replaced from time to time, the “Securities Purchase
Agreement”). Capitalized terms not defined herein shall have the meaning as set forth in the Convertible Note. NEITHER
THIS NOTE NOR ANY INTEREST HEREIN MAY BE PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED, WHETHER BY THE COMPANY, OPERATION OF LAW,
COURT ORDER OR OTHERWISE, WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT OF THE INVESTOR. ANY SUCH PURPORTED ASSIGNMENT OR TRANSFER
WITHOUT SUCH CONSENT SHALL BE NULL AND VOID.
1. Payment
of Principal. The principal amount of this Note (the “Principal”), together with all unpaid interest
accrued thereon and any other Obligations payable hereunder, shall be due and payable in full upon August 8, 2018 (the
“Maturity Date”); provided, that the Maturity Date shall be automatically extended by one (1) calendar day
for each calendar day after May 7, 2018 (the “Scheduled Convertible Note Maturity Date”), if any, that
all, or any part, of the Convertible Note remains outstanding.
2.
Payment of Interest. The unpaid Principal balance due hereunder shall bear interest (the “Interest”)
at an annual rate equal to 2.30% (the “Interest Rate”). Subject to Sections 3 and 7 below, Interest shall
be payable and due upon the Maturity Date. All interest shall be computed on the basis of a year of 365 or 366 days, as the
case may be, for the actual number of days (including the first day but excluding the last day) elapsed.
3. Prepayment
Prior to the Maturity Date.
(a) Optional
Prepayment. The Investor may, at its option at any time and from time to time hereafter, prepay, in whole or in part,
without premium or penalty, the Obligations under this Note (each, an “Optional Prepayment”).
(b) Mandatory
Prepayment. Upon any Mandatory Prepayment Event (as defined below), the Investor shall promptly prepay such aggregate
outstanding Principal of this Note equal to the applicable Mandatory Prepayment Amount (as defined below) with respect to
such Mandatory Prepayment Event. (each, a “Mandatory Prepayment”, and together with each Optional
Prepayment, each a “Prepayment”).
(c) Mechanics
of Prepayments. All Prepayments hereunder shall be made in cash, by wire transfer, in U.S. dollars and immediately
available funds, in accordance with the wire instructions delivered to the Investor by the Company on or prior to such date
of such Prepayment. At the option of the Company, prepayments may be made directly to the Company or to such other Persons as
the Company may direct in its wire instructions.
(d) Cancellation
of Interest upon Prepayment. Notwithstanding anything herein to the contrary, upon any Prepayment prior to the Maturity
Date (including, without limitation, any Mandatory Prepayment), the aggregate cash amount in such Prepayment shall be applied
entirely to and against any outstanding Principal under this Note, and any accrued and unpaid Interest with respect to the
Principal prepaid shall be automatically cancelled as of the date of such prepayment.
(d) Definitions.
For the purpose of this Note, the following definitions shall apply:
(i)
”Mandatory Prepayment Amount” means, with respect to any given Mandatory Prepayment Event, such amount of
cash as specified in the applicable clause of the definition of “Mandatory Prepayment Event” below (or, as
applicable, in such valid written notice delivered pursuant to such clause).
(ii)
”Mandatory Prepayment Event” means, as applicable, (i) with respect to any Restricted Principal of the
Convertible Note designated to be converted in a Conversion Notice, the Company’s receipt of both (A) such Conversion
Notice thereunder executed by the Investor in which all, or any part, of the principal of the Convertible Note to be
converted includes any Restricted Principal and (B) written confirmation by the Investor that the shares of Common Stock
issued pursuant to such Conversion Notice have been properly delivered in accordance with Section 3(c) of the Convertible
Note (in each case, as adjusted, if applicable, to reflect the withdrawal of any Conversion Notice, in whole or in part, by
the Investor, whether pursuant to Section 3(c)(ii) of the Convertible Note or otherwise), or (ii) the Investor’s
receipt of a valid written notice by the Company electing to effect a Mandatory Prepayment hereunder, delivered to the
Investor on a Trading Day at any time on or after the Company receives all Governmental Authorizations (as defined in the
Securities Purchase Agreement) necessary to commence drilling on at least five (5) Properties (as defined in the Securities
Purchase Agreement) reasonably acceptable to the Investor, (each, a “Mandatory Prepayment Notice”, and the
date thereof, a “Mandatory Prepayment Notice Date”); provided, that, with respect to this clause (ii), (x)
no Equity Conditions Failure may exist as of the date of the applicable Mandatory Prepayment, (y) the Company shall have
obtained forbearance agreements, in form and substance reasonably satisfactory to the Collateral Agent, with respect to each
of the Indebtedness and judgments described on Schedule II attached hereto and (z) the Company may not request any
Mandatory Prepayment to the extent that after giving effect to such Mandatory Prepayment (I) the aggregate cash held by (or
for the benefit of) the Company and/or any of its Subsidiaries (excluding cash held in the Collateral Account) would
be greater than or equal to $4 million or (II) more than $2 million of Prepayments shall have occurred during the sixty (60)
calendar day period ending and including the date of such Mandatory Prepayment.
4.
Defaults.
(a)
the Investor shall be deemed in default hereunder upon the occurrence of any of the following (a “Default”):
(i)
Failure to Pay Principal or Interest. The failure of the Investor to pay, when due, all or any part of any Principal or Interest
required to be made hereunder; or
(ii)
Bankruptcy, etc. The Investor shall have entered against it by a court having jurisdiction thereof a decree or order for
relief in respect to the Investor in an involuntary case under any applicable bankruptcy, insolvency or other similar law now
or hereafter in effect, or a receiver, liquidator, assignee, custodian, trustee, sequestrator or other similar official shall
be appointed for the Investor or for any substantial part of the Investor’s property, or the winding up or liquidation
of the Investor’s affairs shall have been ordered; or the Investor shall commence a voluntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect; or the Investor shall consent to the entry of an
order for such relief in an involuntary case under any such law, or any such involuntary case shall commence, and not be
dismissed within sixty (60) days; or the Investor shall consent to the appointment of or taking possession by a receiver,
liquidator, assignee, custodian, trustee, sequestrator or other similar official for the Investor or for any substantial part
of the Investor’s property, or make any general assignment for the benefit of creditors.
(b) Consequence
of Default. Upon the occurrence of a Default, the outstanding Obligations hereunder shall, at the option of the Company,
become immediately due and payable. Notwithstanding the foregoing, if there shall occur a Default under Section 4(a)(ii)
above, the entire outstanding Obligations hereunder, shall automatically become immediately due and payable without any
action on the part of the Company. Upon the occurrence of a Default, the Company shall also have all the rights and remedies
of a secured party on default under Article 9 of the Uniform Commercial Code of the State of New York with respect to the
Collateral (as hereinafter defined).
5. Representations
and Warranties of the Investor. The Investor represents and warrants to the Company as follows as of the date hereof:
(a) the Investor has the power and authority to execute, deliver and perform all obligations in accordance herewith; (b) the
execution, delivery and performance by the Investor of this Note are within the Investor’s legal powers, and do not
contravene any law or any contractual restriction binding on or affecting the Investor; (c) no authorization or approval or
other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the due
execution, delivery and performance by the Investor of this Note; (d) this Note constitutes the legal, valid and binding
obligation of the Investor, enforceable against the Investor in accordance with its terms, except to the extent
enforceability is limited by bankruptcy, insolvency, fraudulent conveyance, moratorium and other laws for the protection of
creditors generally and by general equitable principles; and (e) there is no pending or, to the Investor’s knowledge,
threatened action or proceeding affecting the Investor before any governmental agency or arbitrator with respect to the
transactions contemplated by this Note or which may materially adversely affect the property, assets or condition (financial
or otherwise) of the Investor.
6. Security.
(a) Grant
of Security Interest. As security for the due and prompt payment and performance of all payment obligations under this
Note and any modifications, replacements and extensions hereof (collectively, “Secured Obligations”), the
Investor hereby pledges and grants a security interest to the Company in all of the Investor’s right, title, and
interest in and to $9,550,000, in U.S. dollars and immediately available funds, held by the Investor in the bank account
described on Schedule I attached hereto (the “Collateral”, and such account, the
“Collateral Account”). So long as any Restricted Principal (as defined in the Convertible Note) remains
outstanding under the Convertible Note, the Investor shall keep a cash amount, in U.S. dollars and immediately available
funds, in the Collateral Account equal to the amount of Restricted Principal then outstanding.
(b) Change
in Collateral Account. The Investor may, with at least five (5) Trading Days notice to the Company, move the Collateral
to an account of the Investor (the “New Collateral Account”) to a financial institution selected by the
Investor, subject to the consent of the Company, not to be unreasonably withheld, and upon such move, such New Collateral
Account shall be the Collateral Account for all purposes hereunder.
7. Offset
Rights.
(a) Investor
Optional Offset. Notwithstanding anything herein to the contrary, Investor may, at any time on or after May 28, 2015, at its
option, at its sole discretion, satisfy all, or any part, of any Principal (and related accrued and unpaid Interest hereunder)
in full by the surrender and concurrent cancellation of such portion of the outstanding obligations under the Convertible Note
equal to such portion of Principal being satisfied hereunder (each, an “Investor Optional Offset”). Upon any
Investor Optional Offset, any accrued and unpaid Interest with respect to such portion of Principal being satisfied in such Investor
Optional Offset shall be automatically cancelled as of the date of such Investor Optional Offset. Each Investor Optional Offset
shall be effective upon the date the Investor delivers notice to the Company of the Investor’s election to effect such Investor
Optional Offset.
(b) Redemption
Offset. Notwithstanding anything herein to the contrary, at the option of the Company, the Company may reduce the
Principal by any cash amount then due and payable by the Company to the Investor under the Convertible Note (after which such
cash amount shall be deemed to have been paid in full under the Convertible Note) (a “Redemption Offset”).
Upon any Redemption Offset, any accrued and unpaid Interest with respect to such portion of Principal being satisfied in such
Redemption Offset shall be automatically cancelled as of the date of such Redemption Offset. Each Redemption Offset shall be
effective upon the date the Company delivers notice to the Investor of the Company’s election to effect such Redemption
Offset.
(c) Event
of Default Offset. Notwithstanding anything herein to the contrary, Investor may, at any time on or after the occurrence
of any Event of Default under the Convertible Note, but prior to the date of cure thereof, at its sole discretion, satisfy
all, or any part, of any Principal (and related accrued and unpaid Interest hereunder) in full by the surrender and
concurrent cancellation of such portion of the outstanding obligations under the Convertible Note equal to such portion of
Principal being satisfied hereunder (each, an “Event of Default Offset”). Upon any Event of Default
Offset, any accrued and unpaid Interest with respect to such portion of Principal being satisfied in such Event of Default
Offset shall be automatically cancelled as of the date of such Event of Default Offset. Each Event of Default Offset shall be
effective upon the date the Investor delivers notice to the Company of the Investor’s election to effect such Event of
Default Offset.
(d) Automatic
Set-off Upon any Bankruptcy Event of Default. Notwithstanding anything herein to the contrary, upon any Bankruptcy Event
of Default under the Convertible Note, all Principal (and related accrued and unpaid Interest hereunder) shall be
automatically satisfied in full by the deemed automatic surrender and concurrent cancellation of the outstanding obligations
under the Convertible Note equal to such portion of Principal being satisfied hereunder (each, a “Bankruptcy Event
of Default Offset”, and together with the Investor Optional Offset, and Event of Default Offset, the
“Investor Offset Rights”). Upon any Bankruptcy Event of Default Offset, any accrued and unpaid Interest
with respect to such portion of Principal being satisfied in such Bankruptcy Event of Default Offset shall be automatically
cancelled as of the date of such Bankruptcy Event of Default Offset. Each Bankruptcy Event of Default Offset shall be
effective upon the date of the earliest occurrence of a Bankruptcy Event.
(e) Automatic
Offset Upon Prohibited Transfers of this Note. If for any reason, this Note or any interest herein is pledged, assigned
or transferred to any Person other than the Company without the prior written consent of the Investor, whether by contract,
operation of law, court order or otherwise (each, a “Prohibited Transfer”), (i) all of the outstanding
Principal shall be automatically deemed satisfied in full, (ii) 75% of the remaining Restricted Principal of the Convertible
Note shall be automatically cancelled (with the remaining 25% of the Restricted Principal of the Convertible Note
automatically becoming unrestricted principal thereunder), (iii) all accrued and unpaid Interest payable hereunder shall be
automatically cancelled and (iv) this Note shall be deemed to be paid in full and shall be null and void.
(f) Investor
Offset Rights; Single Integrated Transaction. The Company hereby acknowledges and agrees that (i) the Investor shall be
entitled to exercise the Investor Offset Rights through any means permissible under applicable law, including without
limitation, set-off and recoupment and (ii) the Obligations of the Investor hereunder and the obligations of the Company
under the Convertible Note issued pursuant to the Securities Purchase Agreement arise in a single integrated transaction and
constitute related and interdependent obligations within such transaction.
8. Miscellaneous.
(a)
Full Recourse. The parties hereby acknowledge and agree that this Note is a full recourse obligation of the
Investor.
(b)
No Oral Waivers or Modifications. No provision of this Note may be waived or modified orally, but only in a writing
signed by the Company and the Investor.
(c) Governing
Law. This Note shall be construed and enforced in accordance with, and all questions concerning the construction,
validity, interpretation and performance of this Note shall be governed by, the internal laws of the State of New York,
without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any
other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York. Each
party hereto hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in The City of
New York, Borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit,
action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper.
Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. EACH
PARTY HERETO HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION
OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS NOTE OR ANY TRANSACTION CONTEMPLATED HEREBY.
(d) Severability.
If any provision of this Note is prohibited by law or otherwise determined to be invalid or unenforceable by a court of
competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to
apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision
shall not affect the validity of the remaining provisions of this Note so long as this Note as so modified continues to
express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited
nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective
expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be
conferred upon the parties. The parties will endeavor in good faith, commercially reasonable negotiations to replace the
prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible
to that of the prohibited, invalid or unenforceable provision(s).
(e) Currency.
Principal and interest due hereunder shall be payable in lawful money of the United States of America and shall be payable
to the Company at the address of the Company, or at such other address as may be specified in a written notice to the
Investor given by the Company. The Company has provided the Investor with wire transfer instructions pursuant to which
payments may be made under this Note and such wire transfer instruction shall be valid for the entire period of this
Note.
(f) Weekend;
Holidays. If any payment on this Note shall become due on a Saturday, Sunday or a bank or legal holiday in the State
of New York, such payment shall be made on the next succeeding business day in the State of New York.
(g) Usury.
If interest payable under this Note is in excess of the maximum permitted by law, the interest chargeable hereunder shall be
reduced to the maximum amount permitted by law and any excess over the maximum amount permitted by law shall be credited to
the Principal balance of this Note and applied to the same and not to the payment of Interest.
(h) Remedies.
No delay or omission on the part of the Company in the exercise of any right or remedy hereunder shall operate as a waiver
thereof, and no partial exercise of any right or remedy precludes other or further exercise thereof or the exercise of any
other rights or remedy.
(i) Waiver
of Presentment. The Investor hereby waives presentment, diligence, protest and demand, notice of protest, demand
and dishonor and nonpayment of this Note.
[Signature
Page Follows]
IN
WITNESS WHEREOF, this Note has been executed as of the date first written above.
|
HUDSON BAY MASTER FUND LTD |
|
|
|
|
By: |
/s/
George Antonopoulos |
|
Name: |
George Antonopoulos |
|
Title: |
|
Agreed and
accepted as of
this 7th day of May by:
INFINITY ENERGY RESOURCES, INC. |
|
|
|
|
By: |
/s/ Stanton
E. Ross |
|
Name: |
Stanton E. Ross |
|
Title: |
Chairman, President & CEO |
|
EXHIBIT 10.52
GUARANTY
This
GUARANTY, dated as of ____, 20__ (this “Guaranty”), is made by each of the undersigned (each a “Guarantor”,
and collectively, the “Guarantors”), in favor of Hudson Bay Master Fund Ltd, a company organized under the
laws of the Cayman Islands, in its capacity as collateral agent (in such capacity, the “Collateral Agent” as
hereinafter further defined) for the “Buyers” party to the Securities Purchase Agreement (each as defined below).
W
I T N E S S E T H :
WHEREAS,
Infinity Energy Resources, Inc., a Delaware corporation, with offices located at 11900 College Blvd., Suite 310, Overland Park
KS 66210 (the “Company”) and each party listed as a “Buyer” on the Schedule of Buyers attached
thereto (collectively, the “Buyers”) are parties to the Securities Purchase Agreement, dated as of May 7, 2015
(as amended, restated, replaced or otherwise modified from time to time, the “Securities Purchase Agreement”),
pursuant to which the Company shall be required to sell, and the Buyers shall purchase or have the right to purchase, the “Notes”
issued pursuant thereto (as such Notes may be amended, restated, replaced or otherwise modified from time to time in accordance
with the terms thereof, collectively, the “Notes”);
WHEREAS,
the Securities Purchase Agreement requires that the Guarantors execute and deliver to the Collateral Agent, (i) a guaranty guaranteeing
all of the obligations of the Company under the Securities Purchase Agreement, the Notes and the other Transaction Documents (as
defined below); and (ii) a Security and Pledge Agreement, dated as of the date hereof, granting the Collateral Agent a lien on
and security interest in in all of their assets and properties (the “Security Agreement”); and
WHEREAS,
each Guarantor has determined that the execution, delivery and performance of this Guaranty directly benefits, and is in the best
interest of, such Guarantor.
NOW,
THEREFORE, in consideration of the premises and the agreements herein and in order to induce the Buyers to perform under the Securities
Purchase Agreement, each Guarantor hereby agrees with each Buyer as follows:
Section
1. Definitions. Reference is hereby made to the Securities
Purchase Agreement and the Notes for a statement of the terms thereof. All terms used in this Guaranty and the recitals hereto
which are defined in the Securities Purchase Agreement or the Notes, and which are not otherwise defined herein shall have the
same meanings herein as set forth therein. In addition, the following terms when used in the Guaranty shall have the meanings
set forth below:
“Bankruptcy
Code” means Chapter 11 of Title 11 of the United States Code, 11 U.S.C §§ 101 et seq. (or other applicable
bankruptcy, insolvency or similar laws).
“Business
Day” means any day other than Saturday, Sunday or other day on which commercial banks in New York City are authorized
or required by law to remain closed.
“Buyer”
or “Buyers” shall have the meaning set forth in the recitals hereto.
“Capital
Stock” means (i) with respect to any Person that is a corporation, any and all shares, interests, participations or
other equivalents (however designated and whether or not voting) of corporate stock (including, without limitation, any warrants,
options, rights or other securities exercisable or convertible into equity interests or securities of such Person), and (ii) with
respect to any Person that is not a corporation, any and all partnership, membership or other equity interests of such Person.
“Collateral”
means all assets and properties of the Company and each Guarantor, wherever located and whether now or hereafter existing
and whether now owned or hereafter acquired, of every kind and description, tangible or intangible, including, without limitation,
the collateral described in Section 2 of the Security Agreement.
“Collateral
Agent” shall have the meaning set forth in the recitals hereto.
“Company”
shall have the meaning set forth in the recitals hereto.
“Governmental
Authority” means any nation or government, any Federal, state, city, town, municipality, county, local, foreign or other
political subdivision thereof or thereto and any department, commission, board, bureau, instrumentality, agency or other entity
exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.
“Guaranteed
Obligations” shall have the meaning set forth in Section 2 of this Guaranty.
“Guarantor”
or “Guarantors” shall have the meaning set forth in the recitals hereto.
“Indemnified
Party” shall have the meaning set forth in Section 13(a) of this Guaranty
“Insolvency
Proceeding” means any proceeding commenced by or against any Person under any provision of the Bankruptcy Code or under
any other bankruptcy or insolvency law, assignments for the benefit of creditors, formal or informal moratoria, compositions,
or extensions generally with creditors, or proceedings seeking reorganization, arrangement, or other similar relief.
“Notes”
shall have the meaning set forth in the recitals hereto.
“Obligations”
shall have the meaning set forth in Section 3 of the Security Agreement.
“Other
Taxes” shall have the meaning set forth in Section 12(a)(iv) of this Guaranty.
“Paid
in Full” or “Payment in Full” means the indefeasible payment in full in cash of all of the Guaranteed Obligations.
“Person”
means an individual, corporation, limited liability company, partnership, association, joint-stock company, trust, unincorporated
organization, joint venture or other enterprise or entity or Governmental Authority.
“Securities
Purchase Agreement” shall have the meaning set forth in the recitals hereto.
“Security
Agreement” shall have the meaning set forth in the recitals hereto.
“Subsidiary”
means any Person in which a Guarantor directly or indirectly, (i) owns any of the outstanding Capital Stock or holds any equity
or similar interest of such Person or (ii) controls or operates all or any part of the business, operations or administration
of such Person, and all of the foregoing, collectively, “Subsidiaries”.
“Taxes”
shall have the meaning set forth in Section 12(a) of this Guaranty.
“Transaction
Party” means the Company and each Guarantor, collectively, “Transaction Parties”.
Section
2. Guaranty.
(a)
The Guarantors, jointly and severally, hereby unconditionally and irrevocably, guaranty to the Collateral Agent, for the benefit
of the Collateral Agent and the Buyers, the punctual payment, as and when due and payable, by stated maturity or otherwise, of
all Obligations, including, without limitation, all interest, make-whole and other amounts that accrue after the commencement
of any Insolvency Proceeding of the Company or any Guarantor, whether or not the payment of such interest, make-whole and/or other
amounts are enforceable or are allowable in such Insolvency Proceeding, and all fees, interest, premiums, penalties, causes of
actions, costs, commissions, expense reimbursements, indemnifications and all other amounts due or to become due under any of
the Transaction Documents (all of the foregoing collectively being the “Guaranteed Obligations”), and agrees
to pay any and all costs and expenses (including counsel fees and expenses) incurred by the Collateral Agent in enforcing any
rights under this Guaranty or any other Transaction Document. Without limiting the generality of the foregoing, each Guarantor’s
liability hereunder shall extend to all amounts that constitute part of the Guaranteed Obligations and would be owed by the Company
to the Collateral Agent or any Buyer under the Securities Purchase Agreement and the Notes but for the fact that they are unenforceable
or not allowable due to the existence of an Insolvency Proceeding involving any Transaction Party.
(b)
Each Guarantor, and by its acceptance of this Guaranty, the Collateral Agent and each Buyer, hereby confirms that it is the intention
of all such Persons that this Guaranty and the Guaranteed Obligations of each Guarantor hereunder not constitute a fraudulent
transfer or conveyance for purposes of the Bankruptcy Code, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer
Act or any similar foreign, federal, provincial, state, or other applicable law to the extent applicable to this Guaranty and
the Guaranteed Obligations of each Guarantor hereunder. To effectuate the foregoing intention, the Collateral Agent, the Buyers
and the Guarantors hereby irrevocably agree that the Guaranteed Obligations of each Guarantor under this Guaranty at any time
shall be limited to the maximum amount as will result in the Guaranteed Obligations of such Guarantor under this Guaranty not
constituting a fraudulent transfer or conveyance.
Section
3. Guaranty Absolute; Continuing Guaranty; Assignments.
(a)
The Guarantors, jointly and severally, guaranty that the Guaranteed Obligations will be paid strictly in accordance with the terms
of the Transaction Documents, regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting
any of such terms or the rights of the Collateral Agent or any Buyer with respect thereto. The obligations of each Guarantor under
this Guaranty are independent of the Guaranteed Obligations, and a separate action or actions may be brought and prosecuted against
any Guarantor to enforce such obligations, irrespective of whether any action is brought against any Transaction Party or whether
any Transaction Party is joined in any such action or actions. The liability of any Guarantor under this Guaranty shall be as
a primary obligor (and not merely as a surety) and shall be irrevocable, absolute and unconditional irrespective of, and each
Guarantor hereby irrevocably waives, to the extent permitted by law, any defenses it may now or hereafter have in any way relating
to, any or all of the following:
(i)
any lack of validity or enforceability of any Transaction Document;
(ii)
any change in the time, manner or place of payment of, or in any other term of, all or any of the Guaranteed Obligations, or any
other amendment or waiver of or any consent to departure from any Transaction Document, including, without limitation, any increase
in the Guaranteed Obligations resulting from the extension of additional credit to any Transaction Party or extension of the maturity
of any Guaranteed Obligations or otherwise;
(iii)
any taking, exchange, release or non-perfection of any Collateral;
(iv)
any taking, release or amendment or waiver of or consent to departure from any other guaranty, for all or any of the Guaranteed
Obligations;
(v)
any change, restructuring or termination of the corporate, limited liability company or partnership structure or existence of
any Transaction Party;
(vi)
any manner of application of Collateral or any other collateral, or proceeds thereof, to all or any of the Guaranteed Obligations,
or any manner of sale or other disposition of any Collateral or any other collateral for all or any of the Guaranteed Obligations
or any other Obligations of any Transaction Party under the Transaction Documents or any other assets of any Transaction Party
or any of its Subsidiaries;
(vii)
any failure of the Collateral Agent or any Buyer to disclose to any Transaction Party any information relating to the business,
condition (financial or otherwise), operations, performance, properties or prospects of any other Transaction Party now or hereafter
known to the Collateral Agent or any Buyer (each Guarantor waiving any duty on the part of the Collateral Agent or any Buyer to
disclose such information);
(viii)
taking any action in furtherance of the release of any Guarantor or any other Person that is liable for the Obligations from all
or any part of any liability arising under or in connection with any Transaction Document without the prior written consent of
the Collateral Agent; or
(ix)
any other circumstance (including, without limitation, any statute of limitations) or any existence of or reliance on any representation
by the Collateral Agent or any Buyer that might otherwise constitute a defense available to, or a discharge of, any Transaction
Party or any other guarantor or surety.
(b)
This Guaranty shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Guaranteed
Obligations is rescinded or must otherwise be returned by the Collateral Agent, any Buyer, or any other Person upon the insolvency,
bankruptcy or reorganization of any Transaction Party or otherwise, all as though such payment had not been made.
(c)
This Guaranty is a continuing guaranty and shall (i) remain in full force and effect until Payment in Full of the Guaranteed Obligations
(other than inchoate indemnity obligations) and shall not terminate for any reason prior to the respective Maturity Date of each
Note (other than Payment in Full of the Guaranteed Obligations) and (ii) be binding upon each Guarantor and its respective successors
and assigns. This Guaranty shall inure to the benefit of and be enforceable by the Collateral Agent, the Buyers, and their respective
successors, and permitted pledgees, transferees and assigns. Without limiting the generality of the foregoing sentence, the Collateral
Agent or any Buyer may pledge, assign or otherwise transfer all or any portion of its rights and obligations under and subject
to the terms of any Transaction Document to any other Person, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted to the Collateral Agent or such Buyer (as applicable) herein or otherwise, in each case as
provided in the Securities Purchase Agreement or such Transaction Document.
Section
4. Waivers. To the extent permitted by applicable law, each
Guarantor hereby waives promptness, diligence, protest, notice of acceptance and any other notice or formality of any kind with
respect to any of the Guaranteed Obligations and this Guaranty and any requirement that the Collateral Agent exhaust any right
or take any action against any Transaction Party or any other Person or any Collateral. Each Guarantor acknowledges that it will
receive direct and indirect benefits from the financing arrangements contemplated herein and that the waiver set forth in this
Section 4 is knowingly made in contemplation of such benefits. The Guarantors hereby waive any right to revoke this Guaranty,
and acknowledge that this Guaranty is continuing in nature and applies to all Guaranteed Obligations, whether existing now or
in the future. Without limiting the foregoing, to the extent permitted by applicable law, each Guarantor hereby unconditionally
and irrevocably waives (a) any defense arising by reason of any claim or defense based upon an election of remedies by the
Collateral Agent or any Buyer that in any manner impairs, reduces, releases or otherwise adversely affects the subrogation, reimbursement,
exoneration, contribution or indemnification rights of such Guarantor or other rights of such Guarantor to proceed against any
of the other Transaction Parties, any other guarantor or any other Person or any Collateral, and (b) any defense based on
any right of set-off or counterclaim against or in respect of the Guaranteed Obligations of such Guarantor hereunder. Each Guarantor
hereby unconditionally and irrevocably waives any duty on the part of the Collateral Agent or any Buyer to disclose to such Guarantor
any matter, fact or thing relating to the business, condition (financial or otherwise), operations, performance, properties or
prospects of any other Transaction Party or any of its Subsidiaries now or hereafter known by the Collateral Agent or a Buyer.
Section
5. Subrogation. No Guarantor may exercise any rights that
it may now or hereafter acquire against any Transaction Party or any other guarantor that arise from the existence, payment, performance
or enforcement of any Guarantor’s obligations under this Guaranty, including, without limitation, any right of subrogation,
reimbursement, exoneration, contribution or indemnification and any right to participate in any claim or remedy of the Collateral
Agent or any Buyer against any Transaction Party or any other guarantor or any Collateral, whether or not such claim, remedy or
right arises in equity or under contract, statute or common law, including, without limitation, the right to take or receive from
any Transaction Party or any other guarantor, directly or indirectly, in cash or other property or by set-off or in any other
manner, payment or security solely on account of such claim, remedy or right, unless and until there has been Payment in Full
of the Guaranteed Obligations. If any amount shall be paid to a Guarantor in violation of the immediately preceding sentence at
any time prior to Payment in Full of the Guaranteed Obligations and all other amounts payable under this Guaranty, such amount
shall be held in trust for the benefit of the Collateral Agent and shall forthwith be paid to the Collateral Agent to be credited
and applied to the Guaranteed Obligations and all other amounts payable under this Guaranty, whether matured or unmatured, in
accordance with the terms of the Transaction Document, or to be held as Collateral for any Guaranteed Obligations or other amounts
payable under this Guaranty thereafter arising. If (a) any Guarantor shall make payment to the Collateral Agent of all or
any part of the Guaranteed Obligations, and (b) there has been Payment in Full of the Guaranteed Obligations, the Collateral Agent
will, at such Guarantor’s request and expense, execute and deliver to such Guarantor appropriate documents, without recourse
and without representation or warranty, necessary to evidence the transfer by subrogation to such Guarantor of an interest in
the Guaranteed Obligations resulting from such payment by such Guarantor.
Section
6. Representations, Warranties and Covenants.
(a)
Each Guarantor hereby represents and warrants as of the date first written above as follows:
(i)
such Guarantor (A) is a corporation, limited liability company or limited partnership duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization as set forth on the signature pages hereto, (B) has all requisite
corporate, limited liability company or limited partnership power and authority to conduct its business as now conducted and as
presently contemplated and to execute, deliver and perform its obligations under this Guaranty and each other Transaction Document
to which such Guarantor is a party, and to consummate the transactions contemplated hereby and thereby and (C) is duly qualified
to do business and is in good standing in each jurisdiction in which the character of the properties owned or leased by it or
in which the transaction of its business makes such qualification necessary except where the failure to be so qualified (individually
or in the aggregate) would not result in a Material Adverse Effect.
(ii)
The execution, delivery and performance by such Guarantor of this Guaranty and each other Transaction Document to which such Guarantor
is a party (A) have been duly authorized by all necessary corporate, limited liability company or limited partnership action,
(B) do not and will not contravene its charter, articles, certificate of formation or by-laws, its limited liability company or
operating agreement or its certificate of partnership or partnership agreement, as applicable, or any applicable law or any contractual
restriction binding on such Guarantor or its properties do not and will not result in or require the creation of any lien, security
interest or encumbrance (other than pursuant to any Transaction Document) upon or with respect to any of its properties, and (C)
do not and will not result in any default, noncompliance, suspension, revocation, impairment, forfeiture or nonrenewal of any
material permit, license, authorization or approval applicable to it or its operations or any of its properties.
(iii)
No authorization or approval or other action by, and no notice to or filing with, any Governmental Authority or other Person is
required in connection with the due execution, delivery and performance by such Guarantor of this Guaranty or any of the other
Transaction Documents to which such Guarantor is a party (other than expressly provided for in any of the Transaction Documents).
(iv)
This Guaranty has been duly executed and delivered by each Guarantor and is, and each of the other Transaction Documents to which
such Guarantor is or will be a party, when executed and delivered, will be, a legal, valid and binding obligation of such Guarantor,
enforceable against such Guarantor in accordance with its terms, except as may be limited by the Bankruptcy Code or other applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, suretyship or similar laws and equitable principles
(regardless of whether enforcement is sought in equity or at law).
(v)
There is no pending or, to the best knowledge of such Guarantor, threatened action, suit or proceeding against such Guarantor
or to which any of the properties of such Guarantor is subject, before any court or other Governmental Authority or any arbitrator
that (A) if adversely determined, could reasonably be expected to have a Material Adverse Effect or (B) relates to this
Guaranty or any of the other Transaction Documents to which such Guarantor is a party or any transaction contemplated hereby or
thereby.
(vi)
Such Guarantor (A) has read and understands the terms and conditions of the Securities Purchase Agreement and the other Transaction
Documents, and (B) now has and will continue to have independent means of obtaining information concerning the affairs, financial
condition and business of the Company and the other Transaction Parties, and has no need of, or right to obtain from the Collateral
Agent or any Buyer, any credit or other information concerning the affairs, financial condition or business of the Company or
the other Transaction Parties.
(vii)
There are no conditions precedent to the effectiveness of this Guaranty that have not been satisfied or waived.
(b)
Each Guarantor covenants and agrees that until Payment in Full of the Guaranteed Obligations, it will comply with each of the
covenants (except to the extent applicable only to a public company) which are set forth in Section 4 of the Securities Purchase
Agreement as if such Guarantor were a party thereto.
Section
7. Right of Set-off. Upon the occurrence and during
the continuance of any Event of Default, the Collateral Agent and any Buyer may, and is hereby authorized to, at any time and
from time to time, without notice to the Guarantors (any such notice being expressly waived by each Guarantor) and to the fullest
extent permitted by law, set-off and apply any and all deposits (general or special, time or demand, provisional or final) at
any time held and other indebtedness at any time owing by the Collateral Agent or any Buyer to or for the credit or the account
of any Guarantor against any and all obligations of the Guarantors now or hereafter existing under this Guaranty or any other
Transaction Document, irrespective of whether or not the Collateral Agent or any Buyer shall have made any demand under this Guaranty
or any other Transaction Document and although such obligations may be contingent or unmatured. The Collateral Agent and each
Buyer agrees to notify the relevant Guarantor promptly after any such set-off and application made by the Collateral Agent or
such Buyer, provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights
of the Collateral Agent or any Buyer under this Section 7 are in addition to other rights and remedies (including, without
limitation, other rights of set-off) which the Collateral Agent or such Buyer may have under this Guaranty or any other Transaction
Document in law or otherwise.
Section
8. Limitation on Guaranteed Obligations.
(a)
Notwithstanding any provision herein contained to the contrary, each Guarantor’s liability hereunder shall be limited to
an amount not to exceed as of any date of determination the greater of:
(i)
the amount of all Guaranteed Obligations, plus interest thereon at the applicable Interest Rate as specified in the Note; and
(ii)
the amount which could be claimed by the Collateral Agent from any Guarantor under this Guaranty without rendering such claim
voidable or avoidable under the Bankruptcy Code or under any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent
Conveyance Act or similar statute or common law after taking into account, among other things, Guarantor’s right of contribution
and indemnification.
(b)
Each Guarantor agrees that the Guaranteed Obligations may at any time and from time to time exceed the amount of the liability
of such Guarantor hereunder without impairing the guaranty hereunder or affecting the rights and remedies of the Collateral Agent
or any Buyer hereunder or under applicable law.
(c)
No payment made by the Company, any Guarantor, any other guarantor or any other Person or received or collected by the Collateral
Agent or any other Buyer from the Company, any of the Guarantors, any other guarantor or any other Person by virtue of any action
or proceeding or any set-off or appropriation or application at any time or from time to time in reduction of or in payment of
the Guaranteed Obligations shall be deemed to modify, reduce, release or otherwise affect the liability of any Guarantor hereunder
which shall, notwithstanding any such payment (other than any payment made by such Guarantor in respect of the Guaranteed Obligations
or any payment received or collected from such Guarantor in respect of the Guaranteed Obligations), remain liable for the Guaranteed
Obligations up to the maximum liability of such Guarantor hereunder until after all of the Guaranteed Obligations and all other
amounts payable under this Guaranty shall have been Paid in Full.
Section
9. Notices, Etc. Any notices, consents, waivers or other
communications required or permitted to be given under the terms of this Guaranty must be in writing and will be deemed to have
been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation
of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one (1) Business
Day after deposit with an nationally recognized overnight courier service with next day delivery specified, in each case, properly
addressed to the party to receive the same. All notices and other communications provided for hereunder shall be sent, if to any
Guarantor, to the Company’s address and/or facsimile number, or if to the Collateral Agent or any Buyer, to it at its respective
address and/or facsimile number, each as set forth in Section 9(f) of the Securities Purchase Agreement.
Section
10. Governing Law; Jurisdiction. All questions concerning
the construction, validity, enforcement and interpretation of this Guaranty shall be governed by the internal laws of the State
of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York
or any other jurisdictions) that would cause the application of the laws of any jurisdiction other than the State of New York.
Each Guarantor 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 under any of the other
Transaction Documents or with any transaction contemplated hereby or thereby, and hereby irrevocably waives, and agrees not to
assert in any suit, action or proceeding, any claim, obligation or defense that it is not personally subject to the jurisdiction
of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action
or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served
in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under Section
9(f) of the Securities Purchase 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. Nothing contained herein shall be deemed or operate to preclude the Collateral Agent or the Buyers from bringing suit
or taking other legal action against any Guarantor in any other jurisdiction to collect on a Guarantor’s obligations or
to enforce a judgment or other court ruling in favor of the Collateral Agent or a Buyer.
Section
11. WAIVER OF JURY TRIAL, ETC. EACH GUARANTOR HEREBY IRREVOCABLY
WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR UNDER
ANY OTHER TRANSACTION DOCUMENT OR IN CONNECTION WITH OR ARISING OUT OF THIS GUARANTY, ANY OTHER TRANSACTION DOCUMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY OR THEREBY.
Section
12. Taxes.
(a)
All payments made by any Guarantor hereunder or under any other Transaction Document shall be made in accordance with the terms
of the respective Transaction Document and shall be made without set-off, counterclaim, withholding, deduction or other defense.
Without limiting the foregoing, all such payments shall be made free and clear of and without deduction or withholding for any
present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding
taxes imposed on the net income of the Collateral Agent or any Buyer by the jurisdiction in which the Collateral Agent or
such Buyer is organized or where it has its principal lending office (all such nonexcluded taxes, levies, imposts, deductions,
charges, withholdings and liabilities, collectively or individually, “Taxes”). If any Guarantor shall be required
to deduct or to withhold any Taxes from or in respect of any amount payable hereunder or under any other Transaction Document:
(i)
the amount so payable shall be increased to the extent necessary so that after making all required deductions and withholdings
(including Taxes on amounts payable to the Collateral Agent or any Buyer pursuant to this sentence) the Collateral Agent or each
Buyer receives an amount equal to the sum it would have received had no such deduction or withholding been made,
(ii)
such Guarantor shall make such deduction or withholding,
(iii)
such Guarantor shall pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable
law, and
(iv)
as promptly as possible thereafter, such Guarantor shall send the Collateral Agent or each Buyer an official receipt (or, if an
official receipt is not available, such other documentation as shall be satisfactory to the Collateral Agent, as the case may
be) showing payment. In addition, each Guarantor agrees to pay any present or future stamp or documentary taxes or any other excise
or property taxes, charges or similar levies that arise from any payment made hereunder or from the execution, delivery, registration
or enforcement of, or otherwise with respect to, this Guaranty or any other Transaction Document (collectively, “Other
Taxes”).
(b)
Each Guarantor hereby indemnifies and agrees to hold each Indemnified Party harmless from and against Taxes or Other Taxes (including,
without limitation, any Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this Section 12)
paid by any Indemnified Party as a result of any payment made hereunder or from the execution, delivery, registration or enforcement
of, or otherwise with respect to, this Guaranty or any other Transaction Document, and any liability (including penalties, interest
and expenses for nonpayment, late payment or otherwise) arising therefrom or with respect thereto, whether or not such Taxes or
Other Taxes were correctly or legally asserted. This indemnification shall be paid within thirty (30) days from the date on which
the Collateral Agent or such Buyer makes written demand therefor, which demand shall identify the nature and amount of such Taxes
or Other Taxes.
(c)
If any Guarantor fails to perform any of its obligations under this Section 12, such Guarantor shall indemnify the
Collateral Agent and each Buyer for any taxes, interest or penalties that may become payable as a result of any such failure.
The obligations of the Guarantors under this Section 12 shall survive the termination of this Guaranty and the payment
of the Obligations and all other amounts payable hereunder.
Section
13. Indemnification.
(a)
Without limitation of any other obligations of any Guarantor or remedies of the Collateral Agent or the Buyers under this Guaranty
or applicable law, except to the extent resulting from such Indemnified Party’s gross negligence or willful misconduct,
as determined by a final judgment of a court of competent jurisdiction no longer subject to appeal, each Guarantor shall, to the
fullest extent permitted by law, indemnify, defend and save and hold harmless the Collateral Agent and each Buyer and each of
their affiliates and their respective officers, directors, employees, agents and advisors (each, an “Indemnified Party”)
from and against, and shall pay on demand, any and all claims, damages, losses, liabilities and expenses (including, without limitation,
reasonable fees and expenses of counsel) that may be incurred by or asserted or awarded against any Indemnified Party in connection
with or as a result of any failure of any Guaranteed Obligations to be the legal, valid and binding obligations of any Transaction
Party enforceable against such Transaction Party in accordance with their terms.
(b)
Each Guarantor hereby also agrees that none of the Indemnified Parties shall have any liability (whether direct or indirect, in
contract, tort or otherwise) or any fiduciary duty or obligation to any of the Guarantors or any of their respective affiliates
or any of their respective officers, directors, employees, agents and advisors, and each Guarantor hereby agrees not to assert
any claim against any Indemnified Party on any theory of liability, for special, indirect, consequential, incidental or punitive
damages arising out of or otherwise relating to the facilities, the actual or proposed use of the proceeds of the advances, the
Transaction Documents or any of the transactions contemplated by the Transaction Documents.
Section
14. Miscellaneous.
(a)
Each Guarantor will make each payment hereunder in lawful money of the United States of America and in immediately available funds
to the Collateral Agent or each Buyer, at such address specified by the Collateral Agent or such Buyer from time to time by notice
to the Guarantors.
(b)
No amendment or waiver of any provision of this Guaranty and no consent to any departure by any Guarantor therefrom shall in any
event be effective unless the same shall be in writing and signed by each Guarantor, the Collateral Agent and each Buyer, and
then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.
(c)
No failure on the part of the Collateral Agent or any Buyer to exercise, and no delay in exercising, any right or remedy hereunder
or under any other Transaction Document shall operate as a waiver thereof, nor shall any single or partial exercise of any right
hereunder or under any Transaction Document preclude any other or further exercise thereof or the exercise of any other right
or remedy. The rights and remedies of the Collateral Agent and the Buyers provided herein and in the other Transaction Documents
are cumulative and are in addition to, and not exclusive of, any rights or remedies provided by law. The rights and remedies of
the Collateral Agent and the Buyers under any Transaction Document against any party thereto are not conditional or contingent
on any attempt by the Collateral Agent or any Buyer to exercise any of their respective rights or remedies under any other Transaction
Document against such party or against any other Person.
(d)
Any provision of this Guaranty that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the remaining portions hereof or affecting the validity
or enforceability of such provision in any other jurisdiction.
(e)
This Guaranty is a continuing guaranty and shall (i) remain in full force and effect until Payment in Full of the Guaranteed Obligations
(other than inchoate indemnity obligations) and shall not terminate for any reason prior to the respective Maturity Date of each
Note (other than Payment in Full of the Guaranteed Obligations) and (ii) be binding upon each Guarantor and its respective successors
and assigns. This Guaranty shall inure, together with all rights and remedies of the Collateral Agent hereunder, to the benefit
of and be enforceable by the Collateral Agent, the Buyers, and their respective successors, and permitted pledgees, transferees
and assigns. Without limiting the generality of the foregoing sentence, the Collateral Agent or any Buyer may pledge, assign or
otherwise transfer all or any portion of its rights and obligations under and subject to the terms of the Securities Purchase
Agreement or any other Transaction Document to any other Person in accordance with the terms thereof, and such other Person shall
thereupon become vested with all the benefits in respect thereof granted to the Collateral Agent or such Buyer (as applicable)
herein or otherwise, in each case as provided in the Securities Purchase Agreement or such Transaction Document. None of the rights
or obligations of any Guarantor hereunder may be assigned or otherwise transferred without the prior written consent of each Buyer.
(f)
This Guaranty and the other Transaction Documents reflect the entire understanding of the transaction contemplated hereby and
shall not be contradicted or qualified by any other agreement, oral or written, entered into before the date hereof.
(g)
Section headings herein are included for convenience of reference only and shall not constitute a part of this Guaranty for any
other purpose.
Section
15. Currency Indemnity.
If,
for the purpose of obtaining or enforcing judgment against Guarantor in any court in any jurisdiction, it becomes necessary to
convert into any other currency (such other currency being hereinafter in this Section 15 referred to as the “Judgment
Currency”) an amount due under this Guaranty in any currency (the “Obligation Currency”) other than
the Judgment Currency, the conversion shall be made at the rate of exchange prevailing on the Business Day immediately preceding
(a) the date of actual payment of the amount due, in the case of any proceeding in the courts of courts of the jurisdiction that
will give effect to such conversion being made on such date, or (b) the date on which the judgment is given, in the case of any
proceeding in the courts of any other jurisdiction (the applicable date as of which such conversion is made pursuant to this Section
15 being hereinafter in this Section 15 referred to as the “Judgment Conversion Date”).
If,
in the case of any proceeding in the court of any jurisdiction referred to in the preceding paragraph, there is a change in the
rate of exchange prevailing between the Judgment Conversion Date and the date of actual receipt of the amount due in immediately
available funds, the Guarantors shall pay such additional amount (if any, but in any event not a lesser amount) as may be necessary
to ensure that the amount actually received in the Judgment Currency, when converted at the rate of exchange prevailing on the
date of payment, will produce the amount of the Obligation Currency which could have been purchased with the amount of’
the Judgment Currency stipulated in the judgment or judicial order at the rate of exchange prevailing on the Judgment Conversion
Date. Any amount due from the Guarantors under this Section 15 shall be due as a separate debt and shall not be affected
by judgment being obtained for any other amounts due under or in respect of this Guaranty.
[REMAINDER
OF THIS PAGE INTENTIONALLY LEFT BLANK]
IN
WITNESS WHEREOF, each Guarantor has caused this Guaranty to be executed by its respective duly authorized officer, as of the date
first above written.
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GUARANTORS:
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[U.S. SUBSIDIARY], a
[SUBJURISDICTION] corporation |
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By: |
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Name: |
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Title: |
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[U.S. SUBSIDIARY], a
[SUBJURISDICTION] corporation |
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By: |
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Name: |
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Title: |
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[U.S. SUBSIDIARY], a
[SUBJURISDICTION] corporation |
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By: |
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Name: |
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Title: |
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[U.S. SUBSIDIARY], a
[SUBJURISDICTION] corporation |
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By: |
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Name: |
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Title: |
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[U.S. SUBSIDIARY], a
[SUBJURISDICTION] corporation |
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By: |
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Name: |
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Title: |
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[Signatures
continue on following page]
ACCEPTED
BY: |
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HUDSON
BAY MASTER FUND LTD, as Collateral Agent
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By: |
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