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):
September 25, 2015
AMARANTUS BIOSCIENCE HOLDINGS, INC.
(Exact name of registrant as specified in
its charter)
| Nevada |
000-55016 |
26-0690857 |
(State or other jurisdiction of
incorporation or organization) |
(Commission File Number) |
IRS Employer
Identification No.) |
|
655 Montgomery Street, Suite 900
San Francisco, CA |
94111 |
| (Address of Principal Executive Offices) |
(Zip Code) |
(408) 737-2734
(Registrant’s telephone number, including
area code)
Check the appropriate box below if the
Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨
Written communications pursuant to Rule 425 under the Securities Act
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
| Item 1.01 |
Entry Into a Material Definitive Agreement. |
Series H Preferred Stock and Warrants
On September 30, 2015, Amarantus BioScience
Holdings, Inc. (the “Company”) entered into a Securities Purchase Agreement (the “Series
H SPA”) with an institutional investor for the sale of 3,055.556 (including 10% OID) shares of the Company’s 12% Series
H Preferred Stock (the “Series H Preferred Stock”) and a warrant to purchase 1,298,612 shares of common stock (the
“RD Warrant” and together with the Series H Preferred Stock, the “Securities”) in a registered direct offering
(the “RD Offering”), subject to customary closing conditions. The gross proceeds to the Company from the RD
Offering were $2,750,000. Each share of Series H Preferred Stock has a stated value of $1,000 and is convertible into shares
of common stock at an initial conversion price of the lower of (i) $2.50, subject to adjustment and (ii) 75%, subject to adjustment,
of the lowest volume weighted average price, or VWAP, during the fifteen (15) Trading Days immediately prior to the date a conversion
notice is sent to the Company by a holder, at any time at the option of the holder.
The RD Warrant
is exercisable at any time on or after the earlier to occur of (i) all shares of common stock underlying the RD Warrant
are registered for resale under the Securities Act of 1933, and (ii) the date six (6) months from September 30, 2015 (the earlier
to occur of (i) and (ii), the “Initial Exercise Date”) and on or prior to the close of business on the five-year anniversary
of the Initial Exercise Date at an exercise price of $2.00 per share.
On September 30, 2015, the Company filed
a Certificate of Designation of Preferences, Rights and Limitations of the Series H 12% Convertible Preferred Stock with the Secretary
of State of the State of Nevada. A copy of the Certificate of Designations is attached hereto as Exhibit 3.1, which is incorporated
herein by reference.
The Securities were issued pursuant to a
prospectus supplement dated September 30, 2015 filed with the Securities and Exchange Commission on September 30, 2015, in connection
with a takedown from the Registration Statement on Form S-3 (File No. 333-203845), which was declared effective by the
SEC on May 22, 2015.
The foregoing summary of the terms of the
Series H SPA and RD Warrant is subject to, and qualified in its entirety by, such documents attached hereto as Exhibits 10.1
and 10.2, respectively, each of which is incorporated herein by reference.
12% Senior Secured Convertible Promissory Note and Warrants
On September 30, 2015, the Company entered
into a Securities Purchase Agreement (the “Notes SPA”) with an institutional investor for the sale of an aggregate
principal amount $3,055,556 (including 10% OID) 12% Senior Secured Convertible Promissory Notes due September 29, 2016 (the “Senior
Secured Notes”) and a warrant to purchase 1,298,612 shares of common stock (the “PP Warrant”) in a private placement
offering (the “PP Offering”). The gross proceeds to the Company from the PP Offering were $2,750,000.
The principal amount of the Senior Secured
Notes shall accrue interest at a rate equal to 12% per annum, payable on the Maturity Date in cash, or, at the Company’s
option, in common stock or a combination thereof. At any time upon five (5) days written notice to the Investor, the Company may
prepay any portion of the principal amount of the Senior Secured Notes and any accrued and unpaid interest at an amount equal to
120% of the then outstanding principal amount of the Senior Secured Notes and accrued interest or 130% if a Qualified Financing
(as defined in the Senior Secured Notes) has occurred.
At any time after the issuance date of the
Senior Secured Notes until all amounts due have been paid in full, the Senior Secured Note shall be convertible, in whole or in
part, into shares of common stock at the option of the holder, at any time and from time to time. The conversion price in effect
on any conversion date shall be equal to the lowest of (i) $2.50, (ii) 75% of the lowest daily VWAP in the fifteen (15) trading
days prior to the conversion date, or (iii) (A) if a Public Offering (as defined in the Senior Secured Note) that is not a Qualified
Public Offering (as defined in the Senior Secured Note) has occurred, 75% or (B) if a Qualified Public Offering has occurred, 80%
of the lowest of the (x) per share price of shares of common stock, and (y) the lowest conversion price, exercise price or exchange
price of any common stock equivalents, that are sold or issued to the public in the Public Offering or the Qualified Public Offering,
respectively.
Effective on the closing (the “Mandatory
Conversion Date”) of a Qualified Public Offering, the Qualified Public Offering Conversion Amount (as defined in the Senior
Secured Note) shall automatically (without further act or deed of the Holder or the Company) convert (the “Mandatory Conversion”)
into such number of shares of common stock as shall equal the quotient of (i) the Qualified Public Offering Conversion Amount outstanding
as of and including the Mandatory Conversion Date, divided by (ii) a conversion price equal to the lowest of (i) the Conversion
Price on the Mandatory Conversion Date, and (ii) eighty percent (80%) of the lowest of (x) the price per share at which the Company
sells shares of common stock, and (y) the lowest conversion price, exercise price or exchange price of any common stock equivalents,
if any, sold and or issued to the public in a Qualified Public Offering, if any,
The Senior Secured Notes contain certain
customary Events of Default (including, but not limited to, default in payment of principal or interest thereunder, breaches of
covenants, agreements, representations or warranties thereunder, the occurrence of an event of default under certain material contracts
of the Company, including the transaction documents relating to the PP Offering, changes in control of the Company, filing of bankruptcy
and the entering or filing of certain monetary judgments against the Company). Upon the occurrence of any such Event of Default
the outstanding principal amount of the Senior Secured Notes, plus accrued but unpaid interest, liquidated damages, and other amounts
owing in respect thereof through the date of acceleration, shall become, at the Investor’s election, immediately due and
payable in cash. Upon any Event of Default that results in acceleration of the Senior Secured Notes, the interest rate on the Senior
Secured Notes shall accrue at an interest rate equal to the lesser of 24% per annum or the maximum rate permitted under applicable
law.
In connection with the issuance of the Senior
Secured Notes, effective on September 30, 2015, the Company entered into a Security Agreement and a Patent and Trademark Security
Agreement with the investor (the “Security Agreement”) pursuant to which the Company agreed to grant a security interest
in all of its assets to the investor in order to secure the prompt payment, performance and discharge in full of all of the Company’s
obligations under the Senior Secured Notes.
The PP Warrant
is exercisable at any time on or after the earlier to occur of (i) all shares of common stock underlying the PP Warrant
are registered for resale under the Securities Act of 1933, and (ii) the date six (6) months from September 30, 2015 (the earlier
to occur of (i) and (ii), the “Initial Exercise Date”) and on or prior to the close of business on the five-year anniversary
of the Initial Exercise Date at an exercise price of $2.00 per share.
The foregoing summary of the terms of the
Notes SPA, Senior Secured Notes, Security Agreement, Patent and Trademark Security Agreement and PP Warrant is subject to, and
qualified in its entirety by, such documents attached hereto as Exhibits 10.3, 10.4, 10.5 and 10.6, each of which is incorporated
herein by reference.
Other Agreements
On September 30, 2015, the Company entered
into an exchange agreement (the “Exchange Agreement”) with an existing institutional investor pursuant to which the
existing investor exchanged $3,021,000 (including OID and make-whole) aggregate principal amount of Senior Secured Convertible
Notes of the Company for $3,021,000 aggregate principal amount of Senior Secured Notes and a PP Warrant to purchase 1,298,612 shares
of common stock. The purpose of the exchange was to simplify the Company’s capital structure with a single series of convertible
secured notes outstanding. The exchange of the Senior Secured Convertible Notes for the Senior Secured Notes was made in reliance
on the exemption from registration afforded under Section 3(a)(9) of the Securities Act of 1933, as amended.
In connection with the issuance of the Senior
Secured Notes, effective on September 30, 2015, the existing institutional investor entered into the Security Agreement and the
Patent and Trademark Security Agreement referenced above pursuant to which the Company agreed to grant a security interest in all
of its assets to the investor in order to secure the prompt payment, performance and discharge in full of all of the Company’s
obligations under the Senior Secured Notes.
The foregoing summary of the terms of the
Exchange Agreement is subject to, and qualified in its entirety by, such document attached hereto as Exhibits 10.7, which
is incorporated herein by reference.
On September 30, 2015, the Company entered
into a registration rights agreement (the “Registration Rights Agreement”) with certain investors pursuant to which
the Company agreed to register for resale on Form S-1 the shares of common stock underlying the Senior Secured Notes, the shares
of common stock issuable upon exercise of the PP Warrants and shares of common stock held by certain other holders. Pursuant to
the Registration Rights Agreement, the Company agreed to file the registration statement by October 10, 2015. The Company would
be obligated to pay financial penalties to the holders in the event the registration statement is filed after October 10, 2015
or the registration statement is not declared effective by the SEC within 60 days after October 10, 2015.
The foregoing summary of the terms of the
Registration Rights Agreement is subject to, and qualified in its entirety by, such document attached hereto as Exhibits 10.8,
which is incorporated herein by reference.
In connection with the financings described
above, on September 30, 2015, the Company entered into a letter agreement with certain investors in which the Company agreed to
hold a special stockholder’s meeting by mid- December 2015 to approve an increase in its authorized common stock. In the
event, the Company fails to obtain such approval, the Company will be obligated to pay financial penalties to such investors. The
foregoing summary of the terms of the letter agreement is subject to, and qualified in its entirety by, such document attached
hereto as Exhibits 10.9, which is incorporated herein by reference.
On September 25, 2015, the Company entered
into a repurchase agreement (the “Repurchase Agreement”) with the holder of all of the Company’s issued and outstanding
Series G Preferred Stock (the “Series G Holder”) pursuant to which the Company has repurchased all of the issued and
outstanding shares of Series G Preferred Stock and all shares of common stock held by the Series G Holder for an aggregate purchase
price of $4,750,000. As of October 1, 2015, there are no more shares of Series G Preferred Stock issued and outstanding.
The foregoing summary of the terms of the
Repurchase Agreement is subject to, and qualified in its entirety by, such document attached hereto as Exhibits 10.10, which
is incorporated herein by reference.
| Item 2.03 |
Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
The information set forth in Item 1.01 is
incorporated by reference herein.
| Item 3.02 |
Unregistered Sales of Equity Securities. |
The information set forth in Item 1.01 with
respect to the Senior Secured Note financing is incorporated by reference herein. The issuance of the Senior Secured Notes and
the PP Warrant described above was completed in accordance with the exemption provided by Section 4(a)(2) of the Securities Act
of 1933, as amended.
| Item 5.03 |
Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year. |
The information set forth in Item 1.01 with
respect to the Series H Preferred Stock financing is incorporated herein by reference.
| Item 9.01 |
Financial Statements and Exhibits. |
(d) Exhibits
Exhibit
No. |
|
Description |
| 3.1 |
|
Certificate of Designation of Preferences, Rights and Limitations of the Series H 12% Convertible Preferred Stock |
| |
|
|
| 10.1 |
|
Form of Securities Purchase Agreement dated as of September 30, 2015 for the Series H 12% Convertible Preferred Stock and Warrants. |
| |
|
|
| 10.2 |
|
Form of Warrant. |
| |
|
|
| 10.3 |
|
Form of Securities Purchase Agreement dated as of September 30, 2015 for the 12% Senior Secured Convertible Promissory Notes and Warrants. |
| |
|
|
| 10.4 |
|
Form of 12% Senior Secured Convertible Promissory Notes. |
| |
|
|
| 10.5 |
|
Form of Security Agreement dated September 30, 2015. |
| |
|
|
| 10.6 |
|
Form of Patent and Trademark Security Agreement dated September 30, 2015. |
| |
|
|
| 10.7 |
|
Form of Exchange Agreement dated September 30, 2015. |
| |
|
|
| 10.8 |
|
Form of Registration Rights Agreement dated September 30, 2015. |
| |
|
|
| 10.9 |
|
Form of Letter Agreement dated September 30, 2015. |
| |
|
|
| 10.10 |
|
Form of Repurchase Agreement dated September 25, 2015. |
| |
|
|
| 99.1 |
|
Press Release dated October 1, 2015 |
SIGNATURES
Pursuant to the requirements
of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
| |
|
|
AMARANTUS BIOSCIENCE HOLDINGS, INC. |
| |
|
|
|
|
| Date: October 1, 2015 |
|
By: |
/s/ Gerald E. Commissiong |
|
| |
|
|
|
Name: Gerald E. Commissiong |
|
| |
|
|
|
Title: Chief Executive Officer |
|
Exhibit 3.1
EXECUTION VERSION
AMARANTUS BIOSCIENCE HOLDINGS, INC.
CERTIFICATE OF DESIGNATION OF PREFERENCES,
RIGHTS AND LIMITATIONS
OF
SERIES H 12% CONVERTIBLE PREFERRED STOCK
PURSUANT TO SECTION 78, 1955 OF THE NEVADA
REVISED STATUTES
The undersigned, Gerald
Commissioner, does hereby certify that:
1. He is the President
and Chief Executive Officer, of Inc., a Nevada corporation (the “Corporation” or the “Company”).
2. The Corporation
is authorized to issue 10,000,000 shares of preferred stock, of which 761,893.22 have been issued.
3. The following resolutions
were duly adopted by the board of directors of the Corporation (the “Board of Directors”):
WHEREAS, the Articles
of Incorporation of the Corporation provides for a class of its authorized stock known as preferred stock, consisting of 10,000,000
shares, $0.001 par value per share, issuable from time to time in one or more series;
WHEREAS, the Board
of Directors is authorized to fix the dividend rights, dividend rate, voting rights, conversion rights, rights and terms of redemption
and liquidation preferences of any wholly unissued series of preferred stock and the number of shares constituting any series and
the designation thereof, of any of them; and
WHEREAS, it is the
desire of the Board of Directors, pursuant to its authority as aforesaid, to fix the rights, preferences, restrictions and other
matters relating to a series of the preferred stock, which shall consist of, except as otherwise set forth in the Purchase Agreement,
up to 10,000 shares of the preferred stock which the Corporation has the authority to issue, as follows:
NOW, THEREFORE, BE
IT RESOLVED, that the Board of Directors does hereby provide for the issuance of a series of preferred stock for cash or exchange
of other securities, rights or property and does hereby fix and determine the rights, preferences, restrictions and other matters
relating to such series of preferred stock as follows:
TERMS OF PREFERRED STOCK
Section 1. Definitions.
For the purposes hereof, the following terms shall have the following meanings:
“Affiliate”
means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common
control with a Person, as such terms are used in and construed under Rule 405 of the Securities Act.
“Alternate
Consideration” shall have the meaning set forth in Section 7(e).
“Alternative
Conversion Price” means 60% of the lowest of traded price of a share of Common Stock in the thirty (30) consecutive Trading
Days prior to the Conversion Date.
“Amendment”
means the proposed amendment to the Corporation’s Articles of Incorporation that increases the number of authorized shares
of Common Stock from 13,333,334 shares of Common Stock to no less than 35,000,000 shares of Common Stock.
“Bankruptcy
Event” means any of the following events: (a) the Corporation or any Significant Subsidiary (as such term is defined
in Rule 1-02(w) of Regulation S-X) thereof commences a case or other proceeding under any bankruptcy, reorganization, arrangement,
adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction relating to the
Corporation or any Significant Subsidiary thereof, (b) there is commenced against the Corporation or any Significant Subsidiary
thereof any such case or proceeding that is not dismissed within 60 days after commencement, (c) the Corporation or any Significant
Subsidiary thereof is adjudicated insolvent or bankrupt or any order of relief or other order approving any such case or proceeding
is entered, (d) the Corporation or any Significant Subsidiary thereof suffers any appointment of any custodian or the like
for it or any substantial part of its property that is not discharged or stayed within 60 calendar days after such appointment,
(e) the Corporation or any Significant Subsidiary thereof makes a general assignment for the benefit of creditors, (f) the
Corporation or any Significant Subsidiary thereof calls a meeting of its creditors with a view to arranging a composition, adjustment
or restructuring of its debts, or (g) the Corporation or any Significant Subsidiary thereof, by any act or failure to act,
expressly indicates its consent to, approval of or acquiescence in any of the foregoing or takes any corporate or other action
for the purpose of effecting any of the foregoing.
“Base
Conversion Price” shall have the meaning set forth in Section 7(b).
“Beneficial
Ownership Limitation” shall have the meaning set forth in Section 6(d).
“Business
Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or
any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to
close.
“Buy-In”
shall have the meaning set forth in Section 6(c)(iv).
“Change
of Control Transaction” means the occurrence after the date hereof of any of (a) an acquisition after the date hereof
by an individual or legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of
effective control (whether through legal or beneficial ownership of capital stock of the Corporation, by contract or otherwise)
of in excess of 33% of the voting securities of the Corporation (other than by means of conversion or exercise of Preferred Stock
and the Securities issued together with the Preferred Stock), (b) the Corporation merges into or consolidates with any other
Person, or any Person merges into or consolidates with the Corporation and, after giving effect to such transaction, the stockholders
of the Corporation immediately prior to such transaction own less than 66% of the aggregate voting power of the Corporation or
the successor entity of such transaction, (c) the Corporation sells or transfers all or substantially all of its assets to
another Person and the stockholders of the Corporation immediately prior to such transaction own less than 66% of the aggregate
voting power of the acquiring entity immediately after the transaction, (d) a replacement at one time or within a one year
period of more than one-half of the members of the Board of Directors which is not approved by a majority of those individuals
who are members of the Board of Directors on the Original Issue Date (or by those individuals who are serving as members of the
Board of Directors on any date whose nomination to the Board of Directors was approved by a majority of the members of the Board
of Directors who are members on the Original Issue Date), or (e) the execution by the Corporation of an agreement to which
the Corporation is a party or by which it is bound, providing for any of the events set forth in clauses (a) through (d) above.
“Closing”
means the closing of the purchase and sale of the Securities pursuant to Section 2.1 of the Purchase Agreement.
“Closing
Date” means the Trading Day on which all of the Transaction Documents have been executed and delivered by the applicable
parties thereto and all conditions precedent to (i) each Holder’s obligations to pay the Subscription Amount and (ii) the
Corporation’s obligations to deliver the Securities have been satisfied or waived.
“Commission”
or the “SEC” means the United States Securities and Exchange Commission.
“Common
Stock” means the Corporation’s common stock, par value $0.001 per share, and stock of any other class of securities
into which such securities may hereafter be reclassified or changed.
“Common
Stock Equivalents” means any securities of the Corporation or the Subsidiaries which would entitle the holder thereof
to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, rights, options, warrants or other
instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to
receive, Common Stock.
“Conversion
Amount” means the sum of the Stated Value at issue.
“Conversion
Date” shall have the meaning set forth in Section 6(a).
“Conversion
Price” shall have the meaning set forth in Section 6(b).
“Conversion
Shares” means, collectively, the shares of Common Stock issuable upon conversion of the shares of Preferred Stock in
accordance with the terms hereof.
“Corporation
Redemption” has the meaning set forth in Section 8.
“Corporation
Redemption Price” has the meaning set forth in Section 8.
“Corporation
Redemption Payment Date” has the meaning set forth in Section 8.
“Corporation
Redemption Notice” has the meaning set forth in Section 8.
”Dilutive
Issuance” shall have the meaning set forth in Section 7(b).
“Dilutive
Issuance Notice” shall have the meaning set forth in Section 7(b).
“DTC”
means the Depository Trust Company.
“DTC/FAST
Program” means the DTC’s Fast Automated Securities Transfer Program.
“DWAC
Eligible” means that (a) the Common Stock is eligible at DTC for full services pursuant to DTC’s Operational Arrangements,
including without limitation transfer through DTC’s DWAC system, (b) the Corporation has been approved (without revocation)
by the DTC’s underwriting department, (c) the Transfer Agent is approved as an agent in the DTC/FAST Program, (d) the Conversion
Shares and Warrants are otherwise eligible for delivery via DWAC, and € the Transfer Agent does not have a policy prohibiting
or limiting delivery of the Conversion Shares via DWAC.
“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Equity
Conditions” means, during the period in question, (a) the Corporation shall
have duly honored all conversions scheduled to occur or occurring by virtue of one or more Notices of Conversion of the applicable
Holder on or prior to the dates so requested or required, if any, (b) the Corporation shall have paid all liquidated damages,
late fees and other amounts owing to the applicable Holder in respect of the Preferred Stock, (c)(i) the Conversion Shares
Registration Statement pursuant to which the Holders are permitted to utilize the prospectus thereunder to resell all of the shares
of Common Stock issuable pursuant to the Transaction Documents (and the Corporation believes, in good faith, that such effectiveness
will continue uninterrupted for the foreseeable future), or (ii) all of the Conversion Shares issuable pursuant to the Transaction
Documents (and Conversion Shares issuable in lieu of cash payments of dividends) may be resold pursuant to Rule 144 without volume
or manner-of-sale restrictions or current public information requirements as determined by the counsel to the Corporation as set
forth in a written opinion letter to such effect, addressed and acceptable to the Transfer Agent and the affected Holders, (d)
the Common Stock is trading on a Trading Market and all of the Conversion Shares issuable pursuant to the Transaction Documents
are listed or quoted for trading on such Trading Market (and the Corporation believes, in good faith, that trading of the Common
Stock on a Trading Market will continue uninterrupted for the foreseeable future), (e) there is a sufficient number of authorized,
but unissued and otherwise unreserved, shares of Common Stock for the issuance of all of the shares then issuable pursuant to
the Transaction Documents, (f) there is no existing Triggering Event and no existing event which, with the passage of time or
the giving of notice, would constitute a Triggering Event, (g) the issuance of the shares in question to the applicable Holder
would not violate the limitations set forth in Section 6(d) herein, (h) there has been
no public announcement of a pending or proposed Fundamental Transaction or Change of Control Transaction that has not been consummated,
(i) the applicable Holder is not in possession of any information provided by the Corporation that constitutes, or may constitute,
material non-public information, (j) for each Trading Day in a period of 20 consecutive Trading Days prior to the applicable date
in question, the daily dollar trading volume for the Common Stock on the principal Trading Market exceeds $30,000 per Trading
Day and (k) the shares of Common Stock are DWAC Eligible and not subject to a “DTC Freeze” or a “DTC Chill”
“Exempt Issuance”
means the issuance of (a) shares of Common Stock, options or other equity awards (including, without limitation, restricted
awards) to employees, officers or directors of the Company pursuant to any stock or option plan duly adopted for such purpose,
by a majority of the non-employee members of the Board of Directors or a majority of the members of a committee of non-employee
directors established for such purpose, (b) securities upon the exercise or exchange of or conversion of any Securities issued
hereunder and/or other securities exercisable or exchangeable for or convertible into shares of Common Stock issued and outstanding
on the date of this Agreement, provided that such securities have not been amended since June 1, 2015 to increase the number
of such securities or to decrease the exercise price, exchange price or conversion price of such securities, financings, commercial
property lease transactions or similar transactions, (c) securities issued to (or securities issued upon exercise conversion of
exchange of Common Stock Equivalents issued to), Delafield Investment Limited (“Delafield”) and/or Dominion
Holdings, LLC (“Dominion”), or (d) strategic transactions, which are approved by a majority of the disinterested
directors of the Company, provided that any such issuance shall only be to a Person (or to the equityholders of a Person) which
is, itself or through its subsidiaries, an operating company or an owner of an asset in a business synergistic with the business
of the Company and shall provide to the Company additional benefits in addition to the investment of funds, but shall not include
a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary
business is investing in securities; provided, however, notwithstanding anything to the contrary provided herein
or elsewhere, any issuances of securities by the Company set forth in this definition of Exempt Issuance shall only constitute
an Exempt Issuance, if the Purchasers shall have provided their respective written consents to such issuance.
“FDA”
means the U.S. Food and Drug Administration.
“Fundamental
Transaction” shall have the meaning set forth in Section 7(e).
“GAAP”
means United States generally accepted accounting principles.
“Holder”
shall have the meaning given such term in Section 2.
“Indebtedness”
means (a) any liabilities for borrowed money or amounts owed in excess of $10,000 (other than trade accounts payable incurred
in the ordinary course of business), (b) all guaranties, endorsements and other contingent obligations in respect of indebtedness
of others, whether or not the same are or should be reflected in the Corporation’s balance sheet (or the notes thereto),
except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course
of business, and (c) the present value of any lease payments in excess of $10,000 due under leases required to be capitalized
in accordance with GAAP.
“Issuable
Maximum” shall have the meaning set forth in Section 6(e).
“Junior
Securities” means the Common Stock and all other Common Stock Equivalents of the Corporation other than those securities
which are explicitly senior or pari passu to the Preferred Stock in dividend rights or liquidation preference.
“Liabilities”
means all direct or indirect liabilities, indebtedness and obligations of any kind of the Corporation to Delafield and/or Dominion
to either any Purchaser, howsoever created, arising or evidenced, whether now existing or hereafter arising (including those acquired
by assignment), absolute or contingent, due or to become due, primary or secondary, joint or several, whether existing or arising
through discount, overdraft, purchase, direct loan, participation, operation of law, or otherwise, including, but not limited to,
pursuant to the Notes, this Certification of Designation, any other Transaction Document and/or any of the other Documents, (as
defined in the NPA) or referred to in the “Notes,” any letter of credit, any standby letter of credit, and/or outside
attorneys’ and paralegals’ fees or charges relating to the preparation of the Transaction Documents, the Documents
and the enforcement of rights, remedies and powers under this Agreement, the Notes and/or the other Documents.
“Liens”
means a lien, charge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.
“Liquidation”
shall have the meaning set forth in Section 5.
“Mandatory
Conversion” shall have the meaning set forth in Section 6(e).
“New
York Courts” shall have the meaning set forth in Section 11(d).
“Notes”
has the meaning set forth in Section 10.
“Notice
of Conversion” shall have the meaning set forth in Section 6(a).
“NPA”
has the meaning set forth in Section 10.
“Original
Issue Date” means the date of the first issuance of any shares of the Preferred Stock regardless of the number of transfers
of any particular shares of Preferred Stock and regardless of the number of certificates which may be issued to evidence such Preferred
Stock.
“Permitted
Governmental Indebtedness” means Indebtedness provided by the Export and Import Bank of the United States of America
or other similar governmental entity for the purpose of supporting product sales by the Borrower.
“Permitted
Indebtedness” means (i) Indebtedness of the Corporation evidenced by the Notes, any document, agreement and/or instrument
referenced in the Notes in favor of such persons, this Certificate of Designation and/or any other Transaction Document in favor
of Dominion and/or Delafield including all Liabilities, (ii) Indebtedness of the Corporation set forth in Corporation’s most
recent SEC report filed with the SEC by the Corporation on Form 10-Q or Form 10-K (the “SEC Reports”) provided
none of such Indebtedness, has been increased, extended and/or otherwise changed), (iii) Indebtedness secured by Permitted Liens
described in clauses “(iv)” of the definition of Permitted Liens, and (iv) Permitted Governmental Indebtedness.
“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 Borrower 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, and
(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 and (v) any Liens for Permitted Indebtedness set forth in (i) and
(ii) of the definition of Permitted Indebtedness provided as to “(ii)” of Permitted Indebtedness such Liens
were in existence and not amended, supplemented and/or modified since the original issuance date any such Indebtedness was incurred.
“Person”
means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
“Preferred
Stock” shall have the meaning set forth in Section 2.
“Purchase
Agreement” means the Securities Purchase Agreement, dated on or about the Original Issue Date, among the Corporation
and the original Holders, as amended, modified or supplemented from time to time in accordance with its terms.
“Public
Offering” means any firm commitment underwritten public offering of gross proceeds of at least $4,000,000 of securities
of the Company pursuant to a registration statement on Form S-1 or Form S-3.
“Qualified
Public Offering” means (i) a firm commitment underwritten public offering of shares of Common Stock (and any other securities
of the Company that may be sold along with shares of Common Stock in any such underwritten firm commitment public offering including,
but not limited to, any Common Stock Equivalents), (ii) the gross proceeds resulting from such underwritten firm commitment public
offering equal or exceed, $9,000,000, and (iii) (x) the shares of Common Stock including, but not limited to, all Underlying Shares
have been approved for listing on one of the exchanges or markets set forth below in this definition of Qualified Public Offering,
and (y) on the next trading day following the date the SEC declares the registration statement registering under the Securities
Act the sale of the shares of Common Stock being sold to investors in such firm commitment underwritten public offering effective,
and any of securities of the Company being issued and/or sold in addition to shares of Common Stock by the Company including, but
not limited to, any Common Stock Equivalent (the “Qualified Offering Conversion Date”), the shares of Common
Stock commence trading on the New York Stock Exchange, NYSE MKT, the Nasdaq Global Market, the Nasdaq Global Select Market or the
Nasdaq Capital Market.
“Qualified
Public Offering Conversion Amount” means the product of (i) 130%, multiplied by (ii) the sum of (x) the Stated Value
of all Preferred Stock owned by a Holder on and including the Qualified Public Offering Conversion Date, (y) all accrued but unpaid
dividends (including all dividends deemed earned pursuant to Section 3(a)), as of and including the Qualified Public Offering Conversion
Date (regardless of whether or not the Company accrued for any such dividends on its books and records), and (z) all liquidated
damages, Late Fees, and/or any other amounts owed to a Holder pursuant to this Certification of Designation or otherwise related
to the Preferred Stock through and including the Qualified Public Offering Conversion Date, including, but not limited to, any
and all Late Fees, liquidated damages, premium payments, redemption payments and all other fees and expenses owed to the Holder
and/or its legal counsel or otherwise.
“Qualified
Public Offering Conversion Price” means the lowest of (i) the Conversion Price on the Qualified Public Offering Conversion
Date, and (ii) (A) if a Public Offering constituting a Qualified Public Offering has previously occurred, seventy-five (75%) percent
of, and (B) if a Public Offering not constituting a Qualified Public Offering has not previously occurred, eighty (80%) percent
of the lowest of (x) the price a share of Common Stock is sold to a purchaser in the Qualified Public Offering, and (y) the lowest
conversion price, exchange price and/or exercise price that any Common Stock Equivalents issued and/or sold to investors in the
Qualified Public Offering, if any, are convertible, exchangeable, and/or exercisable into shares of Common Stock, and (z) the price
any Common Stock Equivalents are sold (or deemed sold) and/or issued to investors in the Qualified Public Offering.
“Securities”
means the Preferred Stock, the Warrants, the Warrant Shares and the Underlying Shares.
“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Share
Delivery Date” shall have the meaning set forth in Section 6(c).
“Stated
Value” shall have the meaning set forth in Section 2, as the same may be increased pursuant to Section 3.
“Subscription
Amount” shall mean, as to each Holder, the aggregate amount to be paid for the Preferred Stock purchased pursuant to
the Purchase Agreement as specified below such Holder’s name on the signature page of the Purchase Agreement and next to
the heading “Subscription Amount,” in United States dollars and in immediately available funds.
“Subsidiary”
means any subsidiary of the Corporation as set forth on Schedule 3.1(a) of the Purchase Agreement and shall, where applicable,
also include any direct or indirect subsidiary of the Corporation formed or acquired after the date of the Purchase Agreement.
“Successor
Entity” shall have the meaning set forth in Section 7(e).
“Trading
Day” means a day on which the principal Trading Market is open for business.
“Trading
Market” means any of the following markets or exchanges on which the Common Stock (or any other common stock of any other
Person that references the Trading Market for its common stock) is listed or quoted for trading on the date in question: the OTC
Bulletin Board, The NASDAQ Global Market, The NASDAQ Global Select Market, The NASDAQ Capital Market, the New York Stock Exchange,
NYSE Arca, the NYSE MKT, or the OTCQX Marketplace, the OTCQB Marketplace, the OTCPink Marketplace or any other tier operated by
OTC Markets Group Inc. (or any successor to any of the foregoing).
“Transaction
Documents” means this Certificate of Designation, the Purchase Agreement, the Warrants, all exhibits and schedules thereto
and hereto and any other documents or agreements executed in connection with the transactions contemplated pursuant to the Purchase
Agreement.
“Transfer
Agent” means VStock Transfer, LLC, the current transfer agent of the Company, with a mailing address of 18 Lafayette
Place, Woodmere, New York 11598, and a facsimile number of (646) 536-3179, and any successor transfer agent of the Company.
“Triggering
Event” shall have the meaning set forth in Section 10(a).
“Triggering
Redemption Amount” means, for each share of Preferred Stock, the sum of (a) the greater of (i) 130% of the
Stated Value and (ii) the product of (y) the VWAP on the Trading Day immediately preceding the date of the Triggering
Event, multiplied by (z) the Stated Value divided by the then Conversion Price, (b) all accrued but unpaid dividends
thereon and (c) all liquidated damages, Late Fees and other costs, expenses or amounts due in respect of the Preferred Stock
including, but not limited to legal fees and expenses of legal counsel to the Holder in connection with, related to and/or arising
out of a Triggering Event.
“Triggering
Redemption Payment Date” shall have the meaning set forth in Section 10(b).
“Underlying
Shares” means the shares of Common Stock issued and issuable upon conversion of the Preferred Stock and upon exercise
of the Warrants.
“Variable
Rate Transaction” shall have the meaning ascribed to such term in Section 4.13(b) of the Purchase Agreement.
“VWAP”
means, for or as of any date, the dollar volume-weighted average price for such security on the Trading Market (or, if the Trading
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. All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock
combination, recapitalization or other similar transaction during such period.
“Warrants”
means, collectively, the Common Stock purchase warrants delivered to the Holder at the Closing in accordance with Section 2.2(a)
of the Purchase Agreement, which Warrants shall be immediately exercisable, have full-ratchet anti-dilution protection, cashless
exercise provision only in the event a registration statement is not effective with respect to the Warrant Shares and have a term
of exercise equal to 5 years from the Original Issuance Date, in the form of Exhibit C attached to the Purchase Agreement.
“Warrant
Shares” means the shares of Common Stock issuable upon exercise of the Warrants.
Section 2. Designation,
Amount and Par Value. The series of preferred stock shall be designated as Series H 12% Convertible Preferred Stock (the “Preferred
Stock”) and the number of shares so designated shall be up to 4,000 (which shall not be subject to increase without the
written consent of all of the holders of the Preferred Stock (each, a “Holder” and collectively, the “Holders”)).
Each share of Preferred Stock shall have a par value of $0.001 per share and a stated value of $1,000, subject to increase set
forth in Section 3 and/or elsewhere in this Certificate of Designation below (the “Stated Value”).
Section 3. Dividends.
(a) Dividends in
Cash or in Kind. Each share of Preferred Stock shall be entitled to receive, and the Corporation shall pay, cumulative dividends
(i) for the 12 month period beginning on the Original Issuance Date (the “Initial 12 Month Period”), and (ii)
for each subsequent twelve 12 month period beginning on the first calendar day (the “First Day of a Subsequent 12 Month
Period”) following the last calendar day of the prior twelve (12) month period and terminating 12 months thereafter (each
a “Subsequent 12 Month Period”), provided that for each Subsequent 12 Month Period the share of Preferred Stock
is issued and outstanding on the First Day of a Subsequent 12 Month Period, at the rate per Preferred Share (as a percentage of
the Stated Value per share) equal to 12% per annum (which may be increased pursuant to Section 10 or elsewhere herein) all of which
dividends shall be guaranteed and the total amount of dividends due on each share of Preferred Stock for each twelve (12) month
period shall be deemed earned (i) as to the Initial 12 Month Period, on the Original Issue Date; and (ii) for each Subsequent 12
Month Period, on the First Day of a Subsequent 12 Month Period. Dividends shall be payable for the first dividend payment on September
30, 2015, and, thereafter, quarterly on each December 31, March 31, June 30 and September 30, and on each Conversion Date, Qualified
Offering Conversion Date, Trigger Redemption Payment Date and Corporation Redemption Payment Date, (with respect only to Preferred
Stock being converted.), (each such date, a “Dividend Payment Date”), provided (if any Dividend Payment
Date is not a Trading Day, the applicable payment shall be due on the next succeeding Trading Day. All dividends shall be paid
in cash, or at the Corporation’s option, in duly authorized, validly issued, fully paid and non-assessable shares of Common
Stock as set forth in this Section 3(a), or a combination thereof (the amount to be paid in shares of Common Stock, the “Dividend
Share Amount”); provided all dividends payable on each Preferred Share shall be determined in the following order
of priority: (i) if funds are legally available for the payment of dividends and the Equity Conditions have not been met during
the 15 consecutive Trading Days immediately prior to the applicable Dividend Payment Date or Conversion Date (the “Dividend
Notice Period”), in cash only, (ii) if funds are legally available for the payment of dividends and the Equity Conditions
have been met during the Dividend Notice Period, at the sole election of the Corporation, in any combination of cash or shares
of Common Stock which shall be valued solely for such purpose at the lower of (x) the Conversion Price; and (y) 65% of the average
of the VWAPs for the 15 consecutive Trading Days ending on the Trading Day that is immediately prior to the applicable Dividend
Payment Date or Conversion Date, (iii) if funds are not legally available for the payment of dividends and the Equity Conditions
have been met during the Dividend Notice Period, in shares of Common Stock which shall be valued solely for such purpose at 60%
of the average of the VWAPs for the 15 consecutive Trading Days ending on the Trading Day that is immediately prior to the applicable
Dividend Payment Date or Conversion Date, (iv) if funds are not legally available for the payment of dividends and the Equity Condition
relating to an effective Conversion Shares Registration Statement has been waived by such Holder, as to such Holder only, in unregistered
shares of Common Stock which shall be valued solely for such purpose at the lower of (x) the Conversion Price; and (y) 55% of the
average of the VWAPs for the 15 consecutive Trading Days ending on the Trading Day that is immediately prior to the applicable
Dividend Payment Date or Conversion Date (the “Lowest Section 3 Divided Share Price”), and (v) if funds are
not legally available for the payment of dividends and the Equity Conditions have not been met during the Dividend Notice Period,
then, at the election of such Holder, such dividends shall accrue to the next applicable Dividend Payment Date or Conversion Date
or shall be accreted to, and increase, the outstanding Stated Value. The Holders shall have the same rights and remedies with respect
to the delivery of any such shares as if such shares were being issued pursuant to Section 6. In the event the Corporation notifies
the Holders that it will pay dividends in whole or in part in shares of Common Stock based on its good faith and reasonable belief
that the Corporation it will be in compliance with the Equity Conditions during the Dividend Notice Period, and the Corporation
determines on or before the first day of the Dividend Notice Period that it will not be in compliance with the Equity Conditions,
it shall so notify the Holders and each Holder may elect to receive Common Stock or cash. Notwithstanding anything to the contrary
provided herein or elsewhere, in no event shall any provision set forth herein or elsewhere be deemed to directly and/or indirectly
constitute a waiver of any provision herein and/or in any other Transaction Documents including, but not limited to any Event of
Default, event of default, and/or a Triggering Event.
(b) Participating
Dividends on As-Converted Basis. From and after the initial Closing Date, in addition to the payment of dividends pursuant
to Section 2(a), each Holder shall be entitled to receive, and the Corporation shall pay, dividends on shares of Preferred Stock
equal to (on an as-if-converted-to-Common-Stock basis) and in the same form as dividends actually paid on shares of the Common
Stock when, as and if such dividends are paid on shares of the Common Stock. The Corporation shall pay no dividends on shares of
the Common Stock unless it simultaneously complies with the previous sentence.
(c) Dividend Calculations.
Subject to Section 3(a), dividends on the Preferred Stock shall be calculated on the basis of a 360-day year, consisting of twelve
30 calendar day periods, and shall accrue and compound daily commencing on the Original Issue Date, and shall be deemed to accrue
from such date whether or not earned or declared and whether or not there are profits, surplus or other funds of the Corporation
legally available for the payment of dividends. Dividends shall cease to accrue with respect to any Preferred Stock converted,
provided that the Corporation actually delivers the Conversion Shares within the time period required by Section 6(c)(i) herein.
(d) Late Fees.
Any dividends that are not paid a Dividend Payment Date shall continue to accrue and shall entail a late fee (“Late Fees”),
which must be paid in cash, at the rate of 18% per annum or the lesser rate permitted by applicable law which shall accrue
and compound daily from the Dividend Payment Date through and including the date of actual payment in full.
(e) Other Securities.
So long as any Preferred Stock shall remain outstanding, neither the Corporation nor any Subsidiary thereof shall redeem, purchase
or otherwise acquire directly or indirectly any Junior Securities or pari passu securities other than any Preferred Stock purchased
to the terms of this Certificate of Designation. So long as any Preferred Stock shall remain outstanding, neither the Corporation
nor any Subsidiary thereof shall directly or indirectly pay or declare any dividend or make any distribution upon (other than a
dividend or distribution described in Section 6 or dividends due and paid in the ordinary course on preferred stock of the
Corporation at such times when the Corporation is in compliance with its payment and other obligations hereunder), nor shall any
distribution be made in respect of, any Junior Securities or pari passu securities as long as any dividends due on
the Preferred Stock remain unpaid, nor shall any monies be set aside for or applied to the purchase or redemption (through a sinking
fund or otherwise) of any Junior Securities or pari passu securities.
Section 4. Voting Rights.
Except as otherwise provided herein or as otherwise required by law, the Preferred Stock shall have no voting rights. However,
as long as any shares of Preferred Stock are outstanding, the Corporation shall not, without the affirmative vote of the Holders
of a majority of the then outstanding shares of the Preferred Stock directly and/or indirectly (a) alter or change adversely
the powers, preferences or rights given to the Preferred Stock or alter or amend this Certificate of Designation, (b) authorize
or create any class of stock ranking as to redemption or distribution of assets upon a Liquidation (as defined in Section 5)
senior to, or otherwise pari passu with, the Preferred Stock or, authorize or create any class of stock ranking as to dividends
senior to, or otherwise pari passu with, the Preferred Stock, (c) amend its Articles of Incorporation or other charter
documents in any manner that adversely affects any rights of the Holders, (d) increase the number of authorized shares of
Preferred Stock, or (e) enter into any agreement with respect to any of the foregoing.
Section 5. Liquidation.
Upon any liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary (a “ Liquidation
”), the Holders shall be entitled to receive out of the assets, whether capital or surplus, of the Corporation an amount
equal to the Stated Value, plus any accrued and unpaid dividends thereon and any other fees or liquidated damages then due and
owing thereon under this Certificate of Designation, for each share of Preferred Stock before any distribution or payment shall
be made to the holders of any Junior Securities, and if the assets of the Corporation shall be insufficient to pay in full such
amounts, then the entire assets to be distributed to the Holders shall be ratably distributed among the Holders in accordance with
the respective amounts that would be payable on such shares if all amounts payable thereon were paid in full. A Fundamental Transaction
or Change of Control Transaction shall not be deemed a Liquidation. The Corporation shall mail written notice of any such Liquidation,
not less than 45 days prior to the payment date stated therein, to each Holder.
Section
6. Conversion.
a) Conversions at Option of Holder.
Each share of Preferred Stock shall be convertible, at any time and from time to time from and after the Original Issue Date at
the option of the Holder thereof, into that number of shares of Common Stock (subject to the limitations set forth in Section 6(d)
and Section 6(e)) determined by dividing the Stated Value of such share of Preferred Stock by the Conversion Price. Holders
shall effect conversions by providing the Corporation with the form of conversion notice attached hereto as Annex A (a “Notice
of Conversion”). Each Notice of Conversion shall specify the number of shares of Preferred Stock to be converted, the
number of shares of Preferred Stock owned prior to the conversion at issue, the number of shares of Preferred Stock owned subsequent
to the conversion at issue and the date on which such conversion is to be effected, which date may not be prior to the date the
applicable Holder delivers by facsimile such Notice of Conversion to the Corporation (such date, the “Conversion Date”).
If no Conversion Date is specified in a Notice of Conversion, the Conversion Date shall be the date that such Notice of Conversion
to the Corporation is deemed delivered hereunder. No ink-original Notice of Conversion shall be required, nor shall any medallion
guarantee (or other type of guarantee or notarization) of any Notice of Conversion form be required. The calculations and entries
set forth in the Notice of Conversion shall control in the absence of manifest or mathematical error. To effect conversions of
shares of Preferred Stock, a Holder shall not be required to surrender the certificate(s) representing the shares of Preferred
Stock to the Corporation unless all of the shares of Preferred Stock represented thereby are so converted, in which case such Holder
shall deliver the certificate representing such shares of Preferred Stock promptly following the Conversion Date at issue. Shares
of Preferred Stock converted into Common Stock or redeemed in accordance with the terms hereof shall be canceled and shall not
be reissued.
b) Conversion Price.
The conversion price for the Preferred Stock shall equal the lower of (i) $2.50 (subject to adjustment as provided
herein), (ii) 75% of the lowest daily VWAP during the fifteen (15) Trading Days immediately prior to the date a Conversion
Notice is sent to the Company by the Holder and (iii) (A) if a Public Offering that is not a Qualified Public Offering has occurred,
75% of, or (B) if a Qualified Public Offering has occurred, 80% of the lowest of the (x) per share price of shares of Common Stock,
and (y) the lowest conversion price, exercise price or exchange price of any Common Stock Equivalents, that are sold or issued
to the public in the Public Offering or the Qualified Public Offering, respectively (the “Conversion Price”).
Notwithstanding anything herein to the contrary, at any time after the occurrence of any Triggering Event, the Holder may require
the Company to, at such Holder’s option and otherwise in accordance with the provisions for conversion herein, convert all
or any part of any Preferred Shares into Common Stock at the Alternative Conversion Price. All such foregoing determinations will
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 measuring period. Nothing herein shall limit a Holder’s
right to pursue actual damages including, but not limited to, as a result of a Triggering event pursuant to Section 10 hereof and
the Holder shall have the right to pursue all remedies available to it hereunder, at law or in equity including, without limitation,
a decree of specific performance and/or injunctive relief. The exercise of any such rights shall not prohibit the Holder from seeking
to enforce damages pursuant to any other Section hereof or under applicable law.
c) Mechanics of Conversion
i. Delivery
of Conversion Shares Upon Conversion. Not later than three (3) Trading Days after each Conversion Date (the “
Share Delivery Date ”), the Corporation shall deliver, or cause to be delivered, to the converting Holder (A) the
number of Conversion Shares being acquired upon the conversion of the Preferred Stock, which Conversion Shares shall be free of
restrictive legends and trading restrictions, and (B) a bank check in the amount of accrued and unpaid dividends (if the Corporation
has elected or is required to pay accrued dividends in cash). The Corporation shall deliver the Conversion Shares electronically
through the Depository Trust Company or another established clearing corporation performing similar functions.
ii. Failure
to Deliver Conversion Shares. If, in the case of any Notice of Conversion, such Conversion Shares are not delivered to or as
directed by the applicable Holder by the Share Delivery Date, the Holder shall be entitled to elect by written notice to the Corporation
at any time on or before its receipt of such Conversion Shares, to rescind such Conversion, in which event the Corporation shall
promptly return to the Holder any original Preferred Stock certificate delivered to the Corporation and the Holder shall promptly
return to the Corporation the Conversion Shares issued to such Holder pursuant to the rescinded Conversion Notice.
iii. Obligation
Absolute; Partial Liquidated Damages. The Corporation’s obligation to issue and deliver the Conversion Shares upon conversion
of Preferred Stock in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by
a Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against
any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach
or alleged breach by such Holder or any other Person of any obligation to the Corporation or any violation or alleged violation
of law by such Holder or any other person, and irrespective of any other circumstance which might otherwise limit such obligation
of the Corporation to such Holder in connection with the issuance of such Conversion Shares; provided , however
, that such delivery shall not operate as a waiver by the Corporation of any such action that the Corporation may have against
such Holder. In the event a Holder shall elect to convert any or all of the Stated Value of its Preferred Stock, the Corporation
may not refuse conversion based on any claim that such Holder or any one associated or affiliated with such Holder has been engaged
in any violation of law, agreement or for any other reason, unless an injunction from a court, on notice to Holder, restraining
and/or enjoining conversion of all or part of the Preferred Stock of such Holder shall have been sought and obtained, and the Corporation
posts a surety bond for the benefit of such Holder in the amount of 150% of the Stated Value of Preferred Stock which is subject
to the injunction, which bond shall remain in effect until the completion of arbitration/litigation of the underlying dispute and
the proceeds of which shall be payable to such Holder to the extent it obtains judgment. In the absence of such injunction, the
Corporation shall issue Conversion Shares and, if applicable, cash, upon a properly noticed conversion. If the Corporation fails
to deliver to a Holder such Conversion Shares pursuant to Section 6(c)(i) on the second Trading Day after the Share Delivery
Date applicable to such conversion, the Corporation shall pay to such Holder, in cash, as liquidated damages and not as a penalty,
for each $5,000 of Stated Value of Preferred Stock being converted, $50 per Trading Day (increasing to $100 per Trading Day on
the third Trading Day and increasing to $200 per Trading Day on the sixth Trading Day after such damages begin to accrue) for each
Trading Day after such second Trading Day after the Share Delivery Date until such Conversion Shares are delivered or Holder rescinds
such conversion. All liquidated damages shall be paid to the Holder not later than the fifth (5th) Trading Day after
notice is provided to the Company by the Holder stating that any such liquidated damages are due pursuant to this Section 6(c)
(iii). Nothing herein shall limit a Holder’s right to pursue actual damages or declare a Triggering Event pursuant to Section 10
hereof for the Corporation’s failure to deliver Conversion Shares within the period specified herein and such Holder shall
have the right to pursue all remedies available to it hereunder, at law or in equity including, without limitation, a decree of
specific performance and/or injunctive relief. The exercise of any such rights shall not prohibit a Holder from seeking to enforce
damages pursuant to any other Section hereof or under applicable law.
iv. Compensation
for Buy-In on Failure to Timely Deliver Conversion Shares Upon Conversion. In addition to any other rights available to the
Holder, if the Corporation fails for any reason to deliver to a Holder the applicable Conversion Shares by the Share Delivery Date
pursuant to Section 6(c)(i), and if after such Share Delivery Date such Holder is required by its brokerage firm to purchase
(in an open market transaction or otherwise), or the Holder’s brokerage firm otherwise purchases, shares of Common Stock
to deliver in satisfaction of a sale by such Holder of the Conversion Shares which such Holder was entitled to receive upon the
conversion relating to such Share Delivery Date (a “ Buy-In ”), then the Corporation shall (A) pay in cash
to such Holder (in addition to any other remedies available to or elected by such Holder) the amount, if any, by which (x) such
Holder’s total purchase price (including any brokerage commissions) for the Common Stock so purchased exceeds (y) the
product of (1) the aggregate number of shares of Common Stock that such Holder was entitled to receive from the conversion
at issue multiplied by (2) the actual sale price at which the sell order giving rise to such purchase obligation was executed
(including any brokerage commissions) and (B) at the option of such Holder, either reissue (if surrendered) the shares of
Preferred Stock equal to the number of shares of Preferred Stock submitted for conversion (in which case, such conversion shall
be deemed rescinded) or deliver to such Holder the number of shares of Common Stock that would have been issued if the Corporation
had timely complied with its delivery requirements under Section 6(c)(i). For example, if a Holder purchases shares of Common
Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted conversion of shares of Preferred
Stock with respect to which the actual sale price of the Conversion Shares (including any brokerage commissions) giving rise to
such purchase obligation was a total of $10,000 under clause (A) of the immediately preceding sentence, the Corporation shall
be required to pay such Holder $1,000. The payment of all amounts due by the Company to the Holder shall be paid in cash no later
than the fifth (5th) Business Day after notice is provided by a Holder to the Company requesting the payment of any
such liquidated damages. The Holder shall provide the Corporation written notice indicating the amounts payable to such Holder
in respect of the Buy-In and, upon request of the Corporation, evidence of the amount of such loss. Nothing herein shall limit
a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation,
a decree of specific performance and/or injunctive relief with respect to the Corporation’s failure to timely deliver the
Conversion Shares upon conversion of the shares of Preferred Stock as required pursuant to the terms hereof.
v. Reservation
of Shares Issuable Upon Conversion. The Company covenants that it will at all times reserve and keep available out of its authorized
and unissued shares of Common Stock a number of shares of Common Stock at least equal to 300% of the Required Minimum for the sole
purpose of issuance upon conversion of the Preferred Stock and payment of dividends on the Preferred Stock, all as herein provided,
free from preemptive rights or any other actual contingent purchase rights of Persons other than the Purchasers, not less than
such aggregate number of shares of the Common Stock as shall (subject to the terms and conditions set forth in the Purchase Agreement)
be issuable (taking into account the adjustments and restrictions of Section 7, but ignoring any Beneficial Ownership Limitations
or other restrictions and/or limitations on conversions set forth herein or elsewhere) upon the conversion of the then outstanding
Preferred Stock and payment of dividends hereunder. The Company covenants that all shares of Common Stock that shall be so issuable
shall, upon issue, be duly authorized, validly issued, fully paid and nonassessable, and, at such times as a registration statement
covering such shares is then effective under the Securities Act, will be registered for public resale in accordance with such registration
statement. For purposes of this Certification of Designation, the term “Required Minimum” shall be defined
as the
product of (i) 300%, multiplied by (ii) the quotient of (A)(x) all outstanding Stated Value of all issued and outstanding
Preferred Stock, (y) all unpaid dividends thereon (whether accrued or not), and (z) all fees and/or any costs and expenses relating
to the Transaction Documents including, but not limited to Late Fees and liquidation damages, divided by (B) the lower
of (x) the Conversion Price on the date of Closing, and (y) in the event that the price of the Common Stock is below the Conversion
Price, the Alternative Conversion Price. The Company shall be required to calculate the Required Minimum on the first trading day
of each month that any shares of Preferred Stock are outstanding and provide such calculation to the Holder and the transfer agent
promptly. For purposes of calculating the Required Minimum, Company shall assume that all Preferred Stock will remain outstanding
for eighteen (18) months and all accrued but unpaid dividends thereon accrues at the rate of 18% per annum, is paid on the date
18 months from the Closing.
vi. Fractional
Shares. No fractional shares or scrip representing fractional shares shall be issued upon the conversion of the Preferred Stock.
As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such conversion, the Corporation shall
at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied
by the Conversion Price or round up to the next whole share.
vii. Transfer
Taxes and Expenses. The issuance of Conversion Shares on conversion of this Preferred Stock shall be made without charge to
any Holder for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such Conversion
Shares, provided that the Corporation shall not be required to pay any tax that may be payable in respect of any transfer involved
in the issuance and delivery of any such Conversion Shares upon conversion in a name other than that of the Holders of such shares
of Preferred Stock and the Corporation shall not be required to issue or deliver such Conversion Shares unless or until the Person
or Persons requesting the issuance thereof shall have paid to the Corporation the amount of such tax or shall have established
to the satisfaction of the Corporation that such tax has been paid. The Corporation shall pay all Transfer Agent fees required
for same-day processing of any Notice of Conversion and all fees to the Depository Trust Company (or another established clearing
corporation performing similar functions) required for same-day electronic delivery of the Conversion Shares.
d) Beneficial Ownership
Limitation. The Corporation shall not affect any conversion of the Preferred Stock, and a Holder shall not have the right to
convert any portion of the Preferred Stock, to the extent that, after giving effect to the conversion set forth on the applicable
Notice of Conversion, such Holder (together with such Holder’s Affiliates, and any Persons acting as a group together with
such Holder or any of such Holder’s Affiliates) would beneficially own in excess of the Beneficial Ownership Limitation (as
defined below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by such Holder
and its Affiliates shall include the number of shares of Common Stock issuable upon conversion of the Preferred Stock with respect
to which such determination is being made, but shall exclude the number of shares of Common Stock which are issuable upon (i) conversion
of the remaining, unconverted Stated Value of Preferred Stock beneficially owned by such Holder or any of its Affiliates and (ii) exercise
or conversion of the unexercised or unconverted portion of any other securities of the Corporation subject to a limitation on conversion
or exercise analogous to the limitation contained herein (including, without limitation, the Preferred Stock or the Warrants) beneficially
owned by such Holder or any of its Affiliates. Except as set forth in the preceding sentence, for purposes of this Section 6(d),
beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder. To the extent that the limitation contained in this Section 6(d) applies, the determination of whether
the Preferred Stock is convertible (in relation to other securities owned by such Holder together with any Affiliates) and of how
many shares of Preferred Stock are convertible shall be in the sole discretion of such Holder, and the submission of a Notice of
Conversion shall be deemed to be such Holder’s determination of whether the shares of Preferred Stock may be converted (in
relation to other securities owned by such Holder together with any Affiliates) and how many shares of the Preferred Stock are
convertible, in each case subject to the Beneficial Ownership Limitation. To ensure compliance with this restriction, each Holder
will be deemed to represent to the Corporation each time it delivers a Notice of Conversion that such Notice of Conversion has
not violated the restrictions set forth in this paragraph and the Corporation shall have no obligation to verify or confirm the
accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined in
accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this
Section 6(d), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding
shares of Common Stock as stated in the most recent of the following: (i) the Corporation’s most recent periodic or
annual report filed with the Commission, as the case may be, (ii) a more recent public announcement by the Corporation or
(iii) a more recent written notice by the Corporation or the Transfer Agent setting forth the number of shares of Common Stock
outstanding. Upon the written or oral request of a Holder, the Corporation shall within two Trading Days confirm orally and
in writing to such Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares
of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Corporation, including
the Preferred Stock, by such Holder or its Affiliates since the date as of which such number of outstanding shares of Common Stock
was reported. The “Beneficial Ownership Limitation” shall be 4.99% of the number of shares of the Common Stock
outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon conversion of Preferred Stock
held by the applicable Holder. A Holder, upon not less than 61 days’ prior notice to the Corporation, may increase or decrease
the Beneficial Ownership Limitation provisions of this Section 6(d) applicable to its Preferred Stock provided that the Beneficial
Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately after giving
effect to the issuance of shares of Common Stock upon conversion of this Preferred Stock held by the Holder and the provisions
of this Section 6(d) shall continue to apply. Any such increase or decrease will not be effective until the 61st day
after such notice is delivered to the Corporation and shall only apply to such Holder and no other Holder. The provisions of this
paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 6(d)
to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership
Limitation contained herein or to make changes or supplements necessary or desirable to properly give effect to such limitation.
The limitations contained in this paragraph shall apply to a successor holder of Preferred Stock.
e) Mandatory Conversion.
At any time after the Original Issuance Date, if the Corporation effectuates a Qualified Public Offering, then on the Qualified
Public Offering Conversion Date, provided all Equity Conditions are satisfied (or waived by Holders owing in the aggregate no less
than 75% of the then issued and outstanding Preferred Stock), all (but not less than all), issued and outstanding Preferred Shares
then outstanding shall automatically convert (a “Mandatory Conversion”), into Conversion Shares. The number
of Conversion Shares that a Holder shall receive from the Corporation upon a Mandatory Conversion shall equal the quotient of (i)
such Holder’s Qualified Public Offering Conversion Amount, divided by (ii) the Qualified Public Offering Conversion Price,
which amount, however, shall not exceed the Beneficial Ownership Limitation. All Conversion Shares issued to each Holder upon a
Mandatory Conversion shall be and the Corporation converts and agrees will be fully paid, validly issued and non-assessable. Each
Holder of Preferred Shares shall have all rights and remedies with regard to the conversion of such Holder’s Preferred Shares
in a Mandatory Conversion as if such Holder submitted to the Corporation a timely Notice of Conversion pursuant to Section 6(c)
with the Conversion Amount being the Qualified Public Offering Conversion Amount, the Conversion Price being the Qualified Public
Offering Conversion Price and the Share Delivery Date being the Qualified Public Offering Conversion Date. Notwithstanding anything
to the contrary provided herein or elsewhere, all Preferred Stock may be converted by a Holder hereunder, until the Trading Day
that the Holder receives (or his account is credited with) the required amount of unlegended and non-restricted Conversion Shares
pursuant to this Section 6(e) as if the Holder had submitted a Notice of Conversion to the Corporation. Notwithstanding anything
to the contrary provided herein, if on a Mandatory Conversion a Holder is not able to convert any Preferred Shares as a result
of a Beneficial Ownership Limitation, the Conversion Price for all Preferred Shares a Holder is not so able to convert as a result
of such Beneficial Ownership Limitations shall be reduced to the Qualified Public Offering Conversion Price, the portion of Preferred
Shares. The Corporation shall cause notice of the Mandatory Conversion (the “Mandatory Conversion Notice”) to
be mailed to the Holder, at such Holder’s address, at least ten (10) days prior to the Mandatory Conversion Date. Notwithstanding
the foregoing provisions of this Section 6, the Holder may convert any portion of this Note pursuant to Section 6 on or prior to
the date immediately preceding the date of such Mandatory Conversion.
Section 7.
Certain Adjustments.
a) Stock Dividends
and Stock Splits. If the Corporation, at any time while this Preferred Stock is outstanding: (i) pays a stock dividend
or otherwise makes a distribution or distributions that is payable in shares of Common Stock on shares of Common Stock or any other
Common Stock Equivalents (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Corporation
upon conversion of, or payment of a dividend on, the Preferred Stock), (ii) subdivides outstanding shares of Common Stock
into a larger number of shares, (iii) combines (including by way of a reverse stock split) outstanding shares of Common Stock
into a smaller number of shares, or (iv) issues, in the event of a reclassification of shares of the Common Stock, any shares
of capital stock of the Corporation, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be
the number of shares of Common Stock (excluding any treasury shares of the Corporation) outstanding immediately before such event,
and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event. Any adjustment
made pursuant to this Section 7(a) shall become effective immediately after the record date for the determination of stockholders
entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of
a subdivision, combination or re-classification.
b) Subsequent Equity
Sales. If, at any time while any Preferred Stock is outstanding the Corporation or any Subsidiary, as applicable, sells or
grants any option to purchase or sells or grants any right to reprice, or otherwise disposes of or issues (or announces any sale,
grant or any option to purchase or other disposition), any Common Stock or Common Stock Equivalents entitling any Person to acquire
shares of Common Stock at an effective price per share that is lower than the then Conversion Price (such lower price, the “
Base Conversion Price ” and such issuances, collectively, a “Dilutive Issuance”) (if the holder of
the Common Stock or Common Stock Equivalents so issued shall at any time, whether by operation of purchase price adjustments, reset
provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which
are issued in connection with such issuance, be entitled to receive shares of Common Stock at an effective price per share that
is lower than the Conversion Price, such issuance shall be deemed to have occurred for less than the Conversion Price on such date
of the Dilutive Issuance), then the Conversion Price shall be reduced to equal the Base Conversion Price. Such adjustment shall
be made whenever such Common Stock or Common Stock Equivalents are issued. Notwithstanding the foregoing, no adjustment will be
made under this Section 7(b) in respect of an Exempt Issuance. If the Corporation enters into a Variable Rate Transaction,
despite the prohibition set forth in the Purchase Agreement, the Corporation shall be deemed to have issued Common Stock or Common
Stock Equivalents at the lowest possible conversion price at which such securities may be converted or exercised. The Corporation
shall notify the Holders in writing, no later than the Trading Day following the issuance of any Common Stock or Common Stock Equivalents
subject to this Section 7(b), indicating therein the applicable issuance price, or applicable reset price, exchange price,
conversion price and other pricing terms (such notice, the “Dilutive Issuance Notice”). For purposes of clarification,
whether or not the Corporation provides a Dilutive Issuance Notice pursuant to this Section 7(b), upon the occurrence of any
Dilutive Issuance, the Holders are entitled to receive a number of Conversion Shares based upon the Base Conversion Price on or
after the date of such Dilutive Issuance, regardless of whether a Holder accurately refers to the Base Conversion Price in the
Notice of Conversion.
c) Subsequent Rights
Offerings. In addition to any adjustments pursuant to Section 7(a) above, if at any time the Corporation grants, issues
or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record
holders of any class of shares of Common Stock (the “ Purchase Rights ”), then the Holder of will be entitled
to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired
if the Holder had held the number of shares of Common Stock acquirable upon complete conversion of such Holder’s Preferred
Stock (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation)
immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such
record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or
sale of such Purchase Rights (provided , however, to the extent that the Holder’s right to participate in any
such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled
to participate in such Purchase Right to such extent (or beneficial ownership of such shares of Common Stock as a result of such
Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time,
if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).
d) Pro Rata Distributions.
During such time as this Preferred Stock is outstanding, if the Corporation 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 or options by way of a dividend,
spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”),
at any time after the issuance of this Preferred Stock, then, in each such case, the Holder shall be entitled to participate in
such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares
of Common Stock acquirable upon complete exercise of this Preferred Stock (without regard to any limitations on exercise hereof,
including without limitation, the Beneficial Ownership Limitation) immediately before the date of which a record is taken for such
Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined
for the participation in such Distribution (provided, however, to the extent that the Holder’s right to participate
in any such Distribution would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be
entitled to participate in such Distribution to such extent (or in the beneficial ownership of any shares of Common Stock as a
result of such Distribution to such extent) and the portion of such Distribution shall be held in abeyance for the benefit of the
Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).
e) Fundamental Transaction.
1)
General. The Company shall not enter into or be party to a Fundamental Transaction unless (i) the Holders of any
Notes and Series H Preferred stock, as those are defined in those certain Securities Purchase Agreements and/or Exchange
Agreements dated of even date herewith; (ii) the Successor Entity (as defined below) assumes in writing all of the
obligations of the Company under this Warrant in accordance with the provisions of this Section 7.e) 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 shares of Preferred Stock a security of the Successor Entity
evidenced by a written instrument substantially similar in form and substance to the Preferred Stock, including, without
limitation, which is convertible into a corresponding number of shares of capital stock equivalent to the shares of Common
Stock acquirable and receivable upon conversion of the Preferred Stock (without regard to any limitations on the conversion
of the Preferred Stock) prior to such Fundamental Transaction, and with a conversion price which applies the conversion price
hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant
to such Fundamental Transaction and the value of such shares of capital stock, such adjustments to the number of shares of
capital stock and such conversion price being for the purpose of protecting the economic value of the Preferred
Stock immediately prior to the consummation of such Fundamental Transaction) and (iii) if the Fundamental Transaction occurs
within six (6) months of the Closing Date, 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 Certificate of Designation 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 Certificate of Designation 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 conversion of the Preferred Stock 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) issuable upon the conversion of the Preferred Stock 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
the Preferred Stock been converted immediately prior to the applicable Fundamental Transaction (without regard to any
limitations on the conversion of the Preferred Stock), as adjusted in accordance with the provisions of this Certificate of
Designation. Notwithstanding the foregoing, and without limiting Section 6 hereof, the Holder may elect, at its sole option,
by delivery of written notice to the Company to waive this Section 7.e) to permit the Fundamental Transaction without the
assumption of the Preferred Stock. 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 a conversion of the Preferred Stock 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) issuable upon the conversion of the Preferred Stock 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 Note
been exercised immediately prior to the applicable Fundamental Transaction (without regard to any limitations on the
conversion of the Preferred Stock). Provision made pursuant to the preceding sentence shall be in a form and substance
reasonably satisfactory to the Holder.
2) Black
Scholes Value. Notwithstanding the foregoing and the provisions of Section 6 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 the Preferred Stock from the Holder on the date of such request by paying to the Holder cash in an amount
equal to the Black Scholes Value.
3) Fundamental
Transaction. If, at any time while any Preferred Stock is outstanding, (i) the Company, directly or
indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another
Person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other
disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or
indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to
which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property
and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the Company, directly or
indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the
Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged
for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions
consummates a stock or share purchase agreement or other business combination (including, without limitation, a
reorganization, recapitalization, spin-off or scheme of arrangement) with another Person or group of Persons whereby such
other Person or group acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common
Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making
or party to, such stock or share purchase agreement or other business combination) (each a “Fundamental
Transaction”), then, upon any subsequent conversion of the Preferred Stock, the Holder shall have the right to
receive, for each Conversion Share that would have been issuable upon such conversion immediately prior to the occurrence of
such Fundamental Transaction, at the option of the Holder (without regard to any limitation in Section 6 on the conversion of
the Preferred Stock), the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it
is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable
as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock into which each share of
Preferred Stock is convertible immediately prior to such Fundamental Transaction (without regard to any limitation in Section
6 on the conversion of the Preferred Stock). For purposes of any such conversion, the determination of the Conversion Price
shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration
issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the
Conversion Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different
components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or
property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate
Consideration it receives upon any conversion of this Note following such Fundamental Transaction. Notwithstanding anything
to the contrary, in the event of a Fundamental Transaction, the Company or any Successor Entity shall, at the
Holder’s option, exercisable at any time concurrently with, or within 30 days after, the consummation of the
Fundamental Transaction, purchase the shares of Preferred Stock from the Holder by paying to the Holder an amount of cash
equal to the Black Scholes Value of the remaining unconverted shares of Preferred Stock on the date of the consummation of
such Fundamental Transaction. “Black Scholes Value” means the value of the unconverted shares of Preferred
Stock remaining on the date of the Holder’s request pursuant to Section 7(e)(2) which value is calculated using the
Black Scholes Option Pricing Model for a “call” or “put” option, as elected by the Holder, as
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 7(e)(2) 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 Conversion
Price in effect on the date of the Holder’s request pursuant to Section 7(e)(2), (iii) a risk-free interest rate
corresponding to the U.S. Treasury rate as of the date of the Holder’s request pursuant to Section 7(e)(2) 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. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the
survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under this
Certificate of Designation and the other Transaction Documents in accordance with the provisions of this Section 7(e)
pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder
(without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the Holder, deliver to the
Holder in exchange for the Preferred Stock a security of the Successor Entity evidenced by a written instrument substantially
similar in form and substance to the Preferred Stock which is convertible into a corresponding number of shares of capital
stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon
conversion of the Preferred Stock (without regard to any limitations on the conversion of the Preferred Stock) prior to such
Fundamental Transaction, and with a conversion price which applies the Conversion Price hereunder to such shares of capital
stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and
the value of such shares of capital stock, such number of shares of capital stock and such conversion price being for the
purpose of protecting the economic value of the Preferred Stock immediately prior to the consummation of such Fundamental
Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such
Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of
such Fundamental Transaction, the provisions of this 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.
f) Calculations.
All calculations under this Section 7 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may
be. For purposes of this Section 7, the number of shares of Common Stock deemed to be issued and outstanding as of a given
date shall be the sum of the number of shares of Common Stock (excluding any treasury shares of the Corporation) issued and outstanding.
g) Notice to the Holders.
i. Adjustment
to Conversion Price. Whenever the Conversion Price is adjusted pursuant to any provision of this Section 7, the Corporation
shall promptly deliver to each Holder a notice setting forth the Conversion Price after such adjustment and setting forth a brief
statement of the facts requiring such adjustment.
ii. Notice
to Allow Conversion by Holder. If (A) the Corporation shall declare a dividend (or any other distribution in whatever
form) on the Common Stock, (B) the Corporation shall declare a special nonrecurring cash dividend on or a redemption of the
Common Stock, (C) the Corporation shall authorize the granting to all holders of the Common Stock of rights or warrants to
subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders
of the Corporation shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to
which the Corporation is a party, any sale or transfer of all or substantially all of the assets of the Corporation, or any compulsory
share exchange whereby the Common Stock is converted into other securities, cash or property (E) the Corporation shall authorize
the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Corporation (F) the Corporation shall
take any action to effectuate, and/or its actions could result in, a Mandatory Conversion, (G) the Corporation shall take any action
to effectuate an Corporation Redemption, or (H) a Triggering Event shall have occurred, then, in each case, the Corporation shall
cause to be filed at each office or agency maintained for the purpose of conversion of this Preferred Stock, and shall cause to
be delivered to each Holder at its last address as it shall appear upon the stock books of the Corporation, at least twenty (20) calendar
days prior to the applicable record or effective date hereinafter specified (unless a greater or lesser time period is expressly
required elsewhere in this Certificate of Designation), a notice stating (x) the date on which a record is to be taken for
the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which
the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to
be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected
to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled
to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation,
merger, sale, transfer or share exchange, provided that the failure to deliver such notice or any defect therein or in the delivery
thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice
provided hereunder constitutes, or contains, material, non-public information regarding the Corporation or any of the Subsidiaries,
the Corporation shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holder
shall remain entitled to convert the Conversion Amount of this Preferred Stock (or any part hereof) during the 20-day period commencing
on the date of such notice through the effective date of the event triggering such notice except as may otherwise be expressly
set forth in this Certificate of Designation.
Section 8.
Corporation Redemption.
(a)
The Corporation shall have the right to redeem (a “Corporation Redemption”), all (but not less than all),
shares of the Preferred Stock issued and outstanding at any time after the Original Issue Date, at a redemption price per
Preferred Stock then issued and outstanding (the “Corporation Redemption Price”), equal to the product of
(i) (A) 120%, or (B) 130% if a Qualified Public Offering has previously occurred multiplied by (ii) the sum of (x) the Stated
Value, (y) all accrued but unpaid dividends, and (z) all other amount due to the Holder pursuant to this Certificate of
Designation and/or any Transaction Document including, but not limited to Late Fees, liquidated damages and the legal fees
and expenses of the Holder’s counsel relating to this Certification of Designation, any other Transaction Document
and/or the transactions contemplated thereunder and/or hereunder.
(b)
In connection with any Corporation Redemption, the Corporation shall provide no less than five (5) calendar days advance
written notice (a “Corporation Redemption Notice”) to all Holders of shares of Preferred Stock of a
Corporate Redemption.
(c)
The Corporation may not deliver to a holder a Corporation Redemption Notice unless on or prior to the date of delivery of
such Corporation Redemption Notice, the Corporation shall have segregated on the books and records of the Corporation an
amount of cash sufficient to pay the Corporation Redemption Price for each share of Preferred Stock then issued and
duly. Any Corporation Redemption Notice delivered shall be irrevocable and shall be accompanied by a statement executed
by Corporation duly authorized officer of the Corporation.
(d)
The Corporation Redemption Price required to be paid by the Corporation to each Holder shall be paid in the cash to each
Holder of shares of Preferred Stock no later than 5 calendar days from the date of mailing of the Corporation Redemption
Notice (the “Corporation Redemption Payment Date”).
(e)
Notwithstanding the delivery of a Corporation Redemption Notice, a Holder may convert some or all of its shares of Preferred
Stock until the date it receives in full Corporation Redemption Price, provided, however, that notwithstanding
anything to the contrary provided herein or elsewhere (i) in the event a Holder would be precluded from converting any shares
of Preferred Stock, due to the limitation contained in Section 6(d), the Corporation Redemption Payment Date, for such Holder
only, shall automatically be extended by 120 days (or such shorter period as so provided to the Corporation by the Holder at
any time and (ii) if a Mandatory Conversion has occurred prior to the Corporation Redemption Payment Date and for whatever
reason including, but not limited to, the Beneficial Ownership Limitation, a Holder still owns Preferred Stock, any such
Holder may elect to extend the Corporation Redemption Payment Date as to any or all of such Holder’s Preferred Stock
for up to 120 days following the Corporation Redemption Payment Date to allow such Holder to convert its remaining Preferred
Stock into Conversion Shares.
Section 9. Negative
Covenants. From the date hereof until the date no shares of Preferred Stock are issued and outstanding, unless Holders of at
least 75% in Stated Value of the then outstanding shares of Preferred Stock shall have otherwise given prior written consent, the
Corporation shall not, and shall not permit any of the Subsidiaries to, directly or indirectly:
(a) other than Permitted
Indebtedness, enter into, create, incur, assume, guarantee or suffer to exist any indebtedness for borrowed money of any kind,
including but not limited to, a guarantee, on or with respect to any of its property or assets now owned or hereafter acquired
or any interest therein or any income or profits therefrom;
(b) other than Permitted
Liens, enter into, create, incur, assume or suffer to exist any Liens of any kind, on or with respect to any of its property or
assets now owned or hereafter acquired or any interest therein or any income or profits therefrom;
(c) except for the Amendment,
amend its charter documents, including, without limitation, its articles of incorporation and bylaws, in any manner that materially
and adversely affects any rights of the Holder;
(d) repay, repurchase
or offer to repay, repurchase or otherwise acquire of any shares of its Common Stock, Common Stock Equivalents or Junior Securities,
other than as to the Conversion Shares or Warrant Shares as permitted or required under the Transaction Documents,
(e) pay cash dividends
or distributions on Junior Securities of the Corporation;
(f) enter into any transaction
with any Affiliate of the Corporation which would be required to be disclosed in any public filing with the Commission, unless
such transaction is made on an arm’s-length basis and expressly approved by a majority of the disinterested directors of
the Corporation (even if less than a quorum otherwise required for board approval); or
(g) hire and/or pay directly
and/or indirectly, whether in cash, securities or otherwise and/or any investment banker, borrower/dealer and/or advisor for the
purpose and/or in connection with any direct and/or indirect capital raise including any loans of and/or for the Company and/or
any of its Subsidiaries; or
(h) enter into any agreement
with respect to any of the foregoing.
Section 10. Redemption
Upon Triggering Events.
(a) “Triggering
Event” means, wherever used herein any of the following events (whatever the reason for such event and whether such event
shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or
any order, rule or regulation of any administrative or governmental body):
i. if the
Corporation fails to provide at all times the Registration Statement or usable prospectus that permits the Corporation to issue
the Conversion Shares or which allows the Holder to sell the Conversion Shares pursuant thereto, subject to a grace period of 10
Trading Days in the aggregate in any 365-day period or the Corporation cannot issue the Conversion Shares pursuant to Section 3(a)(9)
of the Securities Act;
ii. the Corporation
shall fail to deliver Conversion Shares issuable upon a conversion hereunder (including, but not limited to, a Mandatory Conversion),
that comply with the provisions hereof prior to the fifth Trading Day after such shares are required to be delivered hereunder,
or the Corporation shall provide written notice to any Holder, including by way of public announcement, at any time, of its intention
not to comply with requests for conversion of any shares of Preferred Stock in accordance with the terms hereof;
iii. the
Corporation shall fail for any reason to pay in full the amount of cash due pursuant to a Buy-In within five Trading Days after
notice therefor is delivered hereunder.
iv. the Corporation
shall fail to have available a sufficient number of authorized and unreserved shares of Common Stock to issue to such Holder upon
a conversion hereunder;
v. unless
specifically addressed elsewhere in this Certificate of Designation as a Triggering Event, the Corporation shall fail to observe
or perform any other covenant, agreement or warranty contained in, or otherwise commit any breach of the Transaction Documents,
and such failure or breach shall not, if subject to the possibility of a cure by the Corporation, have been cured within 5 calendar
days after the date on which written notice of such failure or breach shall have been delivered;
vi. the Corporation
shall redeem Junior Securities or pari passu securities;
vii. the
Corporation shall be party to a Change of Control Transaction;
viii. there
shall have occurred a Bankruptcy Event;
ix. the Common
Stock shall fail to be listed or quoted for trading on a Trading Market for more than five Trading Days, which need not be consecutive
Trading Days;
x. any monetary
judgment, writ or similar final process shall be entered or filed against the Corporation, any subsidiary or any of their respective
property or other assets for more than $50,000 (provided that amounts covered by the Corporation’s insurance policies are
not counted toward this $50,000 threshold), and such judgment, writ or similar final process shall remain unvacated, unbonded or
unstayed for a period of 30 Trading Days;
xi. the electronic
transfer by the Corporation of shares of Common Stock through the Depository Trust Company or another established clearing corporation
is no longer available or is subject to a ‘freeze” and/or “chill”; or
xii. the
2015 Meeting did not occur on September 2, 2015, or did occur but was not held in compliance with all applicable laws, rules and
regulations including, but not limited to, applicable quorum requirements, and/or any proposals including, but not limited to,
the Amendment, voted on at the 2015 Meeting by the Company’s shareholders are not approved; or
xiv. the
authorized Common Stock has not been increased from 13,333,334 shares to 35 million shares by the Closing Date, or
xv. any breach,
Event of Default and/or any event of default occurs (or with the passage of time and/or the providing of notice could occur), with
respect to (x) the Securities Purchase Agreement dated on or about the date hereof by and among the Corporation and the Lenders
named therein pursuant to which such Lenders purchased from the Corporation 12% Senior Secured Convertible Promissory Notes of
the Corporation Due September 30, 2016 (the “Notes”), and in certain cases common stock purchase warrants of
the Corporation (the “NPA”), (y) the Notes issued and/or transferred pursuant to the NPA, and/or pursuant to
any other document and/or agreement, and/or (z) any other document, agreement and/or instrument contemplated under the Notes and/or
the NPA including, but not limited to, the registration rights agreement, the security agreement, the Intercreditor and Subordination
Agreement, and/or any warrants.
b) Upon the occurrence
of a Triggering Event, each Holder shall (in addition to all other rights it may have hereunder or under applicable law) have the
right, exercisable at the sole option of such Holder, to require the Corporation to (A) redeem all of the Preferred Stock then
held by such Holder for a redemption price, in cash, equal to the Triggering Redemption Amount, or (B) at the option of each
Holder either (i) redeem all of the Preferred Stock then held by such Holder though the issuance to such Holder of such number
of shares of Common Stock equal to the quotient of (x) the Triggering Redemption Amount, divided by (y) the lowest of (1) the Conversion
Price, (2) the Qualified Public Offering Conversion Price and (3) 75% of the average of the 10 VWAPs immediately prior to the date
of election hereunder, or (ii) increase the dividend rate on all of the outstanding Preferred Stock held by such Holder retroactively
to the initial Closing Date to 18% per annum thereafter. The Triggering Redemption Amount, whether payable in cash or in shares,
shall be due and payable or issuable, as the case may be, within five (5) Trading Days of the date on which the notice for the
payment therefor is provided by a Holder (the “Triggering Redemption Payment Date”). If the Corporation fails
to pay in full the Triggering Redemption Amount hereunder on the date such amount is due in accordance with this Section (whether
in cash or shares of Common Stock), the Corporation will pay interest thereon at a rate equal to the lesser of 18% per annum
or the maximum rate permitted by applicable law, accruing and compounding daily from such date until the Triggering Redemption
Amount, plus all such interest thereon, is paid in full.
Section 11.
Miscellaneous.
a) Notices.
Any and all notices or other communications or deliveries to be provided by the Holders hereunder including, without limitation,
any Notice of Conversion, shall be in writing and delivered personally or sent by a nationally recognized overnight courier service
and by facsimile or e-mail, addressed to the Corporation, at 655 Montgomery Street, Suite 900, San Francisco, CA 94111; Attention:
Gerald E. Commissiong, facsimile number (408) 852-4427, or e-mail gerald.commissiong@amarantus.com , or such other facsimile
number, e-mail or address as the Corporation may specify for such purposes by prior written notice to the Holders delivered in
accordance with this Section 11. Any and all notices or other communications or deliveries to be provided by the Corporation
hereunder shall be in writing and delivered personally, by facsimile, or sent by a nationally recognized overnight courier service
addressed to each Holder at the facsimile number or address of such Holder appearing on the books of the Corporation, or if no
such facsimile number or address appears on the books of the Corporation, at the principal place of business of such Holder, as
set forth in the Purchase Agreement. Any notice or other communication or deliveries hereunder shall be deemed given and effective
on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile
number set forth in this Section prior to 5:30 p.m. (New York City time) on any date, (ii) the next Trading Day after the
date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth in this Section
on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (iii) the second Trading
Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (iv) upon actual receipt
by the party to whom such notice is required to be given.
b) Absolute
Obligation. Except as expressly provided herein, no provision of this Certificate of Designation shall alter or impair the
obligation of the Corporation, which is absolute and unconditional, to pay liquidated damages, accrued dividends and accrued interest,
as applicable, on the shares of Preferred Stock at the time, place, and rate, and in the coin or currency, herein prescribed.
c) Lost
or Mutilated Preferred Stock Certificate. If a Holder’s Preferred Stock certificate shall be mutilated, lost, stolen
or destroyed, the Corporation shall execute and deliver, in exchange and substitution for and upon cancellation of a mutilated
certificate, or in lieu of or in substitution for a lost, stolen or destroyed certificate, a new certificate for the shares of
Preferred Stock so mutilated, lost, stolen or destroyed, but only upon receipt of evidence of such loss, theft or destruction of
such certificate, and of the ownership hereof reasonably satisfactory to the Corporation.
d) Governing
Law. All questions concerning the construction, validity, enforcement and interpretation of this Certificate of Designation
shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to
the principles of conflict of laws thereof. Each party agrees that all legal proceedings concerning the interpretation, enforcement
and defense of the transactions contemplated by any of the Transaction Documents (whether brought against a party hereto or its
respective Affiliates, directors, officers, stockholders, employees or agents) shall be commenced in the state and federal courts
sitting in the City of New York, Borough of Manhattan (the “New York Courts”). Each party hereto hereby irrevocably
submits to the exclusive jurisdiction of the New York Courts for the adjudication of any dispute hereunder or in connection herewith
or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction
Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of such New York Courts, or such New York Courts are improper or inconvenient venue for
such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for notices to it under this Certificate of Designation and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any
way any right to serve process in any other manner permitted by applicable law. Each party hereto hereby irrevocably waives, to
the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating
to this Certificate of Designation or the transactions contemplated hereby. If any party shall commence an action or proceeding
to enforce any provisions of this Certificate of Designation, then the prevailing party in such action or proceeding shall be reimbursed
by the other party for its attorneys’ fees and other costs and expenses incurred in the investigation, preparation and prosecution
of such action or proceeding.
e) Waiver. Any waiver
by the Corporation or a Holder of a breach of any provision of this Certificate of Designation shall not operate as or be construed
to be a waiver of any other breach of such provision or of any breach of any other provision of this Certificate of Designation
or a waiver by any other Holders. The failure of the Corporation or a Holder to insist upon strict adherence to any term of this
Certificate of Designation on one or more occasions shall not be considered a waiver or deprive that party (or any other Holder)
of the right thereafter to insist upon strict adherence to that term or any other term of this Certificate of Designation on any
other occasion. Any waiver by the Corporation or a Holder must be in writing.
f) Severability.
If any provision of this Certificate of Designation is invalid, illegal or unenforceable, the balance of this Certificate of Designation
shall remain in effect, and if any provision is inapplicable to any Person or circumstance, it shall nevertheless remain applicable
to all other Persons and circumstances. If it shall be found that any interest or other amount deemed interest due hereunder violates
the applicable law governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum
rate of interest permitted under applicable law.
g) Next
Business Day. Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment
shall be made on the next succeeding Business Day.
h) Headings.
The headings contained herein are for convenience only, do not constitute a part of this Certificate of Designation and shall not
be deemed to limit or affect any of the provisions hereof.
i) Status of Converted
or Redeemed Preferred Stock. Shares of Preferred Stock may only be issued pursuant to the Purchase Agreement. If any shares
of Preferred Stock shall be converted, redeemed or reacquired by the Corporation, such shares shall resume the status of authorized
but unissued shares of preferred stock and shall no longer be designated as Series H 12% Convertible Preferred Stock.
RESOLVED, FURTHER, that the Chairman, the president or any vice-president,
and the secretary or any assistant secretary, of the Corporation be and they hereby are authorized and directed to prepare and
file this Certificate of Designation of Preferences, Rights and Limitations in accordance with the foregoing resolution and the
provisions of Delaware law.
IN WITNESS WHEREOF, the undersigned have
executed this Certificate this 30th day of September 2015.
| /s/ Gerald E. Commissiong |
|
| Name: |
Gerald E. Commissiong |
|
| Title: |
President and Chief Executive Officer |
|
ANNEX A
NOTICE OF CONVERSION
(TO BE EXECUTED BY THE REGISTERED HOLDER
IN ORDER TO CONVERT SHARES OF PREFERRED STOCK)
The undersigned hereby elects to convert
the number of shares of Series H 12% Convertible Preferred Stock indicated below into shares of common stock, par value $0.001
per share (the “ Common Stock ”), of Amarantus BioScience Holdings, Inc. a Nevada corporation (the “
Corporation ”), according to the conditions hereof, as of the date written below. If shares of Common Stock are to be
issued in the name of a Person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto
and is delivering herewith such certificates and opinions as may be required by the Corporation in accordance with the Purchase
Agreement. No fee will be charged to the Holders for any conversion, except for any such transfer taxes.
Conversion calculations:
| Date to Effect Conversion: |
|
| Number of shares of Preferred Stock owned prior to Conversion: |
|
| Number of shares of Preferred Stock to be Converted: |
|
| Stated Value of shares of Preferred Stock to be Converted: |
|
| Dollar amount of Interest to be Converted: |
|
| Other amounts owed to the Undersigned by the Corporation under the Certificate of Designation and/or any other Transaction Document to be Converted: |
|
| Number of shares of Common Stock to be Issued: |
|
| Applicable Conversion Price: |
|
| Number of shares of Preferred Stock subsequent to Conversion: |
|
| Address for Delivery: _________________________ |
| |
| or |
| DWAC Instructions: |
| Name of Entity Holder (Please Print) |
| Name of Individual Holder (Please Print) |
|
(Signature of Individual Holder) |
Exhibit 10.1
Execution Copy
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (this
“Agreement”) is dated as of September 30, 2015 by and among Amarantus BioScience Holdings, Inc., a Nevada corporation
(the “Company”), and each purchaser identified on the signature pages hereto (each, including its successors
and assigns, a “Purchaser” and collectively, the “Purchasers”).
WHEREAS, subject to the terms and conditions
set forth in this Agreement and pursuant an effective registration statement under the Securities Act of 1933, as amended (the
“Securities Act”), the Company desires to issue and sell to each Purchaser, and each Purchaser, severally and
not jointly, desires to purchase from the Company, securities of the Company as more fully described in this Agreement.
NOW, THEREFORE, IN CONSIDERATION of the
mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the Company and each Purchaser agree as follows:
ARTICLE I.
DEFINITIONS
1.1 Definitions. In addition to
the terms defined elsewhere in this Agreement: (a) capitalized terms that are not otherwise defined herein have the meanings
given to such terms in the Certificate of Designation (as defined herein), and (b) the following terms have the meanings set
forth in this Section 1.1:
“Acquiring Person”
shall have the meaning ascribed to such term in Section 4.7.
“Action” shall
have the meaning ascribed to such term in Section 3.1(j).
“Affiliate”
means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common
control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.
“Alternative Conversion
Price” has the meaning set forth in the Certificate of Designation.
“Amendment”
means the amendment to the Company’s Articles of Incorporation that increases the number of authorized shares of Common Stock
from 13,333,334 shares of Common Stock to no less than 35,000,000 shares of Common Stock.
“Board of Directors”
means the board of directors of the Company.
“Business Day”
means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or any day on which
banking institutions in the State of New York are authorized or required by law or other governmental action to close.
“Certificate of Designation”
means the Certificate of Designation for the 12% Series H Convertible Preferred Stock of the Company to be filed prior to the Closing
by the Company with the Secretary of State of Nevada, in the form of Exhibit A attached hereto.
“Closing” means
the closing of the purchase and sale of the Securities pursuant to Section 2.1.
“Closing Date”
means the Trading Day on which all of the Transaction Documents have been executed and delivered by the applicable parties thereto,
and all conditions precedent to (i) the Purchasers’ obligations to pay the Subscription Amount and (ii) the Company’s
obligations to deliver the Securities, in each case, have been satisfied or waived, but in no event later than the third Trading
Day following the date hereof.
“Closing Statement”
means the Closing Statement in the form on Annex A attached hereto.
“Commission”
means the United States Securities and Exchange Commission.
“Common Stock”
means the common stock of the Company, par value $0.001 per share, and any other class of securities into which such securities
may hereafter be reclassified or changed.
“Common Stock Equivalents”
means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock,
including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is at any time convertible
into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.
“Company Counsel”
means Sichenzia Ross Friedman Ference LLP, with offices located at 61 Broadway, 32nd floor, New York, New York 10006.
“Conversion Shares”
means, collectively, the shares of Common Stock issuable upon conversion of the shares of Preferred Stock in accordance with the
terms Certificate of Designation.
“Disclosure Schedules”
means the Disclosure Schedules of the Company delivered concurrently herewith.
“GKN” means
Gusrae Kaplan Nusbaum PLLC, with offices located at 120 Wall Street, 25th floor, New York, New York 10005.
“Evaluation Date”
shall have the meaning ascribed to such term in Section 3.1(r).
“Exchange Act”
means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Exempt Issuance”
means the issuance of (a) shares of Common Stock, options or other equity awards (including, without limitation, restricted
awards) to employees, officers or directors of the Company pursuant to any stock or option plan duly adopted for such purpose,
by a majority of the non-employee members of the Board of Directors or a majority of the members of a committee of non-employee
directors established for such purpose, (b) securities upon the exercise or exchange of or conversion of any Securities issued
hereunder and/or other securities exercisable or exchangeable for or convertible into shares of Common Stock issued and outstanding
on the date of this Agreement, provided that such securities have not been amended since June 1, 2015 to increase the number
of such securities or to decrease the exercise price, exchange price or conversion price of such securities, financings, commercial
property lease transactions or similar transactions, (c) securities issued to (or securities issued upon exercise conversion of
exchange of Common Stock Equivalents issued to any such persons), Delafield Investments Limited, a company organized under the
laws of the British Virgin Islands (“Delafield”), and/or Dominion Holdings, LLC (“Dominion”),
or (d) strategic transactions, which are approved by a majority of the disinterested directors of the Company, provided that
any such issuance shall only be to a Person (or to the equityholders of a Person) which is, itself or through its subsidiaries,
an operating company or an owner of an asset in a business synergistic with the business of the Company and shall provide to the
Company additional benefits in addition to the investment of funds, but shall not include a transaction in which the Company is
issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities
and provided further that the Purchasers have each provided their written consent to each such issuance.
“FCPA” means
the Foreign Corrupt Practices Act of 1977, as amended.
“FDA” shall
have the meaning ascribed to such term in Section 3.1(gg).
“FDCA” shall
have the meaning ascribed to such term in Section 3.1(gg).
“GAAP” shall
have the meaning ascribed to such term in Section 3.1(h).
“Indebtedness”
shall have the meaning ascribed to such term in Section 3.1(aa).
“Intellectual Property
Rights” shall have the meaning ascribed to such term in Section 3.1(o).
“Liens” means
a lien, charge, pledge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.
“Material Adverse Effect”
shall have the meaning assigned to such term in Section 3.1(b).
“Material Permits”
shall have the meaning ascribed to such term in Section 3.1(m).
“Maximum Rate”
shall have the meaning ascribed to such term in Section 5.17.
“Participation Maximum”
shall have the meaning ascribed to such term in Section 4.12(a).
“Person” means
an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
“Pre-Notice”
shall have the meaning ascribed to such term in Section 4.12(c).
“Preferred Stock”
means the up to 4,000 shares of the Company’s Series H 12% Convertible Preferred Stock issued and/or issuable hereunder having
the rights, preferences and privileges set forth in the Certificate of Designation.
“Pro Rata Portion”
shall have the meaning ascribed to such term in Section 4.12(e).
“Proceeding”
means an action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial
proceeding, such as a deposition), whether commenced or threatened.
“Prospectus”
means the prospectus contained in the Registration Statement at the time the Registration Statement became effective, as amended
or supplemented prior to the date hereof.
“Prospectus Supplement”
means the supplement to the Prospectus complying with Rule 424(b) of the Securities Act that is filed with the Commission in connection
with the transactions contemplated by the Transaction Documents and delivered by the Company to each Purchaser at the Closing.
“Purchaser Party”
shall have the meaning ascribed to such term in Section 4.10.
“Registration Statement”
means the effective registration statement with the Commission file No. 333-203845 which registers the sale of the Preferred Stock,
Warrants and Underlying Shares.
“Required Approvals”
shall have the meaning ascribed to such term in Section 3.1(e).
“Required Minimum”
means, as of any date, the sum of (I) the product of (i) 300%, multiplied by, (ii) the quotient obtained by dividing (A) the sum
of (1) the Stated Value of all issued and outstanding Preferred Stock (2), all dividends due on the issued and outstanding Preferred
Stock (whether or not accrued), and (3) all fees and expenses including, but not limited to, Late Fees and liquidated damages owed
related to the issued and outstanding Preferred Stock, by (B), the lower of (1) the Conversion Price on the Closing Date, and (2)
in the event that the average closing bid price of the Common Stock on the Trading Market for the 5 Trading Days prior to the determination
date is below the Conversion Price, the Alternative Conversion Price, plus (II) the product of (i) 300%, multiplied by (ii) the
quotient obtained by dividing (A) the maximum number of Warrant Shares issuable upon exercise of the Warrants, by (B) the lowest
of (1) the Exercise Price on the Closing Date, and (2) if the average closing bid price of the Common Stock on the Trading Market
for the 5 Trading Days prior to the determination date is lower than the Exercise Price, the Alternative Conversation Price. The
Company shall be required to calculate the Required Minimum on the first Trading Day of each month that the Preferred Stock is
outstanding and provide such calculation to the Purchasers and the Transfer Agent promptly. In calculating the Required Minimum
all adjustments set forth in Section 7 of the Certificate of Designation, and Section 3 of the Warrants, shall be taken into account,
but all limitations on conversion and/or exercise shall be ignored including, but not limited to, Beneficial Ownership Limitations,
and assuming all Preferred Stock will remain outstanding for 18 months following the Closing Date.
“Rule 144” means
Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to
time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as
such Rule.
“Rule 424” means
Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to
time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as
such Rule.
“SEC Reports”
shall have the meaning ascribed to such term in Section 3.1(h).
“Securities”
means the Preferred Stock, the Warrants and the Underlying Shares.
“Securities Act”
means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Share Authorization Failure”
shall have the meaning ascribed to such term in Section 4.11(b).
“Short Sales”
means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall not be deemed to
include the location and/or reservation of borrowable shares of Common Stock).
“Simultaneous Transactions”
means each of the following:
| (i) | Pursuant to an Exchange Agreement by and between the Company and Dominion, dated on or about the date hereof (the “Dominion
Exchange Agreement”), Dominion exchanged certain securities of the Company owned by it for Notes. |
| (ii) | Pursuant to a Securities Purchase Agreement dated as of September 30, 2015 by and among Delafield, Dominion and the Company
(the “NPA”), among other items, Delafield and Dominion each (i) purchased 12% Senior Secured Convertible Notes
of the Company (such Senior Secured Convertible Promissory Notes were part of a series of “12% Senior Secured Convertible
Note” each a “Note”, and, collectively, the “Notes”), and (ii) Common Stock Purchase
Warrants and such parties entered into various agreements and arrangements with the Company, all as set forth in the NPA including,
but not limited to, a Registration Rights Agreement, Subordination Agreement, Intercreditor and Subordination Agreement and a Security
Agreement; |
| (iii) | Pursuant to a Repurchase Agreement dated as of September 30, 2015, by and between the Company and Discover Growth Fund, a Cayman
Island company (“Discover”), the Company repurchased shares of Series G Preferred Stock and shares of Common
Stock of the Company owned by Discover for $4,750,000, and all remaining shares of Common Stock reserved for issuance upon conversion
of the G Shares become authorized but unissued shares of the Company |
“Stated Value”
means $1,000 per share of Preferred Stock.
“Subscription Amount”
means, as to each Purchaser, the aggregate amount to be paid for the Preferred Stock and Warrants purchased hereunder as specified
below such Purchaser’s name on the signature page of this Agreement and next to the heading “Subscription Amount,”
in United States dollars and in immediately available funds.
“Subsequent Financing”
shall have the meaning ascribed to such term in Section 4.12(a).
“Subsequent Financing
Notice” shall have the meaning ascribed to such term in Section 4.12(b).
“Subsidiary”
means, with respect to any Person, a corporation, partnership, limited liability company or other entity of which shares of stock
or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power
only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation,
partnership or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through
one or more intermediaries, or both, by such Person. Schedule 3.1(a) lists all of the Subsidiaries of the Company.
“Trading Day”
means a day on which the principal Trading Market is open for trading.
“Trading Market”
means any of the following markets or exchanges on which the Common Stock (or any other common stock of any other Person that references
the Trading Market for its common stock) is listed or quoted for trading on the date in question: the OTC Bulletin Board, The NASDAQ
Global Market, The NASDAQ Global Select Market, The NASDAQ Capital Market, the New York Stock Exchange, NYSE Arca, the NYSE MKT,
or the OTCQX Marketplace, the OTCQB Marketplace, the OTCPink Marketplace or any other tier operated by OTC Markets Group Inc. (or
any successor to any of the foregoing).
“Transaction Documents”
means this Agreement, the Certificate of Designation, the Warrants, all exhibits and schedules thereto and hereto and any other
documents or agreements executed in connection with the transactions contemplated hereunder.
“Transfer Agent”
means VStock Transfer, LLC, the current transfer agent of the Company, with a mailing address of 18 Lafayette Place, Woodmere,
New York 11598, and a facsimile number of (646) 536-3179, and any successor transfer agent of the Company.
“2015 Shareholder Meeting
Conditions” means that in connection with the Company’s 2015 Annual Meeting of Stockholders held on September 2,
2015 (the “2015 Meeting”), each Purchaser is satisfied (in its sole discretion), that (i) 2015 Meeting occurred
and was held in compliance with all applicable laws, rules and regulations, including, but not limited to the quorum requirements,
(ii) each of the proposals voted on by the shareholders at the 2015 Meeting were approved including, among the other proposals,
the Amendment to the Company’s Articles of Incorporation increasing the Company’s authorized shares of Common Stock
from 13,333,334 to 35,000,000, all of which proposals are set forth in the Company’s Proxy Statement contained in its Definitive
Schedule 14A filed with the Commission on or about July 21, 2015, and (iii) the Amendment was filed with the Secretary of State
of Nevada and is in effect.
“Underlying Shares”
means the Conversion Shares and the Warrant Shares.
“Variable Rate Transaction”
shall have the meaning ascribed to such term in Section 4.13(b).
“VWAP” means,
for or as of any date, the dollar volume-weighted average price for such security on the Trading Market (or, if the Trading 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. All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock
combination, recapitalization or other similar transaction during such period.
“Warrants” means,
collectively, the Common Stock purchase warrants delivered to the Purchasers at the Closing in accordance with Section 2.2(a)
hereof, which Warrants shall be exercisable six (6) months and one (1) day from the date of issuance and have a term of exercise
equal to five years from the initial exercise date, in the form of Exhibit C attached hereto.
“Warrant Shares”
means the shares of Common Stock issuable upon exercise of the Warrants.
ARTICLE II.
PURCHASE AND SALE
2.1 Closing. On the Closing Date,
upon the terms and subject to the conditions set forth herein, substantially concurrent with the execution and delivery of this
Agreement by the parties hereto, the Company agrees to sell, and the Purchasers, severally and not jointly, agree to purchase (i)
up to an aggregate of $3,055,556 (which includes 10% of original issue discount) Stated Value of shares of Preferred Stock with
an aggregate Stated Value for each Purchaser equal to such Purchaser’s Subscription Amount as set forth on the signature
page hereto executed by such Purchaser, and (ii) Warrants as determined pursuant to Section 2.2(a). Each Purchaser shall deliver
to the Company, via wire transfer, immediately available funds equal to its Subscription Amount, and the Company shall deliver
to each Purchaser its respective shares of Preferred Stock and Warrants, as determined pursuant to Section 2.2(a), and the
Company and each Purchaser shall deliver the other items set forth in Section 2.2 deliverable at the Closing. Upon satisfaction
or waiver of the covenants and conditions set forth in Sections 2.2 and 2.3, the Closing shall occur at the offices of GKN or such
other location as the parties shall mutually agree. The Company covenants that, if the Purchaser delivers a Notice of Conversion
(as defined in the Certificate of Designation) to convert any shares of Preferred Stock between the date hereof and the Closing
Date, the Company shall deliver Conversion Shares to the Purchaser on the Closing Date in connection with such Notice of Conversion.
2.2 Deliveries.
(a) On or prior to the Closing
Date, the Company shall deliver or cause to be delivered to each Purchaser the following:
(i) this Agreement duly executed
by the Company;
(ii) a legal opinion of Company
Counsel, substantially in the form of Exhibit B attached hereto;
(iii) a certificate evidencing
a number of shares of Preferred Stock equal to such Purchaser’s Subscription Amount divided by the Stated Value, registered
in the name of such Purchaser and evidence of the filing and acceptance of the Certificate of Designation from the Secretary of
State of Nevada;
(iv) a Warrant registered in
the name of such Purchaser to purchase up to a number of shares of Common Stock equal to 85% of such Purchaser’s Conversion
Shares on the date hereof, with an exercise price equal to $2.00, subject to adjustment therein; and
(v) the Prospectus and Prospectus
Supplement (which may be delivered in accordance with Rule 172 under the Securities Act).
(b) On or prior to the Closing
Date, each Purchaser shall deliver or cause to be delivered to the Company the following:
(i) this Agreement duly executed
by such Purchaser; and
(ii) such Purchaser’s Subscription
Amount by wire transfer to the account specified in writing by the Company.
2.3 Closing Conditions.
(a) The obligations of the Company
hereunder in connection with the Closing are subject to the following conditions being met:
(i) the accuracy in all material
respects on the Closing Date of the representations and warranties of the Purchasers contained herein (unless as of a specific
date therein in which case they shall be accurate as of such date);
(ii) all obligations, covenants
and agreements of each Purchaser required to be performed at or prior to the Closing Date shall have been performed; and
(iii) the delivery by each Purchaser
of the items set forth in Section 2.2(b) of this Agreement.
(b) The respective obligations
of the Purchasers hereunder in connection with the Closing are subject to the following conditions being met:
(i) the accuracy in all material
respects when made and on the Closing Date of the representations and warranties of the Company contained herein (unless as of
a specific date therein);
(ii) all obligations, covenants
and agreements of the Company required to be performed at or prior to the Closing Date shall have been performed;
(iii) the delivery by the Company
of the items set forth in Section 2.2(a) of this Agreement;
(iv) there shall have been no
Material Adverse Effect with respect to the Company since the date hereof;
(v) from the date hereof to the
Closing Date, trading in the Common Stock shall not have been suspended by the Commission or the Company’s principal Trading
Market, and, at any time prior to the Closing Date, trading in securities generally as reported by Bloomberg L.P. shall not have
been suspended or limited, or minimum prices shall not have been established on securities whose trades are reported by such service,
or on any Trading Market, nor shall a banking moratorium have been declared either by the United States or New York State authorities
nor shall there have occurred any material outbreak or escalation of hostilities or other national or international calamity of
such magnitude in its effect on, or any material adverse change in, any financial market which, in each case, in the reasonable
judgment of such Purchaser, makes it impracticable or inadvisable to purchase the Securities at the Closing;
(vi) all of the Simultaneous
Transactions shall have occurred (or have been waived) and all documents to be executed and/or filed in connection with the Simultaneous
Transactions and the other transactions referenced therein have so been executed, delivered and/or filed; and
(vii) the 2015 Shareholder Meeting
Conditions have been satisfied.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of
the Company. Except as set forth in the Disclosure Schedules, which Disclosure Schedules shall be deemed a part hereof and
shall qualify any representation or otherwise made herein to the extent of the disclosure contained in the corresponding section
of the Disclosure Schedules, the Company hereby makes the following representations and warranties to each Purchaser:
(a) Subsidiaries. All of
the direct and indirect subsidiaries of the Company are set forth on Schedule 3.1(a). The Company owns, directly or indirectly,
all of the capital stock or other equity interests of each Subsidiary free and clear of any Liens, and all of the issued and outstanding
shares of capital stock of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar
rights to subscribe for or purchase securities.
(b) Organization and Qualification.
The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or organization, with the requisite power and authority to own and use
its properties and assets and to carry on its business as currently conducted. Neither the Company nor any Subsidiary is in violation
nor default of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational
or charter documents. Each of the Company and the Subsidiaries is duly qualified to conduct business and is in good standing as
a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it
makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could
not have or reasonably be expected to result in: (i) a material adverse effect on the legality, validity or enforceability
of any Transaction Document, (ii) a material adverse effect on the results of operations, assets, business, prospects or condition
(financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse effect on the
Company’s ability to perform in any material respect on a timely basis its obligations under any Transaction Document (any
of (i), (ii) or (iii), a “Material Adverse Effect”) and no Proceeding has been instituted in any such jurisdiction
revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.
(c) Authorization; Enforcement.
The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this
Agreement and each of the other Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The
execution and delivery of this Agreement and each of the other Transaction Documents by the Company and the consummation by it
of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company
and no further action is required by the Company, the Board of Directors or the Company’s stockholders in connection herewith
or therewith other than in connection with the Required Approvals. This Agreement and each other Transaction Document to which
it is a party has been (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the
terms hereof and thereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance
with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited
by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar
as indemnification and contribution provisions may be limited by applicable law.
(d) No Conflicts. The execution,
delivery and performance by the Company of this Agreement and the other Transaction Documents, the issuance and sale of the Securities
and the consummation by it of the transactions contemplated hereby and thereby to which it is a party do not and will not: (i) conflict
with or violate any provision of the Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws
or other organizational or charter documents, (ii) conflict with, or constitute a default (or an event that with notice or
lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties or assets of
the Company or any Subsidiary, or give to others any rights of termination, amendment, acceleration or cancellation (with or without
notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary
debt or otherwise) or other understanding to which the Company or any Subsidiary is a party or by which any property or asset of
the Company or any Subsidiary is bound or affected, or (iii) subject to the Required Approvals, conflict with or result in
a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental
authority to which the Company or a Subsidiary is subject (including federal and state securities laws and regulations), or by
which any property or asset of the Company or a Subsidiary is bound or affected; except in the case of each of clauses (ii) and
(iii), such as could not have or reasonably be expected to result in a Material Adverse Effect.
(e) Filings, Consents and Approvals.
The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or
registration with, any court or other federal, state, local or other governmental authority or other Person in connection with
the execution, delivery and performance by the Company of the Transaction Documents, other than: (i) the filings required
pursuant to Section 4.6 of this Agreement, (ii) the filing with the Commission of the Prospectus Supplement, (iii) the
notice and/or application(s) to each applicable Trading Market for the issuance and sale of the Securities and the listing of the
Underlying Shares for trading thereon in the time and manner required thereby, and (iv) the filing of the Amendment with the
Secretary of State of the State of Delaware (collectively, the “Required Approvals”).
(f) Issuance of the Securities;
Registration. The Securities are duly authorized and, when issued and paid for in accordance with the applicable Transaction
Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company. The
Underlying Shares, when issued in accordance with the terms of the Transaction Documents, will be validly issued, fully paid and
nonassessable, free and clear of all Liens imposed by the Company. The Company has reserved from its duly authorized capital stock
a number of shares of Common Stock for issuance of the Underlying Shares at least equal to the Required Minimum on the date hereof.
The Company has prepared and filed the Registration Statement in conformity with the requirements of the Securities Act, which
became effective on May 22, 2015 (the “Effective Date”), including the Prospectus, and such amendments
and supplements thereto as may have been required to the date of this Agreement. The Registration Statement is effective under
the Securities Act and no stop pending or preventing the use of the Prospectus has been issued by the Commission and no proceedings
for that purpose have been instituted or, to the knowledge of the Company, are threatened by the Commission. The Company, if required
by the rules and regulations of the Commission, shall file the Prospectus with the Commission pursuant to Rule 424(b). At the time
the Registration Statement and any amendments thereto became effective, at the date of this Agreement and at the Closing Date,
the Registration Statement and any amendments thereto conformed and will conform in all material respects to the requirements of
the Securities Act and did not and will not contain any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein not misleading; and the Prospectus and any amendments
or supplements thereto, at time the Prospectus or any amendment or supplement thereto was issued and at the Closing Date, conformed
and will conform in all material respects to the requirements of the Securities Act and did not and will not contain an untrue
statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(g) Capitalization. The
Company’s capitalization is as set forth on Schedule 3.1(g). The Company has not issued any capital stock since its
most recently filed periodic report under the Exchange Act, other than pursuant to the exercise of equity awards under the Company’s
equity incentive plans, the issuance of shares of Common Stock to employees pursuant to the Company’s equity incentive plans,
pursuant to the conversion and/or exercise of Common Stock Equivalents outstanding as of the date of the most recently filed periodic
report under the Exchange Act, and as set forth on Schedule 3.1(g). No Person has any right of first refusal, preemptive
right, right of participation, or any similar right to participate in the transactions contemplated by the Transaction Documents,
except for such rights that have been waived or complied with. Except as a result of the purchase and sale of the Securities or
as set forth on Schedule 3.1(g), there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments
of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for,
or giving any Person any right to subscribe for or acquire any shares of Common Stock, or contracts, commitments, understandings
or arrangements by which the Company or any Subsidiary is or may become bound to issue additional shares of Common Stock or Common
Stock Equivalents. The issuance and sale of the Securities will not obligate the Company to issue shares of Common Stock or other
securities to any Person (other than the Purchasers) and will not result in a right of any holder of Company securities to adjust
the exercise, conversion, exchange or reset price under any of such securities. All of the outstanding shares of capital stock
of the Company are duly authorized, validly issued, fully paid and nonassessable, have been issued in compliance with all federal
and state securities laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights
to subscribe for or purchase securities. No further approval or authorization of any stockholder, the Board of Directors or others
is required for the issuance and sale of the Securities. Except as set forth on Schedule 3.1(g), there are no stockholders
agreements, voting agreements or other similar agreements with respect to the Company’s capital stock to which the Company
is a party or, to the knowledge of the Company, between or among any of the Company’s stockholders.
(h) SEC Reports; Financial Statements.
The Company has filed all reports, schedules, forms, statements and other documents required to be filed by the Company under the
Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the
date hereof (or such shorter period as the Company was required by law or regulation to file such material) (the foregoing materials,
including the exhibits thereto and documents incorporated by reference therein, together with the Prospectus and the Prospectus
Supplement, being collectively referred to herein as the “SEC Reports”) on a timely basis (except for its Form
10-K for the year ended December 31, 2013) or has received a valid extension of such time of filing and has filed any such SEC
Reports prior to the expiration of any such extension. As of their respective dates, the SEC Reports complied in all material respects
with the requirements of the Securities Act and the Exchange Act, as applicable, and none of the SEC Reports, when filed, contained
any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order
to make the statements therein, in the light of the circumstances under which they were made, not misleading. The financial statements
of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules
and regulations of the Commission with respect thereto as in effect at the time of filing. Such financial statements have been
prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the periods
involved (“GAAP”), except as may be otherwise specified in such financial statements or the notes thereto and
except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects
the financial position of the Company and its consolidated Subsidiaries as of and for the dates thereof and the results of operations
and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit
adjustments.
(i) Material Changes; Undisclosed
Events, Liabilities or Developments. Since the date of the latest audited financial statements included within the SEC Reports,
except as specifically disclosed in a subsequent SEC Report filed prior to the date hereof and as set forth in Schedule 3.1(i):
(i) there has been no event, occurrence or development that has had or that could reasonably be expected to result in a Material
Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables
and accrued expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities not required
to be reflected in the Company’s financial statements pursuant to GAAP or disclosed in filings made with the Commission,
(iii) the Company has not altered its method of accounting, (iv) the Company has not declared or made any dividend or
distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem
any shares of its capital stock and (v) the Company has not issued any equity securities to any officer, director or Affiliate,
except pursuant to existing Company equity incentive plans. The Company does not have pending before the Commission any request
for confidential treatment of information. Except for the issuance of the Securities contemplated by this Agreement, no event,
liability, fact, circumstance, occurrence or development has occurred or exists or is reasonably expected to occur or exist with
respect to the Company or its Subsidiaries or their respective businesses, properties, operations, assets or financial condition,
that would be required to be disclosed by the Company under applicable securities laws at the time this representation is made
or deemed made that has not been publicly disclosed at least 1 Trading Day prior to the date that this representation is made.
(j) Litigation. There is
no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of the Company, threatened
against or affecting the Company, any Subsidiary or any of their respective properties before or by any court, arbitrator, governmental
or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an “Action”)
which (i) adversely affects or challenges the legality, validity or enforceability of any of the Transaction Documents or
the Securities or (ii) could, if there were an unfavorable decision, have or reasonably be expected to result in a Material
Adverse Effect. Neither the Company nor any Subsidiary, nor, to the knowledge of the Company, any director or officer thereof,
is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities laws
or a claim of breach of fiduciary duty. There has not been, and to the knowledge of the Company, there is not pending or contemplated,
any investigation by the Commission involving the Company or any current or former director or officer of the Company. The Commission
has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company or
any Subsidiary under the Exchange Act or the Securities Act.
(k) Labor Relations. No
labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees of the Company, which
could reasonably be expected to result in a Material Adverse Effect. None of the Company’s or its Subsidiaries’ employees
is a member of a union that relates to such employee’s relationship with the Company or such Subsidiary, and neither the
Company nor any of its Subsidiaries is a party to a collective bargaining agreement, and the Company and its Subsidiaries believe
that their relationships with their employees are good. To the knowledge of the Company, no executive officer of the Company or
any Subsidiary, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure
or proprietary information agreement or non-competition agreement, or any other contract or agreement or any restrictive covenant
in favor of any third party, and the continued employment of each such executive officer does not subject the Company or any of
its Subsidiaries to any liability with respect to any of the foregoing matters. The Company and its Subsidiaries are in compliance
with all U.S. federal, state, local and foreign laws and regulations relating to employment and employment practices, terms and
conditions of employment and wages and hours, except where the failure to be in compliance could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
(l) Compliance. Neither
the Company nor any Subsidiary: (i) is in default under or in violation of (and no event has occurred that has not been waived
that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor has the Company
or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or
credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether
or not such default or violation has been waived), (ii) is in violation of any judgment, decree or order of any court, arbitrator
or other governmental authority or (iii) is or has been in violation of any statute, rule, ordinance or regulation of any
governmental authority, including without limitation all foreign, federal, state and local laws relating to taxes, environmental
protection, occupational health and safety, product quality and safety and employment and labor matters, except in each case as
could not have or reasonably be expected to result in a Material Adverse Effect.
(m) Regulatory Permits.
The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal, state,
local or foreign regulatory authorities necessary to conduct their respective businesses as described in the SEC Reports, except
where the failure to possess such permits could not reasonably be expected to result in a Material Adverse Effect (“Material
Permits”), and neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation
or modification of any Material Permit.
(n) Title to Assets. The
Company and the Subsidiaries have good and marketable title in fee simple to all real property owned by them and good and marketable
title in all personal property owned by them that is material to the business of the Company and the Subsidiaries, in each case
free and clear of all Liens, except for (i) Liens as do not materially affect the value of such property and do not materially
interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries and (ii) Liens for
the payment of federal, state or other taxes, for which appropriate reserves have been made in accordance with GAAP and, the payment
of which is neither delinquent nor subject to penalties. Any real property and facilities held under lease by the Company and the
Subsidiaries are held by them under valid, subsisting and enforceable leases with which the Company and the Subsidiaries are in
compliance, except for any failures to comply as would not, individually or in the aggregate, reasonably be expected to result
in a Material Adverse Effect.
(o) Intellectual Property.
The Company and the Subsidiaries have, or have rights to use, all patents, patent applications, trademarks, trademark applications,
service marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual property rights and similar
rights as described in the SEC Reports as necessary or required for use in connection with their respective businesses and which
the failure to so have could have a Material Adverse Effect (collectively, the “Intellectual Property Rights”).
None of, and neither the Company nor any Subsidiary has received a notice (written or otherwise) that any of, the Intellectual
Property Rights has expired, terminated or been abandoned, or is expected to expire or terminate or be abandoned, within two (2) years
from the date of this Agreement. Neither the Company nor any Subsidiary has received, since the date of the latest audited financial
statements included within the SEC Reports, a written notice of a claim or otherwise has any knowledge that the Intellectual Property
Rights violate or infringe upon the rights of any Person, except as could not have or reasonably be expected to not have a Material
Adverse Effect. To the knowledge of the Company, all such Intellectual Property Rights are enforceable and there is no existing
infringement by another Person of any of the Intellectual Property Rights. The Company and its Subsidiaries have taken reasonable
security measures to protect the secrecy, confidentiality and value of all of their intellectual properties, except where failure
to do so could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(p) Insurance. The Company
and the Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts
as are prudent and customary in the businesses in which the Company and the Subsidiaries are engaged, including, but not limited
to, directors and officers insurance coverage at least equal to the aggregate Subscription Amount. Neither the Company nor any
Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be necessary to continue its business without a significant
increase in cost.
(q) Transactions with Affiliates
and Employees. Except as set forth in the SEC Reports, none of the officers or directors of the Company or any Subsidiary and,
to the knowledge of the Company, none of the employees of the Company or any Subsidiary is presently a party to any transaction
with the Company or any Subsidiary (other than for services as employees, officers and directors), including any contract, agreement
or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or
from, providing for the borrowing of money from or lending of money to or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Company, any entity in which any officer, director, or any such employee
has a substantial interest or is an officer, director, trustee, stockholder, member or partner, in each case in excess of $120,000
other than for: (i) payment of salary or consulting fees for services rendered, (ii) reimbursement for expenses incurred
on behalf of the Company and (iii) other employee benefits, including stock option or other equity award agreements under
any equity incentive plan of the Company.
(r) Sarbanes-Oxley; Internal
Accounting Controls. The Company and the Subsidiaries are in compliance in all material respects with any and all applicable
requirements of the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and any and all applicable rules and regulations
promulgated by the Commission thereunder that are effective as of the date hereof and as of the Closing Date. The Company and the
Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that: (i) transactions
are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability
for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.
The Company and the Subsidiaries have established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) for the Company and the Subsidiaries and designed such disclosure controls and procedures to ensure that information
required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized
and reported, within the time periods specified in the Commission’s rules and forms. The Company’s certifying officers
have evaluated the effectiveness of the disclosure controls and procedures of the Company and the Subsidiaries as of the end of
the period covered by the most recently filed periodic report under the Exchange Act (such date, the “Evaluation Date”).
The Company presented in its most recently filed periodic report under the Exchange Act the conclusions of the certifying officers
about the effectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation Date. Since the
Evaluation Date, there have been no changes in the internal control over financial reporting (as such term is defined in the Exchange
Act) of the Company and its Subsidiaries that have materially affected, or is reasonably likely to materially affect, the internal
control over financial reporting of the Company and its Subsidiaries.
(s) Certain Fees. Except
as set forth in the Prospectus Supplement, no brokerage or finder’s fees or commissions are or will be payable by the Company
or any Subsidiary to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person
with respect to the transactions contemplated by the Transaction Documents. The Purchasers shall have no obligation with respect
to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in this Section
that may be due in connection with the transactions contemplated by the Transaction Documents.
(t) Investment Company.
The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Securities, will not be or be
an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as amended. The
Company shall conduct its business in a manner so that it will not become an “investment company” subject to registration
under the Investment Company Act of 1940, as amended.
(u) Registration Rights.
Except for the Registration Rights Agreement dated on or about the date hereof, by and among, the Company, Dominion and Delafield
and those set forth on Schedule 3.1(u), no Person has any right to cause the Company or any Subsidiary to effect the registration
under the Securities Act of any securities of the Company or any Subsidiary.
(v) Listing, Etc. The Common
Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and the Company has taken no action designed to,
or which to its knowledge is likely to have the effect of, terminating the registration of the Common Stock under the Exchange
Act nor has the Company received any notification that the Commission is contemplating terminating such registration. The Company
has not, in the 12 months preceding the date hereof, received notice from any Trading Market on which the Common Stock is or has
been listed or quoted to the effect that the Company is not in compliance with the listing or maintenance requirements of such
Trading Market. Except as set forth on Schedule 3.1(v), the Company is, and has no reason to believe that it will not in
the foreseeable future continue to be, in compliance with all such listing and maintenance requirements. The Common Stock is currently
eligible for electronic transfer through the Depository Trust Company or another established clearing corporation and the Company
is current in payment of the fees to the Depository Trust Company (or such other established clearing corporation) in connection
with such electronic transfer.
(w) Application of Takeover
Protections. The Company and the Board of Directors have taken all necessary action, if any, in order to render inapplicable
any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other
similar anti-takeover provision under the Company’s certificate of incorporation (or similar charter documents) or the laws
of its state of incorporation that is or could become applicable to the Purchasers as a result of the Purchasers and the Company
fulfilling their obligations or exercising their rights under the Transaction Documents, including without limitation as a result
of the Company’s issuance of the Securities and the Purchasers’ ownership of the Securities.
(x) Disclosure. Except with
respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, the Company confirms
that neither it nor any other Person acting on its behalf has provided any of the Purchasers or their agents or counsel with any
information that it believes constitutes or might constitute material, non-public information which is not otherwise disclosed
in the Prospectus Supplement. The Company understands and confirms that the Purchasers will rely on the foregoing representation
in effecting transactions in securities of the Company. All of the disclosure furnished by or on behalf of the Company to the Purchasers
regarding the Company and its Subsidiaries, their respective businesses and the transactions contemplated hereby, including the
Disclosure Schedules to this Agreement, is true and correct and does not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they
were made, not misleading. The press releases disseminated by the Company during the twelve months preceding the date of this Agreement
taken as a whole, and in light of disclosures in the SEC Reports, do not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances
under which they were made and when made, not misleading. The Company acknowledges and agrees that no Purchaser makes or has made
any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth
in Section 3.2 hereof.
(y) No Aggregated Offering.
Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2, neither the Company,
nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers or sales of
any security or solicited any offers to buy any security, under circumstances that would cause this offering of the Securities
to be aggregated with prior offerings by the Company for purposes of any applicable stockholder approval provisions of any Trading
Market on which any of the securities of the Company are listed or designated.
(z) Solvency. Based on the
consolidated financial condition of the Company as of the Closing Date, after giving effect to the receipt by the Company of the
proceeds from the sale of the Securities hereunder: (i) the fair saleable value of the Company’s assets exceeds the
amount that will be required to be paid on or in respect of the Company’s existing debts and other liabilities (including
known contingent liabilities) as they mature, (ii) the Company’s assets do not constitute unreasonably small capital
to carry on its business as now conducted and as proposed to be conducted including its capital needs taking into account the particular
capital requirements of the business conducted by the Company, consolidated and projected capital requirements and capital availability
thereof, and (iii) the current cash flow of the Company, together with the proceeds the Company would receive, were it to
liquidate all of its assets, after taking into account all anticipated uses of the cash, would be sufficient to pay all amounts
on or in respect of its liabilities when such amounts are required to be paid. The Company does not intend to incur debts beyond
its ability to pay such debts as they mature (taking into account the timing and amounts of cash to be payable on or in respect
of its debt). The Company has no knowledge of any facts or circumstances which lead it to believe that it will file for reorganization
or liquidation under the bankruptcy or reorganization laws of any jurisdiction within one year from the Closing Date. Schedule
3.1(z) sets forth as of the date hereof all outstanding secured and unsecured Indebtedness of the Company or any Subsidiary,
or for which the Company or any Subsidiary has commitments. For the purposes of this Agreement, “Indebtedness”
means (x) any liabilities for borrowed money or amounts owed in excess of $50,000 (other than trade accounts payable incurred
in the ordinary course of business), (y) all guaranties, endorsements and other contingent obligations in respect of indebtedness
of others, whether or not the same are or should be reflected in the Company’s consolidated balance sheet (or the notes thereto),
except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course
of business; and (z) the present value of any lease payments in excess of $50,000 due under leases required to be capitalized
in accordance with GAAP. Neither the Company nor any Subsidiary is in default with respect to any Indebtedness.
(aa) Tax Status. Except
for matters that would not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect,
the Company and its Subsidiaries each (i) has made or filed all United States federal, state and local income and all foreign
income and franchise tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has paid
all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns,
reports and declarations and (iii) has set aside on its books provision reasonably adequate for the payment of all material
taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in
any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company or of any Subsidiary
know of no basis for any such claim.
(bb) Foreign Corrupt Practices.
Neither the Company nor any Subsidiary, nor to the knowledge of the Company or any Subsidiary, any agent or other person acting
on behalf of the Company or any Subsidiary, has: (i) directly or indirectly, used any funds for unlawful contributions, gifts,
entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful payment
to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate
funds, (iii) failed to disclose fully any contribution made by the Company or any Subsidiary (or made by any person acting
on its behalf of which the Company is aware) which is in violation of law or (iv) violated in any material respect any provision
of FCPA.
(cc) Accountants. The Company’s
accounting firm is set forth in the SEC Reports. To the knowledge and belief of the Company, such accounting firm: (i) is
a registered public accounting firm as required by the Exchange Act and (ii) shall express its opinion with respect to the
financial statements to be included in the Company’s Annual Report for the fiscal year ending December 31, 2014.
(dd) Acknowledgment Regarding
Purchasers’ Purchase of Securities. The Company acknowledges and agrees that each of the Purchasers is acting solely
in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated
thereby. The Company further acknowledges that no Purchaser is acting as a financial advisor or fiduciary of the Company (or in
any similar capacity) with respect to the Transaction Documents and the transactions contemplated thereby and any advice given
by any Purchaser or any of their respective representatives or agents in connection with the Transaction Documents and the transactions
contemplated thereby is merely incidental to the Purchasers’ purchase of the Securities. The Company further represents to
each Purchaser that the Company’s decision to enter into this Agreement and the other Transaction Documents has been based
solely on the independent evaluation of the transactions contemplated hereby by the Company and its representatives.
(ee) Acknowledgment Regarding
Purchaser’s Trading Activity. Anything in this Agreement or elsewhere herein to the contrary notwithstanding (except
for Sections 3.2(e) and 4.15 hereof), it is understood and acknowledged by the Company that: (i) none of the Purchasers has
been asked by the Company to agree, nor has any Purchaser agreed, to desist from purchasing or selling, long and/or short, securities
of the Company, or “derivative” securities based on securities issued by the Company or to hold the Securities for
any specified term, (ii) past or future open market or other transactions by any Purchaser, specifically including, without
limitation, Short Sales or “derivative” transactions, before or after the closing of this or future private placement
transactions, may negatively impact the market price of the Company’s publicly-traded securities, (iii) any Purchaser,
and counter-parties in “derivative” transactions to which any such Purchaser is a party, directly or indirectly, may
presently have a “short” position in the Common Stock and (iv) each Purchaser shall not be deemed to have any
affiliation with or control over any arm’s length counter-party in any “derivative” transaction. The Company
further understands and acknowledges that (y) one or more Purchasers may engage in hedging activities at various times during
the period that the Securities are outstanding, including, without limitation, during the periods that the value of the Underlying
Shares deliverable with respect to Securities are being determined, and (z) such hedging activities (if any) could reduce
the value of the existing stockholders’ equity interests in the Company at and after the time that the hedging activities
are being conducted. The Company acknowledges that such aforementioned hedging activities do not constitute a breach of any
of the Transaction Documents.
(ff) Regulation M Compliance. The
Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly or indirectly, any action designed
to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or
resale of any of the Securities, (ii) sold, bid for, purchased, or paid any compensation for soliciting purchases of, any
of the Securities, or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other
securities of the Company, other than, in the case of clauses (ii) and (iii), compensation paid to the Company’s placement
agent in connection with the placement of the Securities.
(gg) FDA. As to each product
subject to the jurisdiction of the U.S. Food and Drug Administration (“FDA”) under the Federal Food, Drug and
Cosmetic Act, as amended, and the regulations thereunder (“FDCA”) that is manufactured, packaged, labeled, tested,
distributed, sold, and/or marketed by the Company or any of its Subsidiaries (each such product, a “Pharmaceutical Product”),
such Pharmaceutical Product is being manufactured, packaged, labeled, tested, distributed, sold and/or marketed by the Company
in compliance with all applicable requirements under FDCA and similar laws, rules and regulations relating to registration, investigational
use, premarket clearance, licensure, or application approval, good manufacturing practices, good laboratory practices, good clinical
practices, product listing, quotas, labeling, advertising, record keeping and filing of reports, except where the failure to be
in compliance would not have a Material Adverse Effect. There is no pending, completed or, to the Company’s knowledge, threatened,
action (including any lawsuit, arbitration, or legal or administrative or regulatory proceeding, charge, complaint, or investigation)
against the Company or any of its Subsidiaries, and none of the Company or any of its Subsidiaries has received any notice, warning
letter or other communication from the FDA or any other governmental entity, which (i) contests the premarket clearance, licensure,
registration, or approval of, the uses of, the distribution of, the manufacturing or packaging of, the testing of, the sale of,
or the labeling and promotion of any Pharmaceutical Product, (ii) withdraws its approval of, requests the recall, suspension,
or seizure of, or withdraws or orders the withdrawal of advertising or sales promotional materials relating to, any Pharmaceutical
Product, (iii) imposes a clinical hold on any clinical investigation by the Company or any of its Subsidiaries, (iv) enjoins
production at any facility of the Company or any of its Subsidiaries, (v) enters or proposes to enter into a consent decree
of permanent injunction with the Company or any of its Subsidiaries, or (vi) otherwise alleges any violation of any laws,
rules or regulations by the Company or any of its Subsidiaries, and which, either individually or in the aggregate, would have
a Material Adverse Effect. The properties, business and operations of the Company have been and are being conducted in all material
respects in accordance with all applicable laws, rules and regulations of the FDA. Except as set forth on Schedule 3.1(gg),
the Company has not been informed by the FDA that the FDA will prohibit the marketing, sale, license or use in the United States
of any product proposed to be developed, produced or marketed by the Company nor has the FDA expressed any concern as to approving
or clearing for marketing any product being developed or proposed to be developed by the Company.
(hh) Stock Option Plans.
Each stock option granted by the Company under the Company’s stock option plan was granted (i) in accordance with the
terms of the Company’s stock option plan and (ii) with an exercise price at least equal to the fair market value of
the Common Stock on the date such stock option would be considered granted under GAAP and applicable law. No stock option granted
under the Company’s stock option plan has been backdated. The Company has not knowingly granted, and there is no and has
been no Company policy or practice to knowingly grant, stock options prior to, or otherwise knowingly coordinate the grant of stock
options with, the release or other public announcement of material information regarding the Company or its Subsidiaries or their
financial results or prospects.
(ii) Office of Foreign Assets
Control. Neither the Company nor any Subsidiary nor, to the Company’s knowledge, any director, officer, agent, employee
or affiliate of the Company is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of
the U.S. Treasury Department (“OFAC”).
(jj) U.S. Real Property Holding
Corporation. The Company is not and has never been a U.S. real property holding corporation within the meaning of Section 897
of the Internal Revenue Code of 1986, as amended, and the Company shall so certify upon Purchaser’s request.
(kk) Bank Holding Company Act.
Neither the Company nor any of its Subsidiaries or Affiliates is subject to the Bank Holding Company Act of 1956, as amended (the
“BHCA”) and to regulation by the Board of Governors of the Federal Reserve System (the “Federal Reserve”).
Neither the Company nor any of its Subsidiaries or Affiliates owns or controls, directly or indirectly, five percent (5%) or
more of the outstanding shares of any class of voting securities or twenty-five percent or more of the total equity of a bank or
any entity that is subject to the BHCA and to regulation by the Federal Reserve. Neither the Company nor any of its Subsidiaries
or Affiliates exercises a controlling influence over the management or policies of a bank or any entity that is subject to the
BHCA and to regulation by the Federal Reserve.
(ll) Money Laundering. The
operations of the Company and its Subsidiaries are and have been conducted at all times in compliance with applicable financial
record-keeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, applicable
money laundering statutes and applicable rules and regulations thereunder (collectively, the “Money Laundering Laws”),
and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving
the Company or any Subsidiary with respect to the Money Laundering Laws is pending or, to the knowledge of the Company or any Subsidiary,
threatened.
(mm) Simultaneous Transactions.
The Company has entered into all documents, agreements and instruments related to and/or contemplated by the Simultaneous Transactions
and all representations and warranties of the Company set forth in all such documents, agreements and instruments are incorporated
by reference herein and are deemed made by the Company to each Purchaser.
(nn) 2015 Shareholder Meeting Conditions.
The 2015 Shareholders Meeting Condition’s have been satisfied.
3.2 Representations and Warranties of
the Purchasers. Each Purchaser, for itself and for no other Purchaser, hereby represents and warrants as of the date hereof
and as of the Closing Date to the Company as follows (unless as of a specific date therein):
(a) Organization; Authority.
Such Purchaser is either an individual or an entity duly incorporated or formed, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or formation with full right, corporate, partnership, limited liability company or
similar power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents and otherwise
to carry out its obligations hereunder and thereunder. The execution and delivery of the Transaction Documents and performance
by such Purchaser of the transactions contemplated by the Transaction Documents have been duly authorized by all necessary corporate,
partnership, limited liability company or similar action, as applicable, on the part of such Purchaser. Each Transaction Document
to which it is a party has been duly executed by such Purchaser, and when delivered by such Purchaser in accordance with the terms
hereof, will constitute the valid and legally binding obligation of such Purchaser, enforceable against it in accordance with its
terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium
and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws
relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification
and contribution provisions may be limited by applicable law. Such Purchaser’s execution, delivery and performance of this
Agreement and the other Transaction Documents and the consummation by it of the transactions contemplated hereby and thereby to
which it is a party do not and will not: (x) conflict with or violate any provision of such Purchaser’s certificate
or articles of incorporation, bylaws or other organizational or charter documents, (ii) conflict with or result in a violation
of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or government authority to
which the Purchaser is subject (including federal and state securities laws and regulations), or by which any property or asset
of the Purchaser is bound or affected.
(b) Understandings or Arrangements.
Such Purchaser is acquiring the Securities as principal for its own account and has no direct or indirect arrangement or understandings
with any other persons to distribute or regarding the distribution of such Securities (this representation and warranty not limiting
such Purchaser’s right to sell the Securities pursuant to the Registration Statement or otherwise in compliance with applicable
federal and state securities laws). Such Purchaser is acquiring the Securities hereunder in the ordinary course of its business.
(c) Purchaser Status. At
the time such Purchaser was offered the Securities, it was, and as of the date hereof it is, and on each date on which it exercises
any Warrants or converts any shares of Preferred Stock it will be an “accredited investor” as defined in Rule 501(a)(1),
(a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act.
(d) Experience of Such Purchaser.
Such Purchaser, either alone or together with its representatives, has such knowledge, sophistication and experience in business
and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Securities, and
has so evaluated the merits and risks of such investment. Such Purchaser is able to bear the economic risk of an investment in
the Securities and, at the present time, is able to afford a complete loss of such investment. Such Purchaser understands that
nothing in the Transaction Documents or any other materials presented to such Purchaser in connection with the purchase and sale
of the Securities constitutes legal, tax or investment advice
(e) Certain Transactions and
Confidentiality. Other than consummating the transactions contemplated hereunder, such Purchaser has not directly or indirectly,
nor has any Person acting on behalf of or pursuant to any understanding with such Purchaser, executed any purchases or sales, including
Short Sales, of the securities of the Company during the period commencing as of the time that such Purchaser first received
a term sheet (written or oral) from the Company or any other Person representing the Company setting forth the material terms of
the transactions contemplated hereunder and ending immediately prior to the execution hereof. Notwithstanding the foregoing, in
the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions
of such Purchaser’s assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio
managers managing other portions of such Purchaser’s assets, the representation set forth above shall only apply with respect
to the portion of assets managed by the portfolio manager that made the investment decision to purchase the Securities covered
by this Agreement. Other than to other Persons party to this Agreement, such Purchaser has maintained the confidentiality of all
disclosures made to it in connection with this transaction (including the existence and terms of this transaction). Notwithstanding
the foregoing, for avoidance of doubt, nothing contained herein shall constitute a representation or warranty, or preclude any
actions, with respect to the identification of the availability of, or securing of, available shares to borrow in order to effect
Short Sales or similar transactions in the future.
The Company acknowledges and agrees that the representations
contained in Section 3.2 shall not modify, amend or affect such Purchaser’s right to rely on the Company’s representations
and warranties contained in this Agreement or any representations and warranties contained in any other Transaction Document or
any other document or instrument executed and/or delivered in connection with this Agreement or the consummation of the transaction
contemplated hereby.
ARTICLE IV.
OTHER AGREEMENTS OF THE PARTIES
4.1 Underlying Shares. The Conversion
Shares shall be issued free of legends. If all or any portion of a Warrant is exercised at a time when there is an effective registration
statement to cover the issuance or resale of the Warrant Shares or if the Warrant is exercised via cashless exercise, the Warrant
Shares issued pursuant to any such exercise shall be issued free of all legends. If at any time following the date hereof the Registration
Statement (or any subsequent registration statement registering the sale or resale of the Warrant Shares) is not effective or is
not otherwise available for the sale or resale of the Warrant Shares, the Company shall immediately notify the holders of the Warrants
in writing that such registration statement is not then effective and thereafter shall promptly notify such holders when the registration
statement is effective again and available for the sale or resale of the Warrant Shares (it being understood and agreed that the
foregoing shall not limit the ability of the Company to issue, or any Purchaser to sell, any of the Warrant Shares in compliance
with applicable federal and state securities laws). The Company shall use commercially reasonable best efforts to keep a registration
statement (including the Registration Statement) registering the issuance or resale of the Warrant Shares effective during the
term of the Warrants.
4.2 Acknowledgment of Dilution.
The Company acknowledges that the issuance of the Securities may result in dilution of the outstanding shares of Common Stock,
which dilution may be substantial under certain market conditions. The Company further acknowledges that its obligations under
the Transaction Documents, including, without limitation, its obligation to issue the Underlying Shares pursuant to the Transaction
Documents, are unconditional and absolute and not subject to any right of set off, counterclaim, delay or reduction, regardless
of the effect of any such dilution or any claim the Company may have against any Purchaser and regardless of the dilutive effect
that such issuance may have on the ownership of the other stockholders of the Company.
4.3 Furnishing of Information; Public
Information. Until the earliest of the time that (i) no Purchaser owns Securities or (ii) the Warrants have expired,
the Company covenants to maintain the registration of the Common Stock under Section 12(b) or 12(g) of the Exchange Act and
to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be
filed by the Company after the date hereof pursuant to the Exchange Act even if the Company is not then subject to the reporting
requirements of the Exchange Act.
4.4 Aggregation. The Company shall
not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section 2
of the Securities Act) that would be aggregated with the offer or sale of the Securities for purposes of the rules and regulations
of any Trading Market such that it would require stockholder approval prior to the closing of such other transaction unless stockholder
approval is obtained before the closing of such subsequent transaction.
4.5 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 Certificate
of Designation set forth the totality of the procedures required of the Purchasers in order to exercise the Warrants or convert
the Preferred Stock. Without limiting the preceding sentences, no ink-original Notice of Exercise or Notice of Conversion shall
be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise or Notice
of Conversion form be required in order to exercise the Warrants or convert the Preferred Stock.
No additional legal opinion, other information or instructions
shall be required of the Purchasers to exercise their Warrants or convert their Preferred Stock. The Company shall honor exercises
of the Warrants and conversions of the Preferred Stock and shall deliver Underlying Shares in accordance with the terms, conditions
and time periods set forth in the Transaction Documents.
4.6 Securities Laws Disclosure; Publicity.
(1) No later than 9:30 AM New York Time on the Trading Day after the Closing of the transactions contemplated hereby, the Company
shall issue a Current Report on Form 8-K (the “Current Report”) disclosing the material terms of the transactions
contemplated hereby, and including the Transaction Documents required to be included in such Current Report as exhibits thereto,
within the time required by the Exchange Act. From and after the issuance of the Current Report, the Company represents to the
Purchasers that the Company shall have publicly disclosed all material, non-public information delivered to the Purchasers as of
such time by the Company, or any of its respective officers, directors, employees or agents in connection with the transactions
contemplated by the Transaction Documents. The Company shall afford the Purchasers and its counsel with a reasonable opportunity
to review and comment upon, shall consult with the Purchasers and its counsel on the form and substance of, and shall give due
consideration to all such comments from the Purchasers and its counsel on, any press release, SEC filing or any other public disclosure
made by or on behalf of the Company relating to the Purchasers, the Transaction Documents and/or the transactions contemplated
by any of the Transaction Documents, prior to the issuance, filing or public disclosure thereof, and the Company shall not issue,
file or publicly disclose any such information to which the Purchasers shall reasonably object, unless required by law. For the
avoidance of doubt, the Company shall not be required to submit for review any such disclosure contained in periodic reports filed
with the SEC under the Exchange Act if it shall have previously provided the same disclosure for review in connection with a previous
filing.
(2) The
Company confirms that neither it nor any other person acting on its behalf shall provide the Purchasers or their agents or counsel
with any information that constitutes or might constitute material, non-public information, unless a simultaneous public announcement
thereof is made by the Company in the manner contemplated by Regulation FD. In the event of a breach of the foregoing covenant
by the Company or any person acting on its behalf (as determined in the reasonable good faith judgment of the Purchasers), in addition
to any other remedy provided herein or in the other Transaction Documents, if any Purchaser is holding any securities of the Company
at the time of the disclosure of material, non-public information, any Purchaser shall have the right to make a public disclosure,
in the form of a press release, public advertisement or otherwise, of such material, non-public information without the prior approval
by the Company; provided the Purchaser shall have first provided notice to the Company that it believes it has received information
that constitutes material, non-public information, the Company shall have 48 hours publicly to disclose such material, non-public
information prior to any such disclosure by the Purchaser or demonstrate to the Purchasers in writing why such information does
not constitute material, non-public information, and (assuming the Purchasers and Purchasers’ counsel disagree with the Company’s
determination) the Company shall have failed to publicly disclose such material, non-public information within such time period.
The Purchasers shall not have any liability to the Company, any of its Subsidiaries, or any of their respective directors, officers,
employees, stockholders or agents, for any such disclosure. The Company understands and confirms that the Purchasers shall be relying
on the foregoing covenants and obligations in effecting transactions in securities of the Company.
4.7 Stockholder Rights Plan. No
claim will be made or enforced by the Company or, with the consent of the Company, any other Person, that any Purchaser is an “Acquiring
Person” under any control share acquisition, business combination, poison pill (including any distribution under a rights
agreement) or similar anti-takeover plan or arrangement in effect or hereafter adopted by the Company, or that any Purchaser could
be deemed to trigger the provisions of any such plan or arrangement, by virtue of receiving Securities under the Transaction Documents
or under any other agreement between the Company and the Purchasers.
4.8 Non-Public Information. Except
with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, the Company covenants
and agrees that neither it, nor any other Person acting on its behalf, will provide any Purchaser or its agents or counsel with
any information that the Company believes constitutes material non-public information, unless prior thereto such Purchaser shall
have entered into a written agreement with the Company regarding the confidentiality and use of such information. The Company understands
and confirms that each Purchaser shall be relying on the foregoing covenant in effecting transactions in securities of the Company.
4.9 Use of Proceeds. Except as set
forth on Schedule 4.9 attached hereto, the Company shall use the net proceeds from the sale of the Securities hereunder
for working capital purposes and shall not use such proceeds: (a) for the satisfaction of any portion of the Company’s
debt (other than payment of trade payables in the ordinary course of the Company’s business and prior practices), (b) for
the redemption of any Common Stock or Common Stock Equivalents, (c) for the settlement of any outstanding litigation or (d) in
violation of FCPA or OFAC regulations.
4.10 Indemnification of Purchasers.
Subject to the provisions of this Section 4.10, the Company will indemnify and hold each Purchaser and its directors, officers,
stockholders, members, partners, employees and agents (and any other Persons with a functionally equivalent role of a Person holding
such titles notwithstanding a lack of such title or any other title), each Person who controls such Purchaser (within the meaning
of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, stockholders, agents,
members, partners or employees (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding
a lack of such title or any other title) of such controlling persons (each, a “Purchaser Party”) harmless from
any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts
paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such Purchaser Party
may suffer or incur as a result of or relating to (a) any breach of any of the representations, warranties, covenants or agreements
made by the Company in this Agreement or in the other Transaction Documents or (b) any action instituted against Purchaser
Parties in any capacity, or any of them or their respective Affiliates, by any stockholder of the Company who is not an Affiliate
of such Purchaser Party, with respect to any of the transactions contemplated by the Transaction Documents (unless such action
is based upon a breach of such Purchaser Party’s representations, warranties or covenants under the Transaction Documents
or any agreements or understandings such Purchaser Party may have with any such stockholder or any violations by such Purchaser
Party of state or federal securities laws or any conduct by such Purchaser Party which constitutes fraud, gross negligence, willful
misconduct or malfeasance). If any action shall be brought against any Purchaser Party in respect of which indemnity may be sought
pursuant to this Agreement, such Purchaser Party shall promptly notify the Company in writing, and the Company shall have the right
to assume the defense thereof with counsel of its own choosing reasonably acceptable to the Purchaser Party. Any Purchaser Party
shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Purchaser Party except to the extent that (i) the employment thereof has been
specifically authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time to assume
such defense and to employ counsel or (iii) in such action there is, in the reasonable opinion of counsel, a material conflict
on any material issue between the position of the Company and the position of such Purchaser Party, in which case the Company shall
be responsible for the reasonable fees and expenses of no more than one such separate counsel. The Company will not be liable to
any Purchaser Party under this Agreement (y) for any settlement by a Purchaser Party effected without the Company’s
prior written consent, which shall not be unreasonably withheld or delayed; or (z) to the extent, but only to the extent that
a loss, claim, damage or liability is attributable to any Purchaser Party’s breach of any of the representations, warranties,
covenants or agreements made by such Purchaser Party in this Agreement or in the other Transaction Documents. The indemnification
required by this Section 4.10 shall be made by periodic payments of the amount thereof during the course of the investigation
or defense, as and when bills are received or are incurred. The indemnity agreements contained herein shall be in addition to any
cause of action or similar right of any Purchaser Party against the Company or others and any liabilities the Company may be subject
to pursuant to law.
4.11 Reservation and Listing of Securities.
(a) The Company shall maintain
a reserve from its duly authorized shares of Common Stock for issuance pursuant to the Transaction Documents in such amount as
may then be required to fulfill its obligations in full under the Transaction Documents.
(b) If, on any date, the number
of authorized but unissued (and otherwise unreserved) shares of Common Stock is less than the Required Minimum on such date (“Share
Authorization Failure”), then the Board of Directors shall use commercially reasonable efforts to amend the Company’s
certificate or articles of incorporation to increase the number of authorized but unissued shares of Common Stock to at least the
Required Minimum at such time, as soon as possible and in any event not later than the 75th day after such date. In the event a
Purchaser holds both shares of Preferred Stock and Warrants at a time when there exists a Share Authorization Failure, such Purchaser
(or its permitted assigns) shall have the right to re-allocate any available shares reserved for such issuances among the Conversion
Shares and Warrant Shares by notice to the Company.
(c) The Company shall, if applicable:
(i) in the time and manner required by the principal Trading Market, prepare and file with such Trading Market an additional
shares listing application covering a number of shares of Common Stock at least equal to the Required Minimum on the date of such
application, (ii) take all steps necessary to cause such shares of Common Stock to be approved for listing or quotation on
such Trading Market as soon as possible thereafter, (iii) provide to the Purchasers evidence of such listing or quotation
and (iv) maintain the listing or quotation of such Common Stock on any date at least equal to the Required Minimum on such
date on such Trading Market or another Trading Market. The Company agrees to maintain the eligibility of the Common Stock for electronic
transfer through the Depository Trust Company or another established clearing corporation, including, without limitation, by timely
payment of fees to the Depository Trust Company or such other established clearing corporation in connection with such electronic
transfer. In addition, the Company shall use best efforts to obtain a quorum and shareholder approval for all proposals to be voted
upon at the 2015 Meeting. In the event the Company is unable to obtain a quorum and have all proposals approved at the 2015 Meeting,
the Company shall call a meeting every 45 days thereafter to until the earlier of the date all proposals for the 2015 Meeting are
approved by the required vote of the Company’s stockholders Upon approval of the Amendment by the stockholders of the Company,
the Company shall its best efforts to file the Amendment with the State of Nevada as soon as practicable but in any event within
3 days following such approval by the stockholders.
4.12 Participation in Future Financing.
(a) From the date hereof until
the twenty-four (24) month anniversary of the Closing Date, upon any issuance by the Company or any of its Subsidiaries of
Common Stock or Common Stock Equivalents for cash consideration, Indebtedness or a combination of units thereof (a “Subsequent
Financing”), each Purchaser shall have the right to participate in up to an amount of the Subsequent Financing equal
to 75% of the Subsequent Financing (the “Participation Maximum”) on the same terms, conditions and price provided
for in the Subsequent Financing.
(b) Approximately (5) Trading
Days (or in the case of a firm commitment underwritten public offering, approximately 24 hours) prior to the closing of the Subsequent
Financing, the Company shall deliver to each Purchaser a written notice of its intention to effect a Subsequent Financing (“Pre-Notice”),
which Pre-Notice shall ask such Purchaser if it wants to review the details of such financing (such additional notice, a Subsequent
Financing Notice”). Upon the request of a Purchaser, and only upon a request by such Purchaser, for a Subsequent Financing
Notice, the Company shall promptly, but no later than one (1) Trading Day (or in the case of a firm commitment underwritten
public offering, approximately 6 hours) after such request, deliver a Subsequent Financing Notice to such Purchaser. The Subsequent
Financing Notice shall describe in reasonable detail the proposed terms of such Subsequent Financing, the amount of proceeds intended
to be raised thereunder and the Person or Persons through or with whom such Subsequent Financing is proposed to be effected and
shall include a term sheet or similar document relating thereto as an attachment.
(c) Any Purchaser desiring to participate
in such Subsequent Financing must provide written notice to the Company by not later than 5:30 p.m. (New York City time) on the
third (3rd) Trading Day (or in the case of a firm commitment underwritten public offering, approximately 18 hours) after all
of the Purchasers have received the Pre-Notice that the Purchaser is willing to participate in the Subsequent Financing, the amount
of such Purchaser’s participation, and representing and warranting that such Purchaser has such funds ready, willing, and
available for investment on the terms set forth in the Subsequent Financing Notice. If the Company receives no such notice from
a Purchaser as of such third (3rd) Trading Day (or in the case of a firm commitment underwritten public offering, approximately
18 hours) after all of the Purchasers have received the Pre-Notice, such Purchaser shall be deemed to have notified the Company
that it does not elect to participate.
(d) If by 5:30 p.m. (New York City
time) on the third (3rd) Trading Day (or in the case of a firm commitment underwritten public offering, approximately 18 hours)
after all of the Purchasers have received the Pre-Notice, notifications by the Purchasers of their willingness to participate in
the Subsequent Financing (or to cause their designees to participate) is, in the aggregate, less than the total amount of the Participation
Maximum, then the Company may effect the remaining portion of such Participation Maximum on the terms and with the Persons set
forth in the Subsequent Financing Notice.
(e) If by 5:30 p.m. (New York City
time) on the third (3rd) Trading Day (or in the case of a firm commitment underwritten public offering, approximately 18 hours)
after all of the Purchasers have received the Pre-Notice, the Company receives responses to the Subsequent Financing Notice from
Purchasers seeking to purchase more than the aggregate amount of the Participation Maximum, each such Purchaser shall have the
right to purchase its Pro Rata Portion (as defined below) of the Participation Maximum. “Pro Rata Portion” means
the ratio of (x) the Subscription Amount of Securities purchased on the Closing Date by a Purchaser participating under this
Section 4.12 and (y) the sum of the aggregate Subscription Amounts of Securities purchased on the Closing Date by all
Purchasers participating under this Section 4.12.
(f) The Company must provide the
Purchasers with a second Subsequent Financing Notice, and the Purchasers will again have the right of participation set forth above
in this Section 4.12, if the Subsequent Financing subject to the initial Subsequent Financing Notice is not consummated for
any reason on the terms set forth in such Subsequent Financing Notice within 30 Trading Days after the date of the initial Subsequent
Financing Notice.
(g) The Company and each Purchaser
agree that if any Purchaser elects to participate in the Subsequent Financing, the transaction documents related to the Subsequent
Financing shall not include any term or provision whereby such Purchaser shall be required to agree to any restrictions on trading
as to any of the Securities purchased hereunder or be required to consent to any amendment to or termination of, or grant any waiver,
release or the like under or in connection with, this Agreement, without the prior written consent of such Purchaser.
(h) Notwithstanding anything to
the contrary in this Section 4.12 and unless otherwise agreed to by such Purchaser, the Company shall either confirm in writing
to such Purchaser that the transaction with respect to the Subsequent Financing has been abandoned or shall publicly disclose its
intention to issue the securities in the Subsequent Financing, in either case in such a manner such that such Purchaser will not
be in possession of any material, non-public information, by the sixth (6th) Business Day (or in the case of a firm commitment
underwritten public offering, the third (3rd) Business Day) following delivery of the Subsequent Financing Notice. If by such
sixth (6th) Business Day (or in the case of a firm commitment underwritten public offering, the third (3rd) Business
Day), no public disclosure regarding a transaction with respect to the Subsequent Financing has been made, and no notice regarding
the abandonment of such transaction has been received by such Purchaser, such transaction shall be deemed to have been abandoned
and such Purchaser shall not be deemed to be in possession of any material, non-public information with respect to the Company
or any of its Subsidiaries.
(i) Notwithstanding the foregoing,
this Section 4.12 shall not apply in respect of an Exempt Issuance.
4.13 Subsequent Equity Sales. Except
as expressly provided for in the Transaction Documents:
(a) From the date hereof until
one hundred and eighty (180) days after the Closing Date, neither the Company nor any Subsidiary shall issue, enter into any
agreement to issue or announce the issuance or proposed issuance of any shares of Common Stock or Common Stock Equivalents.
(b) From the date hereof until
such time as no Purchaser holds any Securities, the Company shall be prohibited from effecting or entering into an agreement to
effect any issuance by the Company or any of its Subsidiaries of Common Stock or Common Stock Equivalents (or a combination of
units thereof) involving a Variable Rate Transaction. “Variable Rate Transaction” means a transaction in which
the Company (i) issues or sells any debt or equity securities that are convertible into, exchangeable or exercisable for,
or include the right to receive, additional shares of Common Stock either (A) at a conversion price, exercise price 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 debt or equity 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 debt or equity security 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
(it being understood that anti-dilution adjustments do not make a security subject to this definition) or (ii) enters into
any agreement, including, but not limited to, an equity line of credit, whereby the Company may issue securities at a future determined
price. Any Purchaser shall be entitled to obtain injunctive relief against the Company to preclude any such issuance, which remedy
shall be in addition to any right to collect damages.
(c) Notwithstanding the foregoing,
this Section 4.13 shall not apply in respect of an Exempt Issuance, except that no Variable Rate Transaction shall be an Exempt
Issuance.
4.14 Equal Treatment of Purchasers.
No consideration (including any modification of any Transaction Document) shall be offered or paid to any Person to amend or consent
to a waiver or modification of any provision of this Agreement unless the same consideration is also offered to all of the parties
to this Agreement. For clarification purposes, this provision constitutes a separate right granted to each Purchaser by the Company
and negotiated separately by each Purchaser, and is intended for the Company to treat the Purchasers as a class and shall not in
any way be construed as the Purchasers acting in concert or as a group with respect to the purchase, disposition or voting of Securities
or otherwise.
4.15 Certain Transactions and Confidentiality.
Each Purchaser, severally and not jointly with the other Purchasers, covenants that neither it, nor any Affiliate acting on its
behalf or pursuant to any understanding with it will execute any purchases or sales, including Short Sales, of any of the Company’s
securities during the period commencing with the execution of this Agreement and ending at such time that the transactions contemplated
by this Agreement are first publicly announced pursuant to the initial press release as described in Section 4.6. Each
Purchaser, severally and not jointly with the other Purchasers, covenants that until such time as the transactions contemplated
by this Agreement are publicly disclosed by the Company pursuant to the initial press release as described in Section 4.6,
such Purchaser will maintain the confidentiality of the existence and terms of this transaction and the information included in
the Transaction Documents and the Disclosure Schedules. Notwithstanding the foregoing, and notwithstanding anything contained in
this Agreement to the contrary, the Company expressly acknowledges and agrees that (i) no Purchaser makes any representation,
warranty or covenant hereby that it will not engage in effecting transactions in any securities of the Company after the time that
the transactions contemplated by this Agreement are first publicly announced pursuant to the initial press release as described
in Section 4.6, (ii) no Purchaser shall be restricted or prohibited from effecting any transactions in any securities
of the Company in accordance with applicable securities laws from and after the time that the transactions contemplated by this
Agreement are first publicly announced pursuant to the initial press release as described in Section 4.6 and (iii) no
Purchaser shall have any duty of confidentiality to the Company or its Subsidiaries after the issuance of the initial press release
as described in Section 4.6. Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managed investment
vehicle whereby separate portfolio managers manage separate portions of such Purchaser’s assets and the portfolio managers
have no direct knowledge of the investment decisions made by the portfolio managers managing other portions of such Purchaser’s
assets, the covenant set forth above shall only apply with respect to the portion of assets managed by the portfolio manager that
made the investment decision to purchase the Securities covered by this Agreement.
4.16 Capital Changes. Until the
one year anniversary of the Closing Date, the Company shall not undertake a reverse or forward stock split or reclassification
of the Common Stock without the prior written consent of the Purchasers holding a majority in interest of the then-outstanding
shares of Preferred Stock.
ARTICLE V.
MISCELLANEOUS
5.1 Termination. This Agreement
may be terminated by any Purchaser, as to such Purchaser’s obligations hereunder only and without any effect whatsoever on
the obligations between the Company and the other Purchasers, by written notice to the other parties, if the Closing has not been
consummated on or before September [__], 2015; provided, however, that such termination will not affect the right
of any party to sue for any breach by any other party (or parties).
5.2 Fees and Expenses. At the Closing,
the Company shall pay and/or reimburse the Purchasers for all of the non-accountable sum of its legal fees and expenses. The Company
shall deliver to each Purchaser, prior to the Closing, a completed and executed copy of the Closing Statement, attached hereto
as Annex A. Except as expressly set forth in the Transaction Documents to the contrary, each party shall pay the fees and
expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident
to the negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall pay all Transfer Agent
fees (including, without limitation, any fees required for same-day processing of any instruction letter delivered by the Company
and any conversion or exercise notice delivered by a Purchaser), stamp taxes and other taxes and duties levied in connection with
the delivery of any Securities to the Purchasers.
5.3 Entire Agreement. The Transaction
Documents, together with the exhibits and schedules thereto, the Prospectus and the Prospectus Supplement, contain the entire understanding
of the parties with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings, oral
or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.
5.4 Notices. Any and all notices
or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given
and effective on the earliest of: (a) the date of transmission, if such notice or communication is delivered via facsimile
at the facsimile number or email address as set forth on the signature pages attached hereto at or prior to 5:30 p.m. (New York
City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered
via facsimile at the facsimile number or email address as set forth on the signature pages attached hereto on a day that is not
a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the second (2
nd ) Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service
or (d) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications
shall be as set forth on the signature pages attached hereto.
5.5 Amendments; Waivers. No provision
of this Agreement may be waived, modified, supplemented or amended except in a written instrument signed, in the case of an amendment,
by the Company and the Purchasers who purchased at least 80% in interest of the Securities based on the initial Subscription Amounts
hereunder or, in the case of a waiver, by the party against whom enforcement of any such waived provision is sought. No waiver
of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver
in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall
any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right.
5.6 Headings. The headings herein
are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions
hereof.
5.7 Successors and Assigns. This
Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Company
may not assign this Agreement or any rights or obligations hereunder without the prior written consent of each Purchaser (other
than by merger). Any Purchaser may assign any or all of its rights under this Agreement to any Person to whom such Purchaser assigns
or transfers any Securities, provided that such transferee agrees in writing to be bound, with respect to the transferred Securities,
by the provisions of the Transaction Documents that apply to the “Purchasers.”
5.8 No Third-Party Beneficiaries.
This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not
for the benefit of, nor may any provision hereof be enforced by, any other Person, except as otherwise set forth in Section 4.10.
5.9 Governing Law. All questions
concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall be governed by and construed
and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law
thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions
contemplated by this Agreement and any other Transaction Documents (whether brought against a party hereto or its respective affiliates,
directors, officers, stockholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal
courts sitting in the City of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith
or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction
Documents), and hereby irrevocably waives, and agrees not to assert in any action, suit or proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient
venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served
in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence
of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any other manner permitted by law. If either party shall commence an action or proceeding to enforce any provisions
of the Transaction Documents, then, in addition to the obligations of the Company under Section 4.10, the prevailing party
in such action, suit or proceeding shall be reimbursed by the other party for its reasonable attorneys’ fees and other costs
and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.
5.10 Survival. The representations
and warranties contained herein shall survive the Closing and the delivery of the Securities.
5.11 Execution. This Agreement may
be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall
become effective when counterparts have been signed by each party and delivered to each other party, it being understood that the
parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or by e-mail
delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing
(or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature
page were an original thereof.
5.12 Severability. If any term,
provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void
or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force
and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable
efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would
have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared
invalid, illegal, void or unenforceable.
5.13 Rescission and Withdrawal Right.
Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) any of the other Transaction
Documents, whenever any Purchaser exercises a right, election, demand or option under a Transaction Document and the Company does
not timely perform its related obligations within the periods therein provided, then such Purchaser may rescind or withdraw, in
its sole discretion from time to time upon written notice to the Company, any relevant notice, demand or election in whole or in
part without prejudice to its future actions and rights; provided, however, that in the case of a rescission of a
conversion of the Preferred Stock or exercise of a Warrant, the applicable Purchaser shall be required to return any shares of
Common Stock subject to any such rescinded conversion or exercise notice concurrently with the return to such Purchaser of the
aggregate exercise price paid to the Company for such shares and the restoration of such Purchaser’s right to acquire such
shares pursuant to such Purchaser’s Warrant (including, issuance of a replacement warrant certificate evidencing such restored
right).
5.14 Replacement of Securities.
If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed, the Company shall issue or
cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation), or in lieu of and
substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company
of such loss, theft or destruction. The applicant for a new certificate or instrument under such circumstances shall also pay any
reasonable third-party costs (including customary indemnity) associated with the issuance of such replacement Securities.
5.15 Remedies. In addition to being
entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of the Purchasers and the
Company will be entitled to specific performance under the Transaction Documents. The parties agree that monetary damages may not
be adequate compensation for any loss incurred by reason of any breach of obligations contained in the Transaction Documents and
hereby agree to waive and not to assert in any action for specific performance of any such obligation the defense that a remedy
at law would be adequate.
5.16 Payment Set Aside. To the extent
that the Company makes a payment or payments to any Purchaser pursuant to any Transaction Document or a Purchaser enforces or exercises
its rights thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded,
repaid or otherwise restored to the Company, a trustee, receiver or any other Person under any law (including, without limitation,
any bankruptcy law, state or federal law, common law or equitable cause of action), then to the extent of any such restoration
the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if
such payment had not been made or such enforcement or setoff had not occurred.
5.17 Usury. To the extent it may
lawfully do so, the Company hereby agrees not to insist upon or plead or in any manner whatsoever claim, and will resist any and
all efforts to be compelled to take the benefit or advantage of, usury laws wherever enacted, now or at any time hereafter in force,
in connection with any claim, action or proceeding that may be brought by any Purchaser in order to enforce any right or remedy
under any Transaction Document. Notwithstanding any provision to the contrary contained in any Transaction Document, it is expressly
agreed and provided that the total liability of the Company under the Transaction Documents for payments in the nature of interest
shall not exceed the maximum lawful rate authorized under applicable law (the “Maximum Rate”), and, without
limiting the foregoing, in no event shall any rate of interest or default interest, or both of them, when aggregated with any other
sums in the nature of interest that the Company may be obligated to pay under the Transaction Documents exceed such Maximum Rate.
It is agreed that if the maximum contract rate of interest allowed by law and applicable to the Transaction Documents is increased
or decreased by statute or any official governmental action subsequent to the date hereof, the new maximum contract rate of interest
allowed by law will be the Maximum Rate applicable to the Transaction Documents from the Closing Date thereof forward, unless such
application is precluded by applicable law. If under any circumstances whatsoever, interest in excess of the Maximum Rate is paid
by the Company to any Purchaser with respect to indebtedness evidenced by the Transaction Documents, such excess shall be applied
by such Purchaser to the unpaid principal balance of any such indebtedness or be refunded to the Company, the manner of handling
such excess to be at such Purchaser’s election.
5.18 Independent Nature of Purchasers’
Obligations and Rights. The obligations of each Purchaser under any Transaction Document are several and not joint with the
obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance or non-performance of
the obligations of any other Purchaser under any Transaction Document. Nothing contained herein or in any other Transaction Document,
and no action taken by any Purchaser pursuant hereto or thereto, shall be deemed to constitute the Purchasers as a partnership,
an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers are in any way acting
in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents. Each Purchaser
shall be entitled to independently protect and enforce its rights, including, without limitation, the rights arising out of this
Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Purchaser to be joined as an additional
party in any proceeding for such purpose. Each Purchaser has been represented by its own separate legal counsel in its review and
negotiation of the Transaction Documents. The Company has elected to provide all Purchasers with the same terms and Transaction
Documents for the convenience of the Company and not because it was required or requested to do so by any of the Purchasers. It
is expressly understood and agreed that each provision contained in this Agreement and in each other Transaction Document is between
the Company and a Purchaser, solely, and not between the Company and the Purchasers collectively and not between and among the
Purchasers.
5.19 Liquidated Damages. The Company’s
obligations to pay any partial liquidated damages or other amounts owing under the Transaction Documents is a continuing obligation
of the Company and shall not terminate until all unpaid partial liquidated damages and other amounts have been paid notwithstanding
the fact that the instrument or security pursuant to which such partial liquidated damages or other amounts are due and payable
shall have been canceled.
5.20 Saturdays, Sundays, Holidays, etc.
If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be
a Business Day, then such action may be taken or such right may be exercised on the next succeeding Business Day.
5.21 Construction. The parties agree
that each of them and/or their respective counsel have reviewed and had an opportunity to revise the Transaction Documents and,
therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall
not be employed in the interpretation of the Transaction Documents or any amendments thereto. In addition, each and every reference
to share prices and shares of Common Stock in any Transaction Document shall be subject to adjustment for reverse and forward stock
splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after the date of this
Agreement.
5.22WAIVER OF JURY TRIAL. IN
ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH KNOWINGLY AND
INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY
WAIVES FOREVER TRIAL BY JURY.
(Signature Pages Follow)
IN WITNESS WHEREOF, the parties hereto have
caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated
above.
| AMARANTUS BIOSCIENCE HOLDINGS, INC. |
|
|
|
Address for Notice: |
| |
|
|
|
|
| By: |
|
|
|
|
|
Fax: |
|
|
| |
|
Name: |
|
|
|
Email: |
|
|
| |
|
Title: |
|
|
|
|
|
|
With a copy to (which shall not constitute notice):
Sichenzia Ross Friedman Ference LLP
61 Broadway, 32nd Floor
New York, NY 10006
Attn: Jeffrey Fessler, Esq.
Fax: (212) 930-9725
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOR PURCHASER FOLLOWS]
[PURCHASER SIGNATURE PAGES TO AMARANTUS
BIOSCIENCE HOLDINGS, INC. SECURITIES PURCHASE AGREEMENT]
IN WITNESS WHEREOF, the undersigned have
caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated
above.
| Name of Purchaser: |
|
Delafield
Investments Limited |
| Signature of Authorized Signatory of Purchaser: |
|
|
| Name of Authorized Signatory: |
|
|
| Title of Authorized Signatory: |
|
|
| Email Address of Authorized Signatory: |
|
|
| Facsimile Number of Authorized Signatory: |
|
|
| Address for Notice to Purchaser: |
|
Delafield
Investments Limited
c/o Magna Equities II, LLC
5 Hanover Square, New York, NY 10004
Fax: (646) 737-9948
Email: Research@Mag.na |
Address for Delivery of Securities to Purchaser (if not same
as address for notice):
Subscription Amount: $3,055,556 Stated Value (which includes
10% OID)
Shares of Preferred Stock:
Warrant Shares:
EIN Number:
[SIGNATURE PAGES CONTINUE]
Annex A
CLOSING STATEMENT
Pursuant to the attached Securities Purchase Agreement, dated
as of the date hereof, the purchasers shall purchase up to $3,055,556 Stated Value of Preferred Stock and Warrants to purchase
shares of common stock of and from Amarantus BioScience Holdings, Inc., a Nevada corporation (the “Company”).
All funds will be wired into an account maintained by the Company. All funds will be disbursed in accordance with this Closing
Statement.
Disbursement Date: September 30, 2015
| I. PURCHASE PRICE | |
| | |
| | |
| | |
| Gross Proceeds to be Received | |
$ | | |
| | |
| | |
| II. DISBURSEMENTS | |
| | |
| | |
| | |
| | |
$ | | |
| | |
$ | | |
| | |
$ | | |
| | |
$ | | |
| | |
$ | | |
| | |
| | |
| Total Amount Disbursed: | |
$ | | |
| | |
| | |
| WIRE INSTRUCTIONS: | |
| | |
Exhibit A
Certificate of Designation for the
H Shares
Exhibit B
Form of Company
Legal Opinion
Exhibit C
Form of Warrant
Schedule 3.1(a)
List of Subsidiaries
Schedule 3.1 (g)
Capitalization
Schedule 3.1 (i)
Material, Changes, Etc.
Schedule 3.1 (u)
Registration Rights
| Name of Person |
|
Shares of Common Stock
being Registered |
| |
|
|
| |
|
|
| |
|
|
Schedule 3.1 (v)
Listing Etc.
Schedule 3.1 (z)
Indebtedness, Etc.
Schedule 3.1 (gg)
FDA
Schedule 4.9
Use of Proceeds
Exhibit 10.2
EXECUTION COPY OF RD WARRANT
NEITHER THIS SECURITY
NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE
TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY AND THE SECURITIES
ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH
SECURITIES.
COMMON STOCK PURCHASE WARRANT
Amarantus
Bioscience Holdings, Inc.
| Warrant Shares: |
Initial Issuance Date: September 30, 2015 |
THIS COMMON STOCK PURCHASE
WARRANT (the “Warrant”) certifies that, for value received, Delafield Investments Limited or its assigns (the
“Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter
set forth, at any time on or after the Initial Issuance Date (the “Initial Exercise Date”) and on or prior to
the close of business on the five-year anniversary of the Initial Exercise Date (the “Termination Date”) but
not thereafter, to subscribe for and purchase from Amarantus Bioscience Holdings, Inc., a Nevada corporation (the “Company”),
up to _____ shares (subject to adjustment hereunder, the “Warrant Shares”) of Common Stock. The purchase price
of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).
Section 1. Definitions.
In addition to the terms defined elsewhere in this Warrant, the following terms have the meanings set forth in this Section 1:
“Affiliate”
means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common
control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.
“Alternate
Consideration” shall have the meaning ascribed to such term in Section 3(e).
“Base Share
Price” shall have the meaning ascribed to such term in Section 3(b).
“Beneficial Ownership
Limitation” shall have the meaning ascribed to such term in Section 2(e).
“Bloomberg”
means Bloomberg, L.P.
“Business Day”
means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or any day on which
banking institutions in the State of New York are authorized or required by law or other governmental action to close.
“Black Scholes
Value” shall have the meaning ascribed to such term in Section 3(e).
“Buy-In”
shall have the meaning ascribed to such term in Section 2(d)(iv).
“Closing Bid Price”
and “Closing Sale Price” shall mean for any security as of any date, the last closing bid price and last closing
trade price, respectively, for such security on the Principal Market, as reported by Bloomberg, or, if the Principal Market begins
to operate on an extended hours basis and does not designate the closing bid price or the closing trade price, as the case may
be, then the last bid price or last trade price, respectively, of such security prior to 4:00:00 p.m., New York Time, as reported
by Bloomberg, or, if the Principal Market is not the principal securities exchange or trading market for such security, the last
closing bid price or last trade price, respectively, of such security on the principal securities exchange or trading market where
such security is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last closing bid price or last
trade price, respectively, of such security in the over-the-counter market on the electronic bulletin board for such security as
reported by Bloomberg, or, if no closing bid price or last trade price, respectively, is reported for such security by Bloomberg,
the average of the bid prices, or the ask prices, respectively, of any market makers for such security as reported in the OTC Link
or “pink sheets” by OTC Markets Group Inc. (formerly the Pink OTC Markets Inc.). If the Closing Bid Price or
the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Bid
Price or the Closing Sale Price, as the case may be, of such security on such date shall be the fair market value as mutually determined
by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security,
then such dispute shall be resolved in good faith by the Holder pursuant to Section 17. All such determinations to
be appropriately adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction during
the applicable calculation period.
“Commission”
means the United States Securities and Exchange Commission.
“Common Stock”
means the common stock of the Company, par value $0.001 per share, and any other class of securities into which such securities
may hereafter be reclassified or changed.
“Common Stock Equivalents”
means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock,
including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is at any time convertible
into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.
“Company”
shall have the meaning ascribed to such term in the Preamble.
“Dilutive
Issuance” shall have the meaning ascribed to such term in Section 3(b).
“Dilutive
Issuance Notice” shall have the meaning ascribed to such term in Section 3(b).
“Distribution”
shall have the meaning ascribed to such term in Section 3(d).
“DWAC”
shall have the meaning ascribed to such term in Section 2(d).
“Exchange Act”
means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Exempt Issuance”
shall have the meaning ascribed to such term in Section 3(b).
“Exercise
Price” shall have the meaning ascribed to such term in Section 2(b).
“Fundamental
Transaction” shall have the meaning ascribed to such term in Section 3(e).
“Holder”
shall have the meaning ascribed to such term in the Preamble.
“Initial Exercise
Date” has the meaning set forth on page 1 of this Warrant
“Person” means
an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
“Purchase
Rights” shall have the meaning ascribed to such term in Section 3(c).
“Registrable Securities”
means, as of any date of determination, (a) all Warrant Shares then issued and issuable upon exercise of the Warrants (assuming
on such date the Warrants are exercised in full without regard to any exercise limitations therein), (b) any additional shares
of Common Stock issued and issuable in connection with any anti-dilution provisions in the Warrants (in each case, without giving
effect to any limitations on exercise set forth in the Warrants) and (c) any securities issued or then issuable upon any stock
split, dividend or other distribution, recapitalization or similar event with respect to the foregoing; provided, however,
that any such Registrable Securities shall cease to be Registrable Securities (and the Company shall not be required to maintain
the effectiveness of any, or file another, Registration Statement hereunder with respect thereto) for so long as (a) a Registration
Statement with respect to the sale of such Registrable Securities is declared effective by the Commission under the Securities
Act and such Registrable Securities have been disposed of by the Holder in accordance with such effective Registration Statement,
(b) such Registrable Securities have been previously sold in accordance with Rule 144, or (c) such securities become eligible for
resale without volume or manner-of-sale restrictions and without current public information pursuant to Rule 144 as set forth in
a written opinion letter to such effect, addressed, delivered and acceptable to the Transfer Agent and the affected Holders (assuming
that such securities and any securities issuable upon exercise, conversion or exchange of which, or as a dividend upon which, such
securities were issued or are issuable, were at no time held by any Affiliate of the Company, and all Warrants are exercised by
“cashless exercise” as provided in Section 2(c)), as reasonably determined by the Company, upon the advice of counsel
to the Company.
“Registration
Statement” shall have the meaning ascribed to such term in Section 5(o).
“Rule 144”
means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or
any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.
“Securities Act”
means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Subsidiary”
means any direct and/or indirect, wholly owned or partially owned subsidiary of the Company or a subsidiary of any subsidiary and
shall, where applicable, also include any direct or indirect subsidiary of the Company formed or acquired after the date hereof.
“Successor
Entity” shall have the meaning ascribed to such term in Section 3(e).
“Termination Date”
shall be five years after the Initial Exercise Date.
“Trading Day”
means a day on which the principal Trading Market is open for trading.
“Trading Market”
means any of the following markets or exchanges on which the Common Stock (or any other common stock of any other Person that references
the Trading Market for its common stock) is listed or quoted for trading on the date in question: the OTC Bulletin Board, The NASDAQ
Global Market, The NASDAQ Global Select Market, The NASDAQ Capital Market, the New York Stock Exchange, NYSE Arca, the NYSE MKT,
or the OTCQX Marketplace, the OTCQB Marketplace, the OTCPink Marketplace or any other tier operated by OTC Markets Group Inc. (or
any successor to any of the foregoing).
“VWAP” means,
for or as of any date, the dollar volume-weighted average price for such security on the Trading Market (or, if the Trading 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. All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock
combination, recapitalization or other similar transaction during such period.
“Warrant”
shall have the meaning ascribed to such term in the Preamble.
“Warrant Register”
shall have the meaning ascribed to such term in Section 4(c).
“Warrant Share Delivery
Date” shall have the meaning ascribed to such term in Section 2(d).
“Warrant Shares”
means the shares of Common Stock issuable upon exercise of the Warrants.
Section 2. Exercise.
a) Exercise
of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times
on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company (or such other office or
agency of the Company as it may designate by notice in writing to the registered Holder at the address of the Holder appearing
on the books of the Company) of a duly executed facsimile copy of the Notice of Exercise form annexed hereto and within three (3)
Trading Days of the date said Notice of Exercise is delivered to the Company, the Company shall have received payment of the aggregate
Exercise Price of the shares thereby purchased by wire transfer or cashier’s check drawn on a United States bank. No ink-original
Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice
of Exercise form be required. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender
this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been
exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading
Days of the date the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases
of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number
of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and
the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall
deliver any objection to any Notice of Exercise Form within one (1) Business Day of receipt of such notice. The Holder and any
assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the
purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given
time may be less than the amount stated on the face hereof.
b) Exercise
Price. The exercise price per share of the Common Stock under this Warrant shall be $2.00, subject to adjustment hereunder
(the “Exercise Price”).
c) Cashless
Exercise. If at any time there is no effective registration statement registering, or no current prospectus available for,
the resale of the Warrant Shares by the Holder, then this Warrant may also be exercised, in whole or in part, at such time by means
of a “cashless exercise” in which the Holder shall be entitled to receive a number of Warrant Shares equal to the quotient
obtained by dividing [(A-B) (X)] by (A), where:
(A) = the
VWAP on the Trading Day immediately preceding the date on which Holder elects to exercise this Warrant by means of a “cashless
exercise,” as set forth in the applicable Notice of Exercise;
(B) = the
Exercise Price of this Warrant, as adjusted hereunder; and
(X) =
the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant
if such exercise were by means of a cash exercise rather than a cashless exercise.
i. Delivery
of Warrant Shares Upon Exercise. Warrant Shares purchased hereunder shall be transmitted by the Transfer Agent to the Holder
by crediting the account of the Holder’s prime broker with The Depository Trust Company through its Deposit or Withdrawal
at Custodian system (“DWAC”) if the Company is then a participant in such system and either (A) there is an
effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by the Holder
or (B) the shares are eligible for resale by the Holder without volume or manner-of-sale limitations pursuant to Rule 144, and
otherwise by physical delivery to the address specified by the Holder in the Notice of Exercise by the date that is three (3) Trading
Days after the latest of (A) the delivery to the Company of the Notice of Exercise and (B) surrender of this Warrant (if required)
(such date, the “Warrant Share Delivery Date”). The Warrant Shares shall be deemed to have been issued, and
Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for
all purposes, as of the date the Warrant has been exercised, with payment to the Company of the Exercise Price and all taxes required
to be paid by the Holder, if any, pursuant to Section 2(d)(vi) prior to the issuance of such shares, having been paid. If the Company
fails for any reason to deliver to the Holder the Warrant Shares subject to a Notice of Exercise by the Warrant Share Delivery
Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares
subject to such exercise (based on the VWAP of the Common Stock on the date of the applicable Notice of Exercise), $10 per Trading
Day (increasing to $20 per Trading Day on the fifth Trading Day after such liquidated damages begin to accrue) for each Trading
Day after such Warrant Share Delivery Date until such Warrant Shares are delivered or Holder rescinds such exercise. The Warrant
Shares shall bear a restrictive legend in the following form, as appropriate:
“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 (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER),
IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE
144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.”
ii. Delivery
of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder
and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant
evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall
in all other respects be identical with this Warrant.
iii. Rescission
Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(d)(i)
by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.
iv. Compensation
for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise. In addition to any other rights available to the Holder,
if the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to an exercise on or before
the Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction
or otherwise) or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a
sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”),
then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s total purchase price (including
brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (1) the
number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times
(2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder,
either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored (in
which case such exercise shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have
been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases
Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common
Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding
sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating
the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss.
Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including,
without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely
deliver shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.
v. No
Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise
of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the
Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction
multiplied by the Exercise Price or round up to the next whole share.
vi. Charges,
Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or
other incidental expense in respect of the issuance of Warrant Shares, all of which taxes and expenses shall be paid by the Company,
and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided,
however, that in the event that Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant
when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company
may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The
Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise.
vii. Closing
of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this
Warrant, pursuant to the terms hereof.
e) Holder’s
Exercise Limitations. The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise
any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance after
exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other
Persons acting as a group together with the Holder or any of the Holder’s Affiliates), would beneficially own in excess of
the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common
Stock beneficially owned by the Holder and its Affiliates shall include the number of shares of Common Stock issuable upon exercise
of this Warrant with respect to which such determination is being made, but shall exclude the number of shares of Common Stock
which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder
or any of its Affiliates and (ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of
the Company (including, without limitation, any other Common Stock Equivalents) subject to a limitation on conversion or exercise
analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates. Except as set forth in
the preceding sentence, for purposes of this Section 2(e), beneficial ownership shall be calculated in accordance with Section
13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company
is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder
is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained
in this Section 2(e) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by
the Holder together with any Affiliates) and of which portion of this Warrant is exercisable shall be in the sole discretion of
the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant
is exercisable (in relation to other securities owned by the Holder together with any Affiliates) and of which portion of this
Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to
verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above
shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder.
For purposes of this Section 2(e), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number
of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with
the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by
the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral
request of a Holder, the Company shall within two Trading Days confirm orally and in writing to the Holder the number of shares
of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after
giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates
since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation”
shall be 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares
of Common Stock issuable upon exercise of this Warrant. The Holder, upon not less than 61 days’ prior notice to the Company,
may increase or decrease the Beneficial Ownership Limitation provisions of this Section 2(e), provided that the Beneficial Ownership
Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to
the issuance of shares of Common Stock upon exercise of this Warrant held by the Holder and the provisions of this Section 2(e)
shall continue to apply. Any such increase or decrease will not be effective until the 61st day after such notice is
delivered to the Company. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict
conformity with the terms of this Section 2(e) to correct this paragraph (or any portion hereof) which may be defective or inconsistent
with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to
properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this
Warrant.
f) Redemption
of Warrant. Commencing on the date 18 months from the Initial Exercise Date in the event that (i) the Closing Bid Price or
Closing Sale Price of the Common Stock is at least equal to $7.00 (subject to adjustment for stock splits, stock dividends, reorganizations,
and the like) for a thirty (30) consecutive Trading Day period prior to the Trading Day a Redemption Notice (as defined below)
is sent by the Company to the Holder (“Pre-Call Period”), and (ii) for each trading day during the Pre-Call
Period, the trading volume for the Common Stock is at least equal to 300,000 shares then Company shall have the right, upon at
least ten (10) Trading Days' prior written notice to the Holder (the “Redemption Notice”), to redeem all or
any portion of the Warrant Shares underlying this Warrant (not previously exercised), at a redemption price equal to $7.00 per
Warrant Share issuable hereunder for the portion hereof being redeemed. However, the Company may not exercise such redemption right
more than once.
Any redemption
hereunder shall occur on the date specified in the Redemption Notice (“Redemption Date”), provided that such
Redemption Date may not occur until at least ten (10) Trading Days following the date on which the Holder received the Redemption
Notice (the “Redemption Notice Date”). The period from the Redemption Notice Date to the Redemption Date shall
be referred to herein as the “Post-Call Period.” The Holder may exercise this Warrant, including any portion
subject to a Redemption Notice, at any time and from time to time during the Post-Call Period, and the Company shall honor all
exercises of this Warrant by the Holder during the Post-Call Period. Any Redemption Notice under this Section shall be irrevocable.
If the Company intends to redeem less than all of the then outstanding Warrants issued to Holders under the Purchase Agreement,
it shall do so on a pro rata basis among such holders in accordance with this Section. Failure by the Company to redeem this Warrant
on a timely basis after delivering a Redemption Notice shall result in the Company being prohibited from exercising such right
pursuant to this Section again.
Section 3. Certain
Adjustments.
a) Stock
Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise
makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable
in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon
exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including
by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares or (iv) issues by reclassification
of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied
by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding
immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately
after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the
aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become
effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution
and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.
b) Subsequent
Equity Sales. If the Company or any Subsidiary thereof, as applicable, at any time while this Warrant is outstanding, shall
sell or grant any option to purchase, or sell or grant any right to reprice, or otherwise dispose of or issue (or announce any
offer, sale, grant or any option to purchase or other disposition) any Common Stock or Common Stock Equivalents, at an effective
price per share less than the Exercise Price then in effect (such lower price, the “Base Share Price” and such
issuances collectively, a “Dilutive Issuance”) (it being understood and agreed that if the holder of the Common
Stock or Common Stock Equivalents so issued shall at any time, whether by operation of purchase price adjustments, reset provisions,
floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which are issued
in connection with such issuance, be entitled to receive shares of Common Stock at an effective price per share that is less than
the Exercise Price, such issuance shall be deemed to have occurred for less than the Exercise Price on such date of the Dilutive
Issuance at such effective price), then simultaneously with the consummation of each Dilutive Issuance the Exercise Price shall
be reduced and only reduced to equal the Base Share Price and the number of Warrant Shares issuable hereunder shall be increased
such that the aggregate Exercise Price payable hereunder, after taking into account the decrease in the Exercise Price, shall be
equal to the aggregate Exercise Price prior to such adjustment. Such adjustment shall be made whenever such Common Stock or Common
Stock Equivalents are issued; provided that if such Common Stock or Common Stock Equivalents are issued in tranches such adjustment
shall be made at the first closing of such issuance. Notwithstanding the foregoing, no adjustments shall be made, paid or issued
under this Section 3(b) in respect of an Exempt Issuance (as defined below). The Company shall notify the Holder, in writing, no
later than the Trading Day following the issuance or deemed issuance of any Common Stock or Common Stock Equivalents subject to
this Section 3(b), indicating therein the applicable issuance price, or applicable reset price, exchange price, conversion price
and other pricing terms (such notice, the “Dilutive Issuance Notice”). For purposes of clarification, whether
or not the Company provides a Dilutive Issuance Notice pursuant to this Section 3(b), upon the occurrence of any Dilutive Issuance,
the Holder is entitled to receive a number of Warrant Shares based upon the Base Share Price regardless of whether the Holder accurately
refers to the Base Share Price in the Notice of Exercise. “Exempt Issuance” means the issuance of (a) shares
of Common Stock or options to employees, officers or directors of the Company pursuant to any stock or option plan duly adopted
for such purpose, by a majority of the non-employee members of the Board of Directors or a majority of the members of a committee
of non-employee directors established for such purpose, (b) securities upon the exercise or exchange of or conversion of any Securities
issued hereunder and/or other securities exercisable or exchangeable for or convertible into shares of Common Stock issued and
outstanding on the date of this Agreement, provided that such securities have not been amended since the date of this Agreement
to increase the number of such securities or to decrease the exercise price, exchange price or conversion price of such securities,
and (c) securities issued pursuant to acquisitions or strategic transactions approved by a majority of the disinterested directors
of the Company, provided that any such issuance shall only be to a Person (or to the equityholders of a Person) which is, itself
or through its subsidiaries, an operating company or an owner of an asset in a business synergistic with the business of the Company
and shall provide to the Company additional benefits in addition to the investment of funds, but shall not include a transaction
in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary business
is investing in securities.
c) Subsequent
Rights Offerings. In addition to any adjustments pursuant to Section 3(a) above, if at any time the Company grants, issues
or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record
holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled to
acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired
if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to
any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date
on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as
of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights
(provided, however, to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder
exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such
extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase
Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in
the Holder exceeding the Beneficial Ownership Limitation).
d) Pro
Rata Distributions. During such time as this Warrant is outstanding, 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 or options by way of
a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a "Distribution"),
at any time after the issuance of this 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 on exercise hereof, including without limitation,
the Beneficial Ownership Limitation) immediately before the date of which a record is taken for such Distribution, or, if no such
record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in
such Distribution (provided, however, to the extent that the Holder's right to participate in any such Distribution
would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate
in such Distribution to such extent (or in the beneficial ownership of any shares of Common Stock as a result of such Distribution
to such extent) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time, if
ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).
e) Fundamental
Transaction.
1) Generally.
The Company shall not enter into or be party to a Fundamental Transaction unless (i) the Holders of any Notes and Series H Preferred
stock, as those are defined in those certain Securities Purchase Agreements and/or Exchange Agreements dated of even date herewith;
(ii) the Successor Entity assumes in writing all of the obligations of the Company under this Warrant in accordance with the provisions
of this Section 3(e) 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 (iii) if the Fundamental Transaction occurs within six (6) months of Iniital Issuance Date, 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 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 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) 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 2(d) hereof, the Holder may elect, at its sole option, by delivery of written notice to
the Company to waive this Section 3(e) 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) 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.
2) Black Scholes
Value. Notwithstanding the foregoing and the provisions of Section 1(a)(i)1) 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.
3) If, at any time
while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any merger
or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects any sale, lease,
license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of
related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or
another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for
other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the
Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization
of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged
for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions consummates
a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization,
spin-off or scheme of arrangement) with another Person or group of Persons whereby such other Person or group acquires more than
50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons
making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement
or other business combination) (each a “Fundamental Transaction”), then, upon any subsequent exercise of this
Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately
prior to the occurrence of such Fundamental Transaction, at the option of the Holder (without regard to any limitation in Section
2(e) on the exercise of this Warrant), the number of shares of Common Stock of the successor or acquiring corporation or of the
Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”)
receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant
is exercisable immediately prior to such Fundamental Transaction (without regard to any limitation in Section 2(e) on the exercise
of this Warrant). For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to
apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common
Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in
a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common
Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder
shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental
Transaction. Notwithstanding anything to the contrary, in the event of a Fundamental Transaction, the Company or any Successor
Entity (as defined below) shall, at the Holder’s option, exercisable at any time concurrently with, or within 30 days after,
the consummation of the Fundamental Transaction, purchase this Warrant from the Holder by paying to the Holder an amount of cash
equal to the Black Scholes Value of the remaining unexercised portion of this Warrant on the date of the consummation of such Fundamental
Transaction. “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 3(e)(2)which value is calculated using the Black Scholes Option Pricing
Model for a “call” or “put” option, as elected by the Holder, as 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 3(e)(2) 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 3(e)(2),
(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 3(e)(2) 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 3(e)(2) 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.
The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor
Entity”) to assume in writing all of the obligations of the Company under this Warrant and the other Transaction Documents
in accordance with the provisions of this Section 3(e) pursuant to written agreements in form and substance reasonably satisfactory
to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option
of the Holder, deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument
substantially similar in form and substance to this Warrant which is exercisable for a corresponding number of shares of capital
stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon exercise
of this Warrant (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 number of shares of capital stock and such exercise price being for the purpose of protecting the economic value of this Warrant
immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance
to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted
for (so that from and after the date of such Fundamental Transaction, the provisions of this Warrant and the other Transaction
Documents referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and
power of the Company and shall assume all of the obligations of the Company under this Warrant and the other Transaction Documents
with the same effect as if such Successor Entity had been named as the Company herein.
f) Calculations.
All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be.
For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall
be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.
g) Notice
to Holder.
3) Adjustment
to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly
mail to the Holder a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of
Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.
4) Notice
to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the
Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the
Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares
of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection
with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer
of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted
into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation
or winding up of the affairs of the Company, then, in each case, the Company shall cause to be mailed to the Holder at its last
address as it shall appear upon the Warrant Register of the Company, at least 20 calendar days prior to the applicable record or
effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend,
distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common
Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the
date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares
of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale,
transfer or share exchange; provided that the failure to mail such notice or any defect therein or in the mailing thereof shall
not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided
hereunder constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries, the Company
shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain entitled
to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering
such notice except as may otherwise be expressly set forth herein.
Section 4. Transfer
of Warrant.
a) Transferability.
Subject to compliance with any applicable securities laws and the conditions set forth in Section 4(d) hereof, this Warrant and
all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender
of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant
substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any
transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall
execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable,
and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant
evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. Notwithstanding anything
herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company unless the Holder
has assigned this Warrant in full, in which case, the Holder shall surrender this Warrant to the Company within three (3) Trading
Days of the date the Holder delivers an assignment form to the Company assigning this Warrant full. The Warrant, if properly assigned
in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.
b) New
Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the
Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by
the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such
division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants
to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the Initial
Exercise Date and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.
c) Warrant
Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant
Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered
Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and
for all other purposes, absent actual notice to the contrary.
d) Transfer
Restrictions. If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer
of this Warrant shall not be either (i) registered pursuant to an effective registration statement under the Securities Act and
under applicable state securities or blue sky laws or (ii) eligible for resale without volume or manner-of-sale restrictions or
current public information requirements pursuant to Rule 144, the Company may require, as a condition of allowing such transfer,
that the Holder or transferee of this Warrant, as the case may be, comply with the provisions of Section 5(k).
e) Representation
by the Holder. The Holder, by the acceptance hereof, represents and warrants that it is acquiring this Warrant and, upon any
exercise hereof, will acquire the Warrant Shares issuable upon such exercise, for its own account and not with a view to or for
distributing or reselling such Warrant Shares or any part thereof in violation of the Securities Act or any applicable state securities
law, except pursuant to sales registered or exempted under the Securities Act.
Section 5. Miscellaneous.
a) No
Rights as Stockholder Until Exercise. This Warrant does not entitle the Holder to any voting rights, dividends or other rights
as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i), except as expressly set forth in
Section 3.
b) Loss,
Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant
Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of
the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate,
if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation,
in lieu of such Warrant or stock certificate.
c) Saturdays,
Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or
granted herein shall not be a Business Day, then, such action may be taken or such right may be exercised on the next succeeding
Business Day.
d) Authorized
Shares.
The Company covenants
that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued shares of Common Stock a number
of shares of Common Stock equal to the product of (i) 300% multiplied by (ii) the maximum number of shares of Common Stock issuable
upon exercise of this Warrant assuming the exercise price of this Warrant is $1.00 taking into account any anti-dilution adjustments
but excluding any Beneficial Ownership Limitations and/or other limitations or the exercise of this Warrant solely for the purpose
of calculations under this Section 5(d) only. The Company further covenants that its issuance of this Warrant shall constitute
full authority to its officers who are charged with the duty of issuing the necessary Warrant Shares upon the exercise of the purchase
rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares
may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market
upon which the Common Stock may be listed. The Company covenants that all Warrant Shares which may be issued upon the exercise
of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment
for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from
all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer
occurring contemporaneously with such issue).
Except and
to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending
its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this
Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions
as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting
the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable
therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate
in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant
and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory
body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.
Before taking
any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the
Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary
from any public regulatory body or bodies having jurisdiction thereof.
e) Jurisdiction.
All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be governed by and construed
and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law
thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions
contemplated by this Warrant (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders,
partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New
York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of
New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper
or is an inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents
to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight
delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Warrant and agrees that
such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any other manner permitted by law. If either party shall commence an action,
suit or proceeding to enforce any provisions of the Warrants, then, the prevailing party in such action, suit or proceeding shall
be reimbursed by the other party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation,
preparation and prosecution of such action or
f) Restrictions.
The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, will have restrictions
upon resale imposed by state and federal securities laws.
g) Nonwaiver
and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate
as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies, notwithstanding the fact that all
rights hereunder terminate on the Termination Date. If the Company willfully and knowingly fails to comply with any provision of
this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be
sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of
appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its
rights, powers or remedies hereunder.
h) Notices.
Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered
via U.S. First Class Mail to the address specified below, or to such other address as either such
party shall hereafter specify in writing to the other:
| |
For Holder: |
|
| |
Name: |
Delafield Investments Limited, C/o Magna |
| |
Address: |
5 Hanover Square, New York, NY 10004 |
| |
Telephone Number: |
[______] |
| |
Email: |
Research@Mag.na |
| |
|
|
| |
For Company: |
|
| |
Name: |
Marc Faerber c/o Amarantus Bioscience Holdings, Inc. |
| |
Address: |
655 Montgomery Street |
| |
|
San Francisco, California 94111 |
| |
Telephone Number: |
[______] |
| |
Email: |
marc.faerber@amarantus.com |
i) Limitation
of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase
Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder
for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company
or by creditors of the Company.
j) Remedies.
The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled
to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation
for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert
the defense in any action for specific performance that a remedy at law would be adequate.
k) Successors
and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure
to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns
of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and
shall be enforceable by the Holder or holder of Warrant Shares.
l) Amendment.
This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.
m) Severability.
Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective
to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions
of this Warrant.
n) Headings.
The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of
this Warrant.
o) Piggy-back
Registrations. The Holder has the registration rights with respect to, among other shares of Common Stock, all Warrant Shares
pursuant to a registration rights agreement dated on or about the date hereof.
p) Automatic
Exercise on the Termination Date. In the event that, upon the Termination Date, the VWAP on the Trading Day immediately preceding
the Termination Date as determined in accordance with this Warrant above is greater than the Exercise Price in effect on such date,
then this Warrant shall automatically be deemed on and as of such date to be exercised pursuant to a Cashless Exercise pursuant
to Section 2(c) of this Warrant as to all shares (or such other securities) for which this Warrant shall not previously have been
exercised or converted, and the Company shall promptly deliver a certificate representing the shares (or such other securities)
issued upon such exercise to the Holder.
********************
(Signature Page Follows)
IN WITNESS WHEREOF, the
Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.
| |
Amarantus Bioscience Holdings, Inc. |
| |
|
| |
|
| |
By: |
|
| |
|
Name: |
| |
|
Title: |
NOTICE OF EXERCISE
To: Amarantus
Bioscience Holdings, Inc.
(1) The
undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only
if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes,
if any.
(2) Please
issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:
_______________________________
The Warrant Shares shall be delivered to
the following DWAC Account Number:
_______________________________
_______________________________
_______________________________
(3) Accredited Investor.
The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933,
as amended.
[SIGNATURE
OF HOLDER]
Name of Investing Entity: _________________________________________________________________________
Signature of Authorized Signatory of Investing
Entity: ___________________________________________________
Name of Authorized Signatory: _____________________________________________________________________
Title of Authorized Signatory: ______________________________________________________________________
Date: _________________________________________________________________________________________
EXHIBIT B
ASSIGNMENT
FORM
(To assign the
foregoing Warrant, execute this form and supply required information. Do not use this form to purchase shares.)
FOR VALUE RECEIVED,
the foregoing Warrant and all rights evidenced thereby are hereby assigned to
| Name: |
|
|
|
| |
|
(Please Print) |
|
| |
|
|
|
| Address: |
|
|
|
| |
|
(Please Print) |
|
| Dated: _______________ __, ______ |
|
|
|
| |
|
|
|
| Holder’s Signature: ___________________ |
|
|
|
| |
|
|
|
| Holder’s Address: ____________________ |
|
|
|
Exhibit 10.3
EXECUTION VERSION
SECURITIES PURCHASE AGREEMENT
dated as of September 30, 2015
by and among
DELAFIELD INVESTMENTS LIMITED (LENDER)
and
AMARANTUS BIOSCIENCE HOLDINGS, INC. (BORROWER)
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE
AGREEMENT (the “Agreement”) is made as of September 30, 2015, by and among AMARANTUS BIOSCIENCE HOLDINGS, INC.,
a Nevada corporation (and together with all of its current and future, direct and/or indirect, wholly owned and/or partially owned
Subsidiaries, collectively, the “Borrower” or the “Company”), DELAFIELD INVESTMENTS LIMITED
(“Delafield” or the “Lender”).
RECITALS
A. The Borrower
and the Lender are 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 “Securities Act”), and Rule 506(b) of Regulation
D (“Regulation D”) as promulgated by the United States Securities and Exchange Commission under the Securities
Act.
B. The Lender wishes
to purchase, and the Company wishes to sell, upon the terms and conditions stated in this Agreement, the (i) Notes (in the form
amended hereto Exhibit A); and (ii) Warrants (in the form amended hereto Exhibit B), all in the amounts and for the price set forth
on Schedule 1 hereto.
NOW, THEREFORE, IN
CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Company and the Purchasers hereby agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Defined
Terms. In addition to terms defined elsewhere in this Agreement or in any Supplement, Amendment or Exhibit hereto, when used
herein, the following terms shall have the following meanings:
(a) “Securities Act”
means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
(b) “Exchange Act”
means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
(c) “2015
Shareholder Meeting Conditions” means that in connection with the Company’s 2015 Annual Meeting of Stockholders
held on September 2, 2015 (the “2015 Meeting”), Lender is satisfied in its sole discretion that (i) the 2015
Meeting occurred and was in compliance with all applicable laws, rules and regulations including, but not limited to, those relating
to a quorum (ii) the proposals that the Company’s shareholders were being asked to approve, including, but not limited to
the amendment to the Borrower’s Articles of Incorporation increasing the Borrower’s authorized shares of Common Stock
from 13,333,334 to 35,000,000 shares, (the “Amendment”), which proposals were set forth in the Borrower’s
Proxy Statement contained in its Definitive Schedule 14A filed with the Commission on or about July 21, 2015, were approved and
(iii) the Amendment was filed with the Secretary of State of the State of Nevada and is currently in effect.
(d) “Additional
Notes” means the 12% Senior Secured Convertible Promissory Notes of the Borrower, the terms and conditions of which are
substantially identical to those of the Notes purchased by Dominion Capital, LLC (“Dominion”) from the Borrower
pursuant to the Dominion Exchange Agreement.
(e) “Alternative
Conversion Price” means 60% of the lowest of traded price of a share of Common Stock in the thirty (30) consecutive Trading
Days prior to the Conversion Date and/or any other determination date.
(f) “Affiliate”
means any Person which, directly or indirectly, owns or controls, on an aggregate basis, a ten (10%) percent or greater interest
in any other Person, or which is controlled by or is under common control with any other Person.
(g) “Business
Day” means any day other than a Saturday or Sunday or any other day on which the Federal Reserve Bank of New York is
not open for business.
(h) “Closing”
means the time of issuance and sale by the Borrower of the Note and Warrant to the Lender.
(i) “Closing
Date” means the date the Note and Warrants are purchased by the Lender from the Borrower.
(j) “Collateral
Date” has the meaning set forth in the Security Agreement.
(k) “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.
(l) “Common
Stock” means (i) the Borrower’s common stock, $0.001 par value per share, and (ii) any capital stock into which
such common stock shall have been changed or any share capital resulting from a reclassification of such common stock.
(m) “Common
Stock Equivalents” means any capital stock or other security of the Borrower that is at any time and under any circumstances
directly or indirectly convertible into, exercisable or exchangeable for, and/or which otherwise entitles the holder thereof to
acquire, any capital stock or other security of the Borrower (including, without limitation, Common Stock).
(n) “Conversion
Date” has the meaning set forth in the Notes
(o) “Conversion
Shares” means all shares of Common Stock issuable upon conversion of any portion of the Notes and/or as any other payment
due under the Notes including, but not limited to interest and/or otherwise, but solely to the expert and subject to the Conditions
set forth in the Notes, including, but not limited to, shares of Common Stock, Common Stock Equivalents and shares of Common Stock
and/or other securities of the Borrower issuable upon exercise, exchange and/or conversion of such Common Stock Equivalents.
(p) “Documents”
means collectively, this Agreement, the Notes, the Warrants, the Registration Rights Agreement (in the form annexed hereto as Exhibit
C), the Transfer Agent Irrevocable Instruction Letter (in the form annexed hereto as Exhibit D), the Security Agreement
(in the form amended into as Exhibit E), the Intercreditor and Subordination Agreement (in the form annexed hereto as Exhibit
F) the Leak-Out Agreement (in the form annexed hereto as Exhibit G) the Lock-Up Agreement (in the form annexed hereto
as Exhibit H), a UCC-1 Financing Statement of the Lender and Dominion on all of the assets of the Borrower (the “Lenders
UCC-1”) to be filed with the Secretary of State of Nevada on or about the Closing Date, and all financing statements
(or comparable documents now or hereafter filed in accordance with the UCC or other comparable or similar laws, rules or regulations)
in favor of the Lender and Dominion as secured parties perfecting all Liens the Lender and Dominion have on the Collateral, (which
security interests and Liens of the Lender and Dominion shall be pari passu with each other and which shall be senior
to all Indebtedness of the Borrower, except for a $1,000,000 12% Senior Secured Note due July 6, 2016 sold by the Borrower (the
“July 2015 $1,000,000 Senior Note”), an amendment to the UCC-1 Financing Statement dated____, 2015 of Dominion
(the “Dominion UCC-1”), to add Delafield so that with respect thereto Dominion and Delafield are pari
passu as to the security interest in the collateral set forth in Dominion’s UCC-1 (the “Amended UCC-1”,
and together with the Lenders UCC-1, collectively, (the “Lenders UCC Filings”), which Lenders UCC Filings are
attached hereto as Exhibit I, the Perfection Certificate dated the date hereof from Borrower to the Lender (in the form
annexed hereto as Exhibit J), the Patent and Trademark Security Agreement (annexed hereto as Exhibit K) all of the
issued and outstanding capital stock of each Subsidiary of the Borrower (the “Pledged Securities”), which Pledged
Securities are being pledged, by the Borrower to the the Lender and Dominion or their Agent to secure the Borrower’s obligations
to the Lender and Dominion under the Notes and all documents necessary to transfer the Pledged Securities to the Lender and Dominion
as provided in the Security Agreement (collectively with the Pledged Securities, the “Pledge Documents”), which
Pledge Documents are annexed hereto as Exhibit N, the Letter Agreement dated September 30, 2015 by and among the Lender,
Dominion, and the Company relating to, among other items set forth therein, increasing the authorized shares of Common Stock to
150,000,000 (the “Letter Agreement”) and such other documents, instruments, certificates, supplements, amendments,
exhibits and schedules required and/or attached pursuant to this Agreement and/or any of the above documents, and/or any other
document and/or instrument related to the above agreements, documents and/or instruments, and the transactions hereunder and/or
thereunder and/or any other agreement, documents or instruments required or contemplated hereunder or thereunder, whether now existing
or at any time hereafter arising.
(q) “Dollar(s)”
and “$” means lawful money of the United States (which Pledged Securities and agreement documents are annexed
hereto as Exhibit L), the Patent and Trademark Security Agreement and annexed hereto as Exhibit K.
(r) “Dominion
Exchange Agreement” has the meaning set forth in the definition of the “Notes” in this Section 1.
(s) “Environmental
Laws” means any and all laws, rules, orders, regulations, statutes, ordinances, guidelines, codes, decrees, or other
legally enforceable requirements (including, without limitation, common law) of any international authority, foreign government,
the United States, or any state, local, municipal or other governmental authority, regulating, relating to or imposing liability
or standards of conduct concerning protection of the environment or of human health, or employee health and safety, as has been,
is now, or may at any time hereafter be, in effect.
(t) “Equity
Interests” means shares of capital stock, partnership interests, membership interests in a limited liability company,
beneficial interests in a trust or other equity ownership interests in a Person, and any warrants, options or other rights entitling
the holder thereof to purchase or acquire any such Equity Interest.
(u) “Event
of Default” shall have the meaning set forth in the Notes.
(v) “GAAP”
means generally accepted accounting principles in the United States of America as in effect from time to time.
(w) “Indebtedness”
means, with respect to any Person at any date, without duplication, (a) all indebtedness of such Person for borrowed money,
(b) all obligations of such Person for the deferred purchase price of property or services, (c) all obligations of such
Person evidenced by notes, bonds, debentures or other similar instruments, (d) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and
remedies of the seller or the Lender and Dominion under such agreement in the event of default are limited to repossession or sale
of such property), (e) all capital lease obligations of such Person, (f) all obligations of such Person, contingent or
otherwise, as an account party or applicant under acceptance, letter of credit, surety bond or similar facilities, (g) all
obligations of such Person, contingent or otherwise, to purchase, redeem, retire or otherwise acquire for value any capital stock
of such Person, (h) all obligations for any earn-out consideration, (i) the liquidation value of preferred capital stock of
such Person, (j) all guarantee obligations of such Person in respect of obligations of the kind referred to in clauses (a)
through (i) above, (k) all obligations of the kind referred to in clauses (a) through (i) above secured by (or for which
the holder of such obligation has an existing right, contingent or otherwise, to be secured by) any lien on property (including,
without limitation, accounts and contract rights) owned by such Person, whether or not such Person has assumed or become liable
for the payment of such obligation and all obligations of such Person in respect of hedge agreements; and (l) all Contingent Obligations
in respect to indebtedness or obligations of any Person of the kind referred to in clauses (a)-(k) above. The Indebtedness of any
Person shall include, without duplication, the Indebtedness of any other entity (including any partnership in which such Person
is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or
other relationship with such entity, except to the extent the terms of such Indebtedness expressly provide that such Person is
not liable therefor.
(x) “July
2015 $1,000,000 Note” has the meaning set forth in the definition of “Documents” in this Section 1.
(y) “Liens”
or “liens” means a lien, mortgage, charge pledge, security interest, encumbrance, right of first refusal, preemptive
right or other restriction, or other clouds on title.
(z) “Intercreditor
and Subordination Agreement” means the Intercreditor and Subordination Agreement dated the date hereof by and among the
Borrower, the Lender and Dominion and certain other persons named therein, the form of which is annexed hereto as Exhibit F.
(aa) “Leak-Out
Agreement” shall have the meaning set forth in the definitions of “Documents” in this Section 1, the form
of which is annexed hereto as Exhibit G.
(bb) “Lender
UCC Filings” shall have the meaning set forth in the definition of “Documents” set forth in this Section
1, copies of which all Lenders UCC Documents are annexed hereto as Exhibit I.
(cc) “Lock-Up
Agreement” has the meaning set forth in the definition of “Documents” set forth in this Section H.
(dd) “Liabilities”
means all direct or indirect liabilities, Indebtedness and obligations of any kind of Borrower to the Lender, howsoever created,
arising or evidenced, whether now existing or hereafter arising (including those acquired by assignment), absolute or contingent,
due or to become due, primary or secondary, joint or several, whether existing or arising through discount, overdraft, purchase,
direct loan, participation, operation of law, or otherwise, including, but not limited to, pursuant to the Notes, this Agreement
and/or any of the other Documents, all accrued but unpaid interest on the Notes the principal, any letter of credit, any standby
letter of credit, and/or outside attorneys’ and paralegals’ fees or charges relating to the preparation of the Documents
and the enforcement of Lender’s rights, remedies and powers under this Agreement, the Notes and/or the other Documents.
(ee) “Loan
Maturity Date” means the earlier of the date (i) three hundred sixty (360) days from the Closing Date, (ii) of the consummation
of a Major Transaction, (iii) of an Event of Default and/or the date any the principal under the Notes is accelerated and/or becomes
due and payable for any reason other than an Event of Default
(ff) “Major Transaction” means any of the following (i) the Borrower, directly or indirectly, in one or more related
transactions effects any merger or consolidation of the Borrower with or into another Person, (ii) the Borrower, directly or indirectly,
effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets
in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether
by the Borrower or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange
their shares for other securities, cash or property and has been accepted by the holders of 30% or more of the outstanding Common
Stock, (iv) the Borrower, directly or indirectly, in one or more related transactions effects any reclassification, reorganization
or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted
into or exchanged for other securities, cash or property, (v) the Borrower, directly or indirectly, in one or more related transactions
consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization,
recapitalization, spin-off or scheme or arrangement) with another Person whereby such other Person acquires more than 30% of the
outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or
party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other
business combination), (vi) the majority of directors of the Borrower as of the date hereof are no longer the majority number of
directors; and/or (vii) a Qualified Offering.
(gg) “Material Adverse Effect” means a material adverse effect on (a) the business, assets, property, operations,
or condition (financial or otherwise) of Borrower, (b) the validity or enforceability of this Agreement or any of the other
Documents or (c) the rights or remedies of the Lender hereunder or thereunder.
(hh) “Notes” means all of the 12% Senior Secured Convertible Promissory Notes due September 23, 2016 of the Borrower
owned by the Lender, which, subject to the terms and conditions set forth in this Agreement, shall purchase from the Borrower pursuant
to this Agreement, the form of Note is annexed hereto as Exhibit A. The term “Notes” also means
the Additional Notes issued to Dominion pursuant to an Exchange Agreement as of September 24, 2015 by and between Dominion and
the Borrower (the “Dominion Exchange Agreement”), and any and all Note(s) issued in exchange, transfer or replacement
of the Notes and/or the Additional Notes.
(ii) “Patent
of Trademark Security Agreement” means the Patent and Trademark Security Agreement date on or about the date hereof,
by and among, the the Lender and Dominion, the Borrowers and the Borrower’s Subsidiaries and all documents filed to perfect
the Lender’s security interest in the Patents and Trademark, both terms as defined in such agreement, which is annexed into
as Exhibit K.
(jj) “Pay-Off
Letter” means the Pay-Off Letter between the Company and Discover, in the form annexed hereto as Exhibit M.
(kk) “OFAC”
means the United States Department of the Treasury’s Office of Foreign Assets Control.
(ll) “OFAC
Regulations” means the regulations promulgated by OFAC, as amended from time to time.
(mm) “Permitted
Governmental Indebtedness” means Indebtedness provided by the Export and Import Bank of the United States of America
or other similar governmental entity for the purpose of supporting product sales by the Borrower.
(nn) “Permitted
Indebtedness” means (i) Indebtedness of the Borrower evidenced by the Notes, this Agreement and/or any other Document
in favor of the Lender including all Liabilities, (ii) Indebtedness of the Borrower set forth in Borrower’s most recent SEC
Report, provided none of such Indebtedness, has not been increased, extended and/or otherwise changed since the original issuance
date of Indebtedness), (iii) Indebtedness secured by Permitted Liens described in clauses “(iv)” of the definition
of Permitted Liens, and (iv) Permitted Governmental Indebtedness.
(oo) “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 Borrower to secure the purchase price of such equipment or indebtedness
incurred solely for the purpose of financing the acquisition or lease of such equipment, and (b) existing on such equipment at
the time of its acquisition, provided that the Lien is confined solely to the property so acquired and improvements thereon, and
the proceeds of such equipment, (v) any Liens for Permitted Indebtedness perfecting security interests in the Permitted Indebtedness
set forth in Section (i) of (ii) of definition of Permitted Indebtedness and (vi) the UCC Financing Statement dated July__, 2015
filed with the Secretary of State of Nevada perfecting the $1,000,000 of Indebtedness represented by the July 2015 $1,000,000 Note
provided such Lien was in existence since on or about the original date such July 2015 $1,000,000 Note was purchased from
the Borrower and since such date such Liens and security interests related hereto has not been amended, supplemented and/or otherwise
modified.
(pp) “Person” means any individual, sole proprietorship, partnership, joint venture, trust, unincorporated organization,
association, corporation, institution, entity, party or government (whether national, federal, state, county, city, municipal or
otherwise including, without limitation, any instrumentality, division, agency, body or department thereof).
(qq) “Pledged
Securities” has the meaning set forth in the definition of “Documents”
(rr) “Principal
Market” means the market or exchange on which the Common Stock is listed or quoted for trading on the date in question
(ss) “Purchase Price” means the price to be paid by Lender to purchase such Lender’s Note.
(tt) The
“Required Reserve Amount” has the meaning set forth in Section 4.1(s).
(uu) “Qualified
Offering” means (i) a firm commitment public offering of shares of the Common Stock (and any other securities of the
Company that may be sold along with shares of Common Stock in any such firm commitment public offering), (ii) the gross proceeds
resulting from such firm commitment public offering are equal to or exceed, in the aggregate, $9,000,000, and (iii) (x) the shares
of Common Stock, including, but not limited to, the Underlying Shares, are approved for listing and/or quotation on one of the
exchanges or markets set forth below, and (y) on the next Trading Day following the date the Commission declares the registration
statement registering under the Securities Act the sale of the shares of Common Stock (and any other securities being issued or
sold in such Qualified Offering, if any), being sold to investors in such firm commitment public offering effective (the “Qualified
Offering Conversion Date”), the shares of Common Stock and commence trading on the New York Stock Exchange, NYSE MKT,
the Nasdaq Global market, the Nasdaq Global Select Members or the Nasdaq Capital Market.
(vv) “RD
SPA” has the meaning set forth in the definition of Simultaneous Transactions in this Section 1.
(ww) “Registration
Rights Agreement” means that certain registration rights agreement, date the date hereof, by and between the Borrower
and the Lender pursuant to which the Borrower shall register the Underlying Shares for resale under the Securities Act, the form
of which is annexed hereto as Exhibit C.
(xx) “SEC” or “Commission” means the United States Securities and Exchange Commission.
(yy) “SEC
Reports” has the meaning set forth in Section 3.1(aa) hereof.
(zz) “Securities”
means the Notes and the Warrants purchased pursuant to this Agreement and all Underlying Shares and any securities of the Borrower
issued in replacement, substitution and/or in connection with any exchange, conversion and/or any other transaction pursuant to
which all or any of such securities of the Borrower to the Lender.
(aaa) “Security
Agreement” means the Security Agreement dated on or about the date hereof by and among the Borrower, the Subsidiaries
of the Borrower, and the Lender and Dominion as hereinafter amended and/or supplemented altogether with all exhibits, schedules
and annexes to such Security Agreement, pursuant to which all Liabilities and Indebtedness of the Borrower to the Lender under
the Documents including, but not limited to, the Notes and Additional Notes are secured by the Collateral which security interest
in the Collateral shall be perfected by the Lenders UCC-1, filed with the Secretary of State of the State of Nevada, to the extent
perfectable by the filing of a UCC 1 Financing Statement and such other documents and instruments related thereto, which Security
Agreement is annexed hereto as Exhibit E.
(bbb) “Simultaneous
Transactions” means each of the following:
(i) Pursuant
to a Securities Purchase Agreement dated as of September 30, 2015 by and between Delafield and the Borrower (the “RD SPA”),
among other items, Delafield shall have purchased from the Borrower in a registered direct offering by the Borrower (i) $3,055,556
Stated Value of the Borrower’s shares of Series H 12% Convertible Preferred Stock (the “H Shares”) with
each H Share having a stated value (the “Stated Value”) of $1,000 and having such other terms and conditions
set forth in the Certificate of Designation for the H Shares (the “H Certificate”), and (ii) common stock purchase
warrants to purchase shares of Common Stock of the Borrower (the “RD Warrants”);
(ii) Pursuant
to the Dominion Exchange, Dominion exchanged securities of the Borrower previously purchased by Dominion from the Borrower solely
for Additional Notes;
(iii) Pursuant
to a Repurchase Agreement dated as September 23, 2015, by and between the Borrower and Discover Growth Fund, a Cayman Island company
(“Discover”), the Borrower has repurchased, or has funds and executed documents in escrow, to purchase, shares of Series
G Preferred Stock of the Company (the “G Shares”), and shares of Common Stock owned by Discover (collectively,
the “Discover Securities”), which such Discover Securities represents all of the Securities of the Company owned
by Discover and the Discover Releasing Parties (as defined in the Repurchase Agreement), for $4,750,000, and all shares of Common
Stock reserved for issuance upon conversion of the G Shares become authorized but unissued shares of Common Stock, and the Borrower
entered into such other documents and agreements with Discover so requested by the Lender and Dominion, all of which such documents
shall be in form and substance satisfactory to the Lender in its sole discretion.
(ccc) “Solvent”
means, with respect to any Person, as of any date of determination, (i) the amount of the “present fair saleable value”
of the assets of such Person will, as of such date, exceed the amount of all “liabilities of such Person, contingent or otherwise”,
as of such date, as such quoted terms are determined in accordance with applicable federal and state laws governing determinations
of the insolvency of debtors, (ii) the present fair saleable value of the assets of such Person will, as of such date, be
greater than the amount that will be required to pay the liability of such Person on its debts as such debts become absolute and
matured, (iii) such Person will not have, as of such date, an unreasonably small amount of capital with which to conduct its
business, and (iv) such Person will be able to pay its debts as they mature. For purposes of this definition, (i) “debt”
means liability on a “claim”, and (ii) “claim” means any (a) right to payment, whether or not such
a right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable,
secured or unsecured or (b) right to an equitable remedy for breach of performance if such breach gives rise to a right to
payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured or unmatured, disputed,
undisputed, secured or unsecured.
(ddd) “Subsidiary”
means, with respect to any Person, a corporation, partnership, limited liability company or other entity of which shares of stock
or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power
only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation,
partnership or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through
one or more intermediaries, or both, by such Person all of the Borrower’s Subsidiaries are set forth on Schedule 3.1(a) hereto.
(eee) “Trading
Day” means any day on which the Common Stock is traded on the Trading Market, provided that “Trading Day”
shall not include any day on which the Common Stock is scheduled to trade on the Trading Market for less than 4.5 hours or any
day that the Common Stock is suspended from trading during the final hour of trading on the Trading Market (or if the Trading Market
does not designate in advance the closing time of trading on the Trading Market, then during the hour ending at 4:00:00 p.m., New
York City time) unless such day is otherwise designated as a Trading Day in writing by the Lender.
(fff) “Trading
Market” means any of the following markets or exchanges on which the Common Stock (or any other common stock of any other
Person that references the Trading Market for its common stock) is listed or quoted for trading on the date in question: the OTC
Bulletin Board, The NASDAQ Global Market, The NASDAQ Global Select Market, The NASDAQ Capital Market, the New York Stock Exchange,
NYSE Arca, the NYSE MKT, or the OTCQX Marketplace, the OTCQB Marketplace, the OTCPink Marketplace or any other tier operated by
OTC Markets Group Inc. (or any successor to any of the foregoing).
(ggg) “Transfer
Agent” means VStock Transfer, LLC, the current transfer agent of the Company, with a mailing address of 18 Lafayette
Place, Woodmere, New York 11598 and a facsimile number of (646) 536-3179, and any successor transfer agent of the Borrower.
(hhh) “Transfer
Agent Irrevocable Instruction Letter” means the letter from the Company to the Transfer Agent which instructs the Transfer
Agent to issue shares of Common Stock upon conversion of the Note, in the form of Exhibit D attached hereto.
(iii) “UCC” means the Uniform Commercial Code of as in effect from time to time in the State of New York; provided,
however, that in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection, priority,
or remedies with respect to the Lender’s Liens on any Collateral is governed by the Uniform Commercial Code as enacted and
in effect in a jurisdiction other than the State of New York, the term “UCC” shall mean the Uniform Commercial
code as enacted and in effect in such other jurisdiction solely for purposes of the provisions thereof relating to such attachment,
perfection, priority, or remedies.
(jjj) “Underlying
Shares” means all Warrant Shares and Conversion Shares.
(kkk) “Variable Rate Transaction” shall have the meaning set forth in Section 4.02(n) of this Agreement.
(lll) “Warrant(s)”
means the five (5) year Common Stock Purchase Warrants of the Borrower, the form of which is annexed hereto as Exhibit B.
(mmm) “Warrant
Shares” means all shares of Common Stock issuable upon exercise of the Warrants and/or any other securities issuable
upon exercise of the Warrants.
1.2 Other Definitional Provisions.
(a) Use of Defined Terms.
Unless otherwise specified therein, all terms defined in this Agreement shall have the defined meanings when used in the other
Documents or any certificate or other document made or delivered pursuant hereto or thereto.
(b) Accounting Terms.
As used herein and in the other Documents, and any certificate or other document made or delivered pursuant hereto or thereto,
accounting terms relating to Borrower not defined in 1.1 and accounting terms partly defined in 1.1, to the extent
not defined, shall have the respective meanings given to them under GAAP (provided that all terms of an accounting or financial
nature used herein shall be construed, and all computations of amounts referred to herein shall be made without giving effect to
(i) any election under Accounting Standards Codification 825-10-25 (previously referred to as Statement of Financial Accounting
Standards 159) (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or effect)
to value any Indebtedness or other liabilities of Borrower at “fair value”, as defined therein, and (ii) any treatment
of Indebtedness in respect of convertible debt instruments under Accounting Standards Codification 470-20 (or any other Accounting
Standards Codification or Financial Accounting Standard having a similar result or effect) to value any such Indebtedness in a
reduced or bifurcated manner as described therein, and such Indebtedness shall at all times be valued at the full stated principal
amount thereof).
(c) Construction. The
words “hereof”, “herein” and “hereunder” and words of similar import when
used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section,
Schedule and Exhibit references are to this Agreement unless otherwise specified. The meanings given to terms defined herein shall
be equally applicable to both the singular and plural forms of such terms.
(d) UCC Terms. Terms
used in this Agreement which are defined in the UCC shall, unless the context indicates otherwise or are otherwise defined in this
Agreement, have the meanings provided for by the UCC.
ARTICLE 2
LOAN AND PURCHASE OF NOTES
AND WARRANTS
2.1 Closing. The Closing shall
occur at 10:00 am (EST) on the Closing Date at the offices of Gusrae Kaplan Nusbaum PLLC,
120 Wall Street, 25th Floor, New York, New York 10005, on the first (1st) Trading Day on which the
conditions to Closing set forth in Section 5 hereof are satisfied or waived in writing as provided elsewhere herein, or
on such other date and time as agreed to by the Borrower and Lender.
2.2 Conditions to Purchase of Notes
and Warrants. Subject to the terms and conditions of this Agreement, the Lender will at the Closing, on the Closing Date, purchase
from the Borrower the Notes and Warrants in the amounts and for the Purchase Price as set forth on Schedule 1,
provided that (i) no Event of Default (or event that with the passage of time or the giving of notice, or both, would become
an Event of Default), shall have occurred or would result therefrom; and (ii) the conditions in Section 5.01 have been satisfied.
2.3 Purchase Price and Payment of
the Purchase Price for the Notes and Warrants. The Purchase Price for the Notes and Warrants to be purchased by the Lender
shall be as set forth on Schedule 1 and shall be paid at the Closing, (less all of the Lender’s Expenses (as defined
below)), by the Lender by wire transfer of immediately available funds to the Borrower in accordance with the Borrower’s
written wiring instructions, against delivery of the Notes and Warrants. The Purchase Price for each Note purchased shall be ten
(10%) less than the aggregate principal amount of each such Note purchased, which 10% discount shall constitute original issue
discount.
2.4 Lender’s Cost and Expenses.
On the Closing Date, all direct and indirect costs and expenses of the Lender related to the negotiation, due diligence, preparation,
closing, and all other items regarding or related to this Agreement and the other Documents and all of the transactions contemplated
herein and/or therein including, but not limited to, the Simultaneous Transactions, including, but not limited to the legal fees
and expenses of the Lender’s legal counsel (collectively, the “Lender’s Expenses”), shall be due
and payable from the Borrower to the Lender; and the Lender shall subtract from their respective Purchase Price to be paid to the
Borrower for the purchase of the Notes and Warrants, all of such Lender’s Expenses. Although the Lender’s Expenses
are the sole responsibility and obligation of the Borrower, but are being subtracted by the Lender from their respective Purchase
Prices actually paid to the Borrower, such Lender’s Expenses shall constitute part of such Purchase Prices and shall not
directly and/or indirectly reduce and or result in any set-off the aggregate principal amount of the Note or result in a set-off
and/or reduction of any other funds owed by the Borrower to the Lender.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES;
OTHER ITEMS
3.1 Representation and Warranties.
Borrower (which for purposes of this Section 3 means the Borrower and all of its Subsidiaries), represents and warrants to the
Lender that on the Closing Date:
(a) Subsidiaries. All
of the direct and indirect subsidiaries of the Borrower are set forth on Schedule 3.1(a). The Borrower owns, directly or
indirectly, all of the capital stock or other equity interests of each Subsidiary free and clear of any Liens, and all of the issued
and outstanding shares of capital stock of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive
and similar rights to subscribe for or purchase securities.
(b) Organization, Etc.
Borrower is duly organized, validly existing and in good standing under the laws of the state of their respective organization
and are duly qualified and in good standing or has applied for qualification as a foreign corporation authorized to do business
in each jurisdiction where, because of the nature of its activities or properties, such qualification is required except where
the failure to be so qualified would not reasonably be expected to have a Material Adverse Effect.
(c) Authorization: No Conflict.
The execution, delivery and performance of the Documents and the transactions contemplated thereby by the Borrower, including,
but not limited to, the sale and issuance of the Note and the Warrant for the Purchase Price, the reservation for issuance of the
shares of Common Stock required to be reserved pursuant to the terms of the Notes, and Warrants and of the sale and issuance the
Conversion Shares into which the Notes are convertible into and the Warrant Shares issuable upon exercise of the Warrant (i) are
within Borrower’s corporate powers, (ii) have been duly authorized by all necessary action by or on behalf of Borrower (and/or
its shareholders to the extent required by law), (iii) the Borrower has received all necessary and/or required governmental,
regulatory and other approvals and consents (if any shall be required), (iv) do not and shall not contravene or conflict with any
provision of, or require any consents under (1) any law, rule, regulation or ordinance, (2) Borrower’s organizational documents;
and/or (3) any agreement binding upon Borrower or any of Borrower’s properties except as would not reasonably be expected
to have a Material Adverse Effect, and (v) do not result in, or require, the creation or imposition of any Lien and/or encumbrance
on any of Borrower’s properties or revenues pursuant to any law, rule, regulation or ordinance or otherwise.
(d) Validity and Binding
Nature. The Documents to which Borrower is a party are the legal, valid and binding obligations of Borrower, enforceable against
Borrower in accordance with their respective terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization
and other similar laws of general application affecting the rights and remedies of creditors and by general equitable principles
(whether enforcement is sought by proceedings in equity or at law).
(e) Title to Assets.
Borrower has good and marketable title to all assets owned by Borrower.
(f) No Violations of Laws.
Borrower is not in violation of any law, ordinance, rule, regulation, judgment, decree or order of any federal, state or local
governmental body or court and/or regulatory or self-regulatory body.
(g) Burdensome Obligations.
Borrower is not a party to any indenture, agreement, lease, contract, deed or other instrument, or subject to any partnership restrictions
or has any knowledge of anything which could have a Material Adverse Effect.
(h) Taxes. All federal,
and material state and local tax returns required to be filed by Borrower have been filed with the appropriate governmental agencies
and all taxes due and payable by Borrower have been timely paid.
(i) Employee Benefit Plans.
The term “Plan” means an “employee pension benefit plan” (as defined in Section 3 of Employee Retirement
Income Security Act of 1974, as amended from time to time (“ERISA”)) which is or has been established or maintained,
or to which contributions are or have been made, by Borrower or by any member of the Controlled Group. Each plan and/or employee
benefit plan, if any, (as defined in Section 3(3) of ERISA) maintained by Borrower complies in all material respects with all applicable
requirements of law and regulations and all payments and contributions required to be made with respect to such plans have been
timely made.
(j) Federal Laws and Regulations.
Borrower is not (i) an “investment Borrower” or a Borrower “controlled”, whether directly or indirectly,
by an “investment company”, within the meaning of the Investment Company Act of 1940, as amended; or (ii) engaged principally,
or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying margin stock
(within the meaning of Regulation U of the Board of Governors of the Federal Reserve System).
(k) Fiscal Year. The
fiscal year of Borrower ends on December 31 of each year.
(l) Subsidiaries; Etc.
All Subsidiaries of the Borrower and the locations thereof on the Closing Date are set forth in the SEC Reports. The SEC Reports
set forth as of the Closing Date, Borrower’s jurisdiction of organization and the location of Borrower’s executive
offices and other places of business.
(m)
Officers and Ownership. As of the date hereof, the Persons set forth in the SEC Reports holds the
respective office or offices, position or positions (including director positions if a director), in Borrower and (ii) own
the percentage of each and every class of issued and outstanding capital stock, other ownership interests and/or securities
of Borrower and the voting power over said capital stock, other ownership interests and/or securities of Borrower.
(n) Rule 506(d) Bad Actor
Disqualification Representations and Covenants.
(i) No Disqualification Events.
Neither the Borrower, nor any of its predecessors, affiliates, any manager, executive officer, other officer of the Borrower participating
in the offering, any beneficial owner (as that term is defined in Rule 13d-3 under the Exchange Act) of 20% or more of the Borrower’s
outstanding voting equity securities, calculated on the basis of voting power, nor any promoter (as that term is defined in Rule
405 under the Securities Act) connected with the Borrower in any capacity as of the date of this Agreement and on the Closing Date
(each, a “Borrower Covered Person” and, together, “Borrower Covered Persons”) is subject
to any of the “Bad Actor” disqualifications described in Rule 506(d)(1)(i) to (viii) under the Securities Act (a “Disqualification
Event”), except for a Disqualification Event covered by Rule 506(d)(2) or (d)(3). The Borrower has exercised reasonable
care to determine (i) the identity of each person that is a Borrower Covered Person; and (ii) whether any Borrower Covered Person
is subject to a Disqualification Event. The Borrower will comply with its disclosure obligations under Rule 506(e).
(ii) Other Covered Persons.
The Borrower is not aware of any person (other than any Borrower Covered Person) that has been or will be paid (directly or indirectly)
remuneration in connection with the Loan and the Note and/or the Warrants that is subject to a Disqualification Event (each an
“Other Covered Person”).
(iii) Reasonable Notification
Procedures. With respect to each Borrower Covered Person, the Borrower has established procedures reasonably designed to ensure
that the Borrower receives notice from each such Borrower Covered Person of (i) any Disqualification Event relating to that Borrower
Covered Person, and (ii) any event that would, with the passage of time, become a Disqualification Event relating to that Borrower
Covered Person; in each case occurring up to and including the Closing Date.
(iv) Notice of Disqualification
Events. The Borrower will notify the Lender immediately in writing upon becoming aware of (i) any Disqualification Event relating
to any Borrower Covered Person and (ii) any event that would, with the passage of time, become a Disqualification Event relating
to any Borrower Covered Person and/or Other Covered Person.
(o) Accuracy of Information,
etc. No statement or information contained in this Agreement, the SEC Reports, any other Document or any other document, certificate
or statement furnished to the Lender by or on behalf of Borrower in writing for use in connection with the transactions contemplated
by this Agreement and/or the other Documents, contained as of the date such statement, information, document or certificate was
made or furnished, as the case may be, any untrue statement of a material fact or omitted to state a material fact necessary to
make the statements contained herein or therein, taken as a whole, not materially misleading. There is no fact known to Borrower
that could have a Material Adverse Effect that has not been expressly disclosed herein, in the other Documents, or in any other
documents, certificates and statements furnished to the Lender for use in connection with the transactions contemplated hereby
and by the other Documents.
(p) Solvency. Borrower
is as of the date hereof Solvent; and shall be Solvent immediately prior to, and immediately following the Closing, after giving
effect to the incurrence of all Indebtedness and all other obligations being incurred by the Borrower pursuant hereto and the other
Documents including, but not limited to, all Liabilities and pursuant to the other Documents and the use of the Purchase Prices
as provided elsewhere herein.
(q) Affiliate Transactions.
Other than as disclosed in the SEC Reports, Borrower has not purchased, acquired or leased any property from, or sold, transferred
or leased any property to, or entered into any other transaction with (i) any Affiliate, (ii) any officer, director, manager, shareholder
or member of Borrower or any Affiliate of any thereof, or (iii) any member of the immediate family of any of the foregoing, except
on terms comparable to the terms which would prevail in an arms-length transaction between unaffiliated third parties and have
been disclosed to the Lender in writing.
(r) Intellectual Property.
The Borrower has, or has rights to use, all patents, patent applications, trademarks, trademark applications, service marks, trade
names, trade secrets, inventions, copyrights, licenses and other intellectual property rights and similar rights as described in
the SEC Reports as necessary or required for use in connection with its business and which the failure to so have could have a
Material Adverse Effect (collectively, the “Intellectual Property Rights”). None of, and the Borrower has not
received a notice (written or otherwise) that any of, the Intellectual Property Rights has expired, terminated or been abandoned,
or is expected to expire or terminate or be abandoned. The Borrower has not received, since the date of the latest audited financial
statements included within the SEC Reports, a written notice of a claim or otherwise has any knowledge that the Intellectual Property
Rights violate or infringe upon the rights of any Person, except as could not have or reasonably be expected to not have a Material
Adverse Effect. To the knowledge of the Borrower, all such Intellectual Property Rights are enforceable and there is no existing
infringement by another Person of any of the Intellectual Property Rights. The Borrower has taken reasonable security measures
to protect the secrecy, confidentiality and value of all of their intellectual properties, except where failure to do so could
not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. All Intellectual Property Rights
of the Borrower are set forth in the SEC Reports.
(s) Variable Rate Securities.
The Borrower has not directly and/or indirectly entered into, nor has any agreement, intention and/or obligation to enter into
any Variable Rate Transaction.
(t) USA Patriot Act.
Borrower is in compliance, in all material respects, with (a) the Trading with the Enemy Act, as amended, and each of the foreign
assets control regulations of the United States Treasury Department (31 C.F.R., Subtitle B, Chapter V, as amended) and any other
enabling legislation or executive order relating thereto, and (b) the USA Patriot Act (Title III of Pub. L. 107-56, signed into
law October 26, 2001) (the “Act”). No part of the proceeds of the Loan will be used, directly or indirectly,
for any payments to any governmental official or employee, political party, official of a political party, candidate for political
office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage,
in violation of the United States Foreign Corrupt Practices Act of 1977, as amended.
(u) Foreign Asset Control
Laws. Borrower is not a Person named on a list published by OFAC or a Person with whom dealings are prohibited under any OFAC
Regulations.
(v) Indebtedness; Liens,
Etc. Except for Permitted Indebtedness and Permitted Liens, the Borrower has no Indebtedness nor any Liens.
(w) Authorization; Enforcement.
All corporate action on the part of the Borrower, its officers, directors and stockholders necessary for the authorization, execution
and delivery of the Documents and the performance of all obligations of the Borrower under the Documents, and have been taken on
or prior to the date hereof. Each of the Documents has been duly executed by the Borrower and, when delivered in accordance with
the terms hereof and thereof, will constitute the valid and binding obligation of the Borrower enforceable against the Borrower
in accordance with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by
laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification
and contribution provisions may be limited by applicable law.
(x) Valid Issuance of the
Notes, Warrants and Underlying Shares, Etc. Each of the Notes and Warrants has been duly authorized and, when issued and paid
for in accordance with this Agreement, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens
and all restrictions on transfer other than those expressly imposed by the federal securities laws and vest in the Lender full
and sole title and power to the Notes and the Warrants purchased hereby by the Lender, free and clear of all Liens, and restrictions
on transfer other than those imposed by the federal securities laws. All Conversion Shares when issued pursuant to conversion of
the Note; and all Warrant Shares when issued pursuant to any exercise of the Warrants, will be duly and validly issued, fully paid
and nonassessable, will be free and clear of all Liens and all restrictions on transfer other than those expressly imposed by the
federal securities laws and vest in the holder full and sole title and power to such securities. The Borrower has reserved from
its duly authorized unissued Common Stock, the Required Reserve Amount, which Required Reserve Amount shall be continuously determined
by the Borrower to ensure that the Required Reserve Amount is in reserve with the Transfer Agent at all times. The Warrants, the
Notes, Warrant Shares and all Conversion Shares shall sometimes be collectively referred to as the “Securities.”
(y) Offering. The offer
and sale of the Notes and Warrants as contemplated by this Agreement, the Notes and the Warrants, are exempt from the registration
requirements of the Securities Act, and the qualification or registration requirements of state securities laws or other applicable
blue sky laws. Neither the Borrower nor any authorized agent acting on its behalf will take any action hereafter that would cause
the loss of such exemptions.
(z) Capitalization and Voting
Rights. The authorized capital stock of the Borrower and all securities of the Borrower issued and outstanding are set forth
in the SEC Reports as of the dates reflected therein. All of the outstanding shares of Common Stock and other securities of the
Borrower have been duly authorized and validly issued, and are fully paid and nonassessable. Except as set forth in the SEC Reports,
there are no agreements or arrangements under which the Borrower is obligated to register the sale of any of the Borrower’s
securities under the Securities Act. Except as set forth in the SEC Reports, no shares of Common Stock and/or other securities
of the Borrower are entitled to preemptive rights and there are no outstanding debt securities and no contracts, commitments, understandings,
or arrangements by which the Borrower is or may become bound to issue additional shares of the capital stock and/or other securities
of the Borrower or options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating
to, or securities or rights convertible into or exchangeable for, any shares of capital stock of the Borrower other than those
issued or granted in the ordinary course of business pursuant to the Borrower’s equity incentive and/or compensatory plans
or arrangements. Except for customary transfer restrictions contained in agreements entered into by the Borrower to sell restricted
securities and/or as set forth in the SEC Reports, the Borrower is not a party to, and it has no knowledge of, any agreement restricting
the voting or transfer of any shares of the capital stock and/or other securities of the Borrower. Except as set forth in the SEC
Reports, the offer and sale of all capital stock, convertible or exchangeable securities, rights, warrants, options and/or any
other securities of the Borrower when any such securities of the Borrower were issued complied with all applicable federal and
state securities laws, and no current and/or prior holder of any securities of the Borrower has any right of rescission or damages
or any “put” or similar right with respect thereto that would have a Material Adverse Effect. Except as set forth in
the SEC Reports, there are no securities or instruments of the Borrower containing anti-dilution or similar provisions that will
be triggered by the issuance and/or sale of the Securities and/or the consummation of the transactions described herein or in any
of the other Documents.
(aa) SEC
Reports. The Borrower is subject to the reporting requirements of Section 13 or 15(d) of the
Exchange Act and the Borrower is current in its filing obligations under the Exchange Act, including, without limitation, as to
its filings of Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K (collectively, the
“SEC Reports”). The SEC Reports, at the time filed with the SEC, did not contain any untrue statement of a
material fact or omit to state any fact necessary to make any statement therein not misleading. All financial statements included
in the SEC Reports (the “Financial Statements”) have been prepared in accordance GAAP applied on a consistent
basis throughout the periods indicated and with each other, except that unaudited Financial Statements may not contain all footnotes
required by generally accepted accounting principles. The Financial Statements fairly present, in all material respects, the financial
condition and operating results of the Borrower as of the dates, and for the periods, indicated therein, subject in the case of
unaudited Financial Statements to normal year-end audit adjustments.
(cc) Sarbanes-Oxley
Act. The Borrower is in compliance with any and all applicable requirements of the Sarbanes-Oxley
Act of 2002 that are effective as of the date hereof, and any and all applicable rules and regulations promulgated by the SEC
thereunder that are effective as of the date hereof.
(ee) Arbitration,
Absence of Litigation. Except as disclosed in the SEC Reports, there is no action, suit, proceeding,
inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending
or, to the knowledge of the Borrower, threatened against or affecting the Borrower, the Common Stock or any of the Borrower’s
officers or directors or 5% or greater shareholders in their capacities as such.
(gg) Material Changes; Undisclosed
Events, Liabilities or Developments. Except as provided in Schedule 3.1(gg), since the date of the latest audited Financial
Statements included in the SEC Reports, except as specifically disclosed in a subsequent Public Report filed with the SEC prior
to the date hereof: (i) there has been no event, occurrence or development that has had or that could reasonably be expected to
result in a Material Adverse Effect, (ii) the Borrower has not incurred any liabilities (contingent or otherwise) other than (A)
trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities
not required to be reflected in the Borrower’s Financial Statements pursuant to GAAP or disclosed in Public Reports pursuant
to SEC rules and/or regulations, (iii) the Borrower has not altered its method of accounting, (iv) the Borrower has not declared
or made any dividend or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements
to purchase or redeem any shares of its capital stock and (v) the Borrower has not issued any equity securities to any officer,
director or affiliate, except pursuant to existing Borrower stock option plans. The Borrower does not have pending before the Commission
any request for confidential treatment of information. Except for the issuance of the Securities contemplated by this Agreement,
no event, liability, fact, circumstance, occurrence or development has occurred or exists or is reasonably expected to occur or
exist with respect to the Borrower or its business, properties, operations, assets or financial condition, that would be required
to be disclosed by the Borrower under applicable securities laws at the time this representation is made or deemed made that has
not been publicly disclosed at least one Trading Day prior to the date that this representation is made.
(hh) Disclosure. Except
with respect to the material terms and conditions of the transactions contemplated by the Documents, the Borrower confirms that
neither it nor any other Person acting on its behalf has provided the Lender or its agents or counsel with any information that
constitutes material, non-public information. The Borrower understands and confirms that the Lender will rely on the Documents,
the information included therein including, but not limited to, the foregoing representation and the SEC Reports in purchasing
the Notes and Warrants. All of the disclosure furnished by or on behalf of the Borrower to the Lender in the Documents and/or in
the SEC Reports regarding, among other matters relating to the Borrower, its business and the transactions contemplated in the
Documents, are true and correct in all material respects as of the date made and do not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under
which they were made, not misleading. The Borrower acknowledges and agrees that the Lender does not make nor has it made any representations
or warranties with respect to the transactions contemplated in the Documents other than those specifically set forth in Section
7 hereof.
(ii) No Integrated Offering.
Assuming the accuracy of the representations and warranties set forth in Section 7, neither the Borrower, nor any of its
affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security
or solicited any offers to buy any security, under circumstances that would cause the issuance and/or sale of the Securities to
be integrated with prior offerings of securities by the Borrower for purposes of (i) the Securities Act which would require the
registration of any such Securities and/or securities of the Borrower under the Securities Act, or (ii) any shareholder approval
provisions of any Trading Market on which any of the securities of the Borrower are listed, eligible for quotation and/or designated.
(jj) Bankruptcy Status;
Indebtedness. The Borrower has no current intention or expectation to file for reorganization or liquidation under the bankruptcy
or reorganization laws of any jurisdiction within one year from the applicable representation date. All outstanding secured and
unsecured Indebtedness (as defined below) of the Borrower, or for which the Borrower has commitments, is set forth in the SEC Reports.
(kk) Regulation M Compliance.
The Borrower has not, and to its knowledge no one acting on its behalf has, (i) taken, directly or indirectly, any action designed
to cause or to result in the stabilization or manipulation of the price of any security of the Borrower to facilitate the sale
or resale of any of the Securities, (ii) sold, bid for, purchased, or paid any compensation for soliciting purchases of, any of
the Securities, or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other securities
of the Borrower.
(ll) No Consents, Etc.
No direct or indirect consent, approval, authorization or similar item is required to be obtained by the Borrower to enter into
this Agreement, the Note, the Warrant and/or the other Documents to which it is a party and to perform or undertake any of the
transactions contemplated pursuant to this Agreement, the Note, the Warrant and/or any of the other Documents to which it is a
party.
(mm) Listing of Securities.
All Underlying Shares and Warrant Shares have been approved for listing or quotation on the Trading Market, subject only to notice
of issuance.
(nn) Dilutive Effect.
The Borrower understands and acknowledges that the number of Conversion Shares issuable pursuant to terms of the Notes and the
number of Warrant Shares issuable upon exercise of the Warrants will increase in certain circumstances. The Borrower further acknowledges
that its obligation to issue Conversion Shares pursuant to the terms of the Notes in accordance with this Agreement and the Notes
and its obligation to issue the Warrant Shares upon exercise of the Warrants in accordance with this Agreement 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 Borrower.
(oo) Application of Takeover
Protections; Rights Agreement. The Borrower and its board of directors have taken all necessary action, if any, in order
to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights
agreement) or other similar anti-takeover provision under the Borrower’s Certificate of Incorporation or the laws of the
jurisdiction of its formation which is or could become applicable to the Lender as a result of the transactions contemplated by
this Agreement and/or the other Documents, including, without limitation, the Borrower’s issuance of the Securities and Lender’s
ownership of the Securities. The Borrower has not adopted a stockholder rights plan or similar arrangement relating to accumulations
of beneficial ownership of Common Stock or a change in control of the Borrower.
(pp) Manipulation of Price.
The Borrower has not, and to its knowledge no one acting on its behalf has, (i) taken, directly or indirectly, any action designed
to cause or to result, or that could reasonably be expected to cause or result, in the stabilization or manipulation of the price
of any security of the Borrower to facilitate the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or paid
any compensation for soliciting purchases of, any of the Securities, or (iii) paid or agreed to pay to any person any compensation
for soliciting another to purchase any other securities of the Borrower.
(qq) DTC Eligible. The
Common Stock is DTC eligible and DTC has not placed a “freeze” or a “chill” on the Common Stock and the
Borrower has no reason to believe that DTC has any intention to make the Common Stock not DTC eligible, or place a “freeze”
or “chill” on the Common Stock.
(rr) No Delisting from Trading
Market. The Common Stock is eligible for quotation on the Principal Market and the Borrower has no reason to believe that the
Principal Market has any intention of delisting the Common Stock from the Principal Market.
(ss) No General Solicitation.
Neither the Borrower, nor any of its affiliates, nor any Person acting on its 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 Borrower
has not engaged any placement agent or other agent in connection with the sale of the Securities.
(tt) Acknowledgment Regarding
Lender’s Purchase of Notes and Warrants. The Borrower acknowledges and agrees that the Lender is acting solely
in the capacity of an arm’s length purchaser with respect to the other Documents and the transactions contemplated hereby
and thereby and that the Lender is not (i) an officer or director of the Borrower, (ii) an Affiliate of the Borrower
or (iii) to the knowledge of the Borrower, a “beneficial owner” of more than 10% of the shares of Common Stock
(as defined for purposes of Rule 13d-3 of the Exchange Act. The Borrower further acknowledges that the Lender is not
acting as a financial advisor or fiduciary of the Borrower (or in any similar capacity) with respect to the Documents and the transactions
contemplated hereby and thereby, and any advice given by the Lender or any of its representatives or agents in connection with
the Documents and the transactions contemplated hereby and thereby is merely incidental to the Lender’s purchase of the Securities.
The Borrower further represents to the Lender that the Borrower’s decision to enter into the Documents has been based solely
on the independent evaluation by the Borrower and its representatives.
(uu) Off Balance Sheet Arrangements.
There is no transaction, arrangement, or other relationship between the Borrower and an unconsolidated or other off balance sheet
entity that is required to be disclosed by the Borrower in its Exchange Act filings and is not so disclosed or that otherwise would
be reasonably likely to have a Material Adverse Effect.
(vv) Subsidiary Rights.
The Borrower 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 Borrower or any Subsidiary.
(ww) Internal Accounting
and Disclosure Controls. The Borrower maintains a system of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions
are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles
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 Borrower maintains disclosure controls and procedures (as such term is defined in Rule 13a-15
under the Exchange Act) that are effective in ensuring that information required to be disclosed by the Borrower in the reports
that it files or submits under the Exchange 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 Borrower in the reports that it files or submits under the Exchange Act is accumulated and communicated
to the Borrower’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. Except as disclosed in the SEC Reports,
during the twelve months prior to the date hereof the Borrower has not received any notice or correspondence from any accountant
relating to any material weakness in any part of the system of internal accounting controls of the Borrower
ARTICLE 4
COVENANTS
4.1 Affirmative Covenants. Commencing
on the Closing Date and until all the Liabilities are paid in full and this Agreement, Borrower covenants and agrees that:
(a) Financial Statements
and Certificates. While any amounts are owed to the Lender from the Borrower (including, but not limited to, any Liability),
Borrower will furnish the following to the Lender, all in form and scope acceptable to the Lender, unless such information is included
in the Borrower’s most recent SEC Reports:
(i) within 105 days after
the close of each fiscal year of Borrower, a copy of the annual report of Borrower consisting of a balance sheet, statement of
operating results and retained earnings, statement of cash flows and notes to financial statements, profit and loss statement and
statement of changes in financial position of Borrower, prepared in conformity with GAAP, duly prepared by certified public accountants
of recognized standing selected by Borrower and reasonably approved by the Lender;
(ii) within 45 days after the
end of each fiscal quarter, (a) a copy of an unaudited financial statement of Borrower prepared in the same manner as the report
referred to in paragraph (i) above, signed by the chief financial officer of Borrower and consisting of a balance sheet as at the
close of such fiscal quarter and statements of earnings, cash flow, income and source and application of funds for such fiscal
quarter and for the period from the beginning of such fiscal year to the close of such fiscal quarter, and (b) a duly completed
compliance certificate, dated the date of such financial statements and certified as true and correct by the chief executive officer
or chief financial officer of Borrower, stating that Borrower has not become aware of any Event of Default that has occurred and
is continuing or, if there is any such Event of Default describing it and the steps, if any, being taken to cure it;
(iii) a duly completed compliance
certificate, dated the date of such financial statements and certified as true and correct by the chief executive officer and chief
financial officer of Borrower, stating that Borrower has not become aware of any Event of Default that has occurred and is continuing
or, if there is any such Event of Default describing it and the steps, if any, being taken to cure it;
(iv) copies of any and all reports,
examinations, notices, warnings and citations issued by any governmental or quasi-governmental (whether federal, state or local),
unit, agency, body or entity with respect to Borrower that could have a Material Adverse Effect; and
(v) such other information as
the Lender from time to time reasonably requests.
(b) Books, Records and Inspections.
Borrower shall (i) maintain complete and accurate books and records; (ii) permit access by the Lender and its agents and/or representatives
to such books and records as they relate to this Agreement, the Securities, and/or the other Documents; and (iii) permit such persons,
upon two (2) days prior written notice, to inspect the properties, whether real or personal, and operations of Borrower.
(c) Insurance. Borrower
shall maintain such insurance as may be required by law and such other insurance to the extent and against such hazards and liabilities
as is customarily maintained by companies similarly situated. All property insurance policies shall, within 30 days following the
Closing Date, contain Lender loss payable clauses in form and substance reasonably satisfactory to the Lender, naming the Lender
as a Lender loss payee, mortgagee and/or additional insured, as its interest may appear, and providing that such policies and Lender
loss payable clauses may not be canceled, amended or terminated unless at least thirty (30) days (or ten (10) days in the case
of non-payment of premiums) prior written notice thereof has been given to the Lender. All insurance proceeds received by the Lender
may be retained by the Lender, in its sole discretion, for application to the payment of the Liabilities as the Lender may determine.
(d) Taxes and Liabilities.
Borrower shall pay when due all material taxes, assessments and other liabilities except as contested in good faith and by appropriate
proceedings and for which adequate reserves in conformity with GAAP have been established.
(e) Maintenance of Business;
Borrower Names. Borrower shall (i) keep all property and systems useful and necessary in its business in good working order
and condition, (ii) preserve its existence, rights and privileges in the jurisdiction of its organization or formation, as set
forth on the SEC Reports an 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 (iii) not operate in any business other than a business substantially the same as the
business as in effect on the date of this Agreement; provided, however, that it may change its jurisdiction of organization
or formation establishment upon thirty (30) days prior written notice to the Lender. Borrower shall give Lender thirty (30) days’
prior written notice before Borrower changes its name or does business under any other name.
(f) Employee Benefit Plans,
Etc. Borrower shall (i) maintain each plan and/or each employee benefit plan as to which it may have any liability in substantial
compliance with all applicable requirements of law and regulations; (ii) make all payments and contributions required to be made
pursuant to such Plans and/or plans in a timely manner; and (iii) neither establish any new Plan and/or employee benefit plan,
agree or contribute to any Plan and/or multi-employer plan nor amend any existing Plan and/or employee pension benefit plan in
a manner which would increase its obligation to contribute to such Plan and/or plan.
(g) Good Title. Borrower
shall at all times maintain good and marketable title to all of its assets necessary for the operation of its business.
(h) Maintenance of Intellectual
Property Rights. The Borrower will take all reasonable action necessary or advisable to maintain all of the Intellectual Property
Rights of the Borrower that are necessary or material to the conduct of its business in full force and effect.
(i) Locations. Borrower
shall give the Lender thirty (30) days prior written notice of a change in (i) its jurisdiction of organization or the location
of its Chief Executive Office or sole place of business or principal residence or (ii) its name.
(j) Securities Law Disclosure;
Publicity. (1) No later than 9:30 AM New York Time on the first Trading Day after the closing of the transactions contemplated
hereby, the Borrower shall issue a Current Report on Form 8-K (the “Current Report”) disclosing the material
terms of the transactions contemplated hereby, and including the Documents required to be included in such Current Report as exhibits
thereto, within the time required by the Exchange Act. From and after the issuance of the Current Report, the Borrower represents
to the Lender that the Borrower shall have publicly disclosed all material, non-public information delivered to the Lender, if
any, as of such time by the Borrower, or any of its respective officers, directors, employees or agents in connection with the
transactions contemplated by the Documents. The Borrower shall afford the Lender and its counsel with a reasonable opportunity
to review and comment upon, shall consult with the Lender and its counsel on the form and substance of, and shall give due consideration
to all such comments from the Lender and its counsel on, any press release, SEC filing or any other public disclosure made by or
on behalf of the Borrower relating to the Lender, the Documents and/or the transactions contemplated by any Document, prior to
the issuance, filing or public disclosure thereof, and the Borrower shall not issue, file or publicly disclose any such information
to which the Lender shall reasonably object, unless required by law. For the avoidance of doubt, the Borrower shall not be required
to submit for review any such disclosure contained in periodic reports filed with the SEC under the Exchange Act if it shall have
previously provided the same disclosure for review in connection with a previous filing.
(2) The Borrower confirms that
neither it nor any other person acting on its behalf shall provide the Lender or their agents or counsel with any information that
constitutes or might constitute material, non-public information, unless a simultaneous public announcement thereof is made by
the Borrower in the manner contemplated by Regulation FD. In the event of a breach of the foregoing covenant by the Borrower or
any person acting on its behalf (as determined in the reasonable good faith judgment of the Lender), in addition to any other remedy
provided herein or in the other Transaction Documents, if the Lender is holding any securities of the Borrower at the time of the
disclosure of material, non-public information, the Lender shall have the right to make a public disclosure, in the form of a press
release, public advertisement or otherwise, of such material, non-public information without the prior approval by the Borrower;
provided such Lender shall have first provided notice to the Borrower that it believes it has received information that constitutes
material, non-public information, the Borrower shall have 48 hours publicly to disclose such material, non-public information prior
to any such disclosure by the Investor or demonstrate to the Lender in writing why such information does not constitute material,
non-public information, and (assuming the Lender and Lender’s counsel disagree with the Borrower’s determination) the
Borrower shall have failed to publicly disclose such material, non-public information within such time period. The Lender shall
not have any liability to the Borrower, any of its Subsidiaries, or any of their respective directors, officers, employees, stockholders
or agents, for any such disclosure. The Borrower understands and confirms that the Lender shall be relying on the foregoing covenants
and obligations in effecting transactions in securities of the Borrower.
(k) Notices. Borrower
shall, after receipt of knowledge thereof, give prompt written notice to the Lender of:
(i) the occurrence of any Event
of Default or any event which with the passage of time or the giving of notice or both would become an Event of Default;
(ii) any litigation, investigation
or proceeding which may exist at any time between Borrower and any governmental authority, that in either case, if not cured or
if adversely determined, as the case may be, could have a Material Adverse Effect;
(iii) any litigation or proceeding
affecting Borrower (1) in which the amount involved is $50,000 or more, (2) in which injunctive and/or other equitable relief is
sought and/or (3) which relates to the Lender, any Document and/or any of the transactions contemplated by any Document;
(iv) any Lien (other than security
interests created hereby or Permitted Liens) and/or any Indebtedness other than Indebtedness related to the Documents or Permitted
Indebtedness; and
(v) Any matter, development and/or
event that has resulted or could reasonably be expected to result in a Material Adverse Effect, including any such matter arising
from: any breach or non-performance of, or any default, terms of default or event of default under the Documents, and/or any other
material agreements that the Borrower is a party to and/or any of its property is bound by;
Each notice pursuant to this Section
4.1(k) shall be accompanied by a statement of Borrower setting forth details of the occurrence referred to therein and stating
what action Borrower proposes to take with respect thereto.
(l) Environmental Laws.
Borrower shall (i) comply in all material respects with, and endeavor to ensure compliance in all material respects by all tenants
and subtenants, if any, with, all applicable Environmental Laws, and obtain and comply in all material respects with and maintain,
and endeavor to ensure that all tenants and subtenants obtain and comply in all material respects with and maintain, any and all
licenses, approvals, notifications, registrations or permits required by applicable Environmental Laws, and (ii) conduct and complete
all investigations, studies, sampling and testing, and all remedial, removal and other actions required under Environmental Laws
and promptly comply in all material respects with all lawful orders and directives of all governmental authorities regarding Environmental
Laws.
(m) Further Assurances.
Borrower shall, from time to time execute and deliver, or cause to be executed and delivered, such additional instruments, certificates
or documents, and take such actions, as the Lender may reasonably request for the purposes of implementing or effectuating the
provisions of this Agreement and the other Documents. Upon the exercise by the Lender of any power, right, privilege or remedy
pursuant to this Agreement or the other Documents which requires any consent, approval, recording, qualification or authorization
of any governmental authority, Borrower will execute and deliver, or will cause the execution and delivery of, all applications,
certifications, instruments and other documents and papers that the Lender may be required to obtain from Borrower for such governmental
consent, approval, recording, qualification or authorization.
(n) Reservation of Shares.
So long as any Securities or other warrants owned by the Lender (and/or a transferee thereof), are owned beneficially and/or of
record by the Lender or any transferee thereof, the Borrower covenants and agrees that it will at all times reserve and keep available
out of its authorized and unissued shares of Common Stock a number of shares of Common Stock at least equal to (the “Required
Reserve Amount”) (i) 300%, multiplied by (ii) the Required Minimum (as defined below) for the sole purpose of issuance
upon conversion of the Notes, payment of interest on the Notes, and exercise of the Warrants and other warrants owned beneficially
and/or of record by the Lender (and/or any transferee thereof), free from preemptive rights or any other actual contingent purchase
rights of Persons other than the Lender (and any other holders of any Notes, Warrants and/or warrants transferred from a Lender),
The Borrower covenants that all shares of Common Stock that shall be so issuable shall, upon issue, be duly authorized, validly
issued, fully paid and nonassessable, and, at such times as a registration statement covering such shares is then effective under
the Securities Act, will be registered for public resale in accordance with such registration statement. For purposes of
this Agreement, the “Required Minimum” shall mean the sum of (I) the quotient obtained by dividing the sum of
(A) (i) all outstanding Indebtedness represented
by the Notes, (ii) all interest thereon (whether accrued or not), (iii) the Stated Value of all H Shares then held by the Lender
plus all dividends and other amounts due thereon and (iv) and/or other amounts owed under the Documents and/or the RD SPA, including
Liabilities to the Lender from the Borrower (including but not limited to Late Fees, and liquidated damages), by (B) the
lower of (i) the Conversion Price (as defined in the Notes) on the date of Closing, and (b) in the event that the average closing
bid price or closing sale price, as the case may be, immediately prior to Trading Day that any determination of the Required Reserve
Amount is calculated, the average closing bid price or sale price (as the case may be) for a share of Common Stock for the 5 consecutive
Trading Days immediately prior to the determination date is below the Conversion Price, the Alternative Conversion Price, plus
(II) the quotient of (A) the sum of all shares of Common Stock issuable upon exercise of all Warrants and RD Warrants owed by the
Lender or any transferee thereof, divided by (B) the lower of (i) the Exercise Price (as defined in the Warrants) of the Warrants
and the RD Warrant’s Exercise Price (as defined in the RD Warrants) on the Closing Date, and (ii) if the Exercise Price of
either the Warrants or the RD Warrants is below the average closing bid price or closing sale price, as the case may be, for a
Share of Common Stock on the Trading Market for the 5 consecutive Trading Days prior to the particular date of the determination,
the Alternative Conversion Price. The Borrower shall be required to calculate the Required Minimum on the first Trading Day of
each month that any Securities and/or warrants are outstanding and provide such calculation to the Lender and the Transfer Agent
promptly. For purposes of calculating the Required Minimum, Borrower shall assume that all principal of all Notes will remain
outstanding for eighteen (18) months and all accrued but unpaid interest hereon accrues at the rate of 18% per annum, is paid on
the date 18 months from the Closing Date, and all Warrants (and RD Warrants) will remain unexercised for 5 years.
4.2 Negative Covenants. Until
all the Liabilities are paid in full, Borrower covenants and agrees that:
(a) Restricted Payments.
Except to the Lender, the Borrower shall not directly or indirectly, redeem, defease, repurchase, repay or make any payments in
respect of, by the payment of cash or cash equivalents (in whole or in part, whether by way of open market purchases, tender offers,
private transactions or otherwise), all or any portion of any Indebtedness, whether by way of payment in respect of principal of
(or premium, if any) or interest on, such Indebtedness, except for Permitted Indebtedness; provided, however, that
notwithstanding anything to the contrary provided herein or elsewhere, in no event shall the Borrower directly and/or indirectly
make any payment to any officer, director, or 5% or greater beneficial holder of the Borrower’s voting stock or Common Stock
or an affiliate of the Borrower and/or any affiliate of any such person representing the direct and/or indirect repayment of Indebtedness,
premiums and/or interest on Indebtedness, unpaid salaries, consulting fees, expenses, accrued but unpaid interest and/or otherwise,
except as set forth in Schedule 4.2(a).
(b) Restricted Issuances.
Except to the Lender, the Borrower shall not, directly or indirectly, (i) issue any securities and/or Indebtedness (other than
as contemplated by this Agreement and/or the Documents) or (ii) issue any other securities that would cause a breach or default,
an event of default and/or an Event of Default under any Note and/or any other Document.
(c) Restriction on Redemption
and Dividends. Except to the Lender, the Borrower shall not, directly or indirectly, redeem, repurchase or declare or pay any
dividend or distribution on any of its capital stock whether in cash, stock rights and/or property, except in connection with a
Qualified Public Offering or as set forth in the SEC Reports.
(d) Restriction on Transfer
of Assets. The Borrower shall 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 Borrower owned or hereafter acquired whether in a single transaction
or a series of related transactions, other than sales, leases, licenses, assignments, transfers, conveyances and other dispositions
of such assets or rights by the Borrower in the ordinary course of business; provided, however, that in the event that the Borrower
wishes to effect a transaction under this Section 4.2(d) it shall, prior to undertaking such effort, provide the Lender with a
high-level understanding of the objectives and ideal terms of such anticipation transaction. No fewer than four (4) trading days
prior to the execution of each of a binding term sheet and definitive documentation, the Borrower shall deliver to the Lender a
written notice of any material terms and/or changes since the prior notice given to the Borrower and shall include a term sheet
or similar document relating thereto as an attachment. Thereafter, upon receipt of draft execution copies of such definitive documentation,
the transaction shall be subject to the Lender’s consent, which consent will not be unreasonably withheld. The Borrower shall
file a Current Report on Form 8-K no later than 9:30am New York time on the next Trading Day following the execution of any such
documentation.
(e) Change in Nature of
Business. The Borrower shall not, directly or indirectly, engage in any business substantially different from the business
conducted by the Borrower on the Closing Date or any business substantially related or incidental thereto. The Borrower shall not,
directly or indirectly, modify its or their corporate structure for any purpose.
(f) Indebtedness. Borrower
shall not incur or permit to exist any Indebtedness, except for Permitted Indebtedness.
(g) Liens. Borrower
shall not create or permit to exist any Liens or security interest with respect to any assets whether now owned or hereafter acquired
and owned, except for Permitted Liens.
(h) Guaranties, Loans or
Advances. Borrower shall not become or be a guarantor or surety of, or otherwise become or be responsible in any manner with
respect to any undertaking of any other Person, or make or permit to exist any loans or advances to or investments in any other
Person, except for the endorsement, in the ordinary course of collection, of instruments payable to it or to its order.
(i) Violation of Law.
Borrower shall not violate any law, statute, ordinance, rule, regulation, judgment, decree, order, writ or injunction of any federal,
state or local authority, court, agency, bureau, board, commission, department or governmental body if such violation could have
a Material Adverse Effect.
(j) Unconditional Purchase
Obligations. Borrower shall not enter into or be a party to any contract for the purchase of materials, supplies or other property
or services if such contract requires that payment be made by it regardless of whether or not delivery is ever made of such materials,
supplies or other property or services.
(k) Use of Proceeds.
Borrower shall not permit any proceeds of the Loan to be used either directly or indirectly, for the purpose, whether immediate,
incidental or ultimate, of “purchasing or carrying any margin stock” within the meaning of Regulation U of the Board
of Governors of the Federal Reserve System, as amended from time to time.
(l) Hedge Agreements.
Borrower shall not enter into any hedge agreement other than hedge agreements entered into in the ordinary course of business,
and not for speculative purposes, to protect against changes in interest rates or foreign exchange rates.
(m) ERISA. Borrower
shall not create or become obligated under any Plan.
(n) No Variable Rate Transactions,
Etc. For as long as any Notes and/or Warrants remain outstanding, the Borrower shall not directly or indirectly (i)(I) consummate
any exchange of any Indebtedness and/or securities of the Borrower for any other securities and/or Indebtedness of the Borrower,
(II) cooperate with any person to effect any exchange of securities and/or Indebtedness of the Borrower in connection with a proposed
sale of such securities from an existing holder of such securities to a third party), and/or (III) reduce and/or otherwise change
the exercise price, conversion price and/or exchange price of any Common Stock Equivalent of the Borrower and/or amend any non-convertible
Indebtedness of the Borrower to make it convertible into securities of the Borrower, (ii) issue or sell any of its securities either
(I) at a conversion, exercise or exchange rate or price that is based upon and/or varies with the trading prices of, or quotations
for, the shares of Common Stock, and/or (II) with a conversion, exercise or exchange rate and/or price that is subject to being
reset on one or more occasions either (x) at some future date after the initial issuance of such securities or (y) upon the occurrence
of specified or contingent events directly or indirectly related to the business of the Borrower or the market for the Common Stock,
and/or (iii) enter into any agreement (including, without limitation, an “equity line of credit” or an “at-the-market
offering”) whereby the Borrower may sell securities at a future determined price. Any transaction contemplated in this Section
4.2(n), shall be referred to as a “Variable Rate Transaction.” The Lender shall be entitled to obtain injunctive
relief against the Borrower to preclude any Variable Rate Transaction (without the need for the posting of any bond or similar
item, which the Borrower hereby expressly and irrevocably waives the requirement for), which remedy shall be in addition to any
right of the Lender to collect damages.
(o) Transactions with Affiliates.
The Borrower shall not directly and/or indirectly enter into, renew, extend or be a party to, any transaction or series of related
transactions (including, without limitation, lending funds to an Affiliate and/or borrowing funds from any Affiliate, the purchase,
sale, lease, transfer or exchange of property, securities or assets of any kind or the rendering of services of any kind) with
any officer, director, Affiliate and/or any Affiliate of such person.
(p) Subsidiaries. The
Borrower will not, and will not permit any Subsidiary to, create or acquire any additional Subsidiary. The Borrower shall not,
and shall not permit any Subsidiary to, sell, assign or otherwise dispose of any Equity Interests in any Subsidiary to any Person.
Neither the Borrower nor any Subsidiary shall have any foreign Subsidiaries.
(q) In partial consideration
for the Lender purchasing the Notes, the Borrower expressly and irrevocably agrees for itself and each of its Subsidiaries that
neither it nor any of its Subsidiaries will directly and/or indirectly at any time (i) waive any default and/or breach by the Seller
(as defined in the Repurchase Agreement dated on or about September 30, 2015 by and between the Company and the Seller (the “Repurchase
Agreement)) and/or any of its Affiliates of any provision of the Repurchase Agreement, (ii) immediately inform the Lender in writing
of any such breach and/or default by the Seller and/or its Affiliates of the Repurchase Agreement, and/or (iii) waive and/or otherwise
permit any action of the Seller and/or its Affiliates prohibited by the Repurchase Agreement.
ARTICLE 5
CLOSING CONDITIONS
5.1 Closing Conditions of the Lender.
The Lender’s obligation to enter into the Documents and purchase the Note and Warrant is subject to the fulfillment of each
and every one of the following conditions prior to or contemporaneously with the Lender entering into the Documents and purchasing
the Note and Warrant (unless waived by Lender in writing in their sole and absolute discretion):
(a) Delivery of Documents.
The Lender shall have received from the Borrower each of the following (together with all Exhibits, Schedules, annexes to each
of the following), in form and substance reasonably satisfactory to the Lender and its counsel, and where applicable, duly executed
and recorded (to the extent required):
(i) certificates of the Chief
Executive Officer and Secretary of Borrower and certifying as to (a) copies of the Certificate of Incorporation and by-laws of
the Borrower, as restated or amended as of the date of this Agreement; (b) all actions taken and consents made by the Borrower
and its Board of Directors and shareholders, as applicable to authorize the transactions provided for or contemplated under this
Agreement and the other Documents and the execution, delivery and performance of the Documents; (c) the names of the directors
and officers of the Borrower authorized to sign the Documents, together with a sample of the true signature of each such Person
and (d) that all representatives and warranties of the Borrower made herein and/or in any of the other Documents are true and correct
in all respects;
(ii) this Agreement;
(iii) the Notes;
(iv) the Warrants;
(v) the Registration Right Agreement;
(vi) the Security Agreement;
(vii) the Intercreditor and Subordination
Agreement;
(viii) the Patent and Trademark
Agreement
(ix) the Leak-Out Agreement;
(x) the Lock-Up Agreement:
(xi) certificates of good standing
for Borrower and each Subsidiary in the jurisdiction of each of such Persons incorporation or formation, in the principal places
in which Borrower conducts business and in places in which each such Person owns real estate;
(xii) the
fully executed Transfer Agent Instruction Letter;
(xiii) the
Discount Pay-Off Letter;
(xiv) the
Perfection Certificate
(xv) All
Lender UCC Documents with proof of filing thereof;
(xvi) a
legal opinion of the Borrower’s corporate and securities counsel customarily given in connection with transactions of the
nature set forth in this Agreement and the other Documents and in form and substance reasonably satisfactory to the Lender;
(xvii) Such
other documents, certificates, opinions, instruments and/or other items reasonable requested by the Lender and/or its legal counsel.
(b) Approvals.
The receipt by the Lender of all governmental and third party approvals necessary in connection with the continuing operations
of Borrower, the execution and performance of the Documents and the transactions contemplated thereby, all of which consents/approvals
shall be in full force and effect.
(c) Additional
Conditions. The fulfillment of each and every one of the following conditions prior to or contemporaneously with the making
of the Loan.
(i) Representations
and Warranties. Each of the representations and warranties made by Borrower in or pursuant to the Documents and all Schedules
and/or Exhibits to this Agreement and/or any of the other Documents shall be true and correct in all material respects on and as
of the Closing Date as if made (or given) on and as of such date (except where such representation and warranty speaks of a specific
date in which case such representation and warranty shall be true and correct as of such date).
(ii) No
Events of Default. No breach, event of default, Event of Default or any event which with the passage of time or the giving
of notice or both would become a breach event of default and/or an Event of Default shall have occurred or would result from the
sale of the Note to the Lenders of the performance of any other transaction set forth or contemplated by any of the Documents.
(iii) Fees,
Etc. The Lender’s Expenses shall have been received by the Lender’s counsel.
(iv) Compliance
with Laws. The Borrower shall have complied with all applicable federal, state and local governmental laws, rules, regulations
and ordinances in connection with the execution, delivery and performance of this Agreement and the other Documents to which it
is a party and the consummation of the transactions contemplated hereby and thereby, including, without limitation, the Borrower
shall have obtained all permits and qualifications required by any applicable state securities or “Blue Sky” laws for
the offer and sale of the Securities by the Borrower to the Lender).
(v) No
Injunction. No statute, regulation, order, decree, writ, ruling or injunction shall have been enacted, entered, promulgated,
threatened in writing or endorsed by any court or governmental authority of competent jurisdiction which prohibits the consummation
of or which would materially modify or delay the execution and performance of the Documents and/or any of the transactions contemplated
by the Documents.
(vi) No
Proceedings or Litigation. No action, suit or proceeding before any arbitrator or any court or governmental authority shall
have been commenced or threatened in writing, and no inquiry or investigation by any governmental authority shall have been commenced
or threatened in writing, against the Borrower, or any of the officers, directors or affiliates of the Borrower, seeking to restrain,
prevent or change the Documents and/or any of the transactions contemplated by the Documents, or seeking material damages in connection
with such Documents and/or transactions.
(vii) Listing
of Securities. All of the Conversion Shares and Warrant Shares shall have been approved for listing or quotation on the Trading
Market as of the Closing Date, in each case, and as required, without regard to any limitations on exercise of the Warrants and/or
conversion of the Note including, but not limited to, Beneficial Ownership Limitations.
(viii) No
Material Adverse Effect. No condition, occurrence, state of facts or event constituting a Material Adverse Effect shall have
occurred and be continuing.
(ix) Current
Public Information. All reports, schedules, registrations, forms, statements, information and other documents required to have
been filed by the Borrower with the SEC since January 1, 2013, pursuant to the reporting requirements of the Exchange Act, including
all material required to have been filed pursuant to Section 13(a) or 15(d) of the Exchange Act, shall have been filed with the
SEC under the Exchange Act.
(x) No
Suspension of Trading in or Notice of Delisting of Common Stock. Trading in the Common Stock shall not have been suspended
and/or halted by the SEC, the Principal Trading Market or FINRA. The Borrower shall not have received any final and non-appealable
notice that the listing or quotation of the Common Stock on the Principal Trading Market shall be terminated on a date certain
(unless, prior to such date certain, the Common Stock is listed or quoted on any other Principal Trading Market), trading in securities
generally as reported on the Principal Trading Market shall not have been suspended or limited, nor shall a banking moratorium
have been declared either by the U.S. or New York State authorities, there shall not have been imposed any suspension of electronic
trading or settlement services by the Depository Trust Company (“DTC”) with respect to the Common Stock that
is continuing, the Borrower shall not have received any notice from DTC to the effect that a suspension of electronic trading or
settlement services by DTC with respect to the Common Stock is being imposed or is contemplated (unless, prior to such suspension,
DTC shall have notified the Borrower in writing that DTC has determined not to impose any such suspension), nor shall there have
occurred any material outbreak or escalation of hostilities or other national or international calamity or crisis that has had
or would reasonably be expected to have a material adverse change in any U.S. financial, credit or securities market that is continuing.
(xi) Simultaneous
Transactions. All of the Simultaneous Transactions shall have occurred (or have been waived); and
(xii) 2015
Shareholder Meeting Conditions. The 2015 Shareholder Meeting Conditions have been satisfied in the sole discretion of the Lender.
(xiii) Completion
of Due Diligence. Lender shall have completed its legal, business and financial due diligence of the Borrower to their full
satisfaction and are fully satisfied with the results thereof.
(xiv) Lock-Ups.
Each of the Persons set forth on Schedule 5.1 (c) (xiv) have signed a Lock-Up Agreement and provided executed copies to the
Lender.
(xv) Leak-Out
Agreements. The Lender has entered into Leak-Up Agreements
(xvi) Lender
UCC Documents. All Lender UCC Documents shall be in form and substantially satisfactory to the Lender and shall have been filed
with the Secretary of State.
5.2 Closing
Conditions of Borrower. The obligation of the Borrower to sell and issue the Note and the Warrant to the Lender at the Closing
is subject to the fulfillment, to the Borrower’s reasonable satisfaction, prior to or contemporary at the Closing, of each
of the following conditions (unless waived by the Borrower):
(a) Representations
and Warranties. Each of the representations and warranties made by Borrower in or pursuant to the Documents and all Schedules
and/or Exhibits to this Agreement and/or any of the other Documents shall be true and correct in all material respects on and as
of the Closing Date as if made (or given) on and as of such date (except where such representation and warranty speaks of a specific
date in which case such representation and warranty shall be true and correct as of such date).
(b) No
Injunction. No statute, regulation, order, decree, writ, ruling or injunction shall have been enacted, entered, promulgated,
threatened in writing or endorsed by any court or governmental authority of competent jurisdiction which prohibits the consummation
of or which would materially modify or delay any of the transactions contemplated by the Documents.
(c) Receipt
of the Purchase Price. The Borrower shall receive at or substantially simultaneously with the Closing, the Purchase Price of
the Lender set forth on Schedule 1 hereto (less all of the Lender’s Expenses).
ARTICLE 6
MISCELLANEOUS
6.1 No
Waiver; Modifications In Writing. No failure or delay on the part of the Lender in exercising any right, power or remedy pursuant
to the Documents shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy
preclude any other or further exercise thereof, or the exercise of any other right, power or remedy. No amendment, modification,
supplement, termination or waiver of any provision of the Documents, nor any consent by the Lender to any departure by Borrower
therefrom, shall be effective unless the same shall be in writing and signed by the Lender. Any waiver of any provision of the
Documents and any consent by the Lender to any departure by Borrower from the terms of any provision of the Documents shall be
effective only in the specific instance and for the specific purpose for which given. No notice to or demand on Borrower in any
case shall entitle Borrower to any other or further notice or demand in similar or other circumstances.
6.2 Set-Off.
The Lender shall have the right to set-off, appropriate and apply toward payment of any of the Liabilities, in such order of application
as the Lender may from time to time and at any time elect, any cash, credit, deposits, accounts, securities and any other property
of Borrower which is in transit to or in the possession, custody or control of Lender, or any agent, bailee, or Affiliate of the
Lender. Borrower hereby grants to Lender a security interest in all such property.
6.3 Notices.
All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (a) upon personal delivery
to the party to be notified, (b) when sent by confirmed telex, facsimile or e-mail if sent during normal business hours of the
recipient; if not, then on the next Trading Day, (c) five (5) days after having been sent by registered or certified mail, return
receipt requested, postage prepaid, or (d) one (1) day after deposit with a nationally recognized overnight courier, specifying
next day delivery, with written verification of receipt:
If to Borrower:
Amarantus Bioscience Holdings, Inc.
655 Montgomery Street, Suite 900
San Francisco, CA 94111
Attn: Gerald Commissiong
Fax: (408) 852-4427
Telephone: (_) ___-____
Email: ____________
With copies to
(which shall not constitute notice):
Sichenzia Ross Friedman Ference LLP
61 Broadway, 32nd Floor
New York, NY 10006
Attn: Jeffrey Fessler, Esq.
Fax: (212) 930-9725
If to Delafield:
Delafield Investments Limited
c/o Magna Group
5 Hanover Square
New York, NY 10004
Attention: Marc Manuel
Telephone Number: (347) 491-4240
Fax: (646) 737-9948
Email: research@mag.na
With copies to
(which shall not constitute notice):
Gusrae Kaplan Nusbaum PLLC
120 Wall Street
New York, New York 10005
Attention: Lawrence G. Nusbaum, Esq.
Phone: (212) 269-1400
Fax No.: (212) 809-5449
Email: LNusbaum@gusraekaplan.com
Any party hereto may from time to time change its address for
notices by giving written notice of such changed address to the other party hereto.
6.4 Costs,
Expenses and Taxes. Notwithstanding anything to the contrary provided herein or elsewhere, Borrower agrees to pay (A) on the
Closing Date all of the Lender’s Expenses; and (B) following the Closing Date, all fees and expenses incurred by the Lender
(including, but not limited to, outside counsel to the Lender) in connection with the administration and enforcement of the Documents
and/or and the Loan. In addition, Borrower shall pay any and all stamp, transfer and other similar taxes payable or determined
to be payable in connection with the execution and delivery of the Documents agrees to hold the Lender harmless from and against
any and all liabilities with respect to or resulting from any delay in paying or omission to pay such taxes. If any suit or proceeding
arising from any of the foregoing is brought against the Lender, Borrower, to the extent and in the manner directed by Lender,
will resist and defend such suit or proceeding or cause the same to be resisted and defended by counsel approved by Lender. If
Borrower shall fail to do any act or thing which each has covenanted and/or agreed to do under this Agreement and/or any other
Document or any representation or warranty on the part of Borrower contained in this Agreement and/or any other Document shall
be breached, the Lender may, in its sole and absolute discretion, do the same or cause it to be done or remedy any such breach,
and may expend its funds for such purpose; and any and all amounts so expended by the Lender shall be repayable to the Lender by
Borrower immediately upon the Lender’s demand therefor, with interest at a rate equal to eighteen (18%) percent during the
period from and including the date funds are so expended by the Lender to the date of repayment in full, and any such amounts due
and owing to the Lender shall be deemed to be part of the Liabilities secured hereunder and under the other Documents. The obligations
of Borrower under this 6.4 shall survive the termination of this Agreement and the discharge of the other obligations of
Borrower under the Documents.
6.5 Indemnity,
Etc. In addition to the payment of expenses pursuant to 6.4, whether or not all and/or any of the transactions contemplated
hereby shall be consummated, Borrower agrees to indemnify, pay and hold the Lender, and the Lender’s assignees and affiliates
and their respective officers, directors, employees, agents, consultants, auditors, and attorneys of any of them (collectively
called the “Indemnities”) harmless from and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, expenses and disbursements of any kind or nature whatsoever (including the reasonable
fees and disbursements of counsel for such Indemnitees in connection with any investigative, administrative or judicial proceeding
commenced or threatened, whether or not such Indemnitee shall be designated a party thereto) that may be imposed on, incurred by,
or asserted against that Indemnitee, in any manner relating to or arising out of the SEC Reports, this Agreement and/or the other
Documents, the consummation of the transactions contemplated by this Agreement and the other Documents, the statements contained
in any term sheet delivered by the Lender, the Lender’s agreement to make the Loan, the use or intended use of the proceeds
of the Loan or the exercise of any right or remedy hereunder or under the other Documents (the “Indemnified Liabilities”);
provided that Borrower shall have no obligation to an Indemnitee hereunder with respect to Indemnified Liabilities directly
resulting from the gross negligence or willful misconduct of that Indemnitee, as determined by a court of competent jurisdiction
by a final and nonappealable judgment. In no event shall the Lender and/or any of their respective employees, agents, partners,
affiliates, members, equity and/or debt holders, managers, officers, directors and/or other related or similar type of Person,
have any liability to the Borrower and/or any of its officers, directors, employees, agent, attorneys, affiliates, consultants,
equity and/or debt holders except for any actions or lack of actions of such persons that are found by a court of competent jurisdiction
after the time for all appeals has passed to have resulted directly from Lender’s intentional misconduct or gross negligence.
6.6 Counterparts;
Signatures. This Agreement may be executed in any number of counterparts, each of which counterparts, once they are executed
and delivered, shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the
same agreement. This Agreement and the Documents may be executed by any party to this Agreement or any of the Documents by original
signature, facsimile and/or electronic signature.
6.7 Binding
Effects; Assignment. This Agreement shall be binding upon, and inure to the benefit of, the Lender, Borrower and their respective
successors, assigns, representatives and heirs. Borrower shall not assign any of its rights nor delegate any of its obligations
under Documents without the prior written consent of the Lender. The Lender may delegate any of its obligations under the Documents
without the prior written consent of Borrower, the Lender may assign any of its rights, hereunder, and/or in any of the other Documents,
subject only to compliance with the federal securities laws.
6.8 Headings.
Captions contained in this Agreement are inserted only as a matter of convenience and in no way define, limit or extend the scope
or intent of this Agreement or any provision of this Agreement and shall not affect the construction of this Agreement.
6.9 Entire
Agreement. This Agreement, together with the other Documents, contains the entire agreement between the parties hereto with
respect to the transactions contemplated herein and therein and supersedes all prior representations, agreements, covenants and
understandings, whether oral or written, related to the subject matter of this Agreement and the other Documents. The Lender makes
no covenants to Borrower, including, but not limited to, any commitments to provide any additional financing to Borrower.
6.10 GOVERNING
LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED EXCLUSIVELY IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAWS.
6.11 Severability
Of Provisions. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective only to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this
Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.
6.12 Conflict.
In the event of any conflict between this Agreement and any of the other Documents, the terms and provisions of the Documents so
chosen by the Lender shall govern and control.
6.13 Customer
Identification - USA Patriot Act Notice; OFAC and Bank Secrecy Act. Lender hereby notifies Borrower that pursuant to the requirements
of the Act and such Lender’s policies and practices, Lender is required to obtain, verify and record certain information
and documentation that identifies Borrower, which information includes the name and addresses of Borrower and such other information
that will allow the Lender to identify Borrower in accordance with the Act. In addition, Borrower shall (a) ensure that no person
who owns a controlling interest in or otherwise controls Borrower is or shall be listed on the Specially Designated Nationals and
Blocked Person List or other similar lists maintained by OFAC, the Department of the Treasury or included in any Executive Orders,
(b) not use or permit the use of the proceeds of the Loan to violate any of the foreign asset control regulations of OFAC or any
enabling statute or Executive Order relating thereto, and (c) comply, and cause any of its Subsidiaries to comply, with all applicable
Bank Secrecy Act (“BSA”) laws and regulations, as amended.
6.14 JURISDICTION;
WAIVER. BORROWER ACKNOWLEDGES THAT THIS AGREEMENT IS BEING SIGNED BY THE LENDER IN PARTIAL CONSIDERATION OF THE LENDER’S
RIGHT TO ENFORCE IN THE JURISDICTION STATED BELOW THE TERMS AND PROVISION OF THIS AGREEMENT AND THE DOCUMENTS. BORROWER IRREVOCABLY
CONSENTS TO THE EXCLUSIVE AND SOLE JURISDICTION IN NEW YORK, NEW YORK AND VENUE IN ANY FEDERAL OR STATE COURT IN NEW YORK, NEW
YORK FOR SUCH PURPOSES AND WAIVES ANY AND ALL RIGHTS TO CONTEST SAID JURISDICTION AND VENUE AND ANY OBJECTION THAT NEW YORK, NEW
YORK IS NOT CONVENIENT. BORROWER WAIVES ANY RIGHTS TO COMMENCE ANY ACTION AGAINST THE LENDER IN ANY JURISDICTION EXCEPT NEW YORK,
NEW YORK. THE LENDER AND BORROWER HEREBY EACH EXPRESSLY WAIVE ANY AND ALL RIGHTS TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY WITH RESPECT TO ANY MATTER WHATSOEVER RELATING TO, ARISING OUT
OF OR IN ANY WAY CONNECTED WITH THE LOAN, THE DOCUMENTS AND/OR THE TRANSACTIONS WHICH ARE THE SUBJECT OF THE DOCUMENTS.
6.15 SERVICE
OF PROCESS. BORROWER AGREES THAT SERVICE OF PROCESS IN ANY ACTION OR PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY
CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, RETURN RECEIPT REQUESTED, TO BORROWER AT THE ADDRESS
SET FORTH IN SECTION 6.3 OR AT SUCH OTHER ADDRESS OF WHICH THE LENDER SHALL HAVE BEEN NOTIFIED PURSUANT THERETO. BORROWER
AGREES THAT SUCH SERVICE, TO THE FULLEST EXTENT PERMITTED BY LAW (i) SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS
UPON BORROWER IN ANY SUIT, ACTION OR PROCEEDING, AND (ii) SHALL BE TAKEN AND HELD TO BE VALID PERSONAL SERVICE UPON AND PERSONAL
DELIVERY TO BORROWER. SOLELY TO THE EXTENT PROVIDED BY APPLICABLE LAW, SHOULD BORROWER, AFTER BEING SERVED, FAIL TO APPEAR OR ANSWER
TO ANY SUMMONS, COMPLAINT, PROCESS OR PAPERS SO SERVED WITHIN THE NUMBER OF DAYS PRESCRIBED BY LAW AFTER THE DELIVERY OR MAILING
THEREOF, BORROWER SHALL BE DEEMED IN DEFAULT AND AN ORDER AND/OR JUDGMENT MAY BE ENTERED BY THE COURT AGAINST BORROWER AS DEMANDED
OR PRAYED FOR IN SUCH SUMMONS, COMPLAINT, PROCESS OR PAPERS. NOTHING HEREIN SHALL AFFECT THE LENDER’S RIGHT TO SERVE PROCESS
IN ANY OTHER MANNER PERMITTED BY LAW.
6.16 Survival.
The representations, and warranties of Borrower herein and/or in the other Documents shall survive the execution and delivery hereof
and the Closing Date; the obligations, Liabilities, agreements and covenants of the Borrower set forth herein and/or in the other
Documents shall survive the execution and delivery hereof and the Closing Date, as shall all rights and remedies of the Lender
set forth in this Agreement and/or in any of the other Documents.
6.17 No
Integration. Neither the Borrower, nor any of its affiliates, nor any person acting on behalf of the Borrower or such affiliate,
will sell, offer for sale, or solicit offers to buy or otherwise negotiate with respect to any security (as defined in the Securities
Act) which will be integrated with the sale and/or issuance of any of the Securities in a manner which would require the registration
of the Securities under the Securities Act, or require stockholder approval, under the rules and regulations of the Trading Market
for the Common Stock. The Borrower 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 Securities Act or the rules and regulations of the Trading Market, with the
issuance of Securities contemplated herein.
6.18 No
Frustration. From and after the date hereof and so long as the Note is outstanding, the Borrower, nor any of its respective
officers, employees, directors, agents or other representatives, will, without the prior written consent of the Lender (which consent
may be withheld, delayed or conditioned in the Lender’s sole discretion), effect, enter into, announce or recommend to its
stockholders any agreement, plan, arrangement or transaction (or issue, amend or waive any security) that would or would reasonably
be expected to restrict, delay, conflict with or impair the ability or right of the Borrower to timely perform its obligations
under the Documents.
6.19 Finders’
Fees. Each party represents that it neither is nor will be obligated for any finders’ fee or commission in connection
with this transaction, except as set forth herein. The Borrower shall indemnify and hold harmless the Lender from any liability
for any commission or compensation in the nature of a finders’ fee (and the costs and expenses of defending against such
liability or asserted liability) for which the Borrower or any of its officers, employees or representatives is responsible.
6.20 Rule
144 Availability; Public Information. At all times from the date hereof through and including the date none of the Securities
are outstanding (the “Required Period”) Borrower shall ensure the Lender can sell the Underlying Shares pursuant
to and in accordance with Rule 144 under the Securities Act. If, (i) at any time during the Required Period, the Borrower shall
fail for any reason to satisfy the current public information requirement under Rule 144(c) under the Securities Act (a “Public
Information Failure”), or (ii) the Borrower shall fail to take such action as is reasonably requested by the Lender to
enable the Lender to sell the any of the Securities pursuant to Rule 144 under the Securities Act (including, without limitation,
delivering all such legal opinions, consents, certificates, resolutions and instructions to the Borrower’s transfer agent
as may be reasonably requested from time to time by the Lender and otherwise fully cooperate with Lender and Lender’s broker
to effect such sale of the Securities pursuant to Rule 144 under the Securities Act) (a “Process Failure”) then,
in either case, in addition to the Lender’s other available remedies, the Borrower shall pay to the Lender, as liquidated
damages and not as a penalty, by reason of any such delay in or reduction of its ability to sell any Underlying Shares, an amount
in cash equal to five (5.0%) percent of the aggregate principal amount of the Notes held by a Lender on the day of a Public Information
Failure or Process Failure, as applicable, and on every thirtieth (30th) day (pro rated for periods totaling less than thirty days)
thereafter until (a) in the case of a Process Failure, the date such Process Failure is cured, or (b) in the case of a Public Information
Failure, the earlier of (1) the date such Public Information Failure is cured and (b) such time that such public information is
no longer required for the Lender to transfer the Securities pursuant to Rule 144 under the Securities Act. The payments to which
the Lender shall be entitled pursuant to this Section 6.20 are referred to herein as “Rule 144 Failure Payments”.
Rule 144 Failure Payments shall be paid on the earlier of (i) the last day of the calendar month during which such Rule 144 Failure
Payments are incurred and (ii) the third (3rd) Trading Day after the event or failure giving rise to the Rule 144 Failure Payments
is cured.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF THE LENDER
7.1 Authorization.
The Lender has full power and authority to enter into this Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby and has taken all action necessary to authorize the execution and delivery of this Agreement,
the performance of its obligations hereunder and thereunder and the consummation of the transactions contemplated hereby and thereby.
7.2 Accredited
Investor Status; Investment Experience. The Lender is an “accredited investor” as that term is defined in Rule
501(a) of Regulation D.
7.3 Reliance
on Exemptions. The Lender understands that the Note is 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 Borrower is relying in part upon
the truth and accuracy of, and the Lender’s compliance with, the representations, warranties, agreements, acknowledgments
and understandings of the Lender set forth herein in order to determine the availability of such exemptions and the eligibility
of the Lender to acquire the Note.
7.4 Information.
The Lender has been furnished with all materials relating to the business, finances and operations of the Borrower and materials
relating to the offer and sale of the Note and Warrant which have been requested by the Lender. The Lender has been afforded the
opportunity to ask questions of the Borrower. Neither such inquiries nor any other due diligence investigations conducted by the
Lender shall modify, amend or affect the Lender’s right to rely on the Borrower’s representations and warranties contained
herein. The Lender understands that its investment in the Note and Warrant involves a high degree of risk. The Lender have sought
such accounting, legal and tax advice as it has considered necessary to make an informed investment decision with respect to their
acquisition of their respective Note and Warrant. The Lender is relying solely on their own accounting, legal and tax advisors,
and not on any statements of the Borrower or any of its agents or representatives, for such accounting, legal and tax advice with
respect to its acquisition of the Note and Warrant.
7.5 No
Governmental Review. The Lender 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 Note and Warrant or the fairness or suitability of the investment
in the Note and Warrant nor have such authorities passed upon or endorsed the merits of the offering of the Note and Warrant.
7.6 Validity;
Enforcement; No Conflicts. This Agreement and each Document to which the Lender are a party have been duly and validly authorized,
executed and delivered on behalf of the Lenders and shall constitute the legal, valid and binding obligations of the Lender enforceable
against the Lender 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.
7.7 Organization
and Standing. The Lender is duly organized, validly existing and in good standing under the laws of the State of where it was
formed.
7.8 Brokers
or Finders. The Lender represents and warrants, to the best of their knowledge, that no finder, broker, agent, financial advisor
or other intermediary, nor any purchaser representative or any broker-dealer acting as a broker, are entitled to any compensation
in connection with the transactions contemplated by this Agreement or the transactions contemplated hereby.
7.9 Ability
to Perform. There are no actions, suits, proceedings or investigations pending against Lender or Lender’s assets before
any court or governmental agency (nor is there any threat thereof) which would impair in any way Lender’s ability to enter
into and fully perform their respective commitments and obligations under this Agreement or the transactions contemplated hereby.
7.10 Short
Positions. The Lender covenants and agrees that, so long as the Lender owns any Securities of the Borrower, such Borrower,
shall not maintain a net short position in the Common Stock (as determined under Regulation SHO under the Exchange Act (“Regulation
SHO”) taking into account all positions of the Lender whether or not the Lender otherwise would constitute an independent
trading unit under Regulation SHO).
7.11 Transfer
or Resale. Lender understands that except as provided in the Registration Rights Agreement: (i) the Securities
have not been and are not being registered under the Securities Act or any state securities laws, and may not be offered for sale,
sold, assigned or transferred unless (A) subsequently registered thereunder, (B) the Lender shall have delivered to the
Borrower an opinion of counsel, in a form reasonably acceptable to the Borrower, 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) the Lender
provides the Borrower with reasonable assurance that such Securities can be sold, assigned or transferred pursuant to Rule 144
or Rule 144A promulgated under the Securities Act, as amended, (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 Securities
Act) may require compliance with some other exemption under the Securities Act or the rules and regulations of the SEC thereunder;
and (iii) except as otherwise provided in the Documents, neither the Borrower nor any other Person is under any obligation
to register the Securities under the Securities 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 the Lender in effecting a pledge of Securities shall not be required
to provide the Borrower with any notice thereof or otherwise make any delivery to the Borrower pursuant to this Agreement or any
other Document, including, without limitation, this Section 7.11.
7.12 Legends.
Lender understands that the certificates or other instruments representing the Notes and the Warrants and, until such time as the
resale of the Conversion Shares and the Warrant Shares have been registered under the Securities Act, the stock certificates representing
the Conversion Shares and the Warrant Shares, except as set forth below, 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, IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION
IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING
THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT
SECURED BY THE SECURITIES.
The legend set forth above shall be removed
and the Borrower shall issue a certificate without such legend to the holder of the Securities upon which it is stamped or issue
to such holder by electronic delivery at the applicable balance account at DTC, if, unless otherwise required by state securities
laws, (i) such Securities are registered for resale under the Securities Act, (ii) in connection with a sale, assignment
or other transfer, such holder provides the Borrower with an opinion of counsel, in a form reasonably acceptable to the Borrower,
to the effect that such sale, assignment or transfer of the Securities may be made without registration under the applicable requirements
of the Securities Act, or (iii) the Securities can be sold, assigned or transferred pursuant to Rule 144 or Rule 144A.
The Borrower shall be responsible for the fees of its transfer agent and all DTC fees associated with such issuance.
[BALANCE OF PAGE
INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties hereto
have caused this Agreement to be duly executed and delivered as of the date first above written.
| LENDER: |
DELAFIELD INVESTMENTS LIMITED |
| |
|
| |
By: |
|
|
| |
Name: |
| |
Title: |
| |
|
| BORROWER: |
AMARANTUS BIOSCIENCE HOLDINGS, INC. |
| |
|
| |
By: |
|
|
| |
Name: |
| |
Title: |
SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT
EXHIBIT A
Form of Note
EXHIBIT B
Form of Warrant
EXHIBIT C
Form of Registration
Rights Agreement
EXHIBIT D
Form of Transfer Agent Irrevocable
Instruction Letter
EXHIBIT E
Security Agreement
EXHIBIT F
Form of Intercreditor and Subordination
Agreement
EXHIBIT G
Form of Leak-Out Agreement
EXHIBIT H
Form of Lock-Up Agreement
EXHIBIT I
Lenders UCC Filings
EXHIBIT J
PERFECTION CERTIFICATE
EXHIBIT K
Patent and Trademark Security Agreement
EXHIBIT L
Copies of Pledged Securities and Agreement
Documents
EXHIBIT M
Pay-Off Letter
EXHIBIT M
Pledge Documents
Schedule 1
Purchase Price; Securities
Purchased
Name of
Lender | |
Purchase Price
for Notes
Being Purchased | | |
Aggregate
Principal Amount
of Notes being
Purchased | | |
Number of Warrant Shares issuable
upon exercise of Warrant Purchased | |
| 1. Delafield Investments Limited | |
$ | 2,750,000 | | |
$ | 3,055,556 | | |
| | |
*The difference between the Purchase Price and the aggregate
principal amount of the Note represents an original issue discount of 10%.
Schedule 3.1 (a)
Subsidiaries of
the Company
Schedule 5.1 (c) (xiv)
List of Persons
and Securities Owned Who Are Required to enter into Lock-Up Agreement
Exhibit 10.4
EXECUTION VERSION
NEITHER THIS SECURITY
NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF
COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY
AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES.
| Original Issue Date: September 30, 2015 |
Original Principal Amount: $3,055,556 |
| Note: 12% SSCPN-No - 1 |
|
12%
SENIOR SECURED CONVERTIBLE PROMISSORY NOTE
DUE
September 29, 2016
THIS 12% SENIOR SECURED
CONVERTIBLE PROMISSORY NOTE is one of a series of duly authorized and validly issued 12% Convertible Notes of Amarantus Bioscience
Holdings, Inc., a Nevada corporation, (the “Company”), having its principal place of business at 655 Montgomery
Street, Suite 900, San Francisco, California 94111, designated as its 12% Senior Secured Convertible Promissory Note due September
29, 2016 (this “Note”, or the “Note” and collectively with the other Notes of such series,
the “Notes”).
FOR VALUE RECEIVED,
the Company promises to pay to Delafield Investments Limited or its registered assigns (the “Holder”), or shall
have paid pursuant to the terms hereunder, the principal sum of $3,055,556 on September 29, 2016 (the “Maturity Date”)
or such earlier date as this Note is required or permitted to be repaid as provided hereunder, and to pay interest to the Holder
on the aggregate unconverted and then outstanding principal amount of this Note in accordance with the provisions hereof. This
Note is subject to the following additional provisions:
Section 1. Definitions.
For the purposes hereof, in addition to the terms defined elsewhere in this Note, (a) capitalized terms not otherwise defined
herein shall have the meanings set forth in the Purchase Agreement and (b) the following terms shall have the following meanings:
“Alternate
Consideration” shall have the meaning set forth in Section 5(e).
“Alternate
Conversion Price” means 60% of the lowest of traded price of a share of Common Stock in the thirty (30) consecutive Trading
Days prior to the Conversion Date.
“Bankruptcy
Event” means any of the following events: (a) the Company or any Subsidiary (as such term is defined in Rule 1-02(w)
of Regulation S-X) thereof commences a case or other proceeding under any bankruptcy, reorganization, arrangement, adjustment of
debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction relating to the Company or any
Subsidiary thereof, (b) there is commenced against the Company or any Subsidiary thereof any such case or proceeding that is not
dismissed within 60 days after commencement, (c) the Company or any Subsidiary thereof is adjudicated insolvent or bankrupt or
any order of relief or other order approving any such case or proceeding is entered, (d) the Company or any Subsidiary thereof
suffers any appointment of any custodian or the like for it or any substantial part of its property that is not discharged or stayed
within 60 calendar days after such appointment, (e) the Company or any Subsidiary thereof makes a general assignment for the benefit
of creditors, (f) the Company or any Subsidiary thereof calls a meeting of its creditors with a view to arranging a composition,
adjustment or restructuring of its debts or (g) the Company or any Subsidiary thereof, by any act or failure to act, expressly
indicates its consent to, approval of or acquiescence in any of the foregoing or takes any corporate or other action for the purpose
of effecting any of the foregoing.
“Base
Conversion Price” shall have the meaning set forth in Section 5(b).
“Beneficial
Ownership Limitation” shall have the meaning set forth in Section 4(e).
“Buy-In”
shall have the meaning set forth in Section 4(b)(v).
“Change
of Control Transaction” means the occurrence after the date hereof of any of (a) an acquisition after the date hereof
by an individual or legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of
effective control (whether through legal or beneficial ownership of capital stock of the Company, by contract or otherwise) of
in excess of 33% of the voting securities of the Company (other than by means of conversion or exercise of the Notes and the Securities
issued together with the Notes), (b) the Company merges into or consolidates with any other Person, or any Person merges into or
consolidates with the Company and, after giving effect to such transaction, the stockholders of the Company immediately prior to
such transaction own less than 66% of the aggregate voting power of the Company or the successor entity of such transaction, (c)
the Company sells or transfers all or substantially all of its assets to another Person and the stockholders of the Company immediately
prior to such transaction own less than 66% of the aggregate voting power of the acquiring entity immediately after the transaction,
(d) a replacement at one time or within a three year period of more than one-half of the members of the Board of Directors which
is not approved by a majority of those individuals who are members of the Board of Directors on the Original Issue Date (or by
those individuals who are serving as members of the Board of Directors on any date whose nomination to the Board of Directors was
approved by a majority of the members of the Board of Directors who are members on the date hereof), or (e) the execution by the
Company of an agreement to which the Company is a party or by which it is bound, providing for any of the events set forth in clauses
(a) through (d) above.
“Common
Stock Equivalents” means any securities of the Company or any of its subsidiaries which would entitle the holder thereof
to acquire at any time shares of Common Stock, including, without limitation, any debt, preferred stock, rights, options, warrants
or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the Holder to
receive, Common Stock.
“Conversion”
shall have the meaning ascribed to such term in Section 4.
“Conversion
Date” shall have the meaning set forth in Section 4(a).
“Conversion
Price” shall have the meaning set forth in Section 4(b).
“Conversion
Schedule” means the Conversion Schedule in the form of Schedule 1 attached hereto.
“Conversion
Shares” means, collectively, the shares of Common Stock issuable upon conversion of this Note in accordance with the
terms hereof.
“Default
Redemption Amount” means the product of (i) 130% multiplied by (ii) the sum of (x) the aggregate principal amount outstanding
of this Note through and including the Default Redemption Date; (y) all accrued but unpaid principal due on this Note including,
but not limited to, as provided in the last sentence of Section 6 hereof, and (z) all other amounts owed under this Note including,
but not limited to, Late Fees and liquidated damages, all through and including the date all amounts herein are paid in cash to
the Holder.
“Dilutive
Issuance” shall have the meaning set forth in Section 5(b).
“Dilutive
Issuance Notice” shall have the meaning set forth in Section 5(b).
“DTC”
means the Depository Trust Company.
“DTC/FAST
Program” means the DTC’s Fast Automated Securities Transfer Program.
“DWAC
Eligible” means that (a) the Common Stock is eligible at DTC for full services pursuant to DTC’s Operational Arrangements,
including without limitation transfer through DTC’s DWAC system, (b) the Company has been approved (without revocation) by
the DTC’s underwriting department, (c) the Transfer Agent is approved as an agent in the DTC/FAST Program, (d) the Conversion
Shares are otherwise eligible for delivery via DWAC, and (e) the Transfer Agent does not have a policy prohibiting or limiting
delivery of the Conversion Shares via DWAC.
“Equity
Conditions” means, during the period in question, (a) no Event
of Default shall have occurred, (b) the Company has timely filed (or obtain extensions in respect thereof and file within
the applicable grace period) all reports other than Form 8-K reports required to be filed by the Company after the date hereof
pursuant to the Exchange Act, (c) on any date that the Company desires to make a payment of interest and/or principal, the average
daily dollar volume of the Common Stock for the previous twenty (20) consecutive trading days must be greater than $60,000, (d)
the shares of Common Stock must be DWAC Eligible and not subject to a “DTC Freeze,” or a “DTC chill” (or
other similar term), (e) the Conversion Shares are (i) neither “restricted shares” nor “control shares”
as defined pursuant to Rule 144 of the Securities Act, and (ii) may be sold (x) pursuant to Rule 144 without restriction and/or
volume limitation; or (y) pursuant to an effective registration statement (which in both cases the Equity Conditions set forth
in “(e)” shall be satisfied by the Company’s regular securities counsel providing a legal opinion that the statements
in e(i), e(ii)(x) (or, if applicable, e(ii)(y)) have been satisfied to the Holder which shall be delivered to the Holder each time
the Company is required to certify to the Holder that all of the Equity Conditions have been met), in both cases, however, sales
shall be limited pursuant to the Beneficial Ownership Limitations.
“Event
of Default” shall have the meaning set forth in Section 6(a).
“Exempt
Issuance” means the issuance of (a) shares of Common Stock, options or other
equity awards (including, without limitation, restricted awards) to employees, officers or directors of the Company pursuant to
any stock or option plan duly adopted for such purpose, by a majority of the non-employee members of the Board of Directors or
a majority of the members of a committee of non-employee directors established for such purpose and subsequently ratified by the
Shareholders of the Company, (b) securities upon the exercise or exchange of or conversion of any Securities issued hereunder
and/or other securities exercisable or exchangeable for or convertible into shares of Common Stock issued and outstanding on the
date of this Agreement, provided that such securities have not been amended since June 1, 2015 to increase the number of such
securities or to decrease the exercise price, exchange price or conversion price of such securities, financings, commercial property
lease transactions or similar transactions, (c) securities issued to (or securities issued upon exercise conversion of exchange
of Common Stock Equivalents issued to any such persons), Delafield Investments Limited (“Delafield”),
and/or Dominion Holdings, LLC (“Dominion,”) or (d) strategic
transactions, which are approved by a majority of the disinterested directors of the Company, provided that any such issuance
shall only be to a Person (or to the equityholders of a Person) which is, itself or through its subsidiaries, an operating company
or an owner of an asset in a business synergistic with the business of the Company and shall provide to the Company additional
benefits in addition to the investment of funds, but shall not include a transaction in which the Company is issuing securities
primarily for the purpose of raising capital or to an entity whose primary business is investing in securities, and provided further
that the Holders shall have provided their consent.
“Fundamental
Transaction” shall have the meaning set forth in Section 5(e).
“Late
Fees” shall have the meaning set forth in Section 2(c).
“Mandatory
Default Amount” means the payment of 130% of the outstanding principal amount of this Note and accrued and unpaid interest
hereon, in addition to the payment of all other amounts, costs, expenses, late fees, and liquidated damages due in respect of this
Note.
“New
York Courts” shall have the meaning set forth in Section 8(d).
“Note
Register” shall have the meaning set forth in Section 2(b).
“Notice
of Conversion” shall have the meaning set forth in Section 4(a).
“Original
Issue Date” means the date of the first issuance of this Note, regardless of any transfers of any Note and regardless
of the number of instruments which may be issued to evidence such Notes.
“Purchase
Agreement” means the Securities Purchase Agreement, dated as of September 30, 2015 by and among the Company, the original
Holder, and the other parties named therein, if any, as amended, modified or supplemented from time to time in accordance with
its terms.
“Public
Offering” means any firm commitment underwritten public offering of gross proceeds of at least $4,000,000 of securities
of the Company pursuant to a registration statement on Form S-1 or Form S-3.
“Qualified
Public Offering” means (i) a firm commitment underwritten public offering of shares of Common Stock (and any other securities
of the Company that may be sold along with shares of Common Stock in any such underwritten firm commitment public offering including,
but not limited to, any Common Stock Equivalents), (ii) the gross proceeds resulting from such underwritten firm commitment public
offering equal or exceed, $9,000,000, and (iii) (x) the shares of Common Stock including, but not limited to, all Underlying Shares
have been approved for listing on one of the exchanges or markets set forth below in this definition of Qualified Public Offering,
and (y) on the next trading day following the date the SEC declares the registration statement registering under the Securities
Act the sale of the shares of Common Stock being sold to investors in such firm commitment underwritten public offering effective,
and any of securities of the Company being issued and/or sold in addition to shares of Common Stock by the Company therein including,
but not limited to, any Common Stock Equivalent (the “Qualified Offering Conversion Date”), the shares of Common
Stock commence trading on the New York Stock Exchange, NYSE MKT, the Nasdaq Global Market, the Nasdaq Global Select Market or the
Nasdaq Capital Market.
“Qualified
Public Offering Conversion Amount” means the product of (i) 130%, multiplied by (ii) the sum of (x) the aggregate principal
amount owed of this Note on and including the Qualified Public Offering Conversion Date, (y) all accrued but unpaid interest, and
(z) all liquated damages, Late Fees, and/or any other amounts owed to a Holder pursuant to this Note through and including the
Qualified Public Offering Conversion Date, including, but not limited to, premium payments, redemption payments and all other fees
and expenses owed to the Holder and/or its legal counsel or otherwise.
“Registration
Rights Agreement” means the Registration Rights Agreement, dated as of the date of the Purchase Agreement, by and among
the Company, the original Holders, and such other parties named therein in the form attached as an exhibit to the
Purchase Agreement.
“Registration
Statement” means a registration statement covering the resale of the Underlying Shares by each Holder.
“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Share
Delivery Date” shall have the meaning set forth in Section 4(d)(ii).
“Successor
Entity” shall have the meaning set forth in Section 5(e).
“Trading
Market” means any of the following markets or exchanges on which the Common Stock (or any other common stock of any other
Person that references the Trading Market for its common stock) is listed or quoted for trading on the date in question: the OTC
Bulletin Board, The NASDAQ Global Market, The NASDAQ Global Select Market, The NASDAQ Capital Market, the New York Stock Exchange,
NYSE Arca, the NYSE MKT, or the OTCQX Marketplace, the OTCQB Marketplace, the OTCPink Marketplace or any other tier operated by
OTC Markets Group Inc. (or any successor to any of the foregoing).
“VWAP”
means, for or as of any date, the dollar volume-weighted average price for such security on the Trading Market (or, if the Trading
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. All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock
combination, recapitalization or other similar transaction during such period.
Section 2. Interest.
a) Payment
of Interest in Cash or Kind. The Company shall pay interest to the Holder in an amount equal to the product of (i) 12% (which
interest rate may be increased as provided elsewhere herein), multiplied by (ii) (x) the Original Principal Amount, for the 12
month period beginning on the Original Issuance Date (the “Initial 12 Month Period”), and (y) the aggregate
principal amount of this Note outstanding on the first day following the last day (the “First Day of a New 12 Month Period”)
of the (I) Initial 12 Month Period, and (II) each succeeding 12 month anniversary date of the Original Issue Date (each a “New
12 Month Period”), provided any amount due under this Note is outstanding on the First Day of a New 12 Month Period.
Interest provided for in this Section 2(a), shall be guaranteed and deemed earned in full (i) on the first day following the Original
Issuance Date for the Initial 12 Month Period, and (ii) on the First Day of each New 12 Month Period for each New 12 Month Period.
All interest provided for in this Section (2)(a) shall be due and payable with respect to (x) the Initial 12 Month Period, on the
Maturity Date, and with respect to each New 12 Month Period, 30 days following the First Day of a New 12 Month Period (as applicable,
each a “Fixed Interest Payment Date”); provided, however, notwithstanding anything to the contrary
provided herein or elsewhere, interest due hereunder will be due and payable prior to the applicable Fixed Interest Payment Date,
upon any conversion, prepayment, Event of Default, and/or other acceleration of principal outstanding on this Note, with respect
to the interest relating to the principal so converted, prepaid and/or accelerated whether as a result of an Event of Default,
or otherwise. All interest payments hereunder will be payable in cash, or subject to satisfaction of all of the Equity Conditions,
in cash or Common Stock in the Company’s discretion. Interest paid in Common Stock will be at the lower of (i) the Conversion
Price, and (ii) at 65% of the average of the VWAPs for the 15 consecutive Trading Days ending on the Trading Day that is immediately
prior to such date of payment.
b) Interest
Calculations. Interest shall be calculated on the basis of a 360-day year, consisting of twelve 30 calendar day periods, and
shall accrue and compound daily commencing on the Original Issue Date until payment in full of the outstanding principal, together
with all accrued and unpaid interest, liquidated damages and other amounts which may become due hereunder, has been made. Interest
hereunder will be paid to the Person in whose name this Note is registered on the records of the Company regarding registration
and transfers of this Note (the “Note Register”).
c) Late
Fee. All overdue accrued and unpaid interest to be paid hereunder shall entail a late fee at an interest rate equal to the
lesser of 18% per annum or the maximum rate permitted by applicable law (the “Late Fees”) which shall accrue
daily from the date such interest is due hereunder through and including the date of actual payment in full.
Section 3. Registration
of Transfers and Exchanges.
a) Different
Denominations. This Note is exchangeable for an equal aggregate principal amount of Notes of different authorized denominations,
as requested by the Holder surrendering the same. No service charge will be payable for such registration of transfer or exchange.
b) Investment
Representations. This Note has been issued subject to certain investment representations of the original Holder set forth in
the Purchase Agreement and may be transferred or exchanged only in compliance with therewith and applicable federal and state securities
laws and regulations.
c) Reliance
on Note Register. Prior to due presentment for transfer to the Company of this Note, the Company and any agent of the Company
may treat the Person in whose name this Note is duly registered on the Note Register as the owner hereof for the purpose of receiving
payment as herein provided and for all other purposes, whether or not this Note is overdue, and neither the Company nor any such
agent shall be affected by notice to the contrary.
Section 4. Conversion.
a) Voluntary
Conversion. At any time after the Original Issue Date until all amounts due under this have been paid in full, this Note shall
be convertible, in whole or in part, into shares of Common Stock at the option of the Holder, at any time and from time to time
(subject to the conversion limitations set forth in Section 4(e) hereof). The Holder shall effect conversions by delivering
to the Company a Notice of Conversion, the form of which is attached hereto as Annex A (each, a “Notice of Conversion”),
specifying therein the principal amount of this Note and/or any other amounts due under this Note to be converted and the date
on which such conversion shall be effected (such date, the “Conversion Date”). If no Conversion Date is specified
in a Notice of Conversion, the Conversion Date shall be the date that such Notice of Conversion is deemed delivered hereunder.
No ink-original Notice of Conversion shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization)
of any Notice of Conversion form be required. To effect conversions hereunder, the Holder shall not be required to physically
surrender this Note to the Company unless the entire principal amount of this Note, all accrued and unpaid interest thereon and
all other amounts due under this Note have been so converted. Conversions hereunder shall have the effect of lowering the outstanding
principal amount of this Note in an amount equal to the applicable conversion amount. The Holder and the Company shall maintain
a Conversion Schedule showing the principal amount(s) and/or any other amounts due under this Note converted and the date of such
conversion(s). The Company may deliver an objection to any Notice of Conversion within one (1) Business Day of delivery of such
Notice of Conversion. In the event of any dispute or discrepancy, the records of the Holder shall be controlling and determinative
in the absence of manifest error. The Holder, and any assignee by acceptance of this Note, acknowledge and agree that, by reason
of the provisions of this paragraph, following conversion of a portion of this Note, the unpaid and unconverted principal amount
of this Note may be less than the amount stated on the face hereof.
(b) Conversion
Price. The conversion price in effect on any Conversion Date shall be equal to the lowest of (i) $2.50, (ii) 75% of the lowest
daily VWAP in the fifteen (15) trading days prior to the Conversion Date, or (iii) (A) if a Public Offering that is not a Qualified
Public Offering has occurred, 75% or (B) if a Qualified Public Offering has occurred, 80% of the lowest of the (x) per share price
of shares of Common Stock, and (y) the lowest conversion price, exercise price or exchange price of any Common Stock Equivalents,
that are sold or issued to the public in the Public Offering or the Qualified Public Offering, respectively (the “Conversion
Price”). Notwithstanding anything herein to the contrary, at any time after the occurrence of any Event of Default the
Holder may require the Company to, at such Holder’s option and otherwise in accordance with the provisions for conversion
herein, convert all or any part of this Note into Common Stock at the Alternative Conversion Price. All such foregoing determinations
will 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 measuring period. Nothing herein shall limit a Holder’s
right to pursue actual damages or declare an Event of Default pursuant to Section 6 hereof and the Holder shall have the right
to pursue all remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance
and/or injunctive relief. The exercise of any such rights shall not prohibit the Holder from seeking to enforce damages pursuant
to any other Section hereof or under applicable law.
c) Mandatory
Conversion. Effective on the closing (the “Mandatory Conversion Date”) of a Qualified Public Offering, the
Qualified Public Offering Conversion Amount shall automatically (without further act or deed of the Holder or the Company) convert
(the “Mandatory Conversion”) into such number of shares of Common Stock as shall equal the quotient of (i) the
Qualified Public Offering Conversion Amount outstanding as of and including the Mandatory Conversion Date, divided by (ii) a conversion
price equal to the lowest of (i) the Conversion Price on the Mandatory Conversion Date, and (ii) eighty percent (80%) of the lowest
of (x) the price per share at which the Company sells shares of Common Stock, and (y) the lowest conversion price, exercise price
or exchange price of any Common Stock Equivalents, if any, sold and or issued to the public in a Qualified Public Offering, if
any, up to the Beneficial Ownership Limitation as set forth in Section 4(e). Notwithstanding anything to the contrary provided
herein or elsewhere, the conversion price of any portion this Note that the Holder is not able to convert into Conversion Shares
as a result of the Beneficial Ownership Limitation, shall following the Mandatory Conversion Date, be the Qualified Public Offering
Conversion Price. The Company shall cause notice of the Mandatory Conversion (the “Mandatory Conversion Notice”)
to be mailed to the Holder, at such Holder’s address, at least ten (10) days prior to the Mandatory Conversion Date.
Notwithstanding the foregoing provisions of this Section 4(c), the Holder may convert any portion of this Note pursuant to Section
4(a) on or prior to the date immediately preceding the date of such Mandatory Conversion.
| d) | Mechanics of Conversion. |
i. Conversion
Shares Issuable Upon a Conversion. The number of Conversion Shares issuable upon a conversion hereunder shall be determined
by the quotient obtained by dividing (x) the sum of all outstanding (i) principal, (ii) interest, and (iii) any other amount due
under this Note to be converted as provided in the applicable Notice of Conversion by (y) the Conversion Price.
ii. Delivery
of Certificate Upon Conversion. Not later than two (2) Trading Days after each Conversion Date (the “Share Delivery
Date”), the Company shall deliver, or cause to be delivered, to the Holder (A) a certificate or certificates representing
the Conversion Shares which, on or after the date on which if the resale of such Conversion Shares are covered by and are being
sold pursuant to an effective Registration Statement or such Conversion Shares are eligible to be sold under Rule 144 without the
need for current public information and the Company has received an opinion of counsel to such effect reasonably acceptable to
the Company (which opinion the Company will be responsible for obtaining at its own cost) shall be free of restrictive legends
and trading restrictions (other than those which may then be required by the Purchase Agreement) representing the number of Conversion
Shares being acquired or being sold, as the case may be, upon the conversion of this Note, and (B) a bank check in the amount of
accrued and unpaid interest (if the Company has elected to pay accrued interest in cash). All certificate or certificates required
to be delivered by the Company under this Section 4(d) shall be delivered electronically through DTC or another established clearing
corporation performing similar functions, unless the Company or its Transfer Agent does not have an account with DTC and/or is
not participating in the DTC Fast Automated Securities Transfer Program, then the Company shall issue and deliver to the address
as specified in such Conversion Notice, a certificate (or certificates), registered in the name of the Holder or its designee,
for the number of Conversion Shares to which the Holder shall be entitled. If the Conversion Shares are not being sold pursuant
to an effective Registration Statement or if the Conversion Date is prior to the date on which such Conversion Shares are eligible
to be sold under Rule 144 without the need for current public information, the Conversion Shares shall bear a restrictive legend
in the following form, as appropriate:
“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 (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN
A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE
144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.”
Notwithstanding the foregoing,
commencing on such date that the Conversion Shares are eligible for sale under Rule 144 subject to current public information requirements,
the Company, upon request and at the Company’s expense, shall obtain a legal opinion to allow for such sales under Rule 144.
iii. Failure
to Deliver Certificates. If, in the case of any Notice of Conversion, such certificate or certificates are not delivered to
or as directed by the applicable Holder by the Share Delivery Date, the Holder shall be entitled to elect by written notice to
the Company at any time on or before its receipt of such certificate or certificates, to rescind such Conversion, in which event
the Company shall promptly return to the Holder any original Note delivered to the Company and the Holder shall promptly return
to the Company the Common Stock certificates issued to such Holder pursuant to the rescinded Conversion Notice.
iv. Obligation
Absolute; Partial Liquidated Damages. The Company’s obligations to issue and deliver the Conversion Shares upon conversion
of this Note in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by the
Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any
Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or
alleged breach by the Holder or any other Person of any obligation to the Company or any violation or alleged violation of law
by the Holder or any other Person, and irrespective of any other circumstance which might otherwise limit such obligation of the
Company to the Holder in connection with the issuance of such Conversion Shares; provided, however, that such delivery
shall not operate as a waiver by the Company of any such action the Company may have against the Holder. In the event the Holder
of this Note shall elect to convert any or all of the outstanding principal or interest amount hereof, the Company may not refuse
conversion based on any claim that the Holder or anyone associated or affiliated with the Holder has been engaged in any violation
of law, agreement or for any other reason, unless an injunction from a court, on notice to Holder, restraining and or enjoining
conversion of all or part of this Note shall have been sought. If the injunction is not granted, the Company shall promptly comply
with all conversion obligations herein. If the injunction is obtained, the Company must post a surety bond for the benefit of the
Holder in the amount of 150% of the outstanding principal amount of this Note, which is subject to the injunction, which bond shall
remain in effect until the completion of arbitration/litigation of the underlying dispute and the proceeds of which shall be payable
to the Holder to the extent it obtains judgment. In the absence of seeking such injunction, the Company shall issue Conversion
Shares or, if applicable, cash, upon a properly noticed conversion. If the Company fails for any reason to deliver to the Holder
such certificate or certificates pursuant to Section 4(d)(ii) by the Share Delivery Date, the Company shall pay to the Holder,
in cash, as liquidated damages and not as a penalty, $1,000 per Trading Day for each Trading Day after such Share Delivery Date
until such certificates are delivered or Holder rescinds such conversion. Nothing herein shall limit a Holder’s right to
pursue actual damages or declare an Event of Default pursuant to Section 6 hereof for the Company’s failure to deliver Conversion
Shares within the period specified herein and the Holder shall have the right to pursue all remedies available to it hereunder,
at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief. The exercise of any
such rights shall not prohibit the Holder from seeking to enforce damages pursuant to any other Section hereof or under applicable
law.
v. Compensation
for Buy-In on Failure to Timely Deliver Certificates Upon Conversion. In addition to any other rights available to the Holder,
if the Company fails for any reason to deliver to the Holder such certificate or certificates by the Share Delivery Date pursuant
to Section 4(d)(ii), and if after such Share Delivery Date the Holder is required by its brokerage firm to purchase (in an open
market transaction or otherwise), or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in
satisfaction of a sale by the Holder of the Conversion Shares which the Holder was entitled to receive upon the conversion relating
to such Share Delivery Date (a “Buy-In”), then the Company shall (A) pay in cash to the Holder (in addition
to any other remedies available to or elected by the Holder) the amount, if any, by which (x) the Holder’s total purchase
price (including any brokerage commissions) for the Common Stock so purchased exceeds (y) the product of (1) the aggregate number
of shares of Common Stock that the Holder was entitled to receive from the conversion at issue multiplied by (2) the actual sale
price at which the sell order giving rise to such purchase obligation was executed (including any brokerage commissions) and (B)
at the option of the Holder, either reissue (if surrendered) this Note in a principal amount equal to the principal amount of the
attempted conversion (in which case such conversion shall be deemed rescinded) or deliver to the Holder the number of shares of
Common Stock that would have been issued if the Company had timely complied with its delivery requirements under Section 4(d)(ii).
For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an
attempted conversion of this Note with respect to which the actual sale price of the Conversion Shares (including any brokerage
commissions) giving rise to such purchase obligation was a total of $10,000 under clause (A) of the immediately preceding sentence,
the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts
payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein
shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without
limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver
certificates representing shares of Common Stock upon conversion of this Note as required pursuant to the terms hereof.
vi. Reservation
of Shares Issuable Upon Conversion. The Company covenants that it will at all times reserve and keep available out of its authorized
and unissued shares of Common Stock a number of shares of Common Stock at least equal to 300% of the Required Minimum for the sole
purpose of issuance upon conversion of this Note and payment of interest on this Note, each as herein provided, free from preemptive
rights or any other actual contingent purchase rights of Persons other than the Holder (and the other holders of the Notes), not
less than such aggregate number of shares of the Common Stock as shall (subject to the terms and conditions set forth in the Purchase
Agreement) be issuable (taking into account the adjustments and restrictions of Section 5, but ignoring any Beneficial Ownership
Limitations or other restrictions and/or limitations on conversions set forth herein or elsewhere) upon the conversion of the then
outstanding principal amount of this Note and payment of interest hereunder. The Company covenants that all shares of Common Stock
that shall be so issuable shall, upon issue, be duly authorized, validly issued, fully paid and nonassessable, and, at such times
as a Registration Statement covering such shares is then effective under the Securities Act, will be registered for public resale
in accordance with such Registration Statement. For purposes of this Note, the “Required Minimum” shall be defined
as all outstanding debt plus interest and any fees divided by the lower of (a)
the Conversion Price as on the date of Closing or, (b) in the event that the price of the Company’s Common Stock is below
the Conversion Price, the Alternate Conversion Price. The Company shall be required to calculate the Required Minimum on the first
trading day of each month that the Note is outstanding and provide such calculation to the Holder and the transfer agent promptly.
For purposes of calculating the Required Minimum, Company shall assume that all principal will remain outstanding for eighteen
(18) months and all accrued but unpaid interest hereon accrues at the rate of 18% per annum, is paid on the date 18 months from
the Original Issue Date and all amounts convert into shares of Common Stock at the Alternative Conversion Price.
vii. Fractional
Shares. No fractional shares or scrip representing fractional shares shall be issued upon the conversion of this Note. As to
any fraction of a share which the Holder would otherwise be entitled to purchase upon such conversion, the Company shall at its
election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the
Conversion Price or round up to the next whole share.
viii. Transfer
Taxes and Expenses. The issuance of certificates for shares of the Common Stock on conversion of this Note shall be made without
charge to the Holder hereof for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery
of such certificates, provided that, the Company shall not be required to pay any tax that may be payable in respect of any transfer
involved in the issuance and delivery of any such certificate upon conversion in a name other than that of the Holder of this Note
so converted and the Company shall not be required to issue or deliver such certificates unless or until the Person or Persons
requesting the issuance thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction
of the Company that such tax has been paid. The Company shall pay all Transfer Agent fees required for same-day processing of any
Notice of Conversion.
e) Holder’s
Conversion Limitations. The Company shall not effect any conversion of principal and/or interest of this Note, and a Holder
shall not have the right to convert any principal and/or interest of this Note, to the extent that after giving effect to the conversion
set forth on the applicable Notice of Conversion, the Holder (together with the Holder’s Affiliates, and any Persons acting
as a group together with the Holder or any of the Holder’s Affiliates) would beneficially own in excess of the Beneficial
Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially
owned by the Holder and its Affiliates shall include the number of shares of Common Stock issuable upon conversion of this Note
with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which are issuable
upon (i) conversion of the remaining, unconverted principal amount of this Note beneficially owned by the Holder or any of its
Affiliates and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company subject
to a limitation on conversion or exercise analogous to the limitation contained herein (including, without limitation, any other
Notes) beneficially owned by the Holder or any of its Affiliates. Except as set forth in the preceding sentence, for purposes
of this Section 4(e), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules
and regulations promulgated thereunder. To the extent that the limitation contained in this Section 4(e) applies, the determination
of whether this Note is convertible (in relation to other securities owned by the Holder together with any Affiliates) and of which
principal amount of this Note is convertible shall be in the sole discretion of the Holder, and the submission of a Notice of Conversion
shall be deemed to be the Holder’s determination of whether this Note may be converted (in relation to other securities owned
by the Holder together with any Affiliates) and which principal amount of this Note is convertible, in each case subject to the
Beneficial Ownership Limitation. To ensure compliance with this restriction, the Holder will be deemed to represent to the Company
each time it delivers a Notice of Conversion that such Notice of Conversion has not violated the restrictions set forth in this
paragraph and the Company shall have no obligation to verify or confirm the accuracy of such determination. In
addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of
the Exchange Act and the rules and regulations promulgated thereunder.
For purposes of this Section 4(e), in determining the number of outstanding shares of Common Stock, the Holder may rely on the
number of outstanding shares of Common Stock as stated in the most recent of the following: (i) the Company’s most recent
periodic or annual report filed with the Commission, as the case may be, (ii) a more recent public announcement by the Company,
or (iii) a more recent written notice by the Company or the Company’s transfer agent setting forth the number of shares of
Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall within two Trading Days confirm
orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding
shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including
this Note, by the Holder or its Affiliates since the date as of which such number of outstanding shares of Common Stock was reported.
The “Beneficial Ownership Limitation” shall be 4.99% of the number of shares of the Common Stock outstanding
immediately after giving effect to the issuance of shares of Common Stock issuable upon conversion of this Note held by the Holder.
The Holder, upon not less than 61 days’ prior notice to the Company, may increase or decrease the Beneficial Ownership Limitation
provisions of this Section 4(e), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares
of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon conversion of this
Note held by the Holder and the Beneficial Ownership Limitation provisions of this Section 4(e) shall continue to apply. Any such
increase or decrease will not be effective until the 61st day after such notice is delivered to the Company.
The Beneficial Ownership Limitation provisions of this paragraph shall be
construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 4(e) to correct this paragraph
(or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation contained herein
or to make changes or supplements necessary or desirable to properly give effect to such limitation.
The limitations contained in this paragraph shall apply to a successor holder of this Note.
Section 5. Certain
Adjustments.
a) Stock
Dividends and Stock Splits. If the Company, at any time while this Note is outstanding: (i) pays a stock dividend or otherwise
makes a distribution or distributions payable in shares of Common Stock on shares of Common Stock or any Common Stock Equivalents
(which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon conversion of, or payment
of interest on, the Notes), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including
by way of a reverse stock split) outstanding shares of Common Stock into a smaller number of shares or (iv) issues, in the event
of a reclassification of shares of the Common Stock, any shares of capital stock of the Company, then the Conversion Price shall
be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding any treasury shares
of the Company) outstanding immediately before such event, and of which the denominator shall be the number of shares of Common
Stock outstanding immediately after such event. Any adjustment made pursuant to this Section shall become effective immediately
after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become
effective immediately after the effective date in the case of a subdivision, combination or re-classification.
b) Subsequent
Equity Sales. If, at any time while this Note is outstanding, the Company or any Subsidiary, as applicable, sells or grants
any option to purchase or sells or grants any right to reprice, or otherwise disposes of or issues (or announces any sale, grant
or any option to purchase or other disposition), any Common Stock or Common Stock Equivalents entitling any Person to acquire shares
of Common Stock at an effective price per share that is lower than the then Conversion Price (such lower price, the “Base
Conversion Price” and such issuances, collectively, a “Dilutive Issuance”) (if the holder of the Common
Stock or Common Stock Equivalents so issued shall at any time, whether by operation of purchase price adjustments, reset provisions,
floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which are issued
in connection with such issuance, be entitled to receive shares of Common Stock at an effective price per share that is lower than
the Conversion Price, such issuance shall be deemed to have occurred for less than the Conversion Price on such date of the Dilutive
Issuance), then the Conversion Price shall be reduced to equal the Base Conversion Price. Such adjustment shall be made whenever
such Common Stock or Common Stock Equivalents are issued. Notwithstanding the foregoing, no adjustment will be made under this
Section 5(b) in respect of an Exempt Issuance. The Company shall notify the Holder in writing, no later than the Trading Day following
the issuance of any Common Stock or Common Stock Equivalents subject to this Section 5(b), indicating therein the applicable issuance
price, or applicable reset price, exchange price, conversion price and other pricing terms (such notice, the “Dilutive
Issuance Notice”). For purposes of clarification, whether or not the Company provides a Dilutive Issuance Notice pursuant
to this Section 5(b), upon the occurrence of any Dilutive Issuance, the Holder is entitled to receive a number of Conversion Shares
based upon the Base Conversion Price on or after the date of such Dilutive Issuance, regardless of whether the Holder accurately
refers to the Base Conversion Price in the Notice of Conversion.
c) Subsequent
Rights Offerings. In addition to any adjustments pursuant to Section 5(a) above, if at any time the Company grants, issues
or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record
holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled to
acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired
if the Holder had held the number of shares of Common Stock acquirable upon complete conversion of this Note (without regard to
any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date
on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as
of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights
(provided, however, to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder
exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such
extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase
Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in
the Holder exceeding the Beneficial Ownership Limitation).
d) Intentionally
Omitted.
e) Fundamental
Transaction. The Company shall not, directly or indirectly, in one or more related transactions, effect any merger or consolidation
of the Company and/or or any of its Subsidiaries with and/or into another Person, without the express written consent of 90% of
the then issued and outstanding principal amount of Notes (the “90% Amount”). If, subject to the Company obtaining
written consent of the 90% Amount, at any time while this Note is outstanding (i) the Company, directly or indirectly, in one or
more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly
or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially
all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange
offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell,
tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the
outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification,
reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively
converted into or exchanged for other securities, cash or property, (v) the Company, directly or indirectly, in one or more related
transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization,
recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person acquires more than 50% of the
outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or
party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other
business combination) (each a “Fundamental Transaction”), then, upon any subsequent conversion of this Note,
the Holder shall have the right to receive, for each Conversion Share that would have been issuable upon such conversion immediately
prior to the occurrence of such Fundamental Transaction (without regard to any limitation in Section 4(e) on the conversion of
this Note), the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving
corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such
Fundamental Transaction by a holder of the number of shares of Common Stock for which this Note is convertible immediately prior
to such Fundamental Transaction (without regard to any limitation in Section 4(e) on the conversion of this Note). For purposes
of any such conversion, the determination of the Conversion Price shall be appropriately adjusted to apply to such Alternate Consideration
based on the amount of Alternate Consideration issuable in respect of one (1) share of Common Stock in such Fundamental Transaction,
and the Company shall apportion the Conversion Price among the Alternate Consideration in a reasonable manner reflecting the relative
value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities,
cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate
Consideration it receives upon any conversion of this Note following such Fundamental Transaction. The Company shall cause any
successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”)
to assume in writing all of the obligations of the Company under this Note and the other Transaction Documents (as defined in the
Purchase Agreement) in accordance with the provisions of this Section 5(e) pursuant to written agreements in form and substance
reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction
and shall, at the option of the holder of this Note, deliver to the Holder in exchange for this Note a security of the Successor
Entity evidenced by a written instrument substantially similar in form and substance to this Note which is convertible for a corresponding
number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable
and receivable upon conversion of this Note (without regard to any limitations on the conversion of this Note) prior to such Fundamental
Transaction, and with a conversion price which applies the conversion price hereunder to such shares of capital stock (but taking
into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares
of capital stock, such number of shares of capital stock and such conversion price being for the purpose of protecting the economic
value of this Note immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory
in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed
to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this 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.
f) Calculations.
All calculations under this Section 5 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be.
For purposes of this Section 5, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall
be the sum of the number of shares of Common Stock (excluding any treasury shares of the Company) issued and outstanding.
g) Notice
to the Holder.
i. Adjustment
to Conversion Price. Whenever the Conversion Price is adjusted pursuant to any provision of this Section 5, the Company shall
promptly deliver to each Holder a notice setting forth the Conversion Price after such adjustment and setting forth a brief statement
of the facts requiring such adjustment.
ii. Notice
to Allow Conversion by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on
the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C)
the Company shall authorize the granting to all holders of the Common Stock of rights or warrants to subscribe for or purchase
any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required
in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any
sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common
Stock is converted into other securities, cash or property or (E) the Company shall authorize the voluntary or involuntary dissolution,
liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be filed at each office
or agency maintained for the purpose of conversion of this Note, and shall cause to be delivered to the Holder at its last address
as it shall appear upon the Note Register, at least twenty (20) calendar days prior to the applicable record or effective date
hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution,
redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record
to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such
reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date
as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common
Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or
share exchange, provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect
the validity of the corporate action required to be specified in such notice. To the extent that any notice provided hereunder
constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries, the Company shall
simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain entitled
to convert this Note during the 20-day period commencing on the date of such notice through the effective date of the event triggering
such notice except as may otherwise be expressly set forth herein.
Section 6. Events
of Default.
a) “Event
of Default” means, wherever used herein, any of the following events (whatever the reason for such event and whether
such event shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any
court, or any order, rule or regulation of any administrative or governmental body):
i. any
default in the payment of (A) the principal amount of any Note or (B) interest, liquidated damages, Late Fees and other amounts
owing to a Holder on any Note, as and when the same shall become due and payable (whether on a Conversion Date or the Maturity
Date or by acceleration or otherwise) which default, solely in the case of an interest payment or other default under clause (B)
above, is not cured within 3 Trading Days;
ii. the
Company shall fail to observe or perform any other material covenant or agreement contained in the Notes (and other than a breach
by the Company of its obligations to deliver shares of Common Stock to the Holder upon conversion, which breach is addressed in
clause (ix) below) which failure is not cured, if possible to cure, within the earlier to occur of (A) 5 Trading Days after notice
of such failure sent by the Holder or by any other Holder to the Company and (B) 10 Trading Days after the Company has become or
should have become aware of such failure;
iii. a
material default or material event of default (subject to any grace or cure period provided in the applicable agreement, document
or instrument) shall occur under (A) any of the Transaction Documents or (B) any other material agreement, lease, document or instrument
to which the Company or any Subsidiary is obligated and/or which any of their respective assets are subject to or bound by (and
not covered by clause (vi) below);
iv. any
representation or warranty made in this Note, any other Transaction Documents, any written statement pursuant hereto or thereto
or any other report, financial statement or certificate made or delivered to the Holder or any other Holder shall be untrue or
incorrect in any material respect as of the date when made or deemed made;
v. the
Company or any Subsidiary (as such term is defined in Rule 1-02(w) of Regulation S-X) shall be subject to a Bankruptcy Event;
vi. the
Company or any Subsidiary shall default on any of its obligations under any mortgage, credit agreement or other facility, indenture
agreement, factoring agreement or other instrument under which there may be issued, or by which there may be secured or evidenced,
any indebtedness for borrowed money or money due under any long term leasing or factoring arrangement that (a) involves an obligation
greater than $50,000, whether such indebtedness now exists or shall hereafter be created, and (b) results in such indebtedness
becoming or being declared due and payable prior to the date on which it would otherwise become due and payable;
vii. the
Common Stock shall not be eligible for listing or quotation for trading on a Trading Market and shall not be eligible to resume
listing or quotation for trading thereon within five Trading Days or the transfer of shares of Common Stock through the Depository
Trust Company System is no longer available, “frozen” or “chilled”;
viii. the
Company shall be a party to any Change of Control Transaction or Fundamental Transaction or shall agree to sell or dispose of all
or a portion of its assets in one transaction or a series of related transactions, without the approval of the Holder or Holders
as provided in the Purchase Agreement (whether or not such sale would constitute a Change of Control Transaction);
ix. the
Company does not meet the current public information requirements under Rule 144 in respect of the Registrable Securities (as defined
in the Registration Rights Agreement);
x. if,
during the Effectiveness Period (as defined in the Registration Rights Agreement), either (a) the effectiveness of the Registration
Statement lapses for any reason or (b) the Holder shall not be permitted to resell any Registrable Securities (as defined in the
Registration Rights Agreement) under the Registration Statement for a period of more than 20 consecutive Trading Days or 30 non-consecutive
Trading Days during any 12 month period; provided, however, that if the Company is negotiating a merger, consolidation,
acquisition or sale of all or substantially all of its assets or a similar transaction and, in the written opinion of counsel to
the Company, the Registration Statement would be required to be amended to include information concerning such pending transaction(s)
or the parties thereto which information is not available or may not be publicly disclosed at the time, the Company shall be permitted
an additional 10 consecutive Trading Days during any 12 month period pursuant to this Section 6(a)(x);
xi. the
Company shall fail for any reason to deliver certificates to a Holder prior to the third Trading Day after a Conversion Date pursuant
to Section 4(d) or the Company shall provide at any time notice to the Holder, including by way of public announcement, of the
Company’s intention to not honor requests for conversions of any Notes in accordance with the terms hereof;
xii. the
Company fails to file with the Commission any required reports under Section 13 or 15(d) of the Exchange Act such that it is not
in compliance with Rule 144(c)(1) (or Rule 144(i)(2), if applicable);
xiii. the
Company or any Subsidiary shall: (i) apply for or consent to the appointment of a receiver, trustee, custodian or liquidator of
it or any of its properties, (ii) admit in writing its inability to pay its debts as they mature, (iii) make a general assignment
for the benefit of creditors, (iv) be adjudicated a bankrupt or insolvent or be the subject of an order for relief under Title
11 of the United States Code or any bankruptcy, reorganization, insolvency, readjustment of debt, dissolution or liquidation law
or statute of any other jurisdiction or foreign country, or (v) file a voluntary petition in bankruptcy, or a petition or an answer
seeking reorganization or an arrangement with creditors or to take advantage or any bankruptcy, reorganization, insolvency, readjustment
of debt, dissolution or liquidation law or statute, or an answer admitting the material allegations of a petition filed against
it in any proceeding under any such law, or (vi) take or permit to be taken any action in furtherance of or for the purpose of
effecting any of the foregoing;
xiv. if
any order, judgment or decree shall be entered, without the application, approval or consent of the Company or any Subsidiary,
by any court of competent jurisdiction, approving a petition seeking liquidation or reorganization of the Company or any Subsidiary,
or appointing a receiver, trustee, custodian or liquidator of the Company or any Subsidiary, or of all or any substantial part
of its assets, and such order, judgment or decree shall continue unstayed and in effect for any period of sixty (60) days;
xv. the
occurrence of any levy upon or seizure or attachment of, or any uninsured loss of or damage to, any property of the Company or
any Subsidiary having an aggregate fair value or repair cost (as the case may be) in excess of $100,000 individually or in the
aggregate, and any such levy, seizure or attachment shall not be set aside, bonded or discharged within thirty (30) days after
the date thereof;
xvi. the
Company shall fail to maintain sufficient reserved shares pursuant to Section 4.1(n) of the Purchase Agreement and/or there is
a Breach (as defined in the Letter Agreement) by the Company of the Letter Agreement;
xvii. any
monetary judgment, writ or similar final process shall be entered or filed against the Company, any subsidiary or any of their
respective property or other assets for more than $50,000, and such judgment, writ or similar final process shall remain unvacated,
unbonded or unstayed for a period of 45 calendar days;
xviii. the
Company, without the written consent of the Holders, shall enter into, create, incur, assume, guarantee or suffer to exist any
indebtedness for borrowed money of any kind, including but not limited to, a guarantee, on or with respect to any of its property
or assets now owned or hereafter acquired or any interest therein or any income or profits therefrom;
xix. the
Company, without the written consent of the Holders, shall enter into, create, incur, assume or suffer to exist any liens of any
kind, on or with respect to any of its property or assets now owned or hereafter acquired or any interest therein or any income
or profits therefrom;
xx. the
Company, without the written consent of the Holders, shall repay, repurchase or offer to repay, repurchase or otherwise acquire
of any shares of its Common Stock, Common Stock Equivalents or Junior Securities, other than as to the Conversion Shares or Warrant
Shares (as those terms are defined the in Certificate Of Designation of Preferences, Rights And Limitations of Series H 12% Convertible
Preferred Stock) as permitted or required under the Transaction Documents (as that term is defined in the Securities Purchase Agreement
of even date hereof);
xxi. the
Company, without the written consent of the Holders, pays cash dividends or distributions on Junior Securities (as that term is
defined the in Certificate Of Designation of Preferences, Rights And Limitations of Series H 12% Convertible Preferred Stock) of
the Company;
xxii. the
Company enters into any transaction with any Affiliate of the Company which would be required to be disclosed in any public filing
with the Commission.
b) Remedies
Upon Event of Default. Subject to the Beneficial Ownership Limitation as set forth in Section 4(e), if any Event of Default
occurs, then the outstanding principal amount of this Note, plus accrued but unpaid interest, liquidated damages and other amounts
owing in respect thereof through the date of acceleration, shall become, at the Holder’s election, immediately due and payable
in cash at the Mandatory Default Amount. After the occurrence of any Event of Default that results in the eventual acceleration
of this Note, the interest rate on this Note shall accrue at an additional interest rate equal to the lesser of 2% per month (24%
per annum) or the maximum rate permitted under applicable law. Upon the payment in full of the Mandatory Default Amount, the Holder
shall promptly surrender this Note to or as directed by the Company. In connection with such acceleration described herein, the
Holder need not provide, and the Company hereby waives, any presentment, demand, protest or other notice of any kind, and the Holder
may immediately and without expiration of any grace period enforce any and all of its rights and remedies hereunder and all other
remedies available to it under applicable law. Such acceleration may be rescinded and annulled by Holder at any time prior to payment
hereunder and the Holder shall have all rights as a holder of the Note until such time, if any, as the Holder receives full payment
pursuant to this Section 6(b). No such rescission or annulment shall affect any subsequent Event of Default or impair any right
consequent thereon. Alternatively, at the election of the Holder, the Holder require the Company to redeem all of the Notes then
held by such Holder though the issuance to such Holder of such number of shares of Common Stock equal to the quotient of (x) the
Default Redemption Amount, divided by (y) the lowest of (1) the Conversion Price, (2) the Qualified Public Offering Conversion
Price and (3) 75% of the average of the 10 VWAPs immediately prior to the date of election hereunder, or (ii) increase the
dividend rate on all of the outstanding Notes held by such Holder retroactively to the initial Closing Date to 18% per annum
thereafter. The Default Redemption Amount, whether payable in cash or in shares, shall be due and payable or issuable, as the case
may be, within five (5) Trading Days of the date on which the notice for the payment therefor is provided by a Holder (the “Default
Redemption Payment Date”). If the Company fails to pay in full the Default Redemption Amount hereunder on the date such
amount is due in accordance with this Section (whether in cash or shares of Common Stock), the Company will pay interest thereon
at a rate equal to the lesser of 18% per annum or the maximum rate permitted by applicable law, accruing and compounding daily
from such date until the Default Redemption Amount, plus all such interest thereon, is paid in full.
Section 7. Prepayment
At any time
upon five (5) days prior written notice to the Holder, but subject to the Holder’s conversion rights set forth herein, the
Company may prepay any portion of the principal amount of this Note, all accrued and unpaid interest relating to such prepaid portion
of the principal and all other amounts due under this Note. The written notice shall, among other items, state the date such Prepayment
Amount (as defined below) is to be paid to the Holder, which shall not in any event be later than 5 days from the date of mailing
of the prepayment notice to the Holder (“the Prepayment Date”). If the Company exercises its right to prepay
the Note, the Company shall make payment to the Holder of an amount in cash equal to the product of (i) the sum of (x) the then
outstanding principal amount of this Note, (y) all accrued but unpaid interest and (z) all other amounts owed pursuant to this
Note including, but not limited to, all Late Fees and liquidated damages (collectively the “Prepayment Amount”),
multiplied by (ii) (x) 120%, or (y) 130%, if a Qualified Public Offering has previously occurred. The Holder may continue to convert
the Note from the date notice of the prepayment is given until the date the Holder receives in full, the Prepayment Amount. If
the entire Prepayment Amount is not received by the Holder in immediately available funds by wire transfer pursuant to wire transfer
instructions provided to the Company by the Holder, on or before the Prepayment Date, such shall, (at the election of the Holder)
be an Event of Default of the payment of principal pursuant to Section 6(a)(1) hereof.
Section 8. Miscellaneous.
a) Notices.
Any and all notices or other communications or deliveries to be provided by the Holder hereunder, including, without limitation,
any Notice of Conversion, shall be in writing and delivered personally, by facsimile, or sent by a nationally recognized overnight
courier service, addressed to the Company, at 655 Montgomery Street, Suite 900, San Francisco, California 94111, or such other
facsimile number or address as the Company may specify for such purposes by notice to the Holder delivered in accordance with this
Section 8(a). Any and all notices or other communications or deliveries to be provided by the Company hereunder shall be in writing
and delivered personally, by facsimile, or sent by a nationally recognized overnight courier service addressed to each Holder at
the facsimile number or address of the Holder appearing on the books of the Company, or if no such facsimile number or address
appears on the books of the Company, at the principal place of business of such Holder, as set forth in the Purchase Agreement.
Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the date of
transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages
attached hereto prior to 12:00 p.m. (New York City time) on any date, (ii) the next Trading Day after the date of transmission,
if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto
on a day that is not a Trading Day or later than 12:00 p.m. (New York City time) on any Trading Day, (iii) the second Trading Day
following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (iv) upon actual receipt by the
party to whom such notice is required to be given.
b) Absolute
Obligation. Except as expressly provided herein, no provision of this Note shall alter or impair the obligation of the Company,
which is absolute and unconditional, to pay the principal of, liquidated damages and accrued interest, as applicable, on this Note
at the time, place, and rate, and in the coin or currency, herein prescribed. This Note is a direct debt obligation of the Company.
This Note ranks pari passu with all other Notes now or hereafter issued under the terms set forth herein.
c) Lost
or Mutilated Note. If this Note shall be mutilated, lost, stolen or destroyed, the Company shall execute and deliver, in exchange
and substitution for and upon cancellation of a mutilated Note, or in lieu of or in substitution for a lost, stolen or destroyed
Note, a new Note for the principal amount of this Note so mutilated, lost, stolen or destroyed, but only upon receipt of evidence
of such loss, theft or destruction of such Note, and of the ownership hereof, reasonably satisfactory to the Company.
d) Governing
Law. All questions concerning the construction, validity, enforcement and interpretation of this Note shall be governed by
and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflict
of laws thereof. Each party agrees that all legal proceedings concerning the interpretation, enforcement and defense of the transactions
contemplated by any of the Transaction Documents (whether brought against a party hereto or its respective Affiliates, directors,
officers, shareholders, employees or agents) shall be commenced in the state and federal courts sitting in the City of New York,
Borough of Manhattan (the “New York Courts”). Each party hereto hereby irrevocably submits to the exclusive
jurisdiction of the New York Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby
irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of such New York Courts, or such New York Courts are improper or inconvenient venue for such proceeding. Each
party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding
by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the
address in effect for notices to it under this Note and agrees that such service shall constitute good and sufficient service of
process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other
manner permitted by applicable law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable
law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Note or the transactions contemplated
hereby. If any party shall commence an action or proceeding to enforce any provisions of this Note, then the prevailing party in
such action or proceeding shall be reimbursed by the other party for its attorneys fees and other costs and expenses incurred in
the investigation, preparation and prosecution of such action or proceeding.
e) Waiver.
Any waiver by the Company or the Holder of a breach of any provision of this Note shall not operate as or be construed to be a
waiver of any other breach of such provision or of any breach of any other provision of this Note. The failure of the Company or
the Holder to insist upon strict adherence to any term of this Note on one or more occasions shall not be considered a waiver or
deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Note on any other
occasion. Any waiver by the Company or the Holder must be in writing.
f) Severability.
If any provision of this Note is invalid, illegal or unenforceable, the balance of this Note shall remain in effect, and if any
provision is inapplicable to any Person or circumstance, it shall nevertheless remain applicable to all other Persons and circumstances.
If it shall be found that any interest or other amount deemed interest due hereunder violates the applicable law governing usury,
the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum rate of interest permitted under
applicable law. The Company covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead,
or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would
prohibit or forgive the Company from paying all or any portion of the principal of or interest on this Note as contemplated herein,
wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Note, and
the Company (to the extent it may lawfully do so) hereby expressly waives all benefits or advantage of any such law, and covenants
that it will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Holder, but
will suffer and permit the execution of every such as though no such law has been enacted.
g) Remedies,
Characterizations, Other Obligations, Breaches and Injunctive Relief. The remedies provided in this Note shall be cumulative
and in addition to all other remedies available under this Note and any of the other Transaction Documents at law or in equity
(including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the Holder’s
right to pursue actual and consequential damages for any failure by the Company to comply with the terms of this Note. The
Company covenants to the Holder that there shall be no characterization concerning this instrument other than as expressly provided
herein. Amounts set forth or provided for herein with respect to payments, 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.
h) Next
Business Day. Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment
shall be made on the next succeeding Business Day.
i) Headings.
The headings contained herein are for convenience only, do not constitute a part of this Note and shall not be deemed to limit
or affect any of the provisions hereof.
*********************
(Signature Pages Follow)
IN WITNESS WHEREOF,
the Company has caused this Note to be duly executed by a duly authorized officer as of the date first above indicated.
| |
Amarantus Bioscience Holdings, Inc. |
| |
|
|
|
| |
By: |
|
|
| |
|
Name: |
|
| |
|
Title: |
|
| |
Facsimile No. for delivery of Notices: |
|
ANNEX A
NOTICE OF CONVERSION
The undersigned hereby
elects to convert principal, accrued but unpaid interest and/or any of amounts due under the 12% Senior Secured Convertible Promissory
Note due September 29, 2016 of Amarantus Bioscience Holdings, Inc., a Nevada corporation (the “Company”), into
shares of common stock (the “Common Stock”), of the Company according to the conditions hereof, as of the date
written below. If shares of Common Stock are to be issued in the name of a person other than the undersigned, the undersigned will
pay all transfer taxes payable with respect thereto and is delivering herewith such certificates and opinions as reasonably requested
by the Company in accordance therewith. No fee will be charged to the holder for any conversion, except for such transfer taxes,
if any.
By the delivery of
this Notice of Conversion the undersigned represents and warrants to the Company that its ownership of the Common Stock does not
exceed the amounts specified under Section 4 of this Note, as determined in accordance with Section 13(d) of the Exchange Act.
The undersigned agrees
to comply with the prospectus delivery requirements under the applicable securities laws in connection with any transfer of the
aforesaid shares of Common Stock, if the resale of any such shares of Common Stock are covered by and are being sold pursuant to
an effective Registration Statement.
Conversion calculations:
| |
Date
to Effect Conversion: |
|
| |
Principal
Amount of Note to be Converted: |
|
| |
Payment
of Interest in Common Stock __ yes __ no |
| |
If
yes, $_____ of Interest Accrued on Account of Conversion at Issue. |
| |
Other
Amounts Owed Under this Note to be Converted |
| |
including
Late Fees: |
|
| |
Number
of shares of Common Stock to be issued: |
|
Schedule 1
CONVERSION SCHEDULE
This 12% Senior Secured Convertible Promissory
Note due on September 29, 2016 in the original principal amount of $3,055,556 is issued by Amarantus Bioscience Holdings, Inc.,
a Nevada corporation. This Conversion Schedule reflects conversions made under Section 4 of the above referenced Note.
Dated:
Date of Conversion
(or for first entry,
Original Issue Date) |
|
Amount of
Conversion |
|
Aggregate
Principal
Amount
Remaining
Subsequent to
Conversion
(or original
Principal
Amount) |
|
Company Attest |
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
Exhibit 10.5
SECURITY
AGREEMENT
This
SECURITY AGREEMENT, dated as of September 30, 2015 (this “Agreement”), is among Amarantus Bioscience Holdings,
Inc. (the “Company”), all of the Subsidiaries of the Company, which Subsidiaries are set forth on Schedule
1 hereto the Subsidiaries, and together with the Company, collectively the “Debtors”) and the holders of the
Company’s 12% Senior Secured Convertible Promissory Notes in the original aggregate principal amount of $6,076,556 due on
or about September 29, 2016 (collectively, the “Notes”) signatory hereto, their endorsees, transferees and
assigns (collectively, the “Secured Parties”).
WITNESSETH:
WHEREAS,
in order to induce the Secured Parties to extend the loans evidenced by the Notes and to consummate the other simultaneous transactions
contemplated by Purchase Agreement (the “Simultaneous Transactions”), the Debtors have agreed to execute and
deliver to the Secured Parties this Agreement and to grant the Secured Parties, pari passu with each other Secured
Party and through the Agent (as defined in Section 18 hereof), a security interest in the Collateral to secure the prompt payment,
performance and discharge in full of all of the Debtors’ Obligations to the Secured Parties including, but not limited to,
under the Notes, the Securities Purchase Agreement dated on or about September 15, 2015 by and among Dominion Capital. LLC (“Dominion”),
Delafield Investments Limited (“Delafield”) and the Company (the “Purchase Agent”)
NOW,
THEREFORE, in consideration of the agreements herein contained and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:
1. Certain
Definitions. As used in this Agreement, the following terms shall have the meanings set forth in this Section 1. Terms used
but not otherwise defined in this Agreement that are defined in Article 9 of the UCC (such as “account”, “chattel
paper”, “commercial tort claim”, “deposit account”, “document”, “equipment”,
“fixtures”, “general intangibles”, “goods”, “instruments”, “inventory”,
“investment property”, “letter-of-credit rights”, “proceeds” and “supporting obligations”)
shall have the respective meanings given such terms in Article 9 of the UCC.
(a) “Collateral”
means the collateral in which the Secured Parties are granted a security interest by this Agreement and which shall include the
following personal property of the Debtors, whether presently owned or existing or hereafter acquired or coming into existence,
wherever situated, and all additions and accessions thereto and all substitutions and replacements thereof, and all proceeds,
products and accounts thereof, including, without limitation, all proceeds from the sale or transfer of the Collateral and of
insurance covering the same and of any tort claims in connection therewith, and all dividends, interest, cash, notes, securities,
equity interest or other property at any time and from time to time acquired, receivable or otherwise distributed in respect of,
or in exchange for, any or all of the following:
(i) All
goods, including, without limitation, (A) all machinery, equipment, computers, motor vehicles, trucks, tanks, boats, ships, appliances,
furniture, special and general tools, fixtures, test and quality control devices and other equipment of every kind and nature
and wherever situated, together with all documents of title and documents representing the same, all additions and accessions
thereto, replacements therefor, all parts therefor, and all substitutes for any of the foregoing and all other items used and
useful in connection with the Debtors’ businesses and all improvements thereto; and (B) all inventory, including all now
owned or hereafter acquired inventory wherever located including in transit or in warehouses;
(ii) All
contract rights and other general intangibles, including, without limitation, all partnership interests, membership interests,
stock or other securities, rights under any of the Organizational Documents, agreements related to the Pledged Securities,
licenses, distribution and other agreements, computer software (whether “off-the-shelf”, licensed from
any third party or developed by Debtors), computer software development rights, leases, franchises, customer lists, quality control
procedures, grants and rights, goodwill, Intellectual Property and income tax refunds;
(iii) All
accounts, together with all instruments, all documents of title representing any of the foregoing, all rights in any merchandising,
goods, equipment, motor vehicles and trucks which any of the same may represent, and all right, title, security and guaranties
with respect to each account, including any right of stoppage in transit;
(iv) All
documents, letter-of-credit rights, instruments and chattel paper;
(v) All
commercial tort claims;
(vi) All
deposit accounts and all cash (whether or not deposited in such deposit accounts);
(vii) All
investment property;
(viii) All
supporting obligations; and
(ix) All
files, records, books of account, business papers, and computer programs; and
(x) the
Pledged Securities;
(xi) the
products and proceeds of all of the foregoing Collateral set forth in clauses (i)-(x) above.
Without
limiting the generality of the foregoing, the “Collateral” shall include all investment property and general
intangibles respecting ownership and/or other equity interests in each subsidiary of the Debtors, including, without limitation,
the shares of capital stock and the other equity interests listed on Schedule H hereto (as the same may be modified from
time to time pursuant to the terms hereof), and any other shares of capital stock and/or other equity interests of any Subsidiary
of the Debtors obtained in the future, and, in each case, all certificates representing such shares and/or equity interests and,
in each case, all rights, options, warrants, stock, other securities and/or equity interests that may hereafter be received, receivable
or distributed in respect of, or exchanged for, any of the foregoing and all rights arising under or in connection with the Pledged
Securities, including, but not limited to, all dividends, interest and cash.
Notwithstanding
the foregoing, nothing herein shall be deemed to constitute an assignment of any asset which, in the event of an assignment, becomes
void by operation of applicable law or the assignment of which is otherwise prohibited by applicable law (in each case to the
extent that such applicable law is not overridden by Sections 9-406, 9-407 and/or 9-408 of the UCC or other similar applicable
law); provided, however, that to the extent permitted by applicable law, this Agreement shall create a valid security
interest in such asset and, to the extent permitted by applicable law, this Agreement shall create a valid security interest in
the proceeds of such asset.
(b) “Intellectual
Property” means the collective reference to all rights, priorities and privileges relating to intellectual property,
whether arising under United States, multinational or foreign laws or otherwise, including, without limitation, (i) all copyrights
arising under the laws of the United States, any other country or any political subdivision thereof, whether registered or unregistered
and whether published or unpublished, all registrations and recordings thereof, and all applications in connection therewith,
including, without limitation, all registrations, recordings and applications in the United States Copyright Office, (ii) all
letters patent of the United States, any other country or any political subdivision thereof, all reissues and extensions thereof,
and all applications for letters patent of the United States or any other country and all divisions, continuations and continuations-in-part
thereof, (iii) all trademarks, trade names, corporate names, company names, business names, fictitious business names, trade dress,
service marks, logos, domain names and other source or business identifiers, and all goodwill associated therewith, now existing
or hereafter adopted or acquired, all registrations and recordings thereof, and all applications in connection therewith, whether
in the United States Patent and Trademark Office or in any similar office or agency of the United States, any State thereof or
any other country or any political subdivision thereof, or otherwise, and all common law rights related thereto, (iv) all trade
secrets arising under the laws of the United States, any other country or any political subdivision thereof, (v) all rights to
obtain any reissues, renewals or extensions of the foregoing, (vi) all licenses for any of the foregoing, and (vii) all causes
of action for infringement of the foregoing.
(c) “Majority
in Interest” means, at any time of determination, 50.01% of the outstanding aggregate principal amount of all Notes
of the Secured Parties.
(d) “Necessary
Endorsement” means undated stock powers endorsed in blank or other proper instruments of assignment duly executed and
such other instruments or documents as the Agent (as that term is defined below) may reasonably request.
(e) “Obligations”
means all of the liabilities and obligations (primary, secondary, direct, contingent, sole, joint or several) due or to become
due, or that are now or may be hereafter contracted, acquired, or owing to, of Debtors to the Secured Parties, including, without
limitation, all obligations under this Agreement, the Notes, the Purchase Agreement, the other Documents and any other instruments,
agreements or other documents executed and/or delivered in connection herewith or therewith, in each case, whether now or hereafter
existing, voluntary or involuntary, direct or indirect, absolute or contingent, liquidated or unliquidated, whether or not jointly
owed with others, and whether or not from time to time decreased or extinguished and later increased, created or incurred, and
all or any portion of such obligations or liabilities that are paid, to the extent all or any part of such payment is avoided
or recovered directly or indirectly from any of the Secured Parties as a preference, fraudulent transfer or otherwise as such
obligations may be amended, supplemented, converted, extended or modified from time to time. Without limiting the generality of
the foregoing, the term “Obligations” shall include, without limitation: (i) principal of, and interest on
the Notes and the loans extended pursuant thereto; (ii) any and all other fees, indemnities, costs, obligations and liabilities
of the Debtors from time to time under or in connection with this Agreement, the Notes, the Purchase Agreement and any other instruments,
agreements or other documents executed and/or delivered in connection herewith or therewith; including but not limited to late
fees, liquidated damages, default interest and (iii) all amounts (including but not limited to post-petition interest) in respect
of the foregoing that would be payable but for the fact that the obligations to pay such amounts are unenforceable or not allowable
due to the existence of a bankruptcy, reorganization or similar proceeding involving Debtors.
(f) “Organizational
Documents” means with respect to Debtors, the documents by which Debtors were organized (such as a certificate of incorporation,
certificate of limited partnership or articles of organization, and including, without limitation, any certificates of designation
for preferred stock or other forms of preferred equity) and which relate to the internal governance of Debtors (such as bylaws,
a partnership agreement or an operating, limited liability or members agreement).
(g) “Pledged
Interests” shall have the meaning ascribed to such term in Section 4(j).
(h) “Pledged
Securities” shall have the meaning ascribed to such term in Section 4(i).
(i) “Subsidiary”
means, with respect to any Person, a corporation, partnership, limited liability company or other entity of which shares of stock
or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power
only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation,
partnership or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly
through one or more intermediaries, or both, by such Person and “Subsidiaries” means collectively each and
every Subsidiary of a Person. The signature page hereto of the Debtors lists, in addition to the Company, all Subsidiaries of
the Company
(ii) “UCC”
means the Uniform Commercial Code of the State of New York and or any other applicable law of any state or states which has jurisdiction
with respect to all, or any portion of, the Collateral or this Agreement, from time to time. It is the intent of the parties that
defined terms in the UCC should be construed in their broadest sense so that the term “Collateral” will be construed
in its broadest sense. Accordingly if there are, from time to time, changes to defined terms in the UCC that broaden the definitions,
they are incorporated herein and if existing definitions in the UCC are broader than the amended definitions, the existing ones
shall be controlling.
(j) “Unanimous
Amount” means that so long as Delafield and Dominion are the only Secured Parties, the written consent of Delafield
and Dominion until such time, if ever, as the Debtors have no Obligations to Delafield and Dominion. In the event that Delafield
and Dominion are no longer the only Secured Parties, then this definition shall no long apply and all matters requiring approval
of the Secured Parties shall be made by the Secured Parties holding a Majority in Interest.
2. Grant
of Security Interest in Collateral. As an inducement for the Secured Parties to extend the loans as evidenced by the Notes
(and to convert other loans made or Securities acquired by one or more of the Secured Parties into Notes) and to secure the complete
and timely payment, performance and discharge in full, as the case may be, of all of the Obligations, Debtors hereby unconditionally
and irrevocably pledge, grant and hypothecate to the Secured Parties a security interest in and to, a lien upon and a right of
set-off against all of their respective right, title and interest of whatsoever kind and nature in and to, the Collateral (a “Security
Interest” and, collectively, the “Security Interests”).
3. Delivery
of Certain Collateral. Contemporaneously or prior to the execution of this Agreement, Debtors shall deliver or cause to be
delivered to the Agent (a) any and all certificates and other instruments representing or evidencing the Pledged Securities, and
(b) any and all certificates and other instruments or documents representing any of the other Collateral, in each case, together
with all Necessary Endorsements. The Debtors are, contemporaneously with the execution hereof, delivering to Agent, or has previously
delivered to Agent, a true and correct copy of each Organizational Document governing any of the Pledged Securities.
4. Representations,
Warranties, Covenants and Agreements of the Debtors. Except as expressly set forth under the corresponding section of the
disclosure schedules delivered to the Secured Parties concurrently herewith and attached hereto (the “Disclosure Schedules”),
which Disclosure Schedules shall be deemed a part hereof, Debtors represent and warrant to, and covenants and agrees with, the
Secured Parties as follows:
(a) Each
Debtor has the requisite corporate, partnership, limited liability company or other power and authority to enter into this Agreement
and otherwise to carry out its obligations hereunder. The execution, delivery and performance by Debtors of this Agreement and
the filings contemplated therein have been duly authorized by all necessary action on the part of Debtors and no further action
is required by Debtors. This Agreement has been duly executed by Debtors. This Agreement constitutes the legal, valid and binding
obligation of Debtors, enforceable against Debtors in accordance with its terms except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization and similar laws of general application relating to or affecting the rights
and remedies of creditors and by general principles of equity.
(b) Each
Debtor has no place of business or offices where their respective books of account and records are kept (other than temporarily
at the offices of its attorneys or accountants) or places where Collateral is stored or located, except as set forth on Schedule
A attached hereto. Except as specifically set forth on Schedule A, Debtors are the record owner of the real property
where such Collateral is located, and there exist no mortgages or other liens on any such real property. Except as disclosed on
Schedule A, none of such Collateral is in the possession of any consignee, bailee, warehouseman, agent or processor.
(c) Except
as set forth on Schedule B attached hereto, the Debtors are the sole owner of the Collateral (except for non-exclusive
licenses granted by Debtors in the ordinary course of business), free and clear of any liens, security interests, encumbrances,
rights or claims, and is fully authorized to grant the Security Interests. Except as set forth on Schedule C attached hereto,
there is not on file in any governmental or regulatory authority, agency or recording office an effective financing statement,
security agreement, license or transfer or any notice of any of the foregoing (other than those that will be filed in favor of
the Secured Parties pursuant to this Agreement) covering or affecting any of the Collateral. Except as set forth on Schedule
C attached hereto and except pursuant to this Agreement the Purchase Agreement, the Notes and the other Documents as long
as this Agreement shall be in effect, the Debtors shall not execute and shall not knowingly permit to be on file in any such office
or agency any other financing statement or other document or instrument (except to the extent filed or recorded in favor of the
Secured Parties pursuant to the terms of this Agreement).
(d) Except
as set forth on Schedule D attached hereto, no written claim has been received that any Collateral or Debtors’ use
of any Collateral violates the rights of any third party. Except as set forth on Schedule D attached hereto, there has
been no adverse decision to Debtors’ claim of ownership rights in or exclusive rights to use the Collateral in any jurisdiction
or to Debtors’ right to keep and maintain such Collateral in full force and effect, and there is no proceeding involving
said rights pending or, to the best knowledge of Debtors, threatened before any court, judicial body, administrative or regulatory
agency, arbitrator or other governmental authority.
(e) The
Debtors shall at all times maintain its books of account and records relating to the Collateral at its principal place of business
and its Collateral at the locations set forth on Schedule A attached hereto and may not relocate such books of account
and records or tangible Collateral unless it delivers to the Secured Parties at least 30 days prior to such relocation (i) written
notice of such relocation and the new location thereof (which must be within the United States) and (ii) evidence that appropriate
financing statements under the UCC and other necessary documents have been filed and recorded and other steps have been taken
to perfect the Security Interests to create in favor of the Secured Parties a valid, perfected and continuing perfected first
priority lien in the Collateral.
(f) This
Agreement creates in favor of the Secured Parties a valid security interest in the Collateral securing the payment and performance
of the Obligations. Upon making the filings described in the immediately following paragraph, all security interests created hereunder
in any Collateral which may be perfected by filing Uniform Commercial Code financing statements shall have been duly perfected.
Except for the filing of the Uniform Commercial Code financing statements referred to in the immediately following paragraph,
the recordation of the Intellectual Property Security Agreement (as defined in Section 4(p) hereof) with respect to copyrights
and copyright applications in the United States Copyright Office referred to in paragraph (m), the execution and delivery of deposit
account control agreements satisfying the requirements of Section 9-104(a)(2) of the UCC with respect to each deposit account
of the Debtors, and the delivery of the
certificates and other instruments provided in Section 3, no action is necessary to create, perfect or protect the security interests
created hereunder. Without limiting the generality of the foregoing, except for the filing of said financing statements, the recordation
of said Intellectual Property Security Agreement, and the execution and delivery of said deposit account control agreements, no
consent of any third parties and no authorization, approval or other action by, and no notice to or filing with, any governmental
authority or regulatory body is required for (i) the execution, delivery and performance of this Agreement, (ii) the creation
or perfection of the Security Interests created hereunder in the Collateral or (iii) the enforcement of the rights of the Agent
and the Secured Parties hereunder.
(g) Debtors
hereby authorizes the Agent to file one or more (i) financing statements under the UCC or any other similar law with respect to
the Obligations of the Debtors to the Secured Parties, (ii) amend and restate all prior financing statements under the UCC, and
(iii) take all such other actions so that all Obligations hereunder are pari passu between each of the Secured Parties
with respect to the Security Interests, with the proper filing and recording agencies in any jurisdiction deemed proper by it,
including foreign jurisdictions, including but not limited to filing a fixed and floating charge over the Security Interests in
the
(h) The
execution, delivery and performance of this Agreement by the Debtors does not (i) violate any of the provisions of any Organizational
Documents of Debtors or any judgment, decree, order or award of any court, governmental body or arbitrator or any applicable law,
rule or regulation applicable to Debtors or (ii) conflict with, or constitute a breach, default and/or on event of default (or
an event that with notice or lapse of time or both would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt
or other instrument (evidencing Debtors’ debt or otherwise) or other understanding to which Debtors are a party or by which
any property or asset of Debtors are bound or affected. If any, all required consents (including, without limitation, from stockholders
or creditors of Debtors) necessary for Debtors to enter into and perform its obligations hereunder have been obtained, and which
consents are set forth on Exhibit D hereto.
(i) The
capital stock and other equity interests listed on Schedule H hereto (the “Pledged Securities”) represent
all of the capital stock and other equity interests of all of the subsidiaries of the Debtors, and represent all capital stock
and other equity interests owned, directly or indirectly, by the Debtors. All of the Pledged Securities are validly issued, fully
paid and nonassessable, and except as set forth on Schedule H attached hereto, the Debtors are the legal and beneficial
owner of the Pledged Securities, free and clear of any lien, security interest or other encumbrance except for the security interests
created by this Agreement.
(j) The
ownership and other equity interests in partnerships and limited liability companies (if any) included in the Collateral (the
“Pledged Interests”) by their express terms do not provide that they are securities governed by Article 8 of
the UCC and are not held in a securities account or by any financial intermediary.
(k) Except
as set forth on Schedule D, Debtors shall at all times maintain the liens
and Security Interests provided for hereunder as valid and perfected first priority liens and security interests in the Collateral
in favor of the Secured Parties until this Agreement and the Security Interest hereunder shall be terminated pursuant to Section
14 hereof. Debtors hereby agree to defend the same against the claims of any and all persons and entities. Debtors shall safeguard
and protect all Collateral for the account of the Secured Parties. At the request of the Agent, Debtors will sign and deliver
to the Agent on behalf of the Secured Parties at any time or from time to time one or more financing statements pursuant to the
UCC in form reasonably satisfactory to the Agent and will pay the cost of filing the same in all public offices wherever filing
is, or is deemed by the Agent to be, necessary or desirable to effect the rights and obligations provided for herein. Without
limiting the generality of the foregoing, Debtors shall pay all fees, taxes and other amounts necessary to maintain the Collateral
and the Security Interests hereunder, and Debtors shall obtain and furnish to the Agent from time to time, upon demand, such releases
and/or subordinations of claims and liens which may be required to maintain the priority of the Security Interests hereunder.
(l) Debtors
will not transfer, pledge, hypothecate, encumber, license, sell or otherwise dispose of any of the Collateral (except for non-exclusive
licenses granted by Debtors in their ordinary course of business [and sales of inventory by Debtors in their ordinary course of
business) without the prior written consent as provided herein.
(m) Debtors
shall keep and preserve its equipment, inventory and other tangible Collateral in good condition, repair and order and shall not
operate or locate any such Collateral (or cause to be operated or located) in any area excluded from insurance coverage.
(n) Debtors
shall maintain with financially sound and reputable insurers, insurance with respect to the Collateral, including Collateral hereafter
acquired, against loss or damage of the kinds and in the amounts customarily insured against by entities of established reputation
having similar properties similarly situated and in such amounts as are customarily carried under similar circumstances by other
such entities and otherwise as is prudent for entities engaged in similar businesses but in any event sufficient to cover the
full replacement cost thereof. Debtors shall cause each insurance policy issued in connection herewith to provide, and the insurer
issuing such policy to certify to the Agent, that (a) the Agent will be named as lender loss payee and additional insured under
each such insurance policy; (b) if such insurance be proposed to be cancelled or materially changed for any reason whatsoever,
such insurer will promptly notify the Agent and such cancellation or change shall not be effective as to the Agent for at least
thirty (30) days after receipt by the Agent of such notice, unless the effect of such change is to extend or increase coverage
under the policy; and (c) the Agent will have the right (but no obligation) at its election to remedy any default in the payment
of premiums within thirty (30) days of notice from the insurer of such default. If no Event of Default (as defined in the Notes)
exists and if the proceeds arising out of any claim or series of related claims do not exceed $50,000, loss payments in each instance
will be applied by the Debtors to the repair and/or replacement of property with respect to which the loss was incurred to the
extent reasonably feasible, and any loss payments or the balance thereof remaining, to the extent not so applied, shall be payable
to the Debtors; provided, however, that payments received by Debtors after an Event of Default occurs and is continuing
or in excess of $50,000 for any occurrence or series of related occurrences shall be paid to the Agent on behalf of the Secured
Parties and, if received by Debtors, shall be held in trust for the Secured Parties and immediately paid over to the Agent unless
otherwise directed in writing by the Agent. Copies of such policies or the related certificates, in each case, naming the Agent
as lender loss payee and additional insured shall be delivered to the Agent at least annually and at the time any new policy of
insurance is issued.
(o) Debtors
shall promptly but in no event later than two (2) days of obtaining knowledge thereof, advise the Secured Parties, in sufficient
detail, of any material adverse change in the Collateral, and of the occurrence of any event which would have a material adverse
effect on the value of the Collateral or on the Secured Parties’ security interest, through the Agent, therein.
(p) Debtors
shall promptly execute and deliver to the Agent such further deeds, mortgages, assignments, security agreements, financing statements
or other instruments, documents, certificates and assurances and take such further action as the Agent may from time to time request
and may in its sole discretion deem necessary to perfect, protect or enforce the Secured Parties’ security interest in the
Collateral including, without limitation, if applicable, the execution and delivery of a separate security agreement with respect
to Debtors’ Intellectual Property (“Intellectual Property Security Agreement”) in which the Secured Parties
have been granted a security interest hereunder, substantially in a form reasonably acceptable to the Agent, which Intellectual
Property Security Agreement, other than as stated therein, shall be subject to all of the terms and conditions hereof.
(q) Debtors
shall permit the Agent and its representatives and agents to inspect the Collateral during normal business hours and upon reasonable
prior notice, and to make copies of records pertaining to the Collateral as may be reasonably requested by the Agent from time
to time (except upon an Event of Default, an event of default (and/or an event of default or an event of default that would occur
upon the passage of time and/or the giving of notice), in which event inspection shall be at any time as requested by all of the
above parties.
(r) Debtors
shall take all steps reasonably necessary to diligently pursue and seek to preserve, enforce and collect any rights, claims, causes
of action and accounts receivable in respect of the Collateral.
(s) Debtors
shall promptly notify the Secured Parties in sufficient detail upon becoming aware of any attachment, garnishment, execution or
other legal process levied against any Collateral and of any other information received by Debtors that may materially affect
the value of the Collateral, the Security Interest or the rights and remedies of the Secured Parties hereunder.
(t) All
information heretofore, herein or hereafter supplied to the Secured Parties by or on behalf of Debtors with respect to the Collateral
is accurate and complete in all material respects as of the date furnished.
(u) The
Debtors shall at all times preserve and keep in full force and effect their respective valid existence and good standing and any
rights and franchises material to its business.
(v) Debtors
will not change its name, type of organization, jurisdiction of organization, organizational identification number (if it has
one), legal or corporate structure, or identity, or add any new fictitious name unless it provides at least 30 days prior written
notice to the Secured Parties of such change and, at the time of such written notification, Debtors provides any financing statements
or fixture filings necessary to perfect and continue the perfection of the Security Interests granted and evidenced by this Agreement.
(w) Except
in the ordinary course of business, Debtors may not consign any of its inventory or sell any of its inventory on bill and hold,
sale or return, sale on approval, or other conditional terms of sale without the consent of the Agent which shall not be unreasonably
withheld.
(x) Debtors
may not relocate their chief executive office to a new location without providing 30 days prior written notification thereof to
the Secured Parties and so long as, at the time of such written notification, Debtors provide any financing statements or fixture
filings necessary to perfect and continue the perfection of the Security Interests granted and evidenced by this Agreement.
(y) Debtors
were organized and remains organized solely under the laws of the state set forth next to Debtors’ name in Schedule E
attached hereto, which Schedule E sets forth Debtors’ organizational identification number or, if Debtors do
not have one, states that one does not exist.
(z)
(i) The actual name of Debtors are the name set forth in Schedule F attached hereto; (ii) Debtors have no trade names except
as set forth on Schedule F attached hereto; (iii) Debtors have not used any name other than that stated in the preamble
hereto or as set forth on Schedule F for the preceding five years; and (iv) no entity has merged into Debtors or been acquired
by Debtors within the past five years except as set forth on Schedule F.
(aa) At
any time and from time to time that any Collateral consists of instruments, certificated securities or other items that require
or permit possession by the secured party to perfect the security interest created hereby, the Debtors shall deliver such Collateral
to the Agent.
(bb) Debtors,
in their capacity as issuer, hereby agree to comply with any and all orders and instructions of Agent regarding the Pledged Interests
consistent with the terms of this Agreement without the further consent of Debtors as contemplated by Section 8-106 (or any successor
section) of the UCC. Further, Debtors agree that they shall not enter into a similar agreement (or one that would confer “control”
within the meaning of Article 8 of the UCC) with any other person or entity.
(cc) Debtors
shall cause all tangible chattel paper constituting Collateral to be delivered to the Agent, or, if such delivery is not possible,
then to cause such tangible chattel paper to contain a legend noting that it is subject to the security interest created by this
Agreement. To the extent that any Collateral consists of electronic chattel paper, the Debtors shall cause the underlying chattel
paper to be “marked” within the meaning of Section 9-105 of the UCC (or successor section thereto).
(dd) If
there is any investment property or deposit account included as Collateral that can be perfected by “control” through
an account control agreement, the Debtors shall cause such an account control agreement, in form and substance in each case satisfactory
to the Agent, to be entered into and delivered to the Agent for the benefit of the Secured Parties.
(ee) To
the extent that any Collateral consists of letter-of-credit rights, the Debtors shall cause the issuer of each underlying letter
of credit to consent to an assignment of the proceeds thereof to the Secured Parties.
(ff) To
the extent that any Collateral is in the possession of any third party, the Debtors shall join with the Agent in notifying such
third party of the Secured Parties’ security interest in such Collateral and shall use its best efforts to obtain an acknowledgement
and agreement from such third party with respect to the Collateral, in form and substance reasonably satisfactory to the Agent.
(gg) If
Debtors shall at any time hold or acquire a commercial tort claim, Debtors shall promptly notify the Secured Parties in a writing
signed by Debtors of the particulars thereof and grant to the Secured Parties in such writing a security interest therein and
in the proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance satisfactory to the
Agent.
(hh) Debtors
shall immediately provide written notice to the Secured Parties of any and all accounts which arise out of contracts with any
governmental authority and, to the extent necessary to perfect or continue the perfected status of the Security Interests in such
accounts and proceeds thereof, shall execute and deliver to the Agent an assignment of claims for such accounts and cooperate
with the Agent in taking any other steps required, in its judgment, under the Federal Assignment of Claims Act or any similar
federal, state or local statute or rule to perfect or continue the perfected status of the Security Interests in such accounts
and proceeds thereof.
(ii) Debtors
shall cause each Subsidiary of Debtors to immediately become a party hereto (an “Additional Debtor”), by executing
and delivering an Additional Debtor Joinder in substantially the form of Annex A attached hereto and comply with the provisions
hereof applicable to the Debtors. Concurrent therewith, the Additional Debtor shall deliver replacement schedules for, or supplements
to all other Schedules to (or referred to in) this Agreement, as applicable, which replacement schedules shall supersede, or supplements
shall modify, the Schedules then in effect. The Additional Debtor shall also deliver such opinions of counsel, authorizing resolutions,
good standing certificates, incumbency certificates, organizational documents, financing statements and other information and
documentation as the Agent may reasonably request. Upon delivery of the foregoing to the Agent, the Additional Debtor shall be
and become a party to this Agreement with the same rights and obligations as the Debtors, for all purposes hereof as fully and
to the same extent as if it were an original signatory hereto and shall be deemed to have made the representations, warranties
and covenants set forth herein as of the date of execution and delivery of such Additional Debtor Joinder, and all references
herein to the “Debtor” shall be deemed to include each Additional Debtor.
(jj) Debtors
shall vote the Pledged Securities to comply with the covenants and agreements set forth herein and in the Notes.
(kk) Upon
execution of this Agreement, Debtors shall provide the Agent (i) undated Necessary Endorsements for the transfer to and in the
name of the Agent of all Pledged Securities so that all such Pledged Securities can be dealt with by the Agent upon the occurrence
and in the manner as provided herein, and (ii) all Pledged Securities to the Agent. Upon execution of the Agreement register the
pledge of the applicable Pledged Securities on the books of Debtors. Debtors shall notify each issuer of Pledged Securities to
register the pledge of the applicable Pledged Securities in the name of the Secured Parties on the books of such issuer. Further,
except with respect to certificated securities delivered to the Agent, the Debtors shall deliver to Agent an acknowledgement of
pledge (which, where appropriate, shall comply with the requirements of the relevant UCC with respect to perfection by registration)
signed by the issuer of the applicable Pledged Securities, which acknowledgement shall confirm that: (a) it has registered the
pledge on its books and records; and (b) at any time directed by Agent during the continuation of an Event of Default, such issuer
will transfer the record ownership of such Pledged Securities into the name of any designee of Agent, will take such steps as
may be necessary to effect the transfer, and will comply with all other instructions of Agent regarding such Pledged Securities
without the further consent of the Debtors.
(ll) In
the event that, upon an occurrence of an Event of Default, Agent shall sell all or any of the Pledged Securities to another party
or parties (herein called the “Transferee”) or shall purchase or retain all or any of the Pledged Securities,
Debtors shall, to the extent applicable: (i) deliver to Agent or the Transferee, as the case may be, the articles of incorporation,
bylaws, minute books, stock certificate books, corporate seals, deeds, leases, indentures, agreements, evidences of indebtedness,
books of account, financial records and all other Organizational Documents and records of the Debtors and their direct and indirect
subsidiaries; (ii) use its best efforts to obtain resignations of the persons then serving as officers and directors of the Debtors
and their direct and indirect subsidiaries, if so requested; and (iii) use its best efforts to obtain any approvals that are required
by any governmental or regulatory body in order to permit the sale of the Pledged Securities to the Transferee or the purchase
or retention of the Pledged Securities by Agent and allow the Transferee or Agent to continue the business of the Debtors and
their direct and indirect subsidiaries.
(mm) Without
limiting the generality of the other obligations of the Debtors hereunder, Debtors shall promptly (i) cause to be registered at
the United States Copyright Office all of its material copyrights, (ii) cause the security interest contemplated hereby with respect
to all Intellectual Property registered at the United States Copyright Office or United States Patent and Trademark Office to
be duly recorded at the applicable office, and (iii) give the Agent notice whenever it acquires (whether absolutely or by license)
or creates any additional material Intellectual Property.
(nn) Debtors
will from time to time promptly execute and deliver all such further instruments and documents, and take all such further action
as may be necessary or desirable, or as the Agent may reasonably request, in order to perfect and protect any security interest
granted or purported to be granted hereby or to enable the Secured Parties to exercise and enforce their rights and remedies hereunder
and with respect to any Collateral or to otherwise carry out the purposes of this Agreement.
(oo) Schedule
G attached hereto lists all of the patents, patent applications, trademarks, trademark applications, registered copyrights,
and domain names owned by the Debtors as of the date hereof. Schedule G lists all material licenses in favor of Debtors
for the use of any patents, trademarks, copyrights and domain names as of the date hereof. All material patents and trademarks
of the Debtors have been duly recorded at the United States Patent and Trademark Office and all material copyrights of the Debtors
have been duly recorded at the United States Copyright Office.
(pp) Except
as set forth on Schedule H attached hereto, none of the account debtors or other persons or entities obligated on any of
the Collateral is a governmental authority covered by the Federal Assignment of Claims Act or any similar federal, state or local
statute or rule in respect of such Collateral.
5. Effect
of Pledge on Certain Rights. If any of the Collateral subject to this Agreement consists of nonvoting equity or ownership
interests (regardless of class, designation, preference or rights) that may be converted into voting equity or ownership interests
upon the occurrence of certain events (including, without limitation, upon the transfer of all or any of the other stock or assets
of the issuer), it is agreed that the pledge of such equity or ownership interests pursuant to this Agreement or the enforcement
of any of Agent’s rights hereunder shall not be deemed to be the type of event which would trigger such conversion rights
notwithstanding any provisions in the Organizational Documents or agreements to which Debtors are subject or to which Debtors
are party.
6. Events
of Defaults. The following events shall be “Events
of Default”:
(a) The occurrence of an Event of Default (as defined in the Notes) under the Notes;
(b) Any representation or warranty of Debtors in this Agreement shall prove to have been incorrect in any material respect when made;
(c) The failure by Debtors to observe or perform any of its obligations hereunder for five (5) days after delivery to Debtors of notice
of such failure by or on behalf of a Secured Party unless such default is capable of cure but cannot be cured within such time
frame and Debtors are using best efforts to cure same in a timely fashion; or
(d) If any provision of this Agreement shall at any time for any reason be declared to be null and void, or the validity or enforceability
thereof shall be contested by Debtors, or a proceeding shall be commenced by Debtors, or by any governmental authority having
jurisdiction over Debtors, seeking to establish the invalidity or unenforceability thereof, or Debtors shall deny that Debtors
have any liability or obligation purported to be created under this Agreement; or
(e) Any material diminution in the value of the collateral as determined by the Agent in its reasonable discretion.
7. Duty
To Hold In Trust.
(a) Upon
the occurrence of any Event of Default and at any time thereafter, Debtors shall, upon receipt of any revenue, income, dividend,
interest or other sums subject to the Security Interests, whether payable pursuant to the Notes or otherwise, or of any check,
draft, note, trade acceptance or other instrument evidencing an obligation to pay any such sum, hold the same in trust for the
Secured Parties and shall forthwith endorse and transfer any such sums or instruments, or both, to the Secured Parties, pro-rata
in proportion to their respective then-currently outstanding principal amount of Notes for application to the satisfaction of
the Obligations (and if any Note is not outstanding, pro-rata in proportion to the initial purchases of the remaining Notes).
(b) If
Debtors shall become entitled to receive or shall receive any securities or other property (including, without limitation, shares
of Pledged Securities or instruments representing Pledged Securities acquired after the date hereof, or any options, warrants,
rights or other similar property or certificates representing a dividend, or any distribution in connection with any recapitalization,
reclassification or increase or reduction of capital, or issued in connection with any reorganization of Debtors or any of their
direct or indirect subsidiaries) in respect of the Pledged Securities (whether as an addition to, in substitution of, or in exchange
for, such Pledged Securities or otherwise), Debtors agree to (i) accept the same as the agent of the Secured Parties; (ii) hold
the same in trust on behalf of and for the benefit of the Secured Parties; and (iii) to deliver any and all certificates or instruments
evidencing the same to Agent on or before the close of business on the fifth business day following the receipt thereof by Debtors,
in the exact form received together with the Necessary Endorsements, to be held by Agent subject to the terms of this Agreement
as Collateral.
8. Rights
and Remedies Upon an Event of Default.
(a) Upon
the occurrence of any Event of Default and at any time thereafter, the Secured Parties, acting through the Agent, shall have the
right to exercise all of the remedies conferred hereunder and under the Notes, and the Secured Parties shall have all the rights
and remedies of a secured party under the UCC. Without limitation, the Agent, for the benefit of the Secured Parties, shall have
the following rights and powers:
(i) The
Agent shall have the right to take possession of the Collateral and, for that purpose, enter, with the aid and assistance of any
person, any premises where the Collateral, or any part thereof, is or may be placed and remove the same, and Debtors shall assemble
the Collateral and make it available to the Agent at places which the Agent shall reasonably select, whether at Debtors’
premises or elsewhere, and make available to the Agent, without rent, all of Debtors’ respective premises and facilities
for the purpose of the Agent taking possession of, removing or putting the Collateral in saleable or disposable form.
(ii) Upon
notice to the Debtors by Agent, all rights of Debtors to exercise the voting and other consensual rights which it would otherwise
be entitled to exercise and all rights of Debtors to receive the dividends and interest which it would otherwise be authorized
to receive and retain, shall cease. Upon such notice, Agent shall have the right to receive, for the benefit of the Secured Parties,
any interest, cash dividends or other payments on the Collateral and, at the option of Agent, to exercise in such Agent’s
discretion all voting rights pertaining thereto. Without limiting the generality of the foregoing, Agent shall have the right
(but not the obligation) to exercise all rights with respect to the Collateral as it were the sole and absolute owner thereof,
including, without limitation, to vote and/or to exchange, at its sole discretion, any or all of the Collateral in connection
with a merger, reorganization, consolidation, recapitalization or other readjustment concerning or involving the Collateral or
Debtors or any of their direct or indirect subsidiaries.
(iii)
The Agent shall have the right to operate the business of Debtors using the Collateral and shall have the right to assign, sell,
lease or otherwise dispose of and deliver all or any part of the Collateral, at public or private sale or otherwise, either with
or without special conditions or stipulations, for cash or on credit or for future delivery, in such parcel or parcels and at
such time or times and at such place or places, and upon such terms and conditions as the Agent may deem commercially reasonable,
all without (except as shall be required by applicable statute and cannot be waived) advertisement or demand upon or notice to
Debtors or right of redemption of Debtors, which are hereby expressly waived. Upon each such sale, lease, assignment or other
transfer of Collateral, the Agent, for the benefit of the Secured Parties, may, unless prohibited by applicable law which cannot
be waived, purchase all or any part of the Collateral being sold, free from and discharged of all trusts, claims, right of redemption
and equities of Debtors, which are hereby waived and released.
(iv) The
Agent shall have the right (but not the obligation) to notify any account debtors and any obligors under instruments or accounts
to make payments directly to the Agent, on behalf of the Secured Parties, and to enforce the Debtors’ rights against such
account debtors and obligors.
(v) The
Agent, for the benefit of the Secured Parties, may (but is not obligated to) direct any financial intermediary or any other person
or entity holding any investment property to transfer the same to the Agent, on behalf of the Secured Parties, or its designee.
(vi) The
Agent may (but is not obligated to) transfer any or all Intellectual Property registered in the name of Debtors at the United
States Patent and Trademark Office and/or Copyright Office into the name of the Secured Parties or any designee or any purchaser
of any Collateral.
(b) The
Agent shall comply with any applicable law in connection with a disposition of Collateral and such compliance will not be considered
adversely to affect the commercial reasonableness of any sale of the Collateral. The Agent may sell the Collateral without giving
any warranties and may specifically disclaim such warranties. If the Agent sells any of the Collateral on credit, the Debtors
will only be credited with payments actually made by the purchaser. In addition, Debtors waive any and all rights that they may
have to a judicial hearing in advance of the enforcement of any of the Agent’s rights and remedies hereunder, including,
without limitation, its right following an Event of Default to take immediate possession of the Collateral and to exercise its
rights and remedies with respect thereto.
(c) For
the purpose of enabling the Agent to further exercise rights and remedies under this Section 8 or elsewhere provided by agreement
or applicable law, Debtors hereby grant to the Agent, for the benefit of the Agent and the Secured Parties, an irrevocable, nonexclusive
license (exercisable without payment of royalty or other compensation to Debtors) to use, license or sublicense following an Event
of Default, any Intellectual Property now owned or hereafter acquired by Debtors, and wherever the same may be located, and including
in such license access to all media in which any of the licensed items may be recorded or stored and to all computer software
and programs used for the compilation or printout thereof.
9. Applications
of Proceeds. The proceeds of any such sale, lease or other disposition of the Collateral hereunder or from payments made on
account of any insurance policy insuring any portion of the Collateral shall be applied first, to the expenses of retaking, holding,
storing, processing and preparing for sale, selling, and the like (including, without limitation, any taxes, fees and other costs
incurred in connection therewith) of the Collateral, to the reasonable attorneys’ fees and expenses incurred by the Agent
in enforcing the Secured Parties’ rights hereunder and in connection with collecting, storing and disposing of the Collateral,
and then to satisfaction of the Obligations pro rata among the Secured Parties (based on then-outstanding principal amounts of
Notes at the time of any such determination), and to the payment of any other amounts required by applicable law, after which
the Secured Parties shall pay to the Debtors any surplus proceeds. If, upon the sale, license or other disposition of the Collateral,
the proceeds thereof are insufficient to pay all amounts to which the Secured Parties are legally entitled, the Debtors will be
liable for the deficiency, together with interest thereon, at the rate of 18% per annum or the lesser amount permitted by applicable
law (the “Default Rate”), and the reasonable fees of any attorneys employed by the Secured Parties to collect
such deficiency. To the extent permitted by applicable law, Debtors waive all claims, damages and demands against the Secured
Parties arising out of the repossession, removal, retention or sale of the Collateral, unless due solely to the gross negligence
or willful misconduct of the Secured Parties as determined by a final judgment (not subject to further appeal) of a court of competent
jurisdiction.
10. Securities
Law Provision. Debtors recognize that Agent may be limited in its ability to effect a sale to the public of all or part of
the Pledged Securities by reason of certain prohibitions in the Securities Act of 1933, as amended, or other federal or state
securities laws (collectively, the “Securities Laws”), and may be compelled to resort to one or more sales
to a restricted group of purchasers who may be required to agree to acquire the Pledged Securities for their own account, for
investment and not with a view to the distribution or resale thereof. Debtors agree that sales so made may be at prices and on
terms less favorable than if the Pledged Securities were sold to the public, and that Agent has no obligation to delay the sale
of any Pledged Securities for the period of time necessary to register the Pledged Securities for sale to the public under the
Securities Laws. Debtors shall cooperate with Agent in its attempt to satisfy any requirements under the Securities Laws (including,
without limitation, registration thereunder if requested by Agent) applicable to the sale of the Pledged Securities by Agent.
11. Costs
and Expenses. Debtors agree to pay all reasonable out-of-pocket fees, costs and expenses incurred in connection with any filing
required hereunder, including without limitation, any financing statements pursuant to the UCC, continuation statements, partial
releases and/or termination statements related thereto or any expenses of any searches reasonably required by the Agent. The Debtors
shall also pay all other claims and charges which in the reasonable opinion of the Agent is reasonably likely to prejudice, imperil
or otherwise affect the Collateral or the Security Interests therein. The Debtors will also, upon demand, pay to the Agent the
amount of any and all reasonable expenses, including the reasonable fees and expenses of its counsel and of any experts and agents,
which the Agent, for the benefit of the Secured Parties, may incur in connection with the creation, perfection, protection, satisfaction,
foreclosure, collection or enforcement of the Security Interest and the preparation, administration, continuance, amendment or
enforcement of this Agreement and pay to the Agent the amount of any and all reasonable expenses, including the reasonable fees
and expenses of its counsel and of any experts and agents, which the Agent, for the benefit of the Secured Parties, and the Secured
Parties may incur in connection with (i) the enforcement of this Agreement, (ii) the custody or preservation of, or the sale of,
collection from, or other realization upon, any of the Collateral, or (iii) the exercise or enforcement of any of the rights of
the Secured Parties under the Notes. Until so paid, any fees payable hereunder shall be added to the principal amount of the Notes
and shall bear interest at the default rate.
12. Responsibility
for Collateral. The Debtors assume all liabilities and responsibility in connection with all Collateral, and the Obligations
shall in no way be affected or diminished by reason of the loss, destruction, damage or theft of any of the Collateral or its
unavailability for any reason. Without limiting the generality of the foregoing, (a) neither the Agent nor any Secured Party (i)
has any duty (either before or after an Event of Default) to collect any amounts in respect of the Collateral or to preserve any
rights relating to the Collateral, or (ii) has any obligation to clean-up or otherwise prepare the Collateral for sale, and (b)
Debtors shall remain obligated and liable under each contract or agreement included in the Collateral to be observed or performed
by Debtors thereunder. Neither the Agent nor any Secured Party shall have any obligation or liability under any such contract
or agreement by reason of or arising out of this Agreement or the receipt by the Agent or any Secured Party of any payment relating
to any of the Collateral, nor shall the Agent or any Secured Party be obligated in any manner to perform any of the obligations
of Debtors under or pursuant to any such contract or agreement, to make inquiry as to the nature or sufficiency of any payment
received by the Agent or any Secured Party in respect of the Collateral or as to the sufficiency of any performance by any party
under any such contract or agreement, to present or file any claim, to take any action to enforce any performance or to collect
the payment of any amounts which may have been assigned to the Agent or to which the Agent or any Secured Party may be entitled
at any time or times.
13. Security
Interests Absolute. All rights of the Secured Parties and all obligations of the Debtors hereunder, shall be absolute and
unconditional, irrespective of: (a) any lack of validity or enforceability of this Agreement, the Notes or any agreement entered
into in connection with the foregoing, or any portion hereof or thereof; (b) any change in the time, manner or place of payment
or performance of, or in any other term of, all or any of the Obligations, or any other amendment or waiver of or any consent
to any departure from the Notes or any other agreement entered into in connection with the foregoing; (c) any exchange, release
or nonperfection of any of the Collateral, or any release or amendment or waiver of or consent to departure from any other collateral
for, or any guarantee, or any other security, for all or any of the Obligations; (d) any action by the Secured Parties to obtain,
adjust, settle and cancel in its sole discretion any insurance claims or matters made or arising in connection with the Collateral;
or (e) any other circumstance which might otherwise constitute any legal or equitable defense available to Debtors, or a discharge
of all or any part of the Security Interests granted hereby. Until the Obligations shall have been paid and performed in full,
the rights of the Secured Parties shall continue even if the Obligations are barred for any reason, including, without limitation,
the running of the statute of limitations or bankruptcy. Debtors expressly waive presentment, protest, notice of protest, demand,
notice of nonpayment and demand for performance. In the event that at any time any transfer of any Collateral or any payment received
by the Secured Parties hereunder shall be deemed by final order of a court of competent jurisdiction to have been a voidable preference
or fraudulent conveyance under the bankruptcy or insolvency laws of the United States, or shall be deemed to be otherwise due
to any party other than the Secured Parties, then, in any such event, Debtors’ obligations hereunder shall survive cancellation
of this Agreement, and shall not be discharged or satisfied by any prior payment thereof and/or cancellation of this Agreement,
but shall remain a valid and binding obligation enforceable in accordance with the terms and provisions hereof. Debtors waive
all right to require the Secured Parties to proceed against any other person or entity or
to apply any Collateral which the Secured Parties may hold at any time, or to marshal assets, or to pursue any other
remedy. Debtors waive any defense arising by reason of the application of the statute of limitations to any obligation secured
hereby.
14. Term
of Agreement. This Agreement and the Security Interests shall terminate on the date on which all payments under the Notes
have been indefeasibly paid in full and all other Obligations have been paid or discharged; provided, however, that all indemnities
of the Debtors contained in this Agreement (including, without limitation, Annex B hereto) shall survive and remain operative
and in full force and effect regardless of the termination of this Agreement.
15. Power
of Attorney; Further Assurances.
(a) Debtors
authorize the Agent, and does hereby make, constitute and appoint the Agent and its officers, agents, successors or assigns with
full power of substitution, as Debtors’ true and lawful attorney-in-fact, with power, in the name of the Agent or Debtors,
to, after the occurrence and during the continuance of an Event of Default, (i) endorse any note, checks, drafts, money orders
or other instruments of payment (including payments payable under or in respect of any policy of insurance) in respect of the
Collateral that may come into possession of the Agent; (ii) to sign and endorse any financing statement pursuant to the UCC or
any invoice, freight or express bill, bill of lading, storage or warehouse receipts, drafts against debtors, assignments, verifications
and notices in connection with accounts, and other documents relating to the Collateral; (iii) to pay or discharge taxes, liens,
security interests or other encumbrances at any time levied or placed on or threatened against the Collateral; (iv) to demand,
collect, receipt for, compromise, settle and sue for monies due in respect of the Collateral; (v) to transfer any Intellectual
Property or provide licenses respecting any Intellectual Property; and (vi) generally, at the option of the Agent, and at the
expense of the Debtors, at any time, or from time to time, to execute and deliver any and all documents and instruments and to
do all acts and things which the Agent deems necessary to protect, preserve and realize upon the Collateral and the Security Interests
granted therein in order to effect the intent of this Agreement and the Notes all as fully and effectually as the Debtors might
or could do; and Debtors hereby ratify all that said attorney shall lawfully do or cause to be done by virtue hereof. This power
of attorney is coupled with an interest and shall be irrevocable for the term of this Agreement and thereafter as long as any
of the Obligations shall be outstanding. The designation set forth herein shall be deemed to amend and supersede any inconsistent
provision in the Organizational Documents or other documents or agreements to which Debtors are subject or to which Debtors are
a party. Without limiting the generality of the foregoing, after the occurrence and during the continuance of an Event of Default,
each Secured Party is specifically authorized to execute and file any applications for or instruments of transfer and assignment
of any patents, trademarks, copyrights or other Intellectual Property with the United States Patent and Trademark Office and the
United States Copyright Office.
(b) On
a continuing basis, Debtors will make, execute, acknowledge, deliver, file and record, as the case may be, with the proper filing
and recording agencies in any jurisdiction, including, without limitation, the jurisdictions indicated on Schedule E attached
hereto, all such instruments, and take all such action as may reasonably be deemed necessary or advisable, or as reasonably requested
by the Agent, to perfect the Security Interests granted hereunder and otherwise to carry out the intent and purposes of this Agreement,
or for assuring and confirming to the Agent the grant or perfection of a perfected security interest in all the Collateral under
the UCC.
(c) Debtors
hereby irrevocably appoint the Agent as Debtors’ attorney-in-fact, with full authority in the place and instead of Debtors
and in the name of Debtors, from time to time in the Agent’s discretion, to take any action and to execute any instrument
which the Agent may deem necessary or advisable to accomplish the purposes of this Agreement, including the filing, in its sole
discretion, of one or more financing or continuation statements and amendments thereto, relative to any of the Collateral without
the signature of Debtors where permitted by law, which financing statements may (but need not) describe the Collateral as “all
assets” or “all personal property” or words of like import, and ratifies all such actions taken by the Agent.
This power of attorney is coupled with an interest and shall be irrevocable for the term of this Agreement and thereafter as long
as any of the Obligations shall be outstanding.
16. Notices.
All notices, requests, demands and other communications hereunder shall be subject to the notice provision of the Purchase Agreement
(as such term is defined in the Notes).
17. Other
Security. To the extent that the Obligations are now or hereafter secured by property other than the Collateral or by the
guarantee, endorsement or property of any other person, firm, corporation or other entity, then the Agent shall have the right,
in its sole discretion, to pursue, relinquish, subordinate, modify or take any other action with respect thereto, without in any
way modifying or affecting any of the Secured Parties’ rights and remedies hereunder.
18. Appointment
of Agent. The Secured Parties hereby appoint DOMINION CAPITAL, LLC to act as their agent (“Agent”) for
purposes (subject to the terms of the Intercreditor Agreement (as defined below)) of exercising any and all rights and remedies
of the Secured Parties hereunder including Annex B hereto. Such appointment shall continue until revoked in writing by a Majority
in Interest or the Unanimous Amount, as applicable, at which time a Majority in Interest or Unanimous Amount, as applicable, shall
appoint a new Agent. The Agent shall have the rights, responsibilities and immunities set forth in Annex B hereto.
19. Miscellaneous.
(a) No
course of dealing between the Debtors and the Secured Parties, nor any failure to exercise, nor any delay in exercising, on the
part of the Secured Parties, any right, power or privilege hereunder or under the Notes shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, power or privilege hereunder or thereunder preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.
(b) All
of the rights and remedies of the Secured Parties with respect to the Collateral, whether established hereby or by the Notes or
by any other agreements, instruments or documents or by law shall be cumulative and may be exercised singly or concurrently.
(c) This
Agreement, together with the exhibits and schedules hereto, contain the entire understanding of the parties with respect to the
subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which
the parties acknowledge have been merged into this Agreement and the exhibits and schedules hereto. No provision of this Agreement
may be waived, modified, supplemented or amended except in a written instrument signed, in the case of an amendment, by the Debtors
and the Secured Parties holding a Majority in Interest or Unanimous Amount, as applicable, of the principal amount of Notes then
outstanding, or, in the case of a waiver, by the party against whom enforcement of any such waived provision is sought.
(d) If
any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially
reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that
they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.
(e) No
waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing
waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof,
nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right.
(f) This
Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Debtors
may not assign this Agreement or any rights or obligations hereunder without the prior written consent of each Secured Party (other
than by merger). Any Secured Party may assign any or all of its rights under this Agreement to any Person (as defined in the Purchase
Agreement) to whom such Secured Party assigns or transfers any Obligations, provided such transferee agrees in writing to be bound,
with respect to the transferred Obligations, by the provisions of this Agreement that apply to the “Secured Parties.”
(g) Each
party shall take such further action and execute and deliver such further documents as may be necessary or appropriate in order
to carry out the provisions and purposes of this Agreement.
(h) Except to the extent mandatorily governed by the jurisdiction or situs where the Collateral is located, all questions concerning
the construction, validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in
accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Except
to the extent mandatorily governed by the jurisdiction or situs where the Collateral is located, Debtors agree that all proceedings
concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement, the Notes the Purchase
Agreement and/or other documents (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders,
partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of
New York, Borough of Manhattan. Except to the extent mandatorily governed by the jurisdiction or situs where the Collateral is
located, Debtors hereby irrevocably submit to the exclusive jurisdiction of the state and federal courts sitting in the City of
New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that such proceeding is improper. Each party hereto hereby
irrevocably waives personal service of process and consents to process being served in any such proceeding by mailing a copy thereof
via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for
notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law.
Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by
jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.
(i) This
Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and,
all of which taken together shall constitute one and the same Agreement. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid binding obligation of the party executing (or on whose behalf such signature
is executed) the same with the same force and effect as if such facsimile signature were the original thereof.
(j) Debtors
shall indemnify, reimburse and hold harmless each of the Agent and the Secured Parties and their respective partners, members,
shareholders, officers, directors, employees and agents (and any other persons with other titles that have similar functions)
(collectively, “Indemnitees”) from and against any and all losses, claims, liabilities, damages, penalties,
suits, costs and expenses, of any kind or nature, (including fees relating to the cost of investigating and defending any of the
foregoing) imposed on, incurred by or asserted against such Indemnitee in any way related to or arising from or alleged to arise
from this Agreement or the Collateral, except any such losses, claims, liabilities, damages, penalties, suits, costs and expenses
which result from the gross negligence or willful misconduct of the Indemnitee as determined by a final, nonappealable decision
of a court of competent jurisdiction. This indemnification provision is in addition to, and not in limitation of, any other indemnification
provision in the Notes, the Purchase Agreement (as such term is defined in the Notes) or any other agreement, instrument or other
document executed or delivered in connection herewith or therewith.
(k) Nothing
in this Agreement shall be construed to subject Agent or any Secured Party to liability as a partner in Debtors or any if their
direct or indirect subsidiaries that is a partnership or as a member in Debtors or any of its direct or indirect subsidiaries
that is a limited liability company, nor shall Agent or any Secured Party be deemed to have assumed any obligations under any
partnership agreement or limited liability company agreement, as applicable, of any Debtors or any of their direct or indirect
subsidiaries or otherwise, unless and until any such Secured Party exercises its right to be substituted for Debtors as a partner
or member, as applicable, pursuant hereto.
(l) To
the extent that the grant of the security interest in the Collateral and the enforcement of the terms hereof require the consent,
approval or action of any partner or member, as applicable, of Debtors or any direct or indirect subsidiary of Debtors or compliance
with any provisions of any of the Organizational Documents, the Debtors hereby grants such consent and approval and waives any
such noncompliance with the terms of said documents.
20. Subject
to the rights of the Senior Lender under the Intercreditor and Subordination Agreement (the “Intercreditor Agreement”)
dated substantially the date hereof by and among the Debtors and the other parties thereto, payments under this Agreement to be
made to the Secured Parties shall be on a pari passu basis. To be free from doubt, the priority of payments under the
Intercreditor Agreement is as follows: first 100% to the Senior Lender until the Senior Obligations are paid in full and, after
giving effect to such payments, the remainder of the payments, if any, 100% to the Subordinated Lenders, on a pari passu basis.
21. Agent.
Notwithstanding anything to the contrary provided herein or elsewhere, the rights, remedies and other provisions set forth
herein as to the Agent, the Debtors, the Secured Parties and the Senior Lenders, are subject to the Intercreditor Agreement.
[SIGNATURE PAGES
FOLLOW]
IN WITNESS WHEREOF,
the parties hereto have caused this Security Agreement to be duly executed on the day and year first above written.
| Amarantus Bioscience Holdings, Inc. |
|
| |
|
|
| By: |
|
|
| |
Name: |
|
| |
Title: |
|
| |
|
|
| Amarantus Therapeutics, Inc. |
|
| |
|
|
| By: |
|
|
| |
Name: |
|
| |
Title: |
|
| |
|
|
| Amarantus Therapeutics, Inc. |
|
| |
|
|
| By: |
|
|
| |
Name: |
|
| |
Title: |
|
| |
|
|
| Amarantus MA, Inc. |
|
| |
|
|
| By: |
|
|
| |
Name: |
|
| |
Title: |
|
| |
|
|
| CUTANOGEN CORPORATION |
|
| |
|
|
| By: |
|
|
| |
Name: |
|
| |
Title: |
|
| |
|
|
| [SUB 1] |
|
| |
|
|
| By: |
|
|
| |
Name: |
|
| |
Title: |
|
[SIGNATURE PAGE
OF SECURED PARTIES TO SECURITY AGREEMENT]
Name of Investing Entity: Dominion
Capital, LLC: ______________________
Signature
of Authorized Signatory of Investing entity: _________________________
Name of Authorized
Signatory: _________________________
Title of Authorized
Signatory: __________________________
[SIGNATURE PAGE
OF SECURED PARTIES TO SECURITY AGREEMENT]
Name of Investing Entity: Delafield
Investments Limited
Signature
of Authorized Signatory of Investing entity: _________________________
Name of Authorized
Signatory: _________________________
Title of Authorized
Signatory: __________________________
Appointment as Collateral Agent
accepted and agreed to:
DOMINION CAPITAL, LLC
Signature
of Authorized Signatory of Investing entity: _________________________
Name of Authorized
Signatory: _________________________
Title of Authorized Signatory: __________________________
SCHEDULE I
List of Subsidiaries
ANNEX A
to
SECURITY
AGREEMENT
FORM
OF ADDITIONAL DEBTOR JOINDER
Security Agreement
dated as of September 30, 2015 made by
Amarantus Bioscience
Holdings, Inc.,
and its Subsidiaries
party thereto from time to time, as Debtors
to and in favor
of
the Secured
Parties identified therein (the “Security Agreement”)
Reference
is made to the Security Agreement as defined above; capitalized terms used herein and not otherwise defined herein shall have
the meanings given to such terms in, or by reference in, the Security Agreement.
The
undersigned hereby agrees that upon delivery of this Additional Debtor Joinder to the Secured Parties referred to above, the undersigned
shall (a) be an Additional Debtor under the Security Agreement, (b) have all the rights and obligations of the Debtor under the
Security Agreement as fully and to the same extent as if the undersigned was an original signatory thereto and (c) be deemed to
have made the representations and warranties set forth therein as of the date of execution and delivery of this Additional Debtor
Joinder. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, THE UNDERSIGNED SPECIFICALLY GRANTS TO THE SECURED PARTIES A SECURITY
INTEREST IN THE COLLATERAL AS MORE FULLY SET FORTH IN THE SECURITY AGREEMENT AND ACKNOWLEDGES AND AGREES TO THE WAIVER OF JURY
TRIAL PROVISIONS SET FORTH THEREIN.
Attached
hereto are supplemental and/or replacement Schedules to the Security Agreement, as applicable.
An
executed copy of this Joinder shall be delivered to the Secured Parties, and the Secured Parties may rely on the matters set forth
herein on or after the date hereof. This Joinder shall not be modified, amended or terminated without the prior written consent
of the Secured Parties.
IN
WITNESS WHEREOF, the undersigned has caused this Joinder to be executed in the name and on behalf of the undersigned.
| |
[Name of Additional Debtor] |
| |
|
| |
By: |
|
| |
Name: |
|
| |
Title: |
|
| |
|
|
| |
Address: |
|
| |
|
|
| Dated: |
|
|
ANNEX B
to
SECURITY
AGREEMENT
THE AGENT
1.
Appointment. The Secured Parties (all capitalized terms used herein and not otherwise defined shall have the respective
meanings provided in the Security Agreement to which this Annex B is attached (the "Agreement")), by their acceptance
of the benefits of the Agreement, hereby designate DOMINION CAPITAL, LLC (“Agent”) as the Agent to act as specified
herein and in the Agreement. Each Secured Party shall be deemed irrevocably to authorize the Agent to take such action on its
behalf under the provisions of the Agreement and any other Document (as such term is defined in the Purchase Agreement) and/or
any other agreement deemed to be a part of a Simultaneous Transaction (as such term is defined in the Purchase Agreement), including,
without limitation, the Intercreditor and Subordination Agreement dated substantially the date hereof by and among the Debtors
and the Secured Parties and to exercise such powers and to perform such duties hereunder and thereunder as are specifically delegated
to or required of the Agent by the terms hereof and thereof and such other powers as are reasonably incidental thereto. The Agent
may perform any of its duties hereunder by or through its agents or employees.
2.
Nature of Duties. The Agent shall have no duties or responsibilities except those expressly set forth in the Agreement.
Neither the Agent nor any of its partners, members, shareholders, officers, directors, employees or agents shall be liable for
any action taken or omitted by it as such under the Agreement or hereunder or in connection herewith or therewith, be responsible
for the consequence of any oversight or error of judgment or answerable for any loss, unless caused solely by its or their gross
negligence or willful misconduct as determined by a final judgment (not subject to further appeal) of a court of competent jurisdiction.
The duties of the Agent shall be mechanical and administrative in nature; the Agent shall not have by reason of the Agreement
or any other Document a fiduciary relationship in respect of Debtor or any Secured Party; and nothing in the Agreement or any
other Document, expressed or implied, is intended to or shall be so construed as to impose upon the Agent any obligations in respect
of the Agreement or any other Transaction Document except as expressly set forth herein and therein.
3.
Lack of Reliance on the Agent. Independently and without reliance upon the Agent, each Secured Party, to the extent it
deems appropriate, has made and shall continue to make (i) its own independent investigation of the financial condition and affairs
of the Debtor and its subsidiaries in connection with such Secured Party’s investment in the Debtor, the creation and continuance
of the Obligations, the transactions contemplated by the Transaction Documents, and the taking or not taking of any action in
connection therewith, and (ii) its own appraisal of the creditworthiness of the Debtor and its subsidiaries, and of the value
of the Collateral from time to time, and the Agent shall have no duty or responsibility, either initially or on a continuing basis,
to provide any Secured Party with any credit, market or other information with respect thereto, whether coming into its possession
before any Obligations are incurred or at any time or times thereafter. The Agent shall not be responsible to any Debtor or any
Secured Party for any recitals, statements, information, representations or warranties herein or in any document, certificate
or other writing delivered in connection herewith, or for the execution, effectiveness, genuineness, validity, enforceability,
perfection, collectibility, priority or sufficiency of the Agreement or any other Document, or for the financial condition of
any Debtor or the value of any of the Collateral, or be required to make any inquiry concerning either the performance or observance
of any of the terms, provisions or conditions of the Agreement or any other Transaction Document, or the financial condition of
any Debtor, or the value of any of the Collateral, or the existence or possible existence of any default or Event of Default under
the Agreement, the Purchase Agreement, the Notes or any of the other Documents.
4.
Certain Rights of the Agent. The Agent shall have the right to take any action with respect to the Collateral, on behalf
of all of the Secured Parties. To the extent practical, the Agent shall request instructions from the Secured Parties with respect
to any material act or action (including failure to act) in connection with the Agreement or any other Document, and shall be
entitled to act or refrain from acting in accordance with the instructions of a Majority in Interest or Unanimous Amount, as applicable;
if such instructions are not provided despite the Agent’s request therefor, the Agent shall be entitled to refrain from
such act or taking such action, and if such action is taken, shall be entitled to appropriate indemnification from the Secured
Parties in respect of actions to be taken by the Agent; and the Agent shall not incur liability to any person or entity by reason
of so refraining. Without limiting the foregoing, (a) no Secured Party shall have any right of action whatsoever against the Agent
as a result of the Agent acting or refraining from acting hereunder in accordance with the terms of the Agreement or any other
Document, and the Debtors shall have no right to question or challenge the authority of, or the instructions given to, the Agent
pursuant to the foregoing and (b) the Agent shall not be required to take any action which the Agent believes (i) could reasonably
be expected to expose it to personal liability or (ii) is contrary to this Agreement, the Transaction Documents or applicable
law.
5.
Reliance. The Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, notice,
statement, certificate, telex, teletype or telecopier message, cablegram, radiogram, order or other document or telephone message
signed, sent or made by the proper person or entity, and, with respect to all legal matters pertaining to the Agreement and the
other Documents and its duties thereunder, upon advice of counsel selected by it and upon all other matters pertaining to this
Agreement and the other Transaction Documents and its duties thereunder, upon advice of other experts selected by it. Anything
to the contrary notwithstanding, the Agent shall have no obligation whatsoever to any Secured Party to assure that the Collateral
exists or is owned by the Debtors or is cared for, protected or insured or that the liens granted pursuant to the Agreement have
been properly or sufficiently or lawfully created, perfected, or enforced or are entitled to any particular priority.
6.
Indemnification. To the extent that the Agent is not reimbursed and indemnified by the Debtor, the Secured Parties
will jointly and severally reimburse and indemnify the Agent, in proportion to their initially purchased respective principal
amounts of Notes, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against the
Agent in performing its duties hereunder or under the Agreement or any other Document, or in any way relating to or arising out
of the Agreement or any other Document except for those determined by a final judgment (not subject to further appeal) of a court
of competent jurisdiction to have resulted solely from the Agent's (and/or by Agent’s, and/or representatives of the Agent)
gross negligence or willful misconduct. Prior to taking any action hereunder as Agent, the Agent may require each Secured Party
to deposit with it sufficient sums as it determines in good faith is necessary to protect the Agent for costs and expenses associated
with taking such action.
7.
Resignation by the Agent.
(a)
The Agent may resign from the performance of all its functions and duties under the Agreement and the other Transaction Documents
at any time by giving 30 days' prior written notice (as provided in the Agreement) to the Debtor and the Secured Parties. Such
resignation shall take effect upon the appointment of a successor Agent pursuant to clauses (b) and (c) below.
(b)
Upon any such notice of resignation, the Secured Parties, acting by a Majority in Interest or Unanimous Amount, as applicable,
shall appoint a successor Agent hereunder.
(c)
If a successor Agent shall not have been so appointed within said 30-day period, the Agent shall then appoint a successor Agent
who shall serve as Agent until such time, if any, as the Secured Parties appoint a successor Agent as provided above. If a successor
Agent has not been appointed within such 30-day period, the Agent may petition any court of competent jurisdiction or may interplead
the Debtors and the Secured Parties in a proceeding for the appointment of a successor Agent, and all fees, including, but not
limited to, extraordinary fees associated with the filing of interpleader and expenses associated therewith, shall be payable
by the Debtor on demand.
8.
Rights with respect to Collateral. Each Secured Party agrees with all other Secured Parties and the Agent (i) that
it shall not, and shall not attempt to, exercise any rights with respect to its security interest in the Collateral, whether pursuant
to any other agreement or otherwise (other than pursuant to this Agreement), or take or institute any action against the Agent
or any of the other Secured Parties in respect of the Collateral or its rights hereunder (other than any such action arising from
the breach of this Agreement) and (ii) that such Secured Party has no other rights with respect to the Collateral other than as
set forth in this Agreement and the other Documents. Upon the acceptance of any appointment as Agent hereunder by a successor
Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of
the retiring Agent and the retiring Agent shall be discharged from its duties and obligations under the Agreement. After
any retiring Agent’s resignation or removal hereunder as Agent, the provisions of the Agreement including this Annex B shall
inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent.
DISCLOSURE
SCHEDULES
(Security Agreement)
The following
are the Disclosure Schedules (the “Disclosure Schedules”) referred to in that certain Security Agreement, dated
as of September 30, 2015 (the “Agreement”), by and between Amarantus Bioscience Holdings, Inc., a Nevada corporation
(the “Company”), all of the Subsidiaries of the Company (such subsidiaries, the “Subsidiaries”
and together with the Company, the “Debtors”) and the holders of the Company’s 12% Senior Secured Convertible
Promissory Notes, in the original aggregate principal amount of up to $6,076,556 (the “Notes”) signatory thereto,
their endorsees, transferees and assigns (collectively, the “Secured Parties”).
Schedule
I (4(d))
Schedule
A
Principal
Place of Business of each Debtor:
Locations
Where all Collateral is Located or Stored, Etc.
[LIST]
Schedule
B
Ownership
Interest to Collateral
[LIST]
Schedule
C
Other Liens,
Etc.
[LIST]
Schedule
D
List of Capital
Stock and other Equity Securities of Subsidiaries; Ownership of such Capital Stock; Liens Etc. of such Capital Stock
[LIST]
Schedule
E
Name and
Place of Jurisdiction; State of formation and organized number of each Debtor.
[LIST]
Schedule
F
Legal Names
of Organization Identification Numbers of each Debtor, andTrade Names, other Names, Mergers and Acquisitions
[LIST AS APPROPRIATE.]
Schedule
G
Intellectual
Property, Etc.
Patents/Patent Applications
Domain Names
Copyrights
[LIST]
Trademarks/Trademark Applications
Schedule
H
Account Debtors
[LIST]
Schedule
I
Pledged Securities
The Company
is the sole owner 100% of the [_____] its subsidiaries, as follows:
Exhibit 10.6
PATENT AND TRADEMARK SECURITY AGREEMENT
This PATENT AND TRADEMARK
SECURITY AGREEMENT, dated as of September 30, 2015 (this “Agreement”), is among Amarantus Bioscience Holdings,
Inc. (the “Company”), and Subsidiaries of the Company, which Subsidiaries are set forth on Schedule 1 hereto
(such Subsidiaries, together with the Company, collectively the “Debtors”)
and the holders of the Company’s 12% Senior Secured Convertible Promissory Notes in the original aggregate principal amount
of $6,076,556 (collectively, the “Notes”) signatory hereto, and their endorsees, transferees and assigns (collectively,
the “Secured Parties”) certain of which Notes were sold to the Secured Parties pursuant to a Securities Purchase
Agreement dated on or about the date hereof by and among Delafield Investments Limited, Dominion Capital, LLC and the Company
(the “Purchase Agreement”).
WITNESSETH:
WHEREAS, in order
to induce the Secured Parties to extend the loans evidenced by the Notes and to consummate the other simultaneous transactions
contemplated by Purchase Agreement (the “Simultaneous Transactions”), the Debtors have agreed to execute and
deliver to the Secured Parties this Agreement and to grant the Secured Parties, pari passu with each other Secured
Party and through the Agent (as defined in Section 18 hereof), a security interest in certain property of the Debtors to secure
the prompt payment, performance and discharge in full of all of the Debtors’ obligations under the Notes.
NOW, THEREFORE, in
consideration of the agreements herein contained and for other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto hereby agree as follows:
1. Definitions. All
terms defined in the WITNESSETH clauses or in the Security Agreement dated on or about the date hereof by and among the Debtors
and the Secured Parties (the “Security Agreement”) that are not otherwise defined herein shall have the meanings
given to them in the Security Agreement. In addition, the following terms have the meanings set forth below:
“Patents”
means all of Company’s right, title and interest in and to patents or applications for patents, fees or royalties with respect
to each, and including without limitation the right to sue for past infringement and damages therefor, and licenses thereunder,
all as presently existing or hereafter arising or acquired, including without limitation the patents listed on Exhibit A.
“Security Interest” has the meaning
given in Section 2.
“Subsidiary”
means, with respect to any Person, a corporation, partnership, limited liability company or other entity of which shares of stock
or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power
only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation,
partnership or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly
through one or more intermediaries, or both, by such Person and “Subsidiaries” means collectively each and
every Subsidiary of a Person. The signature page hereto of the Debtors lists, in addition to the Company, all Subsidiaries of
the Company
“Trademarks” means all of
Company’s right, title and interest in and to: (a) trademarks, service marks, collective membership marks,
registrations and applications for registration for each, and the respective goodwill associated with each, (b) licenses,
fees or royalties with respect to each, (c) the right to sue for past, present and future infringement, dilution and damages
therefor, and (d) licenses thereunder, all as presently existing or hereafter arising or acquired, including, without
limitation, the marks listed on Exhibit B.
2. Security
Interest. Company hereby irrevocably pledges and assigns to, and grants the Secured Parties and through the Agent (as defined
in Section 7 hereof) a security interest (the “Security Interest”) with power of sale to the extent permitted
by law, in the Patents and in the Trademarks to secure payment of the Obligations. As set forth in the Security Agreement, the
Security Interest is coupled with a security interest in substantially all of the personal property of Company. This Agreement
grants only the Security Interest herein described, is not intended to and does not affect any present transfer of title of any
trademark registration or application and makes no assignment and grants no right to assign or perform any other action with respect
to any intent to use trademark application, unless such action is permitted under 15 U.S.C. § 1060.
3. Representations,
Warranties and Agreements. Company represents, warrants and agrees as follows:
(a) Existence;
Authority. Company is a limited liability company duly organized, validly existing and in good standing under the laws
of its state of formation, and this Agreement has been duly and validly authorized by all necessary company action on the part
of Company.
(b) Patents. Exhibit
A accurately lists all Patents owned or controlled by Company as of the date hereof, or to which Company has a right as of
the date hereof to have assigned to it, and accurately reflects the existence and status of applications and letters patent pertaining
to the Patents as of the date hereof. If after the date hereof, Company owns, controls or has a right to have assigned to it any
Patents not listed on Exhibit A, or if Exhibit A ceases to accurately reflect the existence and status of applications
and letters patent pertaining to the Patents, then Company shall within 60 days provide written notice to the Secured Parties
with a replacement Exhibit A, which upon acceptance by the Secured Parties shall become part of this Agreement.
(c) Trademarks. Exhibit
B accurately lists all Trademarks owned or controlled by Company as of the date hereof and accurately reflects the existence
and status of Trademarks and all applications and registrations pertaining thereto as of the date hereof; provided, however, that
Exhibit B need not list common law marks (i.e., Trademarks for which there are no applications or registrations) which are not
material to Company’s or any Affiliate’s business(es). If after the date hereof, Company owns or controls any Trademarks
not listed on Exhibit B (other than common law marks which are not material to Company’s or any Affiliate’s
business(es)), or if Exhibit B ceases to accurately reflect the existence and status of applications and registrations
pertaining to the Trademarks, then Company shall promptly provide written notice to the Secured Parties with a replacement Exhibit
B, which upon acceptance by the Secured Parties shall become part of this Agreement.
(d) Affiliates.
As of the date hereof, no Affiliate owns, controls, or has a right to have assigned to it any items that would, if such item
were owned by Company, constitute Patents or Trademarks. If after the date hereof any Affiliate owns, controls, or has a
right to have assigned to it any such items, then Company shall promptly either: (i) cause such Affiliate to assign all of
its rights in such item(s) to Company; or (ii) notify the Secured Parties of such item(s) and cause such Affiliate to execute
and deliver to the Secured Parties a patent and trademark security agreement substantially in the form of this Agreement.
(e) Title.
Company has absolute title to each Patent and each Trademark listed on Exhibits A and B, free and clear of all
Liens except Permitted Liens (as defined in the Security Agreement). Company (i) will have, at the time Company acquires any rights
in Patents or Trademarks hereafter arising, absolute title to each such Patent or Trademark free and clear of all Liens except
Permitted Liens, and (ii) will keep all Patents and Trademarks free and clear of all Liens except Permitted Liens.
(f) No
Sale. Except as permitted in the Security Agreement, Company will not assign, transfer, encumber or otherwise dispose
of the Patents or Trademarks, or any interest therein, without the Secured Parties’ prior written consent.
(g) Defense.
Company will at its own expense and using commercially reasonable efforts, protect and defend the Patents and Trademarks against
all claims or demands of all Persons other than those holding Permitted Liens.
(h) Maintenance.
Company will at its own expense maintain the Patents and the Trademarks to the extent reasonably advisable in its business
including, but not limited to, filing all applications to obtain letters patent or trademark registrations and all affidavits,
maintenance fees, annuities, and renewals possible with respect to letters patent, trademark registrations and applications therefor.
Company covenants that it will not abandon nor fail to pay any maintenance fee or annuity due and payable on any Patent or Trademark,
nor fail to file any required affidavit or renewal in support thereof, without first providing the Secured Parties: (i) sufficient
written notice, of at least 30 days, to allow the Secured Parties to timely pay any such maintenance fees or annuities which may
become due on any Patents or Trademarks, or to file any affidavit or renewal with respect thereto, and (ii) a separate written
power of attorney or other authorization to pay such maintenance fees or annuities, or to file such affidavit or renewal, should
such be necessary or desirable.
(i) The
Secured Parties’ Right to Take Action. If Company fails to perform or observe any of its covenants or agreements
set forth in this Section 3, and if such failure continues for a period of five (5) calendar days after the Secured Parties gives
Company written notice thereof (or, in the case of the agreements contained in subsection (h), immediately upon the occurrence
of such failure, without notice or lapse of time), or if Company notifies the Secured Parties that it intends to abandon a Patent
or Trademark, the Secured Parties may (but need not) perform or observe such covenant or agreement or take steps to prevent such
intended abandonment on behalf and in the name, place and stead of Company (or, at the Secured Parties’ option, in the Secured
Parties’ own name) and may (but need not) take any and all other actions which the Secured Parties may reasonably deem necessary
to cure or correct such failure or prevent such intended abandonment.
Costs and Expenses.
Except to the extent that the effect of such payment would be to render any loan or forbearance of money usurious or otherwise
illegal under any applicable law, Company shall pay the Secured Parties on demand the amount of all moneys expended and all costs
and expenses (including reasonable attorneys’ fees and disbursements) incurred by the Secured Parties in connection
with or as a result of the Secured Parties’ taking action under subsection (i) or exercising its rights under Section 6,
together with interest thereon from the date expended or incurred by the Secured Parties at the Default Rate.
(j) Power
of Attorney. To facilitate the Secured Parties’ taking action under subsection (i) and exercising its rights
under Section 6, Company hereby irrevocably appoints (which appointment is coupled with an interest) the Secured Parties, or its
delegate, as the attorney-in-fact of Company with the right (but not the duty) from time to time to create, prepare, complete,
execute, deliver, endorse or file, in the name and on behalf of Company, any and all instruments, documents, applications, financing
statements, and other agreements and writings required to be obtained, executed, delivered or endorsed by Company under this Section
3, or, necessary for the Secured Parties, after an Event of Default, to enforce or use the Patents or Trademarks or to grant or
issue any exclusive or non-exclusive license under the Patents or Trademarks to any third party, or to sell, assign, transfer,
pledge, encumber or otherwise transfer title in or dispose of the Patents or Trademarks to any third party. Company hereby ratifies
all that such attorney shall lawfully do or cause to be done by virtue hereof. The power of attorney granted herein shall terminate
upon the termination of the Note as provided therein and the payment and performance of all Obligations.
4. Company’s
Use of the Patents and Trademarks. Company shall be permitted to control and
manage the Patents and Trademarks, including the right to exclude others from making, using or selling items covered by
the Patents and Trademarks and any licenses thereunder, in the same manner and with the same effect as if this Agreement had
not been entered into, so long as no Event of Default occurs and remains uncured.
5. Events
of Default. Each of the following occurrences shall constitute an event of default under this Agreement (herein called “Event
of Default”): (a) an Event of Default, as defined in the Note or the Security Agreement, shall occur; or (b) Company
shall fail promptly to observe or perform any covenant or agreement herein binding on it; or (c) any of the representations or
warranties contained in Section 3 or in the Security Agreement or the Purchase Agreement shall prove to have been incorrect in
any material respect when made.
6. Remedies.
Upon the occurrence of an Event of Default and at any time thereafter, the Secured Parties may, at its option, take any or all
of the following actions:
(a) the
Secured Parties may exercise any or all remedies available under the Note or the Security Agreement.
(b) the
Secured Parties may sell, assign, transfer, pledge, encumber or otherwise dispose of the Patents and Trademarks.
(c) the
Secured Parties may enforce the Patents and Trademarks and any licenses thereunder, and if the Secured Parties shall commence
any suit for such enforcement, Company shall, at the request of the Secured Parties, do any and all lawful acts and execute any
and all proper documents required by the Secured Parties in aid of such enforcement
7. Appointment
of Agent. The Secured Parties hereby appoint DOMINION CAPITAL, LLC to act as their agent (“Agent”) for
purposes of exercising any and all rights and remedies of the Secured Parties hereunder, subject to the limitations set forth
in Section 29 of the Security Agreement. Such appointment shall continue until revoked in writing by a Majority
in Interest of the Subordinated Lender or the Unanimous Amount, as applicable,
at which time a Majority in Interest of the Subordinated Lender or Unanimous Amount, as applicable, shall appoint a new
Agent. The Agent shall have the rights, responsibilities and immunities set
forth in Annex A hereto.
8. Miscellaneous. This
Agreement can be waived, modified, amended, terminated or discharged, and the Security Interest can be released, only explicitly
in a writing signed by the Secured Parties. A waiver signed by the Secured Parties shall be effective only in the specific instance
and for the specific purpose given. Mere delay or failure to act shall not preclude the exercise or enforcement of any of the
Secured Parties’ rights or remedies. All rights and remedies of the Secured Parties shall be cumulative and may be exercised
singularly or concurrently, at the Secured Parties’ option, and the exercise or enforcement of any one such right or remedy
shall neither be a condition to nor bar the exercise or enforcement of any other. All notices to be given to Company under this
Agreement shall be given in the manner and with the effect provided in the Note. the Secured Parties shall not be obligated to
preserve any rights Company may have against prior parties, to realize on the Patents and Trademarks at all or in any particular
manner or order, or to apply any cash proceeds of Patents and Trademarks in any particular order of application. This Agreement
shall be binding upon and inure to the benefit of Company and the Secured Parties and their respective participants, successors
and assigns and shall take effect when signed by Company and delivered to the Secured Parties, and Company waives notice of the
Secured Parties’ acceptance hereof. the Secured Parties may execute this Agreement if appropriate for the purpose of filing,
but the failure of the Secured Parties to execute this Agreement shall not affect or impair the validity or effectiveness of this
Agreement. A carbon, photographic or other reproduction of this Agreement or of any financing statement signed by Company shall
have the same force and effect as the original for all purposes of a financing statement. This Agreement shall be governed by
the internal law of New York without regard to conflicts of law provisions. If any provision or application of this Agreement
is held unlawful or unenforceable in any respect, such illegality or unenforceability shall not affect other provisions or applications
which can be given effect and this Agreement shall be construed as if the unlawful or unenforceable provision or application had
never been contained herein or prescribed hereby. All representations and warranties contained in this Agreement shall survive
the execution, delivery and performance of this Agreement and the creation and payment of the Obligations.
THE
PARTIES WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED ON OR PERTAINING TO THIS AGREEMENT.
9. All
rights, powers, remedies and other provisions set forth herein are subject to the limitations and conditions set forth in the
Security Agreement.
IN WITNESS WHEREOF, the parties hereto
have caused this Patent and Trademark Security Agreement to be duly executed on the day and year first above written.
Amarantus Bioscience
Holdings, Inc.
Amarantus Therapeutics,
Inc.
Amarantus Therapeutics,
Inc.
Amarantus MA, Inc.
CUTANOGEN CORPORATION
[SUB
1]
[SIGNATURE PAGE OF SECURED PARTIES TO PATENT
AND TRADEMARK SECURITY AGREEMENT]
Name of Investing Entity: Delafield Investments Limited: ______________________
Signature of Authorized Signatory of
Investing entity: _________________________
Name of Authorized Signatory: _________________________
Title of Authorized Signatory: __________________________
[Patent
and Trademark Security Agreement Signature Page]
[SIGNATURE PAGE OF SECURED PARTIES TO PATENT
AND TRADEMARK SECURITY AGREEMENT]
Name of Investing Entity: Delafield Investments Limited
Signature of Authorized Signatory of
Investing entity: _________________________
Name of Authorized Signatory: _________________________
Title of Authorized Signatory: __________________________
Appointment as Collateral Agent accepted and agreed to:
DOMINION CAPITAL, LLC
Signature of Authorized Signatory of
Investing entity: _________________________
Name of Authorized Signatory: _________________________
Title of Authorized Signatory: __________________________
[Patent
and Trademark Security Agreement Signature Page]
SCHEDULE I
List of Subsidiaries
SCHEDULE A
Secured Parties
EXHIBIT A
UNITED STATES ISSUED PATENTS
[List]
UNITED STATES PATENT APPLICATIONS
[List]
FOREIGN ISSUED PATENTS
[List]
FOREIGN PATENT APPLICATIONS
[List]
EXHIBIT B
UNITED STATES ISSUED TRADEMARKS, SERVICE
MARKS
AND COLLECTIVE MEMBERSHIP MARKS
REGISTRATIONS
| Trademark
Name |
|
Application
No. |
|
Registration
No. |
|
Status |
| None |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
U.S. APPLICATIONS
| Trademark Name |
|
Jurisdiction |
|
Application No. |
|
Status |
None |
|
|
|
|
|
|
FOREIGN REGISTRATIONS
| Trademark Name |
|
Jurisdiction |
|
Registration No. |
|
Status |
| None |
|
|
|
|
|
|
ANNEX A
to
PATENT AND TRADEMARK SECURITY
AGREEMENT
THE AGENT
1. Appointment.
The Secured Parties (all capitalized terms used herein and not otherwise defined shall have the respective meanings provided in
the Security Agreement to which this Annex A is attached (the "Agreement")), by their acceptance of the benefits
of the Agreement, hereby designate DOMINION CAPITAL, LLC (“Agent”) as the Agent to act as specified herein
and in the Agreement. Each Secured Party shall be deemed irrevocably to authorize the Agent to take such action on its behalf
under the provisions of the Agreement and any other Document (as such term is defined in the Purchase Agreement) and/or any other
agreement deemed to be a part of a Simultaneous Transaction (as such term is defined in the Purchase Agreement), including, without
limitation, the Intercreditor and Subordination Agreement dated substantially the date hereof by and among the Debtors and the
Secured Parties and to exercise such powers and to perform such duties hereunder and thereunder as are specifically delegated
to or required of the Agent by the terms hereof and thereof and such other powers as are reasonably incidental thereto. The Agent
may perform any of its duties hereunder by or through its agents or employees.
2. Nature of Duties.
The Agent shall have no duties or responsibilities except those expressly set forth in the Agreement. Neither the Agent nor
any of its partners, members, shareholders, officers, directors, employees or agents shall be liable for any action taken or omitted
by it as such under the Agreement or hereunder or in connection herewith or therewith, be responsible for the consequence of any
oversight or error of judgment or answerable for any loss, unless caused solely by its or their gross negligence or willful misconduct
as determined by a final judgment (not subject to further appeal) of a court of competent jurisdiction. The duties of the Agent
shall be mechanical and administrative in nature; the Agent shall not have by reason of the Agreement or any other Document a
fiduciary relationship in respect of Debtor or any Secured Party; and nothing in the Agreement or any other Document, expressed
or implied, is intended to or shall be so construed as to impose upon the Agent any obligations in respect of the Agreement or
any other Transaction Document except as expressly set forth herein and therein.
3. Lack of Reliance
on the Agent. Independently and without reliance upon the Agent, each Secured Party, to the extent it deems appropriate, has
made and shall continue to make (i) its own independent investigation of the financial condition and affairs of the Debtor and
its subsidiaries in connection with such Secured Party’s investment in the Debtor, the creation and continuance of the Obligations,
the transactions contemplated by the Transaction Documents, and the taking or not taking of any action in connection therewith,
and (ii) its own appraisal of the creditworthiness of the Debtor and its subsidiaries, and of the value of the Collateral from
time to time, and the Agent shall have no duty or responsibility, either initially or on a continuing basis, to provide any Secured
Party with any credit, market or other information with respect thereto, whether coming into its possession before any Obligations
are incurred or at any time or times thereafter. The Agent shall not be responsible to any Debtor or any Secured Party for any
recitals, statements, information, representations or warranties herein or in any document, certificate or other writing delivered
in connection herewith, or for the execution, effectiveness, genuineness, validity, enforceability, perfection, collectibility,
priority or sufficiency of the Agreement or any other Document, or for the financial condition of any Debtor or the value of any
of the Collateral, or be required to make any inquiry concerning either the performance or observance of any of the terms, provisions
or conditions of the Agreement or any other Transaction Document, or the financial condition of any Debtor, or the value of any
of the Collateral, or the existence or possible existence of any default or Event of Default under the Agreement, the Purchase
Agreement, the Notes or any of the other Documents.
4. Certain Rights
of the Agent. The Agent shall have the right to take any action with respect to the Collateral, on behalf of all of the Secured
Parties. To the extent practical, the Agent shall request instructions from the Secured Parties with respect to any material act
or action (including failure to act) in connection with the Agreement or any other Document, and shall be entitled to act or refrain
from acting in accordance with the instructions of a Majority in Interest or Unanimous Amount, as applicable; if such instructions
are not provided despite the Agent’s request therefor, the Agent shall be entitled to refrain from such act or taking such
action, and if such action is taken, shall be entitled to appropriate indemnification from the Secured Parties in respect of actions
to be taken by the Agent; and the Agent shall not incur liability to any person or entity by reason of so refraining. Without
limiting the foregoing, (a) no Secured Party shall have any right of action whatsoever against the Agent as a result of the Agent
acting or refraining from acting hereunder in accordance with the terms of the Agreement or any other Document, and the Debtors
shall have no right to question or challenge the authority of, or the instructions given to, the Agent pursuant to the foregoing
and (b) the Agent shall not be required to take any action which the Agent believes (i) could reasonably be expected to expose
it to personal liability or (ii) is contrary to this Agreement, the Transaction Documents or applicable law.
5. Reliance.
The Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, notice, statement,
certificate, telex, teletype or telecopier message, cablegram, radiogram, order or other document or telephone message signed,
sent or made by the proper person or entity, and, with respect to all legal matters pertaining to the Agreement and the other
Documents and its duties thereunder, upon advice of counsel selected by it and upon all other matters pertaining to this Agreement
and the other Transaction Documents and its duties thereunder, upon advice of other experts selected by it. Anything to the contrary
notwithstanding, the Agent shall have no obligation whatsoever to any Secured Party to assure that the Collateral exists or is
owned by the Debtors or is cared for, protected or insured or that the liens granted pursuant to the Agreement have been properly
or sufficiently or lawfully created, perfected, or enforced or are entitled to any particular priority.
6. Indemnification.
To the extent that the Agent is not reimbursed and indemnified by the Debtor, the Secured Parties will jointly and severally
reimburse and indemnify the Agent, in proportion to their initially purchased respective principal amounts of Notes, from and
against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever which may be imposed on, incurred by or asserted against the Agent in performing its duties hereunder
or under the Agreement or any other Document, or in any way relating to or arising out of the Agreement or any other Document
except for those determined by a final judgment (not subject to further appeal) of a court of competent jurisdiction to have resulted
solely from the Agent's (and/or by Agent’s, and/or representatives of the Agent) gross negligence or willful misconduct.
Prior to taking any action hereunder as Agent, the Agent may require each Secured Party to deposit with it sufficient sums as
it determines in good faith is necessary to protect the Agent for costs and expenses associated with taking such action.
7. Resignation
by the Agent.
(a) The
Agent may resign from the performance of all its functions and duties under the Agreement and the other Transaction Documents
at any time by giving 30 days' prior written notice (as provided in the Agreement) to the Debtor and the Secured Parties. Such
resignation shall take effect upon the appointment of a successor Agent pursuant to clauses (b) and (c) below.
(b) Upon
any such notice of resignation, the Secured Parties, acting by a Majority in Interest
of the Subordinated Lenders or Unanimous Amount, as applicable, shall appoint a successor Agent hereunder.
(c) If a
successor Agent shall not have been so appointed within said 30-day period, the Agent shall then appoint a successor Agent who
shall serve as Agent until such time, if any, as the Secured Parties appoint a successor Agent as provided above. If a successor
Agent has not been appointed within such 30-day period, the Agent may petition any court of competent jurisdiction or may interplead
the Debtors and the Secured Parties in a proceeding for the appointment of a successor Agent, and all fees, including, but not
limited to, extraordinary fees associated with the filing of interpleader and expenses associated therewith, shall be payable
by the Debtor on demand.
8. Rights with
respect to Collateral. Each Secured Party agrees with all other Secured Parties and the Agent (i) that it shall not,
and shall not attempt to, exercise any rights with respect to its security interest in the Collateral, whether pursuant to any
other agreement or otherwise (other than pursuant to this Agreement), or take or institute any action against the Agent or any
of the other Secured Parties in respect of the Collateral or its rights hereunder (other than any such action arising from the
breach of this Agreement) and (ii) that such Secured Party has no other rights with respect to the Collateral other than as set
forth in this Agreement and the other Documents. Upon the acceptance of any appointment as Agent hereunder by a successor Agent,
such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring
Agent and the retiring Agent shall be discharged from its duties and obligations under the Agreement. After any retiring
Agent’s resignation or removal hereunder as Agent, the provisions of the Agreement including this Annex A shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was Agent.
Exhibit 10.7
EXCHANGE AGREEMENT
THIS EXCHANGE AGREEMENT
(the “Agreement”) is dated this 30th day of September, 2015, by and among AMARANTUS BIOSCIENCE HOLDINGS,
INC., a Nevada corporation (the “Company”), all of the subsidiaries of the Company that are party to the Agreement
(collectively, “Subsidiaries”), and DOMINION CAPITAL LLC (the “Holder”).
WHEREAS, the Holder
beneficially owns and holds certain Senior Secured Convertible Promissory Notes, as set forth on Exhibit A hereto (the “Securities”);
and
WHEREAS, the Holder
desires to exchange (the “Exchange”) the Securities for new 12% Senior Secured Convertible Promissory Notes
and Warrants to purchase Common Stock (the “Exchange Securities”) of the Company as set forth and memorialized
on Exhibit B hereto, and the Company desires to issue the Exchange Securities in exchange for the Securities, all on the
terms and conditions set forth in this Agreement in reliance on the exemption from registration provided by Section 3(a)(9) of
the Securities Act of 1933, as amended (the “Securities Act”).
NOW, THEREFORE, in
consideration of the terms and conditions contained herein, and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the Company and the Holder hereby agree as follows:
Section 1. Exchange. Subject
to and upon the terms and conditions set forth in this Agreement, the Holder agrees to surrender to the Company the Securities
and, in exchange therefore, the Company shall issue to the Holder the Exchange Securities.
1.1 Closing. On
the Closing Date (as defined below), the Company will issue and deliver (or cause to be issued and delivered) the Exchange Securities
to the Holder, or in the name of a custodian or nominee of the Holder, or as otherwise requested by the Holder in writing, and
the Holder will surrender to the Company the Securities. The closing of the Exchange shall occur on September 30, 2015,
or as soon thereafter as the parties may mutually agree in writing (the “Closing Date”), subject to the provisions
of Section 4 and Section 5 herein.
1.2 Section
3(a)(9). Assuming the accuracy of the representations and warranties of each of the Company and the Holder set forth
in Sections 2 and 3 of this Agreement, the parties acknowledge and agree that the purpose of such representations and warranties
is, among other things, to ensure that the Exchange qualifies as an exchange of securities under Section 3(a)(9) of the Securities
Act.
Section 2. Representations
and Warranties of the Company. The Company represents and warrants to the Holder that:
2.1 Organization
and Qualification. The Company and each of the subsidiaries of the Company (the “Subsidiaries”)
is an entity duly incorporated or otherwise organized, validly existing and in good standing under the laws of the jurisdiction
of its incorporation or organization, with the requisite power and authority to own and use its properties and assets and to carry
on its business as currently conducted. Neither the Company, nor any Subsidiary is in violation or default of any of
the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents. Each
of the Company and the Subsidiaries is duly qualified to conduct business and is in good standing as a foreign corporation or other
entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary,
except where the failure to be so qualified or in good standing, as the case may be, could not have or reasonably be expected to
result in: (i) a material adverse effect on the legality, validity or enforceability of this Agreement or any documents executed
in connection herewith (the “Transaction Documents”), (ii) a material adverse effect on the results of operations,
assets, business, prospects or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii)
a material adverse effect on the Company’s ability to perform in any material respect on a timely basis its obligations under
any Transaction Document (any of (i), (ii) or (iii), a “Material Adverse Effect”) and no proceeding has been
instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority
or qualification.
2.2 Authorization;
Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions
contemplated by this Agreement and each of the other Transaction Documents and otherwise to carry out its obligations hereunder
and thereunder. The execution and delivery of this Agreement and each of the other Transaction Documents by the Company
and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary action
on the part of the Company and no further action is required by the Company, the Board of Directors or the Company’s stockholders
in connection herewith or therewith other than in connection with the Required Approvals (as defined below). This Agreement
and each other Transaction Document to which it is a party has been (or upon delivery will have been) duly executed by the Company
and, when delivered in accordance with the terms hereof and thereof, will constitute the valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except: (i) as limited by general equitable principles and applicable
bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’
rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.
2.3 Issuance
of Exchange Securities. The issuance of the Exchange Securities is duly authorized and, upon issuance in accordance
with the terms hereof, the Exchange Securities shall be validly issued, fully paid and non-assessable. The shares of Common Stock
issued upon conversion of the Exchange Securities, when issued and delivered in accordance with the terms of the Exchange Securities,
will be duly and validly issued, fully paid and non-assessable, free and clear of all Liens (as defined below) imposed by the Company,
other than restrictions on transfer under applicable state and federal securities laws. The shares of Common Stock issued
upon exercise of the Exchange Securities, when issued and delivered in accordance with the terms of the Exchange Securities for
the consideration expressed therein, will be duly and validly issued, fully paid and non-assessable, free and clear of all Liens
imposed by the Company, other than restrictions on transfer under applicable state and federal securities laws. Upon
issuance in accordance herewith, the issuance by the Company of the Exchange Securities is exempt from the registration requirements
of the Securities Act under Section 3(a)(9) of the Securities Act and all of the shares of Common Stock issuable upon conversion
of the Exchange Securities and upon exercise of the Exchange Securities will be freely transferable and freely tradable by the
Holder without restriction pursuant to Rule 144 of the Securities Act, assuming the Holder is not an Affiliate and the holding
period requirements of Rule 144 have been met. The shares of Common Stock issuable upon conversion or exercise, as applicable,
of the Exchange Securities shall not bear any restrictive or other legends or notations. The Company has reserved from its duly
authorized capital stock a number of shares of Common Stock for issuance of the shares underlying the Exchange Securities at least
equal to 300% of the Required Minimum on the date hereof. “Required Minimum” means, as of any date, the maximum
aggregate number of shares of Common Stock then issued or potentially issuable in the future pursuant to the Transaction Documents,
including any shares of Common Stock issuable upon exercise in full of all Exchange Securities or conversion in full of all Exchange
Securities (including shares of Common Stock issuable as payment of interest on the Exchange Securities), ignoring any conversion
or exercise limits set forth therein, and assuming that the Conversion Price or Exercise Price, as applicable, is at all times
on and after the date of determination 75% of the then Conversion Price or Exercise Price, as applicable, on the Trading Day immediately
prior to the date of determination.
2.4 No
Conflicts. The execution, delivery and performance by the Company of this Agreement and the other Transaction Documents
to which it is a party, the issuance of the Exchange Securities and the consummation by it of the transactions contemplated hereby
and thereby do not and will not: (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate
or articles of incorporation, bylaws or other organizational or charter documents, (ii) conflict with, or constitute a default
(or an event that with notice or lapse of time or both would become a default) under, result in the creation of any options, contracts,
agreements, liens, security interests, or other encumbrances (“Liens”) upon any of the properties or assets
of the Company or any Subsidiary, or give to others any rights of termination, amendment, acceleration or cancellation (with or
without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary
debt or otherwise) or other understanding to which the Company or any Subsidiary is a party or by which any property or asset of
the Company or any Subsidiary is bound or affected, or (iii) subject to the Required Approvals, conflict with or result in a violation
of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to
which the Company or a Subsidiary is subject (including federal and state securities laws and regulations), or by which any property
or asset of the Company or a Subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii), such as could
not have or reasonably be expected to result in a Material Adverse Effect.
2.5 Acknowledgment
Regarding the Exchange. The Company acknowledges and agrees that the Holder is acting solely in the capacity of
an arm’s length third party with respect to this Agreement and the transactions contemplated hereby. The Company
further acknowledges the Holder is not acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with
respect to this Agreement and the transactions contemplated hereby, and any advice given by the Holder or any of their representatives
or agents in connection with this Agreement is merely incidental to the Exchange.
2.6 No
Commission; No Other Consideration. The Company has not paid or given, and has not agreed to pay or give, directly
or indirectly, any commission or other remuneration for soliciting the Exchange. The Exchange Securities are being issued
exclusively for the exchange of the Securities and no other consideration has or will be paid for the Exchange Securities.
2.7 3(a)(9)
Representation. The Company has not, nor has any person acting on its behalf, directly or indirectly made any offers
or sales of any security or solicited any offers to buy any security under circumstances that would cause the Exchange and the
issuance of the Exchange Securities pursuant to this Agreement to be integrated with prior offerings by the Company for purposes
of the Securities Act which would prevent the Company from delivering the Exchange Securities to the Holder pursuant to Section
3(a)(9) of the Securities Act, nor will the Company take any action or steps that would cause the Exchange, issuance and delivery
of the Exchange Securities to be integrated with other offerings to the effect that the delivery of the Exchange Securities to
the Holder would be seen not to be exempt pursuant to Section 3(a)(9) of the Securities Act.
2.8 No
Third-party Advisors. Other than legal counsel, the Company has not engaged any third parties to assist in the solicitation
with respect to the Exchange.
2.9 SEC
Reports; Financial Statements. Except for the Company’s Form 10-K for the year ended December 31, 2013, the
Company has filed all reports, schedules, forms, statements and other documents required to be filed by the Company under the Securities
Act and the Exchange Act of 1934, as amended (the “Exchange Act”), including pursuant to Section 13(a) or 15(d)
of the Exchange Act, for the two years preceding the date hereof (or such shorter period as the Company was required by law or
regulation to file such material) (the foregoing materials, including the exhibits thereto and documents incorporated by reference
therein, being collectively referred to herein as the “SEC Reports”) on a timely basis or has received a valid
extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension. As
of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the
Exchange Act, as applicable, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The financial statements of the Company included in the SEC
Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the SEC with respect
thereto as in effect at the time of filing. Such financial statements have been prepared in accordance with United States
generally accepted accounting principles applied on a consistent basis during the periods involved (“GAAP”),
except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements
may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company
and its consolidated Subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods
then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments.
2.10 Subsidiaries. All
of the direct and indirect subsidiaries of the Company are set forth in the SEC Reports. The Company owns, directly
or indirectly, all of the capital stock or other equity interests of each Subsidiary free and clear of any Liens, and all of the
issued and outstanding shares of capital stock of each Subsidiary are validly issued and are fully paid, non-assessable and free
of preemptive and similar rights to subscribe for or purchase securities. If the Company has no subsidiaries, all other
references to the Subsidiaries or any of them in the Transaction Documents shall be disregarded.
2.11 Filings,
Consents and Approvals. Other than as set forth on Schedule 2.11, the Company is not required to obtain any
consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal,
state, local or other governmental authority or any natural person, firm, partnership, association, corporation, company,
trust, business trust or other entity (each, a “Person”) in connection with the
execution, delivery and performance by the Company of the Transaction Documents, other than: (i) the notice and/or application(s)
to each applicable Trading Market for the issuance and the listing of the shares of Common Stock issuable upon conversion of the
Exchange Securities and the shares of Common Stock issuable upon exercise of the Exchange Securities for trading thereon in the
time and manner required thereby, and (ii) the filing of Form D with the SEC and such filings as are required to be made under
applicable state securities laws (collectively, the “Required Approvals”).
2.12 Capitalization. The
capitalization of the Company is as set forth on Schedule 2.12. No Person has any right of first refusal, preemptive
right, right of participation, or any similar right to participate in the transactions contemplated by the Transaction Documents. Other
than as set forth on Schedule 2.12 or as set forth in the SEC Reports, there are no outstanding options, warrants, scrip
rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible
into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire any shares of Common Stock,
or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to issue
additional shares of Common Stock or any securities of the Company which would entitle the holder thereof to acquire at any time
Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is at any
time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock. All
of the outstanding shares of capital stock of the Company are duly authorized, validly issued, fully paid and nonassessable, have
been issued in compliance with all federal and state securities laws, and none of such outstanding shares was issued in violation
of any preemptive rights or similar rights to subscribe for or purchase securities. No further approval or authorization
of any stockholder, the Board of Directors or others is required for the issuance of the Exchange Securities. There
are no stockholder agreements or other similar agreements with respect to the Company’s capital stock to which the Company
is a party or, to the knowledge of the Company, between or among any of the Company’s stockholders.
2.13 DTC
Eligibility. The Company, through the Transfer Agent, currently participates in the DTC Fast Automated Securities
Transfer (FAST) Program and the Common Stock can be transferred electronically to third parties via the DTC Fast Automated Securities
Transfer (FAST) Program.
2.14 Material
Changes; Undisclosed Events, Liabilities or Developments. Since the date of the latest audited financial statements
included within the SEC Reports, except as specifically disclosed in a subsequent SEC Report filed prior to the date hereof: (i)
there has been no event, occurrence or development that has had or that could reasonably be expected to result in a Material Adverse
Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses
incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the
Company’s financial statements pursuant to GAAP or disclosed in filings made with the SEC, (iii) the Company has not altered
its method of accounting, (iv) the Company has not declared or made any dividend or distribution of cash or other property to its
stockholder or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock and (v) the Company
has not issued any equity securities to any officer, director or Affiliate (as defined below), except pursuant to existing Company
stock option plans. The Company does not have pending before the SEC any request for confidential treatment of information. Except
for the issuance of the Exchange Securities contemplated by this Agreement, no event, liability, fact, circumstance, occurrence
or development has occurred or exists or is reasonably expected to occur or exist with respect to the Company or its Subsidiaries
or their respective businesses, properties, operations, assets or financial condition, that would be required to be disclosed by
the Company under applicable securities laws at the time this representation is made or deemed made that has not been publicly
disclosed at least 1 Trading Day prior to the date that this representation is made.
2.15 Litigation. Other
than as set forth on Schedule 2.15 or as set forth in the SEC Reports, there is no action, suit, inquiry, notice of violation,
proceeding or investigation pending or, to the knowledge of the Company, threatened against or affecting the Company, any Subsidiary
or any of their respective properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority
(federal, state, county, local or foreign) (collectively, an “Action”) which (i) adversely affects or challenges
the legality, validity or enforceability of any of the Transaction Documents or the Exchange Securities or (ii) could, if there
were an unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect. Neither the Company
nor any Subsidiary, nor any director or officer thereof, is or has been the subject of any Action involving a claim of violation
of or liability under federal or state securities laws or a claim of breach of fiduciary duty. There has not been, and
to the knowledge of the Company, there is not pending or contemplated, any investigation by the SEC involving the Company or any
current or former director or officer of the Company. The SEC has not issued any stop order or other order suspending
the effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities
Act.
2.16 Labor
Relations. No labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees
of the Company, which could reasonably be expected to result in a Material Adverse Effect. None of the Company’s
or its Subsidiaries’ employees is a member of a union that relates to such employee’s relationship with the Company
or such Subsidiary, and neither the Company nor any of its Subsidiaries is a party to a collective bargaining agreement, and the
Company and its Subsidiaries believe that their relationships with their employees are good. To the knowledge of the
Company, no executive officer of the Company or any Subsidiary, is, or is now expected to be, in violation of any material term
of any employment contract, confidentiality, disclosure or proprietary information agreement or non-competition agreement, or any
other contract or agreement or any restrictive covenant in favor of any third party, and the continued employment of each such
executive officer does not subject the Company or any of its Subsidiaries to any liability with respect to any of the foregoing
matters. The Company and its Subsidiaries are in compliance with all U.S. federal, state, local and foreign laws and
regulations relating to employment and employment practices, terms and conditions of employment and wages and hours, except where
the failure to be in compliance could not, individually or in the aggregate, reasonably be expected to have a Material Adverse
Effect.
2.17 Compliance. Except
as set forth on Schedule 2.17, neither the Company nor any Subsidiary: (i) is in default under or in violation of (and no event
has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any
Subsidiary under), nor has the Company or any Subsidiary received notice of a claim that it is in default under or that it is in
violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it
or any of its properties is bound (whether or not such default or violation has been waived), (ii) is in violation of any judgment,
decree or order of any court, arbitrator or other governmental authority or (iii) is or has been in violation of any statute, rule,
ordinance or regulation of any governmental authority, including without limitation all foreign, federal, state and local laws
relating to taxes, environmental protection, occupational health and safety, product quality and safety and employment and labor
matters, except in each case as could not have or reasonably be expected to result in a Material Adverse Effect.
2.18 Regulatory
Permits. The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate
federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses as described in the SEC
Reports, except where the failure to possess such permits could not reasonably be expected to result in a Material Adverse Effect
(“Material Permits”), and neither the Company nor any Subsidiary has received any notice of proceedings relating
to the revocation or modification of any Material Permit.
2.19 Title
to Assets. The Company and the Subsidiaries have good and marketable title in fee simple to all real property owned
by them and good and marketable title in all personal property owned by them that is material to the business of the Company and
the Subsidiaries, in each case free and clear of all Liens, except for (i) Liens as do not materially affect the value of such
property and do not materially interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries,
(ii) Liens for the payment of federal, state or other taxes, for which appropriate reserves have been made therefor in accordance
with GAAP and, the payment of which is neither delinquent nor subject to penalties and (iii) Liens held by the Holder. Any
real property and facilities held under lease by the Company and the Subsidiaries are held by them under valid, subsisting and
enforceable leases with which the Company and the Subsidiaries are in compliance.
2.20 Intellectual
Property. Other than as set forth on Schedule 2.20 or as set forth in the SEC Reports, the Company and the
Subsidiaries have, or have rights to use, all patents, patent applications, trademarks, trademark applications, service marks,
trade names, trade secrets, inventions, copyrights, licenses and other intellectual property rights and similar rights as described
in the SEC Reports as necessary or required for use in connection with their respective businesses and which the failure to so
have could have a Material Adverse Effect (collectively, the “Intellectual Property Rights”). None
of, and neither the Company nor any Subsidiary has received a notice (written or otherwise) that any of, the Intellectual Property
Rights has expired, terminated or been abandoned, or is expected to expire or terminate or be abandoned, within two (2) years from
the date of this Agreement. Neither the Company nor any Subsidiary has received, since the date of the latest audited
financial statements included within the SEC Reports, a written notice of a claim or otherwise has any knowledge that the Intellectual
Property Rights violate or infringe upon the rights of any Person, except as could not have or reasonably be expected to not have
a Material Adverse Effect. To the knowledge of the Company, all such Intellectual Property Rights are enforceable and
there is no existing infringement by another Person of any of the Intellectual Property Rights. The Company and its
Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and value of all of their intellectual
properties, except where failure to do so could not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
2.21 Insurance. The
Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in
such amounts as are prudent and customary in the businesses in which the Company and the Subsidiaries are engaged, including, but
not limited to, directors and officers insurance coverage at least equal to the aggregate principal amount of the Exchange Securities. Neither
the Company nor any Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and
when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business without
a significant increase in cost.
2.22 Transactions
With Affiliates and Employees. Except as set forth in the SEC Reports, none of the officers or directors of the
Company or any Subsidiary and, to the knowledge of the Company, none of the employees of the Company or any Subsidiary is presently
a party to any transaction with the Company or any Subsidiary (other than for services as employees, officers and directors), including
any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or
personal property to or from providing for the borrowing of money from or lending of money to, or otherwise requiring payments
to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which any officer, director,
or any such employee has a substantial interest or is an officer, director, trustee, stockholder, member or partner, in each case
in excess of $120,000 other than for: (i) payment of salary or consulting fees for services rendered, (ii) reimbursement for expenses
incurred on behalf of the Company and (iii) other employee benefits, including stock option agreements under any stock option plan
of the Company.
2.23 Sarbanes-Oxley;
Internal Accounting Controls. The Company and the Subsidiaries are in compliance with any and all applicable requirements
of the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and any and all applicable rules and regulations promulgated
by the SEC thereunder that are effective as of the date hereof and as of the Closing Date. The Company and the Subsidiaries
maintain a system of internal accounting controls sufficient to provide reasonable assurance that: (i) transactions are executed
in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted
only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. The
Company and the Subsidiaries have established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) for the Company and the Subsidiaries and designed such disclosure controls and procedures to ensure that information
required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized
and reported, within the time periods specified in the SEC’s rules and forms. The Company’s certifying officers
have evaluated the effectiveness of the disclosure controls and procedures of the Company and the Subsidiaries as of the end of
the period covered by the most recently filed periodic report under the Exchange Act (such date, the “Evaluation Date”). The
Company presented in its most recently filed periodic report under the Exchange Act the conclusions of the certifying officers
about the effectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation Date. Since
the Evaluation Date, there have been no changes in the internal control over financial reporting (as such term is defined in the
Exchange Act) that have materially affected, or is reasonably likely to materially affect, the internal control over financial
reporting of the Company and its Subsidiaries.
2.24 Certain
Fees. Except as set forth in Schedule 2.24, no brokerage or finder’s fees or commissions are or will be payable
by the Company or any Subsidiaries to any broker, financial advisor or consultant, finder, placement agent, investment banker,
bank or other Person with respect to the transactions contemplated by the Transaction Documents.
2.25 Investment
Company. The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Exchange Securities,
will not be or be an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940,
as amended. The Company shall conduct its business in a manner so that it will not become an “investment company”
subject to registration under the Investment Company Act of 1940, as amended.
2.26 Registration
Rights. Other than as disclosed in the SEC Reports, the Transaction Documents and as set forth on Schedule 2.26,
no Person has any right to cause the Company to effect the registration under the Securities Act of any securities of the Company
or any Subsidiaries.
2.27 Listing
and Maintenance Requirements. The Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange
Act, and the Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the
registration of the Common Stock under the Exchange Act nor has the Company received any notification that the SEC is contemplating
terminating such registration. Except as set forth in the SEC Reports, the Company has not, in the 12 months preceding
the date hereof, received notice from the OTCBB or any other exchange or quotation service on which the Common Stock is or has
been listed or quoted (the “Trading Market”) to the effect that the Company is not in compliance with the listing
or maintenance requirements of such Trading Market. Except as set forth in the SEC Reports, the Company is, and has no reason to
believe that it will not in the foreseeable future continue to be, in compliance with all such listing and maintenance requirements.
2.28 Application
of Takeover Protections. The Company and the Board of Directors have taken all necessary action, if any, in order
to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights
agreement) or other similar anti-takeover provision under the Company’s certificate of incorporation (or similar charter
documents) or the laws of its state of incorporation that is or could become applicable to the Holder as a result of the Holder
and the Company fulfilling their obligations or exercising their rights under the Transaction Documents, including without limitation
as a result of the Company’s issuance of the Exchange Securities pursuant to the Exchange.
2.29 Disclosure. Except
with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, the Company confirms
that neither it nor any other Person acting on its behalf has provided the Holder or its agents or counsel with any information
that it believes constitutes or might constitute material, non-public information. The Company understands and confirms
that the Holder will rely on the foregoing representation in effecting transactions in securities of the Company. All
of the disclosure furnished by or on behalf of the Company to the Holder regarding the Company and its Subsidiaries, their respective
businesses and the transactions contemplated hereby, including the Disclosure Schedules to this Agreement, is true and correct
and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the
statements made therein, in light of the circumstances under which they were made, not misleading. The press releases
disseminated by the Company during the twelve months preceding the date of this Agreement taken as a whole do not contain any untrue
statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made and when made, not misleading. The Company acknowledges
and agrees that the Holder makes no nor has made any representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in Section 3 hereof.
2.30 No
Integrated Offering. Assuming the accuracy of the Holder’s representations and warranties set forth in Section 3, neither
the Company, nor any of its 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 cause the Exchange to be integrated
with prior offerings by the Company for purposes of (i) the Securities Act which would require the registration of any such securities
under the Securities Act, or (ii) any applicable shareholder approval provisions of any Trading Market on which any of the securities
of the Company are listed or designated.
2.31 Solvency. The
Company does not intend to incur debts beyond its ability to pay such debts as they mature (taking into account the timing and
amounts of cash to be payable on or in respect of its debt). The SEC Reports set forth as of the date hereof
all outstanding secured and unsecured Indebtedness of the Company or any Subsidiary, or for which the Company or any Subsidiary
has commitments. For the purposes of this Agreement, “Indebtedness” means (x) any liabilities for
borrowed money or amounts owed in excess of $50,000 (other than trade accounts payable incurred in the ordinary course of business),
(y) all guaranties, endorsements and other contingent obligations in respect of indebtedness of others, whether or not the same,
are, or should be, reflected in the Company’s consolidated balance sheet (or the notes thereto), except guaranties by endorsement
of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business; and (z) the present
value of any lease payments in excess of $50,000 due under leases required to be capitalized in accordance with GAAP. Except
as set forth in the SEC Reports, neither the Company nor any Subsidiary is in default with respect to any Indebtedness.
2.32 Tax
Status. Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result in a
Material Adverse Effect, the Company and its Subsidiaries each (i) has made or filed all United States federal, state and local
income and all foreign income and franchise tax returns, reports and declarations required by any jurisdiction to which it is subject,
(ii) has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due
on such returns, reports and declarations and (iii) has set aside on its books provision reasonably adequate for the payment of
all material taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There
are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the
Company or of any Subsidiary know of no basis for any such claim.
2.33 Foreign
Corrupt Practices. Neither the Company nor any Subsidiary, nor to the knowledge of the Company or any Subsidiary,
any agent or other person acting on behalf of the Company or any Subsidiary, has: (i) directly or indirectly, used any funds for
unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii)
made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties
or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by the Company or any Subsidiary (or made
by any person acting on its behalf of which the Company is aware) which is in violation of law or (iv) violated in any
material respect any provision of FCPA.
2.34 No
Disagreements with Accountants and Lawyers. There are no disagreements of any kind presently existing, or reasonably
anticipated by the Company to arise, between the Company and the accountants and lawyers formerly or presently employed by the
Company and the Company is current with respect to any fees owed to its accountants and lawyers which could affect the Company’s
ability to perform any of its obligations under any of the Transaction Documents.
2.35 Acknowledgment
Regarding Holder’s Exchange of Securities. The Company acknowledges and agrees that the Holder is acting solely
in the capacity of an arm’s length party with respect to the Transaction Documents and the transactions contemplated thereby.
2.36
Regulation M Compliance. The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly
or indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any security of the
Company to facilitate the issuance or resale of any of the Exchange Securities or the shares of Common Stock into which the Exchange
Securities are convertible or exercisable, as applicable, (ii) sold, bid for, purchased, or paid any compensation for soliciting
purchases of, any of the Exchange Securities or the shares of Common Stock into which the Exchange Securities are convertible or
exercisable, as applicable, or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any
other securities of the Company.
2.37 Office
of Foreign Assets Control. Neither the Company nor any Subsidiary nor, to the Company's knowledge, any director,
officer, agent, employee or affiliate of the Company or any Subsidiary is currently subject to any U.S. sanctions administered
by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”).
2.38 Bank
Holding Company Act. Neither the Company nor any of its Subsidiaries or Affiliates is subject to the Bank Holding
Company Act of 1956, as amended (the “BHCA”) and to regulation by the Board of Governors of the Federal Reserve
System (the “Federal Reserve”). Neither the Company nor any of its Subsidiaries or Affiliates owns
or controls, directly or indirectly, five percent (5%) or more of the outstanding shares of any class of voting securities or twenty-five
percent or more of the total equity of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve. Neither
the Company nor any of its Subsidiaries or Affiliates exercises a controlling influence over the management or policies of a bank
or any entity that is subject to the BHCA and to regulation by the Federal Reserve.
2.39 Money
Laundering. The operations of the Company and its Subsidiaries are and have been conducted at all times in compliance
with applicable financial record-keeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970,
as amended, applicable money laundering statutes and applicable rules and regulations thereunder (collectively, the “Money
Laundering Laws”), and no action, suit or proceeding by or before any court or governmental agency, authority or body
or any arbitrator involving the Company or any Subsidiary with respect to the Money Laundering Laws is pending or, to the knowledge
of the Company or any Subsidiary, threatened.
Section 3. Representations
and Warranties of the Holder. The Holder represents and warrants, severally and not jointly, to the Company that:
3.1 Ownership
of the Securities. The Holder is the legal and beneficial owner of the Securities. The Holder paid for
the Securities, and has continuously held the Securities since its issuance or purchase. The Holder, individually or
through an affiliate, owns the Securities outright and free and clear of any options, contracts, agreements, liens, security interests,
or other encumbrances.
3.2 No
Public Sale or Distribution. The Holder is acquiring the Exchange Securities in the ordinary course of business
for its own account and not with a view toward, or for resale in connection with, the public sale or distribution thereof; provided,
however, that by making the representations herein, the Holder does not agree to hold any of the Exchange Securities or the shares
of Common Stock into which such securities are convertible or exercisable, as applicable, for any minimum or other specific term
and reserves the right to dispose of the Exchange Securities and the shares of Common Stock into which such securities are convertible
and exercisable at any time in accordance with an exemption from the registration requirements of the Securities Act and applicable
state securities laws. The Holder does not presently have any agreement or understanding, directly or indirectly, with
any person to distribute, or transfer any interest or grant participation rights in, the Securities or the Exchange Securities.
3.3 Accredited
Investor and Affiliate Status. The Holder is an “accredited investor” as that term is defined in Rule
501 of Regulation D under the Securities Act. The Holder is not, and has not been, for a period of at least three months
prior to the date of this Agreement (a) an officer or director of the Company, (b) an “affiliate” of the Company (as
defined in Rule 144) (an “Affiliate”) or (c) a “beneficial owner” of more than 10% of the common
stock (as defined for purposes of Rule 13d-3 of the Exchange Act).
3.4 Reliance
on Exemptions. The Holder understands that the Exchange is being made in reliance on specific exemptions from the
registration requirements of United States federal and state securities laws and that the Company is relying in part upon the truth
and accuracy of, and the Holder’s compliance with, the representations, warranties, agreements, acknowledgments and understandings
of the Holder set forth herein in order to determine the availability of such exemptions and the eligibility of the Holder to complete
the Exchange and to acquire the Exchange Securities.
3.5 Information. The
Holder has been furnished with all materials relating to the business, finances and operations of the Company and materials relating
to the Exchange which have been requested by the Holder. The Holder has been afforded the opportunity to ask questions
of the Company. Neither such inquiries nor any other due diligence investigations conducted by the Holder or its representatives
shall modify, amend or affect the Holder’s right to rely on the Company’s representations and warranties contained
herein. The Holder acknowledges that all of the documents filed by the Company with the SEC under Sections 13(a), 14(a)
or 15(d) of the Exchange Act that have been posted on the SEC’s EDGAR site are available to the Holder, and the Holder has
not relied on any statement of the Company not contained in such documents in connection with the Holder’s decision to enter
into this Agreement and the Exchange.
3.6 Risk. The
Holder understands that its investment in the Exchange Securities involves a high degree of risk. The Holder is able
to bear the risk of an investment in the Exchange Securities including, without limitation, the risk of total loss of its investment. The
Holder has sought such accounting, legal and tax advice as it has considered necessary to make an informed investment decision
with respect to the Exchange. There is no assurance that the Exchange Securities or any securities into which the Exchange
Securities may convert will continue to be quoted, traded or listed for trading or quotation on the OTCBB or on any other organized
market or quotation system.
3.7 No
Governmental Review. The Holder 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 in connection with the Exchange or the fairness
or suitability of the investment in the Exchange Securities nor have such authorities passed upon or endorsed the merits of the
Exchange Securities.
3.8 Organization;
Authorization. The Holder is duly organized, validly existing and in good standing under the laws of its state of
formation and has the requisite organizational power and authority to enter into and perform its obligations under this Agreement.
3.9 Validity;
Enforcement. This Agreement has been duly and validly authorized, executed and delivered on behalf of the Holder
and shall constitute the legal, valid and binding obligations of the Holder enforceable against the Holder in accordance with its
terms. The execution, delivery and performance of this Agreement by the Holder and the consummation by the Holder of
the transactions contemplated hereby (including, without limitation, the irrevocable surrender of the Securities) will not result
in a violation of the organizational documents of the Holder.
3.10 Prior
Investment Experience. The Holder acknowledges that it has prior investment experience, including investment in
securities of the type being exchanged, including the Securities and the Exchange Securities, and has read all of the documents
furnished or made available by the Company to it and is able to evaluate the merits and risks of such an investment on its behalf,
and that it recognizes the highly speculative nature of this investment.
3.11 Tax
Consequences. The Holder acknowledges that the Company has made no representation regarding the potential or actual
tax consequences for the Holder which will result from entering into the Agreement and from consummation of the Exchange. The
Holder acknowledges that it bears complete responsibility for obtaining adequate tax advice regarding the Agreement and the Exchange.
3.12 No
Registration, Review or Approval. The Holder acknowledges, understands and agrees that the Exchange Securities are
being exchanged hereunder pursuant to an exchange offer exemption under Section 3(a)(9) of the Securities Act.
Section 4. Conditions
Precedent to Obligations of the Company. The obligation of the Company to consummate the transactions contemplated
by this Agreement is subject to the satisfaction 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 the Holder with prior
written notice thereof:
4.1 Delivery. The
Holder shall have delivered to the Company the Securities.
4.2 No
Prohibition. No order of any court, arbitrator, or governmental or regulatory authority shall be in effect which
purports to enjoin or restrain any of the transactions contemplated by this Agreement; and
4.3 Representations. The
accuracy in all material respects when made and on the applicable Closing Date of the representations and warranties of the Holder
contained herein (unless as of a specific date therein);
Section 5. Conditions
Precedent to Obligations of the Holder. The obligation of the Holder to consummate the transactions contemplated
by this Agreement is subject to the satisfaction of each of the following conditions, provided that these conditions are for the
Holder’s sole benefit and may be waived by the Holder at any time in its sole discretion by providing the Company with prior
written notice thereof:
5.1 No
order of any court, arbitrator, or governmental or regulatory authority shall be in effect which purports to enjoin or restrain
any of the transactions contemplated by this Agreement;
5.2 the
representations and warranties of the Company (i) shall be true and correct in all material respects when made and on the applicable
Closing Date (unless as of a specific date therein) for such representations and warranties contained herein that are not qualified
by “materiality” or “Material Adverse Effect” and (ii) shall be true and correct when made and on the applicable
Closing Date (unless as of specific date therein) for such representations and warranties contained herein that are qualified by
“materiality” or “Material Adverse Effect”;
5.3 all
obligations, covenants and agreements of the Company required to be performed at or prior to the applicable Closing Date shall
have been performed; and
5.4 from
the date hereof to the relevant Closing Date, trading in the Company’s common stock shall not have been suspended by the
SEC or any Trading Market and, at any time prior to the Closing Date, trading in securities generally as reported by Bloomberg
L.P. shall not have been suspended or limited, or minimum prices shall not have been established on securities whose trades are
reported by such service, or on any trading market, nor shall a banking moratorium have been declared either by the United States
or New York State authorities nor shall there have occurred any material outbreak or escalation of hostilities or other national
or international calamity of such magnitude in its effect on, or any material adverse change in, any financial market which, in
each case, in the reasonable judgment of the Holder makes it impracticable or inadvisable to purchase the Exchange Securities at
the closing.
Section 6. Holding
Period. For the purposes of Rule 144 of the Securities Act, the Company acknowledges that the holding period of
the Exchange Securities may be tacked on the holding period of the Securities, and the Company agrees not to a position contrary
to this Section 6.
Section 7. Governing
Law; Jurisdiction; Waiver of Jury Trial. This Agreement shall be construed under the laws of the state of New York,
without regard to principles of conflicts of law or choice of law that would permit or require the application of the laws of another
jurisdiction. The Company and the Holder each hereby agrees that all actions or proceedings arising directly or indirectly
from or in connection with this Agreement shall be litigated only in the Supreme Court of the State of New York or the United States
District Court for the Southern District of New York located in New York County, New York. The Company and the Holder
each consents to the exclusive jurisdiction and venue of the foregoing courts and consents that any process or notice of motion
or other application to either of said courts or a judge thereof may be served inside or outside the State of New York or the Southern
District of New York by generally recognized overnight courier or certified or registered mail, return receipt requested, directed
to such party at its or his address set forth below (and service so made shall be deemed “personal service”) or by
personal service or in such other manner as may be permissible under the rules of said courts. THE COMPANY AND THE HOLDER
EACH HEREBY WAIVES ANY RIGHT TO A JURY TRIAL IN CONNECTION WITH ANY LITIGATION PURSUANT TO THIS AGREEMENT.
Section 8. 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; provided that a facsimile
signature shall be considered due execution and shall be binding upon the signatory thereto with the same force and effect as if
the signature were an original, not a facsimile signature.
Section 9. Headings. The
headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement.
Section 10. Severability. If
any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall
not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability
of any provision of this Agreement in any other jurisdiction.
Section 11. No
Strict 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.
Section 12. Entire
Agreement; Amendments. This Agreement supersedes all other prior oral or written agreements between the Holder,
the Company, their affiliates and persons acting on their behalf with respect to the matters discussed herein, and this Agreement
and the instruments referenced herein contain the entire understanding of the parties with respect to the matters covered herein
and therein and, except as specifically set forth herein or therein, neither the Company nor the Holder makes any representation,
warranty, covenant or undertaking with respect to such matters; provided, however, that all representations and warranties contained
in that certain Securities Purchase Agreement dated of September 30, 2015, covering the purchase of an identical senior secured
convertible promissory note to the Notes being issued hereunder shall be incorporated herein. No provision of this Agreement
may be amended other than by an instrument in writing signed by the Company and the Holder. No provision hereof may
be waived other than by an instrument in writing signed by the party against whom enforcement is sought.
Section 13. 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: (a) upon receipt, when delivered personally; (b) upon receipt, when sent
by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending
party); or (c) one calendar day (excluding Saturdays, Sundays, and national banking holidays) after deposit with an overnight courier
service, in each case properly addressed to the party to receive the same.
The addresses and facsimile numbers for
such communications shall be:
If to the Company:
Amarantus Bioscience Holdings, Inc.
655 Montgomery Street – Suite 900
San Francisco, California 94111
Attn: Gerald Commissiong
If to the Holder:
Dominion Capital LLC
341 West 38th Street, Suite 800
New York NY 10018
Attn: Mikhail Gurevich
or to such other 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.
Section 14. 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 the Exchange Securities. The Holder may assign some or all of its rights hereunder
without the consent of the Company, in which event such assignee shall be deemed to be the Holder hereunder with respect to such
assigned rights.
Section 15. 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.
Section 16. Survival
of Representations. The representations and warranties of the Company and the Holder contained in Sections 2 and
3, respectively, will survive the closing of the transactions contemplated by this Agreement.
Section 17. 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.
[Signature Page Follows]
IN WITNESS WHEREOF, the parties have executed
this Exchange Agreement as of the date first written above.
AMARANTUS BIOSCIENCE HOLDINGS, INC.
| By: |
|
|
| Name: |
Gerald Commissiong |
|
| Title: |
Chief Executive Officer |
|
| |
|
|
| Amarantus Therapeutics, Inc. |
|
| |
|
|
| By: |
|
|
| |
Name: |
|
| |
Title: |
|
| |
|
|
| Amarantus Therapeutics, Inc. |
|
| |
|
|
| By: |
|
|
| |
Name: |
|
| |
Title: |
|
| |
|
|
| Amarantus MA, Inc. |
|
| |
|
|
| By: |
|
|
| |
Name: |
|
| |
Title: |
|
| |
|
|
| DOMINION CAPITAL LLC |
|
| |
|
|
| By: |
|
|
| Name: |
|
|
| Title: |
|
|
| |
|
|
| By: |
|
|
| Name: |
|
|
| Title: |
|
|
Exhibit
A
Senior Secured Convertible Promissory
Notes
| | |
Face Value | | |
Make Whole | | |
OID | | |
Date |
| Notes | |
$ | 2,500,000.00 | | |
$ | 150,000.00 | | |
$ | 0.00 | | |
2/24/2015 |
| | |
$ | 350,000.00 | | |
$ | 21,000.00 | | |
$ | 0.00 | | |
3/31/2015 |
| Totals | |
$ | 2,850,000 | | |
$ | 171,000 | | |
$ | 0.00 | | |
|
Cumulative Total for Face Value, Make Whole, OID: $ 3,021,000.00
EXHIBIT B
Form of and Schedule of Exchanged Securities
| 12% Senior Secured Convertible Promissory Note | |
$ | 3,021,000.00 | |
| Common Stock Warrants | |
| 1,298,612 | |
ANNEX A
NOTICE OF CONVERSION
The undersigned hereby
elects to convert principal, accrued but unpaid interest and/or any of amounts due under the 12% Senior Secured Convertible Promissory
Note due September 29, 2016 of Amarantus Bioscience Holdings, Inc., a Nevada corporation (the “Company”), into
shares of common stock (the “Common Stock”), of the Company according to the conditions hereof, as of the date
written below. If shares of Common Stock are to be issued in the name of a person other than the undersigned, the undersigned
will pay all transfer taxes payable with respect thereto and is delivering herewith such certificates and opinions as reasonably
requested by the Company in accordance therewith. No fee will be charged to the holder for any conversion, except for
such transfer taxes, if any.
By the delivery of
this Notice of Conversion the undersigned represents and warrants to the Company that its ownership of the Common Stock does not
exceed the amounts specified under Section 4 of this Note, as determined in accordance with Section 13(d) of the Exchange Act.
The undersigned agrees
to comply with the prospectus delivery requirements under the applicable securities laws in connection with any transfer of the
aforesaid shares of Common Stock, if the resale of any such shares of Common Stock are covered by and are being sold pursuant to
an effective Registration Statement.
Conversion calculations:
| |
Date to Effect Conversion: |
|
| |
Principal Amount of Note to be Converted: |
|
| |
Payment of Interest in Common
Stock __ yes __ no |
| |
If yes, $_____ of Interest Accrued
on Account of Conversion at Issue. |
| |
Other Amounts Owed Under this Note to be Converted including Late Fees: ____________________________________ |
| |
Number of shares of Common Stock to be issued: |
|
Schedule 1
CONVERSION SCHEDULE
This 12% Senior Secured Convertible Promissory
Note due on September 29, 2016 in the original principal amount of $[_______] is issued by Amarantus Bioscience Holdings, Inc.,
a Nevada corporation. This Conversion Schedule reflects conversions made under Section 4 of the above referenced Note.
Dated:
Date of Conversion
(or for first entry,
Original Issue Date) |
|
Amount of
Conversion |
|
Aggregate
Principal
Amount
Remaining
Subsequent to
Conversion
(or original
Principal
Amount) |
|
Company Attest |
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
SCHEDULES
Disclosure Schedules to Exchange Agreement
between Dominion Capital, LLC and Amarantus BioScience Holdings, Inc. September 4, 2015
Section 2.12 Capitalization:
| | |
Fully Diluted | |
| Issued and outstanding | |
| 8,054,061 | |
| Lincoln Park Capital | |
| 83,603 | |
| Series C Convertible Preferred Stock | |
| 5,000 | |
| Series E Convertible Preferred Stock | |
| 624,848 | |
| Series G Convertible Preferred Stock | |
| 1,567,242 | |
| Memory Dx | |
| 43,333 | |
| Warrants | |
| 302,891 | |
| | |
| | |
| Total | |
| 10,680,978 | |
Section 2.17 Compliance
Agreement and Plan of Merger by and among
Amarantus Bioscience Holdings, Inc., Neuro Acquisition Corporation, Diogenix, Inc. and Nerveda, LLC dated January 8, 2015, Section
4.12 Issuance and Registration of Parent Common Stock
Section 2.26 Registration Rights
Agreement and Plan of Merger by and among
Amarantus Bioscience Holdings, Inc., Neuro Acquisition Corporation, Diogenix, Inc. and Nerveda, LLC dated January 8, 2015, Section
4.12 Issuance and Registration of Parent Common Stock
Exhibit 10.8
EXECUTION COPY
REGISTRATION RIGHTS AGREEMENT
This Registration Rights
Agreement (this “Agreement”) is made and entered into as of September 30, 2015, between Amarantus Bioscience
Holdings, Inc., a Nevada corporation (the “Company”), and each of the persons signatory hereto (each such purchaser,
a “Purchaser” and, collectively, the “Purchasers”).
This Agreement is made
pursuant to (i) the Securities Purchase Agreement, dated as of the date hereof, by and among, Delafield Investment Limited (“Delafield”),
Dominion Capital, LLC (“Dominion” and together with Delafield, collectively the “Purchasers”)
and the Company, (ii) various understandings between the Company and the Purchasers (collectively, the “Purchase Agreement”)
and (iii) the Agreement and Plan of Merger, by and among, the Company, Neuro Acquisition Corporation, Diogenix, Inc. Nerveda and
Nerveda LLC, date as of January 8, 2015, (the “Diogenix Agreement”), pursuant to which the persons set forth
on Schedule 1 hereto are registering for resale the number of shares of Common Stock set forth opposite such persons name on Schedule
1 (each a “Diogenix Person”).
The Company and collectively
each Purchaser hereby agrees as follows:
Capitalized terms
used and not otherwise defined herein that are defined in the Purchase Agreement shall have the meanings given such terms in the
Purchase Agreement. As used in this Agreement, the following terms shall have the following meanings:
“Advice”
shall have the meaning set forth in Section 6(d).
“Effectiveness
Date” means, with respect to the Initial Registration Statement required to be filed hereunder, the 60th calendar
day following the Filing Date, and with respect to any additional Registration Statements which may be required pursuant to Section
2(c) or Section 3(c), the 50th calendar day following the date on which an additional Registration Statement is required
to be filed hereunder; provided, however, that in the event the Company is notified by the Commission that one or
more of the above Registration Statements will not be reviewed or is no longer subject to further review and comments, the Effectiveness
Date as to such Registration Statement shall be the 3rd Trading Day following the date on which the Company is so notified if such
date precedes the dates otherwise required above, provided, further, if such Effectiveness Date falls on a day that is not a Trading
Day, then the Effectiveness Date shall be the next succeeding Trading Day.
“Effectiveness
Period” shall have the meaning set forth in Section 2(a).
“Event”
shall have the meaning set forth in Section 2(d).
“Event
Date” shall have the meaning set forth in Section 2(d).
“Filing
Date” means, with respect to the Initial Registration Statement required hereunder, the 10th calendar day
following the date of this Agreement, and, with respect to any additional Registration Statements which may be required pursuant
to Section 2(c) or Section 3(c), the earliest practical date on which the Company is permitted by SEC Guidance to file such additional
Registration Statement related to the Registrable Securities.
“Holder”
or “Holders” means Delafield, Dominion and any other the holder or holders, as the case may be, from time to
time of Registrable Securities.
“Indemnified
Party” shall have the meaning set forth in Section 5(c).
“Indemnifying
Party” shall have the meaning set forth in Section 5(c).
“Initial
Registration Statement” means the initial Registration Statement filed pursuant to this Agreement.
“Losses”
shall have the meaning set forth in Section 5(a).
“Plan
of Distribution” shall have the meaning set forth in Section 2(a).
“Prospectus”
means the prospectus included in a Registration Statement (including, without limitation, a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated
by the Commission pursuant to the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the
terms of the offering of any portion of the Registrable Securities covered by a Registration Statement, and all other amendments
and supplements to the Prospectus, including post-effective amendments, and all material incorporated by reference or deemed to
be incorporated by reference in such Prospectus.
“Registrable
Securities” means, as of any date of determination, (a) all of the shares of Common Stock then issued and/or issuable
upon conversion in full of the Notes, whether such Notes were issued pursuant to the Purchase Agreement and/or otherwise (assuming
on such date the Notes are converted in full without regard to any conversion limitations therein), (b) all shares of Common Stock
issued and/or issuable as interest, principal or otherwise on the Notes assuming all permissible interest and principal payments
are made in shares of Common Stock and the Notes are held until maturity, (c) all Warrant Shares and Other Warrant Shares then
issued and/or issuable upon exercise of the Warrants and the Other Warrants (assuming on such date the Warrants are exercised in
full without regard to any exercise limitations therein), (d) all shares of Common Stock (“Other Warrant Shares”),
issued and/or issuable upon exercise of any warrants held by a Purchaser that are not Warrants (“Other Warrants”),
assuming on such date all Other Warrants are exercised in full without regard to any exercise limitations therein) (e) any additional
shares of Common Stock issued and issuable in connection with any anti-dilution provisions in the Notes, the Warrants and/or the
Other Warrants (in each case, without giving effect to any limitations on conversion set forth in the Notes or limitations on exercise
set forth in the Warrants and/or the Other Warrants) and (f) any securities issued or then issuable upon any stock split, dividend
or other distribution, recapitalization or similar event with respect to the foregoing; provided, however, that any
such Registrable Securities shall cease to be Registrable Securities (and the Company shall not be required to maintain the effectiveness
of any, or file another, Registration Statement hereunder with respect thereto) for so long as (a) a Registration Statement with
respect to the sale of such Registrable Securities is declared effective by the Commission under the Securities Act and such Registrable
Securities have been disposed of by the Holder in accordance with such effective Registration Statement, (b) such Registrable Securities
have been previously sold in accordance with Rule 144, or (c) such securities become eligible for resale without volume or manner-of-sale
restrictions and without current public information pursuant to Rule 144 as set forth in a written opinion letter to such effect,
addressed, delivered and acceptable to the Transfer Agent and the affected Holders (assuming that such securities and any securities
issuable upon exercise, conversion or exchange of which, or as a dividend upon which, such securities were issued or are issuable,
were at no time held by any Affiliate of the Company, and all Warrants are exercised by “cashless exercise” as provided
in Section 2(c) of each of the Warrants), as reasonably determined by the Company, upon the advice of counsel to the Company.
“Registration
Statement” means any registration statement required to be filed hereunder pursuant to Section 2(a) and any additional
registration statements contemplated by Section 2(c) or Section 3(c), including (in each case) the Prospectus, amendments and supplements
to any such registration statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all material
incorporated by reference or deemed to be incorporated by reference in any such registration statement.
“Rule
415” means Rule 415 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted
from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose
and effect as such Rule.
“Rule
424” means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted
from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose
and effect as such Rule.
“Selling
Stockholder Questionnaire” shall have the meaning set forth in Section 3(a).
“SEC
Guidance” means (i) any publicly-available written or oral guidance of the Commission staff, or any comments, requirements
or requests of the Commission staff and (ii) the Securities Act.
(a) On
or prior to each Filing Date, the Company shall prepare and file with the Commission a Registration Statement covering the resale
of all of the Registrable Securities that are not then registered on an effective Registration Statement for an offering to be
made on a continuous basis pursuant to Rule 415. Each Registration Statement filed hereunder shall be on Form S-3 (except if the
Company is not then eligible to register for resale the Registrable Securities on Form S-3, in which case such registration shall
be on another appropriate form in accordance herewith, subject to the provisions of Section 2(e)) and shall contain (unless otherwise
directed by at least 85% in interest of the Holders) substantially the “Plan of Distribution” attached hereto
as Annex A. Subject to the terms of this Agreement, the Company shall use its reasonable best efforts to cause a Registration
Statement filed under this Agreement (including, without limitation, under Section 3(c)) to be declared effective under the Securities
Act as promptly as possible after the filing thereof, but in any event no later than the applicable Effectiveness Date, and shall
use its reasonable best efforts to keep such Registration Statement continuously effective under the Securities Act until all Registrable
Securities covered by such Registration Statement (i) have been sold, thereunder or pursuant to Rule 144, or (ii) may be sold without
volume or manner-of-sale restrictions pursuant to Rule 144 and without the requirement for the Company to be in compliance with
the current public information requirement under Rule 144, as determined by the counsel to the Company pursuant to a written opinion
letter to such effect, addressed and acceptable to the Transfer Agent and the affected Holders (the “Effectiveness Period”).
The Company shall telephonically request effectiveness of a Registration Statement as of 5:00 p.m. Eastern Time on a Trading Day.
The Company shall immediately notify the Holders via facsimile or by e-mail of the effectiveness of a Registration Statement on
the same Trading Day that the Company telephonically confirms effectiveness with the Commission, which shall be the date requested
for effectiveness of such Registration Statement. The Company shall, by 9:30 a.m. Eastern Time on the Trading Day after the effective
date of such Registration Statement, file a final Prospectus with the Commission as required by Rule 424. Failure to so notify
the Holder within one (1) Trading Day of such notification of effectiveness or failure to file a final Prospectus as foresaid shall
be deemed an Event under Section 2(d).
(b) Notwithstanding
the registration obligations set forth in Section 2(a), if the Commission informs the Company that all of the Registrable Securities
cannot, as a result of the application of Rule 415, be registered for resale as a secondary offering on a single registration statement,
the Company agrees to promptly inform each of the Holders thereof and use its commercially reasonable efforts to file amendments
to the Initial Registration Statement as required by the Commission, covering the maximum number of Registrable Securities permitted
to be registered by the Commission, on Form S-3 or such other form available to register for resale the Registrable Securities
as a secondary offering, subject to the provisions of Section 2(e); with respect to filing on Form S-3 or other appropriate form,
and subject to the provisions of Section 2(d) with respect to the payment of liquidated damages; provided, however,
that prior to filing such amendment, the Company shall be obligated to use diligent efforts to advocate with the Commission for
the registration of all of the Registrable Securities in accordance with the SEC Guidance, including without limitation, Compliance
and Disclosure Interpretation 612.09.
(c) Notwithstanding
any other provision of this Agreement and subject to the payment of liquidated damages pursuant to Section 2(d), if the Commission
or any SEC Guidance sets forth a limitation on the number of Registrable Securities permitted to be registered on a particular
Registration Statement as a secondary offering (and notwithstanding that the Company used diligent efforts to advocate with the
Commission for the registration of all or a greater portion of Registrable Securities), unless otherwise directed in writing by
a Holder as to its Registrable Securities, the number of Registrable Securities to be registered on such Registration Statement
will be reduced as follows:
| a. | First, the Company shall reduce or eliminate any securities to be included by any Person other
than a Holder; |
| b. | Second, the Company shall reduce Registrable Securities held by any person/entity who received
such Registrable Securities pursuant to the Diogenix Agreement |
| c. | Third, the Company shall reduce Registrable Securities represented by Warrant Shares and Other
Warrant Shares (applied, in the case that some Warrant Shares and Other Warrant Shares may be registered, to the Holders on a pro
rata basis based on the total number of unregistered Warrant Shares and Other Warrant Shares held by such Holders); and |
| d. | Fourth, the Company shall reduce Registrable Securities represented by Conversion Shares (applied,
in the case that some Conversion Shares may be registered, to the Holders on a pro rata basis based on the total number of unregistered
Conversion Shares held by such Holders). |
In the event of a cutback hereunder,
the Company shall give the Holder at least five (5) Trading Days prior written notice along with the calculations as to such Holder’s
allotment. In the event the Company amends the Initial Registration Statement in accordance with the foregoing, the Company will
use its best efforts to file with the Commission, as promptly as allowed by Commission or SEC Guidance provided to the Company
or to registrants of securities in general, one or more registration statements on Form S-3 or such other form available to register
for resale those Registrable Securities that were not registered for resale on the Initial Registration Statement, as amended.
(d) If:
(i) the Initial Registration Statement is not filed on or prior to its Filing Date (if the Company files the Initial Registration
Statement without affording the Holders the opportunity to review and comment on the same as required by Section 3(a) herein, the
Company shall be deemed to have not satisfied this clause (i)), or (ii) the Company fails to file with the Commission a request
for acceleration of a Registration Statement in accordance with Rule 461 promulgated by the Commission pursuant to the Securities
Act, within five Trading Days of the date that the Company is notified (orally or in writing, whichever is earlier) by the Commission
that such Registration Statement will not be “reviewed” or will not be subject to further review, or (iii) prior to
the effective date of a Registration Statement, the Company fails to file a pre-effective amendment and otherwise respond in writing
to comments made by the Commission in respect of such Registration Statement within ten (10) calendar days after the receipt of
comments by or notice from the Commission that such amendment is required in order for such Registration Statement to be declared
effective, or (iv) a Registration Statement registering for resale all of the Registrable Securities is not declared effective
by the Commission by the Effectiveness Date of the Initial Registration Statement, or (v) after the effective date of a Registration
Statement, such Registration Statement ceases for any reason to remain continuously effective as to all Registrable Securities
included in such Registration Statement, or the Holders are otherwise not permitted to utilize the Prospectus therein to resell
such Registrable Securities, for more than ten (10) consecutive calendar days or more than an aggregate of fifteen (15) calendar
days (which need not be consecutive calendar days) during any 12-month period (any such failure or breach being referred to as
an “Event”, and for purposes of clauses (i) and (iv), the date on which such Event occurs, and for purpose of
clause (ii) the date on which such five (5) Trading Day period is exceeded, and for purpose of clause (iii) the date which such
ten (10) calendar day period is exceeded, and for purpose of clause (v) the date on which such ten (10) or fifteen (15) calendar
day period, as applicable, is exceeded being referred to as “Event Date”), then, in addition to any other rights
the Holders may have hereunder or under applicable law, on each such Event Date and on each monthly anniversary of each such Event
Date (if the applicable Event shall not have been cured by such date) until the applicable Event is cured, the Company shall pay
to each Holder an amount in cash, as partial liquidated damages and not as a penalty, equal to the product of 3.0% multiplied by
the aggregate Subscription Amount paid by such Holder pursuant to the Purchase Agreement. If the Company fails to pay any partial
liquidated damages pursuant to this Section in full within seven days after the date payable, the Company will pay interest thereon
at a rate of 18% per annum (or such lesser maximum amount that is permitted to be paid by applicable law) to the Holder, accruing
daily from the date such partial liquidated damages are due until such amounts, plus all such interest thereon, are paid in full.
The partial liquidated damages pursuant to the terms hereof shall apply on a daily pro rata basis for any portion of a month prior
to the cure of an Event.
(e) If
Form S-3 is not available for the registration of the resale of Registrable Securities hereunder, the Company shall (i) register
the resale of the Registrable Securities on another appropriate form and (ii) undertake to register the Registrable Securities
on Form S-3 as soon as such form is available, provided that the Company shall maintain the effectiveness of the Registration
Statement then in effect until such time as a Registration Statement on Form S-3 covering the Registrable Securities has been declared
effective by the Commission.
| 3. | Registration Procedures. |
In connection with
the Company’s registration obligations hereunder, the Company shall:
(a) Not
less than five (5) Trading Days prior to the filing of each Registration Statement and not less than one (1) Trading Day prior
to the filing of any related Prospectus or any amendment or supplement thereto (including any document that would be incorporated
or deemed to be incorporated therein by reference), the Company shall (i) furnish to each Holder copies of all such documents proposed
to be filed, which documents (other than those incorporated or deemed to be incorporated by reference) will be subject to the review
of such Holders, and (ii) cause its officers and directors, counsel and independent registered public accountants to respond to
such inquiries as shall be necessary, in the reasonable opinion of respective counsel to each Holder, to conduct a reasonable investigation
within the meaning of the Securities Act. Notwithstanding the above, the Company shall not be obligated to provide the Holders
advance copies of any universal shelf registration statement registering securities in addition to those required hereunder, or
any Prospectus prepared thereto. The Company shall not file a Registration Statement or any such Prospectus or any amendments or
supplements thereto to which the Holders of a majority of the Registrable Securities shall reasonably object in good faith, provided
that, the Company is notified of such objection in writing no later than five (5) Trading Days after the Holders have been so furnished
copies of a Registration Statement or one (1) Trading Day after the Holders have been so furnished copies of any related Prospectus
or amendments or supplements thereto. Each Holder agrees to furnish to the Company a completed questionnaire in the form attached
to this Agreement as Annex B (a “Selling Stockholder Questionnaire”) on a date that is not less than
two (2) Trading Days prior to the Filing Date or by the end of the fourth (4th) Trading Day following the date on which
such Holder receives draft materials in accordance with this Section.
(b) (i)
Prepare and file with the Commission such amendments, including post-effective amendments, to a Registration Statement and the
Prospectus used in connection therewith as may be necessary to keep a Registration Statement continuously effective as to the applicable
Registrable Securities for the Effectiveness Period and prepare and file with the Commission such additional Registration Statements
in order to register for resale under the Securities Act all of the Registrable Securities, (ii) cause the related Prospectus to
be amended or supplemented by any required Prospectus supplement (subject to the terms of this Agreement), and, as so supplemented
or amended, to be filed pursuant to Rule 424, (iii) respond as promptly as reasonably possible to any comments received from the
Commission with respect to a Registration Statement or any amendment thereto and provide as promptly as reasonably possible to
the Holders true and complete copies of all correspondence from and to the Commission relating to a Registration Statement (provided
that, the Company shall excise any information contained therein which would constitute material non-public information regarding
the Company or any of its Subsidiaries), and (iv) comply in all material respects with the applicable provisions of the Securities
Act and the Exchange Act with respect to the disposition of all Registrable Securities covered by a Registration Statement during
the applicable period in accordance (subject to the terms of this Agreement) with the intended methods of disposition by the Holders
thereof set forth in such Registration Statement as so amended or in such Prospectus as so supplemented.
(c) If
during the Effectiveness Period, the number of Registrable Securities at any time exceeds 100% of the number of shares of Common
Stock then registered in a Registration Statement, then the Company shall file as soon as reasonably practicable, but in any case
prior to the applicable Filing Date, an additional Registration Statement covering the resale by the Holders of not less than the
number of such Registrable Securities.
(d) Notify
the Holders of Registrable Securities to be sold (which notice shall, pursuant to clauses (iii) through (vi) hereof, be accompanied
by an instruction to suspend the use of the Prospectus until the requisite changes have been made) as promptly as reasonably possible
(and, in the case of (i)(A) below, not less than one (1) Trading Day prior to such filing) and (if requested by any such Person)
confirm such notice in writing no later than one (1) Trading Day following the day (i)(A) when a Prospectus or any Prospectus supplement
or post-effective amendment to a Registration Statement is proposed to be filed, (B) when the Commission notifies the Company whether
there will be a “review” of such Registration Statement and whenever the Commission comments in writing on such Registration
Statement, and (C) with respect to a Registration Statement or any post-effective amendment, when the same has become effective,
(ii) of any request by the Commission or any other federal or state governmental authority for amendments or supplements to a Registration
Statement or Prospectus or for additional information, (iii) of the issuance by the Commission or any other federal or state governmental
authority of any stop order suspending the effectiveness of a Registration Statement covering any or all of the Registrable Securities
or the initiation of any Proceedings for that purpose, (iv) of the receipt by the Company of any notification with respect to the
suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction,
or the initiation or threatening of any Proceeding for such purpose, (v) of the occurrence of any event or passage of time that
makes the financial statements included in a Registration Statement ineligible for inclusion therein or any statement made in a
Registration Statement or Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any
material respect or that requires any revisions to a Registration Statement, Prospectus or other documents so that, in the case
of a Registration Statement or the Prospectus, as the case may be, it will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, and (vi) of the occurrence or existence of any pending corporate development with respect
to the Company that the Company believes may be material and that, in the determination of the Company, makes it not in the best
interest of the Company to allow continued availability of a Registration Statement or Prospectus, provided, however,
in no event shall any such notice contain any information which would constitute material, non-public information regarding the
Company or any of its Subsidiaries.
(e) Use
its reasonable best efforts to avoid the issuance of, or, if issued, obtain the withdrawal of (i) any order stopping or suspending
the effectiveness of a Registration Statement, or (ii) any suspension of the qualification (or exemption from qualification) of
any of the Registrable Securities for sale in any jurisdiction, at the earliest practicable moment.
(f) Furnish
to each Holder, without charge, at least one conformed copy of each such Registration Statement and each amendment thereto, including
financial statements and schedules, all documents incorporated or deemed to be incorporated therein by reference to the extent
requested by such Person, and all exhibits to the extent requested by such Person (including those previously furnished or incorporated
by reference) promptly after the filing of such documents with the Commission; provided, that any such item which is available
on the EDGAR system (or successor thereto) need not be furnished in physical form.
(g) Subject
to the terms of this Agreement, the Company hereby consents to the use of such Prospectus and each amendment or supplement thereto
by each of the selling Holders in connection with the offering and sale of the Registrable Securities covered by such Prospectus
and any amendment or supplement thereto, except after the giving of any notice pursuant to Section 3(d).
(h) The
Company shall cooperate with any broker-dealer through which a Holder proposes to resell its Registrable Securities in effecting
a filing with the FINRA Corporate Financing Department pursuant to FINRA Rule 5110, as requested by any such Holder, and the Company
shall pay the filing fee required by such filing within two (2) Business Days of request therefor.
(i) Prior
to any resale of Registrable Securities by a Holder, use its commercially reasonable efforts to register or qualify or cooperate
with the selling Holders in connection with the registration or qualification (or exemption from the Registration or qualification)
of such Registrable Securities for the resale by the Holder under the securities or Blue Sky laws of such jurisdictions within
the United States as any Holder reasonably requests in writing, to keep each registration or qualification (or exemption therefrom)
effective during the Effectiveness Period and to do any and all other acts or things reasonably necessary to enable the disposition
in such jurisdictions of the Registrable Securities covered by each Registration Statement; provided, that, the Company shall not
be required to qualify generally to do business in any jurisdiction where it is not then so qualified, subject the Company to any
material tax in any such jurisdiction where it is not then so subject or file a general consent to service of process in any such
jurisdiction.
(j) If
requested by a Holder, cooperate with such Holder to facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be delivered to a transferee pursuant to a Registration Statement, which certificates shall be free,
to the extent permitted by the Purchase Agreement, of all restrictive legends, and to enable such Registrable Securities to be
in such denominations and registered in such names as any such Holder may request.
(k) Upon
the occurrence of any event contemplated by Section 3(d), as promptly as reasonably possible under the circumstances taking into
account the Company’s good faith assessment of any adverse consequences to the Company and its stockholders of the premature
disclosure of such event, prepare a supplement or amendment, including a post-effective amendment, to a Registration Statement
or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated therein by reference, and file
any other required document so that, as thereafter delivered, neither a Registration Statement nor such Prospectus will contain
an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made, not misleading. If
the Company notifies the Holders in accordance with clauses (iii) through (vi) of Section 3(d) above to suspend the use of any
Prospectus until the requisite changes to such Prospectus have been made, then the Holders shall suspend use of such Prospectus.
The Company will use its best efforts to ensure that the use of the Prospectus may be resumed as promptly as is practicable. The
Company shall be entitled to exercise its right under this Section 3(k) to suspend the availability of a Registration Statement
and Prospectus, subject to the payment of partial liquidated damages otherwise required pursuant to Section 2(d), for a period
not to exceed 60 calendar days (which need not be consecutive days) in any 12-month period.
(l) Comply
with all applicable rules and regulations of the Commission.
(m) The
Company shall use its reasonable best efforts to maintain eligibility for use of Form S-3 (or any successor form thereto) for the
registration of the resale of Registrable Securities.
(n) The
Company may require each selling Holder to furnish to the Company a certified statement as to the number of shares of Common Stock
beneficially owned by such Holder and, if required by the Commission, the natural persons thereof that have voting and dispositive
control over the shares. During any periods that the Company is unable to meet its obligations hereunder with respect to the registration
of the Registrable Securities solely because any Holder fails to furnish such information within three Trading Days of the Company’s
request, any liquidated damages that are accruing at such time as to such Holder only shall be tolled and any Event that may otherwise
occur solely because of such delay shall be suspended as to such Holder only, until such information is delivered to the Company.
4. Registration
Expenses. All fees and expenses incident to the performance of or compliance with, this Agreement by the Company shall be borne
by the Company whether or not any Registrable Securities are sold pursuant to a Registration Statement. The fees and expenses referred
to in the foregoing sentence shall include, without limitation, (i) all registration and filing fees (including, without limitation,
fees and expenses of the Company’s counsel and independent registered public accountants) (A) with respect to filings made
with the Commission, (B) with respect to filings required to be made with any Trading Market on which the Common Stock is then
listed for trading, (C) in compliance with applicable state securities or Blue Sky laws reasonably agreed to by the Company in
writing (including, without limitation, fees and disbursements of counsel for the Company in connection with Blue Sky qualifications
or exemptions of the Registrable Securities) and (D) if not previously paid by the Company in connection with an Issuer Filing,
with respect to any filing that may be required to be made by any broker through which a Holder intends to make sales of Registrable
Securities with FINRA pursuant to FINRA Rule 5110, so long as the broker is receiving no more than a customary brokerage commission
in connection with such sale, (ii) printing expenses (including, without limitation, expenses of printing certificates for Registrable
Securities), (iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of counsel for the Company, (v) Securities
Act liability insurance, if the Company so desires such insurance, (vi) fees and expenses of all other Persons retained by the
Company in connection with the consummation of the transactions contemplated by this Agreement and (vii) fees and expenses of one
legal counsel for each of Delafield and for Dominion. In addition, the Company shall be responsible for all of its internal expenses
incurred in connection with the consummation of the transactions contemplated by this Agreement (including, without limitation,
all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit
and the fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange as required
hereunder. In no event shall the Company be responsible for any broker or similar commissions of any Holder or, except to the extent
provided for in the Transaction Documents, any legal fees or other costs of the Holders.
(a) Indemnification
by the Company. The Company shall, notwithstanding any termination of this Agreement, indemnify and hold harmless each Holder,
the officers, directors, members, partners, agents, brokers (including brokers who offer and sell Registrable Securities as principal
as a result of a pledge or any failure to perform under a margin call of Common Stock), investment advisors and employees (and
any other Persons with a functionally equivalent role of a Person holding such titles, notwithstanding a lack of such title or
any other title) of each of them, each Person who controls any such Holder (within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act) and the officers, directors, members, stockholders, partners, agents and employees (and
any other Persons with a functionally equivalent role of a Person holding such titles, notwithstanding a lack of such title or
any other title) of each such controlling Person, to the fullest extent permitted by applicable law, from and against any and all
losses, claims, damages, liabilities, costs (including, without limitation, reasonable attorneys’ fees) and expenses (collectively,
“Losses”), as incurred, arising out of or relating to (1) any untrue or alleged untrue statement of a material
fact contained in a Registration Statement, any Prospectus or any form of prospectus or in any amendment or supplement thereto
or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required
to be stated therein or necessary to make the statements therein (in the case of any Prospectus or supplement thereto, in light
of the circumstances under which they were made) not misleading or (2) any violation or alleged violation by the Company of the
Securities Act, the Exchange Act or any state securities law, or any rule or regulation thereunder, in connection with the performance
of its obligations under this Agreement, except to the extent, but only to the extent, that (i) such untrue statements or omissions
are based solely upon information regarding such Holder furnished in writing to the Company by such Holder expressly for use therein
and actually used herein, or to the extent that such information relates to such Holder or such Holder’s proposed method
of distribution of Registrable Securities and was reviewed and expressly approved in writing by such Holder expressly for use in
a Registration Statement, such Prospectus or in any amendment or supplement thereto (it being understood that the Holder has approved
Annex A hereto for this purpose) or (ii) in the case of an occurrence of an event of the type specified in Section 3(d)(iii)-(vi),
the use by such Holder of an outdated, defective or otherwise unavailable Prospectus after the Company has notified such Holder
in writing that the Prospectus is outdated, defective or otherwise unavailable for use by such Holder and prior to the receipt
by such Holder of the Advice contemplated in Section 6(d), but only if and to the extent that following the receipt of the Advice
the misstatement or omission giving rise to such Loss would have been corrected. The Company shall notify the Holders promptly
of the institution, threat or assertion of any Proceeding arising from or in connection with the transactions contemplated by this
Agreement of which the Company is aware. Such indemnity shall remain in full force and effect regardless of any investigation made
by or on behalf of such indemnified person and shall survive the transfer of any Registrable Securities by any of the Holders in
accordance with Section 6(h).
(b) Indemnification
by Holders. Each Holder shall, severally and not jointly, indemnify and hold harmless the Company, its directors, officers,
agents and employees, each Person who controls the Company (within the meaning of Section 15 of the Securities Act and Section
20 of the Exchange Act), and the directors, officers, agents or employees of such controlling Persons, to the fullest extent permitted
by applicable law, from and against all Losses, as incurred, to the extent arising out of or based solely upon: (x) such Holder’s
failure to comply with any applicable prospectus delivery requirements of the Securities Act through no fault of the Company or
(y) any untrue or alleged untrue statement of a material fact contained in any Registration Statement, any Prospectus, or in any
amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission
of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or
supplement thereto, in light of the circumstances under which they were made) not misleading (i) to the extent, but only to the
extent, that such untrue statement or omission is contained in any information so furnished in writing by such Holder to the Company
expressly for inclusion in such Registration Statement or such Prospectus and such information was actually used therein or (ii)
to the extent, but only to the extent, that such information relates to such Holder’s proposed method of distribution of
Registrable Securities and was reviewed and expressly approved in writing by such Holder expressly for use in a Registration Statement
(it being understood that the Holder has approved Annex A hereto for this purpose), such Prospectus or in any amendment
or supplement thereto or (iii) in the case of an occurrence of an event of the type specified in Section 3(d)(iii)-(vi), to the
extent, but only to the extent, related to the use by such Holder of an outdated, defective or otherwise unavailable Prospectus
after the Company has notified such Holder in writing that the Prospectus is outdated, defective or otherwise unavailable for use
by such Holder and prior to the receipt by such Holder of the Advice contemplated in Section 6(d), but only if and to the extent
that following the receipt of the Advice the misstatement or omission giving rise to such Loss would have been corrected. In no
event shall the liability of any selling Holder under this Section 5(b) be greater in amount than the dollar amount of the net
proceeds received by such Holder upon the sale of the Registrable Securities giving rise to such indemnification obligation.
(c) Conduct
of Indemnification Proceedings. If any Proceeding shall be brought or asserted against any Person entitled to indemnity hereunder
(an “Indemnified Party”), such Indemnified Party shall promptly notify the Person from whom indemnity is sought
(the “Indemnifying Party”) in writing, and the Indemnifying Party shall have the right to assume the defense
thereof, including the employment of counsel reasonably satisfactory to the Indemnified Party and the payment of all fees and expenses
incurred in connection with defense thereof; provided, that, the failure of any Indemnified Party to give such notice shall not
relieve the Indemnifying Party of its obligations or liabilities pursuant to this Agreement, except (and only) to the extent that
it shall be finally determined by a court of competent jurisdiction (which determination is not subject to appeal or further review)
that such failure shall have materially and adversely prejudiced the Indemnifying Party.
An Indemnified
Party shall have the right to employ separate counsel in any such Proceeding and to participate in the defense thereof, but the
fees and expenses of such counsel shall be at the expense of such Indemnified Party or Parties unless: (1) the Indemnifying Party
has agreed in writing to pay such fees and expenses, (2) the Indemnifying Party shall have failed promptly to assume the defense
of such Proceeding and to employ counsel reasonably satisfactory to such Indemnified Party in any such Proceeding, or (3) the named
parties to any such Proceeding (including any impleaded parties) include both such Indemnified Party and the Indemnifying Party,
and counsel to the Indemnified Party shall reasonably believe that a material conflict of interest is likely to exist if the same
counsel were to represent such Indemnified Party and the Indemnifying Party (in which case, if such Indemnified Party notifies
the Indemnifying Party in writing that it elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying
Party shall not have the right to assume the defense thereof and the reasonable fees and expenses of no more than one separate
counsel shall be at the expense of the Indemnifying Party). The Indemnifying Party shall not be liable for any settlement of any
such Proceeding effected without its written consent, which consent shall not be unreasonably withheld or delayed. No Indemnifying
Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending Proceeding in respect
of which any Indemnified Party is a party, unless such settlement includes an unconditional release of such Indemnified Party from
all liability on claims that are the subject matter of such Proceeding.
Subject to
the terms of this Agreement, all reasonable fees and expenses of the Indemnified Party (including reasonable fees and expenses
to the extent incurred in connection with investigating or preparing to defend such Proceeding in a manner not inconsistent with
this Section) shall be paid to the Indemnified Party, as incurred, within ten Trading Days of written notice thereof to the Indemnifying
Party; provided, that, the Indemnified Party shall promptly reimburse the Indemnifying Party for that portion of such fees and
expenses applicable to such actions for which such Indemnified Party is finally determined by a court of competent jurisdiction
(which determination is not subject to appeal or further review) not to be entitled to indemnification hereunder.
(d) Contribution.
If the indemnification under Section 5(a) or 5(b) is unavailable to an Indemnified Party or insufficient to hold an Indemnified
Party harmless for any Losses, then each Indemnifying Party shall contribute to the amount paid or payable by such Indemnified
Party, in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Party in connection
with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations.
The relative fault of such Indemnifying Party and Indemnified Party shall be determined by reference to, among other things, whether
any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission of
a material fact, has been taken or made by, or relates to information supplied by, such Indemnifying Party or Indemnified Party,
and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action, statement
or omission. The amount paid or payable by a party as a result of any Losses shall be deemed to include, subject to the limitations
set forth in this Agreement, any reasonable attorneys’ or other fees or expenses incurred by such party in connection with
any Proceeding to the extent such party would have been indemnified for such fees or expenses if the indemnification provided for
in this Section was available to such party in accordance with its terms.
The parties
hereto agree that it would not be just and equitable if contribution pursuant to this Section 5(d) were determined by pro rata
allocation or by any other method of allocation that does not take into account the equitable considerations referred to in the
immediately preceding paragraph. Notwithstanding the provisions of this Section 5(d), no Holder shall be required to contribute
pursuant to this Section 5(d), in the aggregate, any amount in excess of the amount by which the net proceeds actually received
by such Holder from the sale of the Registrable Securities subject to the Proceeding exceeds the amount of any damages that such
Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission.
The indemnity
and contribution agreements contained in this Section are in addition to any liability that the Indemnifying Parties may have to
the Indemnified Parties.
(a) Remedies.
In the event of a breach by the Company or by a Holder of any of their respective obligations under this Agreement, each Holder
or the Company, as the case may be, in addition to being entitled to exercise all rights granted by law and under this Agreement,
including recovery of damages, shall be entitled to specific performance of its rights under this Agreement. Each of the Company
and each Holder agrees that monetary damages would not provide adequate compensation for any losses incurred by reason of a breach
by it of any of the provisions of this Agreement and hereby further agrees that, in the event of any action for specific performance
in respect of such breach, it shall not assert or shall waive the defense that a remedy at law would be adequate and no bond or
similar items shall be requested to be posted.
(b) No
Piggyback on Registrations; Prohibition on Filing Other Registration Statements. Except for shares of Common Stock that were
(i) issued and/or (ii) are issuable upon exercise, conversion and/or exchange of securities exercisable, convertible and/or exchangeable
into shares of Common Stock pursuant to the Diogenix Agreement, neither the Company nor any of its security holders (other than
the Holders in such capacity pursuant hereto) may include securities of the Company in any Registration Statements other than the
Registrable Securities. The Company shall not file any other registration statements until all Registrable Securities are registered
pursuant to a Registration Statement that is declared effective by the Commission, provided that this Section 6(b) (i) shall not
prohibit the Company from filing amendments to registration statements filed prior to the date of this Agreement and (ii) shall
not prohibit the Company from filing a shelf registration statement on Form S-3 for a primary offering by the Company, provided
that the Company makes no offering of securities pursuant to such shelf registration statement prior to the effective date of the
Registration Statement required hereunder that includes all of the Registrable Securities.
(c) Compliance.
Each Holder covenants and agrees that it will comply with the prospectus delivery requirements of the Securities Act as applicable
to it (unless an exemption therefrom is available) in connection with sales of Registrable Securities pursuant to a Registration
Statement.
(d) Discontinued
Disposition. By its acquisition of Registrable Securities, each Holder agrees that, upon receipt of a notice from the Company
of the occurrence of any event of the kind described in Section 3(d)(iii) through (vi), such Holder will forthwith discontinue
disposition of such Registrable Securities under a Registration Statement until it is advised in writing (the “Advice”)
by the Company that the use of the applicable Prospectus (as it may have been supplemented or amended) may be resumed. The Company
will use its best efforts to ensure that the use of the Prospectus may be resumed as promptly as is practicable. The Company agrees
and acknowledges that any periods during which the Holder is required to discontinue the disposition of the Registrable Securities
hereunder shall be subject to the provisions of Section 2(d).
(e) Piggy-Back
Registrations. If, at any time during the Effectiveness Period, there is not an effective Registration Statement covering all
of the Registrable Securities and the Company shall determine to prepare and file with the Commission a registration statement
relating to an offering for its own account or the account of others under the Securities Act of any of its equity securities,
other than on Form S-4 or Form S-8 (each as promulgated under the Securities Act) or their then equivalents relating to equity
securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection
with the Company’s stock option or other employee benefit plans, then the Company shall deliver to each Holder a written
notice of such determination and, if within fifteen days after the date of the delivery of such notice, any such Holder shall so
request in writing, the Company shall include in such registration statement all or any part of such Registrable Securities such
Holder requests to be registered; provided, however, that the Company shall not be required to register any Registrable
Securities pursuant to this Section 6(e) that are eligible for resale pursuant to Rule 144 (without volume restrictions or current
public information requirements) promulgated by the Commission pursuant to the Securities Act or that are the subject of a then
effective Registration Statement.
(f) Amendments
and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be given, unless the same shall be in writing and signed
by the Company and the Holders of 67% or more of the then outstanding Registrable Securities (for purposes of clarification, this
includes any Registrable Securities issuable upon exercise or conversion of any Security). If a Registration Statement does not
register all of the Registrable Securities pursuant to a waiver or amendment done in compliance with the previous sentence, then
the number of Registrable Securities to be registered for each Holder shall be reduced pro rata among all Holders and each Holder
shall have the right to designate which of its Registrable Securities shall be omitted from such Registration Statement. Notwithstanding
the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the
rights of a Holder or some Holders and that does not directly or indirectly affect the rights of other Holders may be given only
by such Holder or Holders of all of the Registrable Securities to which such waiver or consent relates; provided, however,
that the provisions of this sentence may not be amended, modified, or supplemented except in accordance with the provisions of
the first sentence of this Section 6(f). No consideration shall be offered or paid to any Person to amend or consent to a waiver
or modification of any provision of this Agreement unless the same consideration also is offered to all of the parties to this
Agreement.
(g) Notices.
Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be delivered as
set forth in the Purchase Agreement.
(h) Successors
and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of each
of the parties and shall inure to the benefit of each Holder. The Company may not assign (except by merger) its rights or obligations
hereunder without the prior written consent of all of the Holders of the then outstanding Registrable Securities. Each Holder may
assign their respective rights hereunder in the manner and to the Persons as permitted under Section 5.7 of the Purchase Agreement.
(i) No
Inconsistent Agreements. Neither the Company nor any of its Subsidiaries has entered, as of the date hereof, nor shall the
Company or any of its Subsidiaries, on or after the date of this Agreement, enter into any agreement with respect to its securities,
that would have the effect of impairing the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions
hereof. Except as set forth on Schedule 6(i), neither the Company nor any of its Subsidiaries has previously entered into
any agreement granting any registration rights with respect to any of its securities to any Person that have not been satisfied
in full.
(j) Execution
and Counterparts. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered
one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other
party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by
facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if
such facsimile or “.pdf” signature page were an original thereof.
(k) Governing
Law. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed
by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of
conflict of laws thereof. Each party agrees that all legal proceedings concerning the interpretation, enforcement and defense
of the transactions contemplated by this Agreement (whether brought against a party hereto or its respective Affiliates, directors,
officers, shareholders, employees or agents) shall be commenced in the state and federal courts sitting in the City of New York,
Borough of Manhattan (the “New York Courts”). Each party hereto hereby irrevocably submits to the exclusive
jurisdiction of the New York Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein (including but not limited to, with respect to the enforcement of this Agreement), and
hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject
to the jurisdiction of such New York Courts, or such New York Courts are improper or inconvenient venue for such proceeding.
Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action
or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such
party at the address in effect for notices to it under this Note and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process
in any other manner permitted by applicable law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by
applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby. If any party shall commence an action or proceeding to enforce any provisions of this Note, then
the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys fees and other costs
and expenses incurred in the investigation, preparation and prosecution of such action or proceeding.
(l) Cumulative
Remedies. The remedies provided herein are cumulative and not exclusive of any other remedies provided by law.
(m) Severability.
If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially
reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that
they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.
(n) Headings.
The headings in this Agreement are for convenience only, do not constitute a part of the Agreement and shall not be deemed to limit
or affect any of the provisions hereof.
(o) Independent
Nature of Holders’ Obligations and Rights. The obligations of each Holder hereunder are several and not joint with the
obligations of any other Holder hereunder, and no Holder shall be responsible in any way for the performance of the obligations
of any other Holder hereunder. Nothing contained herein or in any other agreement or document delivered at any closing, and no
action taken by any Holder pursuant hereto or thereto, shall be deemed to constitute the Holders as a partnership, an association,
a joint venture or any other kind of group or entity, or create a presumption that the Holders are in any way acting in concert
or as a group or entity with respect to such obligations or the transactions contemplated by this Agreement or any other matters,
and the Company acknowledges that the Holders are not acting in concert or as a group, and the Company shall not asset any such
claim, with respect to such obligations or transactions. Each Holder shall be entitled to protect and enforce its rights, including
without limitation the rights arising out of this Agreement, and it shall not be necessary for any other Holder to be joined as
an additional party in any proceeding for such purpose. The use of a single agreement with respect to the obligations of the Company
contained was solely in the control of the Company, not the action or decision of any Holder, and was done solely for the convenience
of the Company and not because it was required or requested to do so by any Holder. It is expressly understood and agreed that
each provision contained in this Agreement is between the Company and a Holder, solely, and not between the Company and the Holders
collectively and not between and among Holders.
(p) Lock-up.
As a condition precedent to each Diogenix Person including their Registrable Securities in a Registration Statement, each such
Diogenix Person shall enter into a Lock-Up Agreement in the form substantially similar as annexed hereto as Exhibit A.
********************
(Signature Pages Follow)
EXECUTION COPY
IN WITNESS WHEREOF,
the parties have executed this Registration Rights Agreement as of the date first written above.
| |
AMARANTUS BIOSCIENCE HOLDINGS, INC. |
| |
|
|
|
| |
By: |
|
| |
|
Name: |
|
| |
|
Title: |
|
[SIGNATURE PAGE OF HOLDERS FOLLOWS]
EXECUTION COPY
[SIGNATURE
PAGE OF HOLDERS TO RRA]
Name of Holder: __________________________
Signature of Authorized Signatory of Holder: __________________________
Name of Authorized Signatory: _________________________
Title of Authorized Signatory: __________________________
[SIGNATURE PAGES CONTINUE]
EXECUTION COPY
Schedule 1
DIOGENIX PERSONS
| Name of Diogenix Person |
|
Number of shares being Registered for
Resale |
| 1. |
|
|
| 2. |
|
|
| 3. |
|
|
EXECUTION COPY
Exhibit A
Form of Lock-Up Agreement
EXECUTION COPY
Annex A
Plan of Distribution
Each Selling Stockholder
(the “Selling Stockholders”) of the securities and any of their pledgees, assignees and successors-in-interest
may, from time to time, sell any or all of their securities covered hereby on the OTC Bulletin Board or any other stock exchange,
market or trading facility on which the securities are traded or in private transactions. These sales may be at fixed or negotiated
prices. A Selling Stockholder may use any one or more of the following methods when selling securities:
| · | ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; |
| · | block trades in which the broker-dealer will attempt to sell the securities as agent but may position and resell a portion
of the block as principal to facilitate the transaction; |
| · | purchases by a broker-dealer as principal and resale by the broker-dealer for its account; |
| · | an exchange distribution in accordance with the rules of the applicable exchange; |
| · | privately negotiated transactions; |
| · | settlement of short sales; |
| · | in transactions through broker-dealers that agree with the Selling Stockholders to sell a specified number of such securities
at a stipulated price per security; |
| · | through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise; |
| · | a combination of any such methods of sale; or |
| · | any other method permitted pursuant to applicable law. |
The Selling Stockholders
may also sell securities under Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”),
if available, rather than under this prospectus.
Broker-dealers engaged
by the Selling Stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the Selling Stockholders (or, if any broker-dealer acts as agent for the purchaser of securities, from the purchaser)
in amounts to be negotiated, but, except as set forth in a supplement to this Prospectus, in the case of an agency transaction
not in excess of a customary brokerage commission in compliance with FINRA Rule 2440; and in the case of a principal transaction
a markup or markdown in compliance with FINRA IM-2440.
In connection with
the sale of the securities or interests therein, the Selling Stockholders may enter into hedging transactions with broker-dealers
or other financial institutions, which may in turn engage in short sales of the securities in the course of hedging the positions
they assume. The Selling Stockholders may also sell securities short and deliver these securities to close out their short positions,
or loan or pledge the securities to broker-dealers that in turn may sell these securities. The Selling Stockholders may also enter
into option or other transactions with broker-dealers or other financial institutions or create one or more derivative securities
which require the delivery to such broker-dealer or other financial institution of securities offered by this prospectus, which
securities such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended
to reflect such transaction).
The Selling Stockholders
and any broker-dealers or agents that are involved in selling the securities may be deemed to be “underwriters” within
the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers
or agents and any profit on the resale of the securities purchased by them may be deemed to be underwriting commissions or discounts
under the Securities Act. Each Selling Stockholder has informed the Company that it does not have any written or oral agreement
or understanding, directly or indirectly, with any person to distribute the securities.
The Company is required
to pay certain fees and expenses incurred by the Company incident to the registration of the securities. The Company has agreed
to indemnify the Selling Stockholders against certain losses, claims, damages and liabilities, including liabilities under the
Securities Act.
Because Selling Stockholders
may be deemed to be “underwriters” within the meaning of the Securities Act, they will be subject to the prospectus
delivery requirements of the Securities Act including Rule 172 thereunder. In addition, any securities covered by this prospectus
which qualify for sale pursuant to Rule 144 under the Securities Act may be sold under Rule 144 rather than under this prospectus.
The Selling Stockholders have advised us that there is no underwriter or coordinating broker acting in connection with the proposed
sale of the resale securities by the Selling Stockholders.
We agreed to keep this
prospectus effective until the earlier of (i) the date on which the securities may be resold by the Selling Stockholders without
registration and without regard to any volume or manner-of-sale limitations by reason of Rule 144, without the requirement for
the Company to be in compliance with the current public information under Rule 144 under the Securities Act or any other rule of
similar effect or (ii) all of the securities have been sold pursuant to this prospectus or Rule 144 under the Securities Act or
any other rule of similar effect. The resale securities will be sold only through registered or licensed brokers or dealers if
required under applicable state securities laws. In addition, in certain states, the resale securities covered hereby may not be
sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification
requirement is available and is complied with.
Under applicable rules
and regulations under the Exchange Act, any person engaged in the distribution of the resale securities may not simultaneously
engage in market making activities with respect to the common stock for the applicable restricted period, as defined in Regulation
M, prior to the commencement of the distribution. In addition, the Selling Stockholders will be subject to applicable provisions
of the Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and
sales of securities of the common stock by the Selling Stockholders or any other person. We will make copies of this prospectus
available to the Selling Stockholders and have informed them of the need to deliver a copy of this prospectus to each purchaser
at or prior to the time of the sale (including by compliance with Rule 172 under the Securities Act).
EXECUTION COPY
Annex B
AMARANTUS BIOSCIENCE HOLDINGS, INC.
Selling Stockholder Notice and Questionnaire
The undersigned beneficial
owner of common stock (the “Registrable Securities”) of AMARANTUS BIOSCIENCE HOLDINGS, INC. (the “Company”),
understands that the Company has filed or intends to file with the Securities and Exchange Commission (the “Commission”)
a registration statement (the “Registration Statement”) for the registration and resale under Rule 415 of the
Securities Act of 1933, as amended (the “Securities Act”), of the Registrable Securities, in accordance with
the terms of the Registration Rights Agreement (the “Registration Rights Agreement”) to which this document
is annexed. A copy of the Registration Rights Agreement is available from the Company upon request at the address set forth below.
All capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Registration Rights Agreement.
Certain legal consequences
arise from being named as a selling stockholder in the Registration Statement and the related prospectus. Accordingly, holders
and beneficial owners of Registrable Securities are advised to consult their own securities law counsel regarding the consequences
of being named or not being named as a selling stockholder in the Registration Statement and the related prospectus.
NOTICE
The undersigned beneficial
owner (the “Selling Stockholder”) of Registrable Securities hereby elects to include the Registrable Securities
owned by it in the Registration Statement.
The undersigned hereby provides the following
information to the Company and represents and warrants that such information is accurate:
QUESTIONNAIRE
| (a) | Full Legal Name of Selling Stockholder |
| | | |
| | | |
| (b) | Full Legal Name of Registered Holder (if not the same as (a) above) through which Registrable Securities
are held: |
| | | |
| | | |
| (c) | Full Legal Name of Natural Control Person (which means a natural person who directly or indirectly
alone or with others has power to vote or dispose of the securities covered by this Questionnaire): |
| | | |
| | | |
| 2. | Address for Notices to Selling Stockholder: |
| (a) | Are you a broker-dealer? |
Yes ¨ No ¨
| (b) | If “yes” to Section 3(a), did you receive your Registrable Securities as compensation
for investment banking services to the Company? |
Yes ¨ No ¨
| Note: | If “no” to Section 3(b), the Commission’s staff has indicated that you should
be identified as an underwriter in the Registration Statement. |
| (c) | Are you an affiliate of a broker-dealer? |
Yes ¨ No ¨
| (d) | If you are an affiliate of a broker-dealer, do you certify that you purchased the Registrable Securities
in the ordinary course of business, and at the time of the purchase of the Registrable Securities to be resold, you had no agreements
or understandings, directly or indirectly, with any person to distribute the Registrable Securities? |
Yes ¨ No ¨
| Note: | If “no” to Section 3(d), the Commission’s staff has indicated that you should
be identified as an underwriter in the Registration Statement. |
| 4. | Beneficial Ownership of Securities of the Company Owned by the Selling Stockholder. |
Except as set forth below
in this Item 4, the undersigned is not the beneficial or registered owner of any securities of the Company other than the securities
issuable pursuant to the Purchase Agreement.
| (a) | Type and Amount of other securities beneficially owned by the Selling Stockholder: |
| | | |
| | | |
| | | |
| 5. | Relationships with the Company: |
Except as set forth below,
neither the undersigned nor any of its affiliates, officers, directors or principal equity holders (owners of 5% of more of the
equity securities of the undersigned) has held any position or office or has had any other material relationship with the Company
(or its predecessors or affiliates) during the past three years.
State any exceptions here:
The undersigned agrees
to promptly notify the Company of any inaccuracies or changes in the information provided herein that may occur subsequent to the
date hereof at any time while the Registration Statement remains effective.
By
signing below, the undersigned consents to the disclosure of the information contained herein in its answers to Items 1 through
5 and the inclusion of such information in the Registration Statement and the related prospectus and any amendments or supplements
thereto. The undersigned understands that such information will be relied upon by the Company in
connection with the preparation or amendment of the Registration Statement and the related prospectus and any amendments or supplements
thereto.
IN WITNESS WHEREOF
the undersigned, by authority duly given, has caused this Notice and Questionnaire to be executed and delivered either in person
or by its duly authorized agent.
PLEASE FAX A COPY (OR EMAIL A .PDF COPY)
OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE, AND RETURN THE ORIGINAL BY OVERNIGHT MAIL, TO:
Exhibit 10.9
AMARANTUS BIOSCIENCE HOLDINGS, INC.
Letter
Agreement
dated
September 30, 2015
This letter agreement dated September 30,
2015 (this “Letter Agreement”) amends that (i) Securities Purchase Agreement dated September 30, 2015 (the “SPA”)
by and between Amarantus Bioscience Holdings, Inc. (the “Company”) and Delafield Investments Limited (“Delafield”)
and (ii) Exchange Agreement dated September 30, 2015, between Dominion Capital, LLC (“Dominion,” and, together
with Delafield, collectively, the “Lenders”) and the Company (the “Exchange Agreement,” and,
together with SPA, collectively, the “Acquiring Agreements”) solely to the extent described below. To the extent
of any inconsistency between this Letter Agreement and/or the Acquiring Agreement(s), this Letter Agreement shall control and supersede
any contrary provisions in either of the Acquiring Agreements.
This Letter Agreement is incorporated by
reference into the Acquiring Agreements.
Capitalized terms used but not defined
herein shall have the meanings set forth in the applicable Acquiring Agreements. Except as expressly set forth in this Letter Agreement,
the Acquiring Agreements shall continue unmodified.
Increase in Authorized Shares of Common
Stock
Notwithstanding anything to the contrary
provided herein or elsewhere, the Company shall use its best-efforts to (i) file with the Secretary of State of Nevada, and (ii)
cause to be effective a Certificate of Amendment to the Company’s Certificate of Incorporation increasing its authorized
and unissued shares of Common Stock to 150,000,000 shares (the “Increase”), within sixty (60) days from the
date hereof, but in no event later than seventy-five (75) days following the date hereof (the “Last Day”).
Failure by the Company to use its best efforts to effectuate the Increase, if the Increase does not occur by the Last Day and/or
if the Increase occurs by the Last Day but such Increase did not comply with all applicable laws, rules and regulations, including
but not limited to the laws of the State of Nevada and the Securities and Exchange Commission (each a “Breach”),
then the Company shall pay to each Lender for each day that the Company has not cured such Breach in cash by wire transfer to
each Lender an amount equal to 1% of each such Lender’s aggregate principal amount of Notes, Stated Value of any Series
E Preferred Stock of the Company (the “E Shares”), and Stated Value of any Series H Preferred Stock of the
Company (the “H Shares”) owned by such Lender until such Breach is cured and all amounts owed to the Lenders
hereunder are received in full in cash by each Lender by wire transfer pursuant to wiring instructions provided to the Company
from each Lender (the “1% Payment”). Notwithstanding anything to the contrary provided herein, at either Lenders’
option, such Lender may (subject to any other agreement between the parties) declare and Event of Default under the Notes and/or
require a Mandatory Redemption (as defined in the E Certificate or the H Certificate, as applicable) and obtain any other relief
available under applicable law, whether in equity or otherwise, and/or in any of the Documents, the RD SPA, the RD Warrants, the
E Certificate, the H Certificate and/or any documents related thereto (the “RD Documents”). In no event shall
any action or non-action by either Lender constitute a waiver of any right and/or remedy such Lender may have under law, the Documents
and/or the RD Documents. Once the Increase is in effect, the Company shall immediately calculate the Required Reserve Amount for
each Lender (for Delafield as defined in the SPA and for Dominion as defined in the Exchange Agreement) and immediately provide
a draft of an irrevocable instruction to its transfer agent to each Lender, which once approved by each Lender, shall immediately
be signed by the Company and delivered to the Company’s transfer agent to meet the Required Reserve Amount of each Lender.
In addition to the Increase as provided in this Letter Agreement, in the event that at any time and from time to time following
the Increase the Required Reserve Amount for each Lender has not been reserved and the Company does not have sufficient authorized
but unissued shares of Common Stock to meet such Required Reserve Amount, then the Company shall have the same obligation set
forth above with respect to the Increase including, but not limited to, the 60 and 75 days and its obligations to use its best
efforts, but adjusted as applicable to any subsequent deficiency in the Required Reserve Amount and the Lenders shall have the
same rights and remedies, including but not limited to, the right to receive 1% Payments for any Breach.
The date of this Letter Agreement is
September 30, 2015
[ACKNOWLEDGEMENT
SIGNATURE PAGE]
IN WITNESS WHEREOF,
the parties hereto have caused this Agreement to be duly executed and delivered as of the date first above written
| |
DELAFIELD INVESTMENTS
LIMITED |
| |
|
|
| |
By: |
|
|
| |
Name: |
|
| |
Title: |
|
| |
|
|
| |
|
|
| |
DOMINION CAPITAL, LLC |
| |
|
|
| |
By: |
|
|
| |
Name: |
|
| |
Title: |
|
| |
|
|
| |
|
|
| |
AMARANTUS BIOSCIENCE HOLDINGS,
INC. |
| |
|
|
| |
|
|
| |
By: |
|
|
| |
Name: |
|
| |
Title: |
|
Exhibit 10.10
REPURCHASE AGREEMENT
This Agreement (the
"Agreement") is made on the 25th day of September 2015 (“Effective Date”) by and between Amarantus
Bioscience Holdings, Inc., a Nevada corporation with its principal place of business at 655 Montgomery Street, Suite 900, San Francisco,
California 94111 (the "Company") and Discover Growth Fund, a Cayman Islands exempted mutual fund with its principal
place of business at Governors Square, 23 Lime Tree Bay Avenue, Grand Cayman, Cayman Islands KY1-1209 (the "Seller").
WITNESSETH:
WHEREAS, the
Company and Seller previously made and entered into a Stock Purchase Agreement dated April 23, 2015 and an Amended and Restated
Stock Purchase Agreement dated July 9, 2015 (collectively, the “SPAs”) pursuant to which the Seller purchased
from the Company shares of the Company’s Series G Preferred Stock, par value $0.001 per share (the “Shares”)
which Shares are convertible into shares (the “Underlying Shares”) of common stock, par value $0.001 per share
of the Company (the “Common Stock”). Capitalized terms used in this Agreement and not otherwise defined shall
have the meanings ascribed to them in the SPAs, including the Exhibits attached thereto;
WHEREAS, Seller
has fully and timely performed all of its obligations under the SPAs and all other Transaction Documents. Company acknowledges
and confirms that all calculations and Conversion Notices provided by Seller to date are accurate and correct in all respects;
WHEREAS, the
Seller, at the Closing will be the beneficial and record owner of (i) the number of Shares set forth in Schedule 1, which
Shares have an aggregate Face Value as set forth in Schedule 1 (the “Preferred Shares”), and (ii) the number
of shares of Common Stock set forth in Schedule 1 (the “Common Shares”); and
WHEREAS the
Company desires to purchase from the Seller, (i) the Preferred Shares and (ii) the Common Shares (collectively, the “Securities”),
and the Seller is willing to sell the Securities to the Company on and subject to the terms and conditions set forth herein (the
“Repurchase”); and
WHEREAS, these
“Whereas” clauses (as well as Schedule 1) are expressly made a part of this Agreement.
NOW, THEREFORE,
in consideration of the premises and the mutual agreements herein contained, the Company and the Seller hereby agree as follows:
1. Repurchase
of the Securities. Subject to the terms and conditions of this Agreement, and in reliance upon the representations, warranties,
covenants and agreements contained in this Agreement, in the Repurchase the Seller shall sell to the Company the (i) Preferred
Shares, and (ii) the Common Shares; and the Company shall purchase such Securities from the Seller for an aggregate purchase price
of US $4,750,000.00 (the “Purchase Price”).
2. Closing.
The Repurchase of the Securities and the occurrence of the other transactions to take place substantially simultaneously therewith
(the “Closing”), shall occur no later than three Business Days after the Effective Date (the “Final
Date”) and shall be held at such time and place as shall be determined by the parties hereto. The date that the Closing
has been fully effectuated shall be the “Closing Date.” For purposes hereof “Business Day”
shall mean any day other than a Saturday or Sunday or any other day on which the Federal Reserve Bank of New York is not open for
business. On or before the Business Day prior to Closing, (i) the Company shall deliver to Sichenzia Ross Friedman Ference LLP,
as escrow agent (the “Escrow Agent”) (a) all originally executed Transaction Documents in its and/or in any
of its Affiliates possession and/or control (“Original Transaction Documents”), pursuant to the terms and conditions
of an escrow agreement dated on or before the Closing Date, the form of which is annexed hereto as Exhibit A (the “Escrow
Agreement”), (b) the Purchase Price via wire transfer in immediately available funds to an account designated to the
Company by the Escrow Agent, and (c) an original executed mutual release agreement of Dominion Capital LLC (“Dominion”)
and Delafield Investments Limited (“Delafield” and together with Dominion, the “2 Funders”),
their respective Affiliates and the other persons named therein, in favor of the Seller, its Affiliates and the other persons named
therein, the form of which mutual release agreement is annexed hereto as Exhibit B (the “Release Agreement”);
and (ii) the Seller shall deliver to the Escrow Agent (a) all Original Transaction Documents in its and/or in any of its Affiliates
possession and/or control, (b) an executed letter (the “Instruction Letter”) from the Seller to VSTOCK Transfer,
LLC, the Company’s transfer agent (“VStock”), the form of which is annexed hereto as Exhibit C
pursuant to which the Seller authorizes VStock, to return the Securities to the Company’s treasury and instructs VStock that
the Underlying Shares reserved pursuant to irrevocable transfer agent letters dated April 23, 2015 and July 10, 2015 (the “TA
Letters”) may be taken out of reserve and are no longer subject to the TA Letters, and (c) original executed Release
Agreement of Seller for itself and on behalf of its Affiliates and the other persons named therein in favor of the 2 Funders, their
respective Affiliates and the other persons named therein, the form of which is annexed hereto as Exhibit B (the documents, instruments
and other items set forth in this Section 2(i)-(ii) shall hereinafter be referred to as the “Escrow Items.”
Upon receipt by the Escrow Agent of the Escrow Items, the Escrow Agent shall send a confirmation letter to the Company, the 2 Funders
and the Seller (the “Confirming Letter”) indicating all of the Escrow Items have been received and upon receipt
from the 2 Funders, the Seller and the Company of written instructions to release the Escrow Property, the Escrow Agent shall disburse
(i) the Purchase Price to the Seller, (ii) the Instruction Letter and the Release Agreement to the Company, the 2 Funders and to
VStock and (iii) all original Transaction Documents and the TA Letters to the Company. The Purchase Price shall be delivered to
the Seller by wire transfer in immediately available funds pursuant to wiring instructions provided by the Seller to the Escrow
Agent. Upon receipt by the Seller of the Purchase Price, the Company shall automatically become the sole and exclusive record and
beneficial owner of the Securities and all rights, title and interests therein or relating thereto shall vest solely in the Company,
and Seller shall so advise Vstock, and neither the Seller, its Affiliates (as defined under Section 405 of the Securities Act of
1933, as amended) nor any other party except the Company shall have any further right, title and/or interest in or to the Securities,
the Underlying Shares and/or the TA Letters except as otherwise expressly provided herein and/or in any of the Escrow Items. If
for any reason the Purchase Price is not disbursed to Seller on or before the Final Date, the Instruction Letter and Release Agreement
shall be null and void ab initio and shall be destroyed by the Escrow Agent and of no further force and/or effect, and the
Purchase Price shall be wired directly to Delafield pursuant to wire instructions provided to the Escrow Agent by Delafield.
3. Representations
of the Seller.
(a) The
Seller is validly existing and in good standing under the laws of the jurisdiction of its organization with full right, power and
authority to enter into and to perform its obligations and agreements under this Agreement, the Instruction Letter and any other
document, agreement and/or instrument contemplated herein and/or in any of such other documents (collectively, the “Documents”)
and otherwise to carry out its obligations and agreements hereunder and thereunder. The execution, delivery and performance by
the Seller of this Agreement, the Instruction Letter and any other Documents have been duly authorized by all necessary company
or similar action on the part of the Seller (and to the extent required its equity holders) and no consents, permits and/or authorizations
are required in connection therewith. Each Document constitutes the valid and binding obligations of the Seller, enforceable against
the Seller in accordance with their respective terms, subject to the (i) laws of general application relating to bankruptcy, insolvency
and the relief of debtors; and (ii) rules of law governing specific performance, injunctive relief and other equitable remedies.
(b) The
Seller owns sole and exclusive right, title and interest in and to, and has subject to the SPAs the right to transfer to the Company
in connection with the Repurchase, all of the Securities being repurchased by the Company in the Repurchase which when transferred
pursuant to Section 2 hereof to the Company all of such securities will vest in the Company sole exclusive right, title and interest
in the Securities, free and clear of all liens, security interests, charges, rights of first refusal, clouds or title and/or other
encumbrances (“Liens”).
(c) The
Seller (either alone or together with its advisors) has such knowledge and experience in financial or business matters that it
is capable of evaluating the merits and risks of the Repurchase. The Seller and its advisors has had a reasonable opportunity to
ask questions of and receive answers from a person or persons acting on behalf of the Company concerning the Repurchase and the
business, financial condition, and results of operations of the Company, and all such questions have been answered to the full
satisfaction of the Seller. The Seller is an informed and sophisticated party and has engaged, to the extent the Seller deems appropriate,
expert advisors experienced in the evaluation of transactions of the type contemplated hereby. The Seller acknowledges that neither
it nor any advisor to the Seller has relied upon any express or implied representations or warranties of any nature made by or
on behalf of the Company and/or any other person, whether or not any such representations, warranties or statements were made in
writing or orally, except as expressly set forth for the benefit of the Seller in this Agreement.
(d) The
Seller acknowledges and understands that the Company on or around the date of the consummation of the Repurchase may sell securities
of the Company, to third parties at per share, or effective per-share, purchase prices that may be significantly higher or lower
than the per share purchase price being paid hereunder by the Company for the Shares. Notwithstanding any such sales, the Seller
agrees to accept the Purchase Price as full and fair payment for the Securities.
(e) Neither
the Seller nor any of its Affiliates has sold, granted an option in and/or otherwise effected any transaction and/or entered into
any agreement, and/or understanding with respect to any of the Securities and/or the Underlying Shares, except for this Agreement
and the Instruction Letter.
(f) The
Preferred Shares have a Face Value as set forth in Schedule 1.
(g) The
execution, delivery and performance of each of the Documents by the Seller and the consummation by the Seller of the transactions
contemplated by any of the Documents do not and will not (a) conflict with or violate any provision of the Seller’s articles
of incorporation, bylaws and/or other organizational or charter documents, (b) conflict with, or constitute a default (or an event
that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties
or assets of the Seller, or give to others any rights of termination, amendment, acceleration or cancellation (with or without
notice, lapse of time or both) of any agreement, credit facility, debt or other instrument (evidencing Seller debt or otherwise)
or other understanding and/or agreement and/or document to which the Seller is a party and/or is bound (including, but not limited
to any subscription agreement, private placement memorandum, purchase agreement (other than the SPAs) and/or similar document and/or
agreement between the Seller and/or any of its Affiliates on the one hand and any owner of any equity and/or rights in the Seller
and/or any of its Affiliates on the other hand) or by which any property or asset of the Seller and/or any of its Affiliates is
bound or affected, (c) conflict with or result in a violation of any material law, rule, regulation, order, judgment, injunction,
decree or other restriction of any court or governmental authority to which the Seller is subject (including, but not limited to,
any U.S. federal and state securities laws and regulations and any applicable law, rule and/or regulation of the Cayman Islands),
or by which any property or assets of the Seller is bound or affected, and/or (d) conflict with or violate the terms of any material
agreement by which the Seller is bound or to which any property or asset of the Seller is bound or affected; except in the case
of each of clauses (b), (c) and (d), such as would not reasonably be expected to result in a material adverse effect on the results
of operations, assets, business or financial condition of the Seller.
(h) Attached hereto
as Schedule 1 is a list of all securities of the Company and/or any of its subsidiaries owned directly and/or indirectly,
beneficially and/or of record by the Seller, and the other Discover Releasing Parties (as defined in the Release Agreement), which
Schedule 1 shall make reference to all Preferred Shares and all Common Shares (and the amount thereof) owned by such persons and
to be bought by the Company on the Closing Date for the Purchase Price.
4. Representations
of the Company
(a) The
Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada
(b) The
Company has full right, power and authority to enter into and to perform its obligations and agreements under this Agreement and
the Documents and otherwise to carry out its obligations hereunder and thereunder, and the execution, delivery and performance
by the Company of this Agreement and the Documents and the transactions contemplated by this Agreement have been duly authorized
by all necessary action on the part of the Company and its board of directors (and to the extent required its equity holders) and
no consents, permits and/or authorizations are required in connection therewith. This Agreement and each of the Documents constitutes
the valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to the:
(i) laws of general application relating to bankruptcy, insolvency and the relief of debtors; and (ii) rules of law governing specific
performance, injunctive relief and other equitable remedies.
(c) The
execution, delivery and performance of this Agreement by the Company and the consummation by Company of the other transactions
contemplated thereby do not and will not (a) conflict with or violate any provision of Company’s articles of incorporation,
bylaws and/or other organizational or charter documents, (b) conflict with, or constitute a default (or an event that with notice
or lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties or assets
of Company, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse
of time or both) of, any agreement, credit facility, debt or other instrument (evidencing Company debt or otherwise) or other understanding
and/or agreement and/or document to which Company is a party and/or is bound (including, but not limited to any subscription agreement,
private placement memorandum, purchase agreement (other than the SPAs) and/or similar document and/or agreement between the Company
on the one hand and any owner of any equity and/or rights in the Company on the other hand) to which Company is a party or by which
any property or asset of Company is bound or affected, (c) conflict with or result in a violation of any material law, rule, regulation,
order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company is subject
(including, but not limited to, any U.S. federal and state securities laws and regulations and any applicable law, rule and/or
regulation of the state of Nevada), or by which any property or assets of the Company is bound or affected, and/or (d) conflict
with or violate the terms of any material agreement by which the Company is bound or to which any property or asset of the Company
is bound or affected; except in the case of each of clauses (b), (c) and (d), such as would not reasonably be expected to result
in a material adverse effect on the results of operations, assets, business or financial condition of the Company.
(d) The
Company is acquiring the Securities as principal for its own account. The Company (either alone or together with its advisors)
has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the
Repurchase. The Company has had a reasonable opportunity to ask questions of and receive answers from a person or persons acting
on behalf of the Seller concerning the Repurchase of the Securities, and all such questions have been answered to the full satisfaction
of the Company. The Company is an informed and sophisticated party and has engaged, to the extent the Company deems appropriate,
expert advisors experienced in the evaluation of transactions of the type contemplated hereby. The Company acknowledges that the
Company has not relied upon any express or implied representations or warranties of any nature made by or on behalf of the Seller,
whether or not any such representations, warranties or statements were made in writing or orally, except as expressly set forth
for the benefit of the Company in this Agreement.
(e) The
Preferred Shares have a Face Value as set forth in Schedule 1.
5. Restrictions
on Transfer. Except for the Repurchase no party hereto shall transfer, assign, sell, convey or otherwise encumber any of the
Securities nor any Underlying Shares not released from escrow or agree to any of the foregoing in any way, until Closing or termination
of this Agreement.
6. Waiver.
Provided that a portion of the proceed thereof are used to pay the Purchase Price in full, as of the Effective Date the Seller
hereby waives the prohibition against subsequent financings as set forth in Section IV.N. of each of the SPAs.
7. Termination.
On the Closing Date and receipt by the Seller of the Purchase Price of the Securities, the Original Transaction Documents, including
but not limited to the SPAs, any stock certificates representing the Preferred Shares, the TA Letters and the Certificate of Designations
shall automatically be terminated so as to be rendered null and void and of no further force and effect; provided, however,
that the provisions of Section IV.F (except the last sentence thereof), Section IV.G and all of Section VI of the SPAs, shall
remain in full force and effect for the period set forth in the SPAs, and are hereby ratified and confirmed in all respects.
8. Seller
Securities Representation and Covenant. As of the Closing Date and receipt by the Seller of the Purchase Price, the Seller
hereby represents that it and its Affiliates will not own or have any rights to any securities of the Company and agrees that for
a period of Seven Hundred and Twenty (720) calendar days from the Closing Date, neither the Seller nor any Affiliate shall directly
and/or indirectly (1) purchase, agree to purchase, contract to purchase and/or otherwise acquire, offer, pledge, sell, contract
to sell, grant, lend, or otherwise transfer or dispose of, any securities of the Company and/or any of the Company’s Subsidiaries
(as defined below) including, but not limited to, any shares of Common Stock, warrants, options, notes, debt (whether or not any
such debt is deemed to be a “Security” as defined under the 1933 Act) and/or any other securities that are convertible,
exchangeable and/or exercisable into any shares of Common Stock and/or other securities of the Company and/or any of its Subsidiaries,
whether now owned or hereafter acquired by the Seller and/or any Affiliate or with respect to which the Seller and/or any Affiliate
has or hereafter acquires the power of acquisition and/or disposition (collectively, the “Lock-Up Securities”);
(2) enter into any swap or other arrangement (including, but not limited to, a Hedging Transaction (as defined below) that transfers
to another, in whole or in part, any of the economic consequences of ownership of the Lock-Up Securities, whether any such transaction
described in clause (1) or (2) above is to be settled by delivery of Lock-Up Securities, in cash or otherwise; (3) make any demand
for or exercise any right with respect to the registration of any Lock-Up Securities; or (4) publicly disclose the intention to
make any offer, sale, pledge or disposition, or to enter into any transaction, swap, hedge or other arrangement relating to any
Lock-Up Securities. For purposes of this Agreement, the term “Hedging Transaction” means any short sale (whether
or not against the box) or any purchase, sale or grant of any right (including, without limitation, any put or call option) with
respect to any security that includes, relates to and/or derives any part of its value from the Common Stock and/or any other securities
of the Company and/or any of its Subsidiaries; and the term “Subsidiaries” means, with respect to any person
and/or entity, a corporation, partnership, limited liability company or other entity of which shares of stock or other ownership
interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of
the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership
or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or
more intermediaries, or both, by such person and/or entity, that is disclosed in the Company’s public filings with the U.S.
Securities & Exchange Commission.
9. Mutual
Release.
(a) In
consideration of the covenants, agreements and undertakings of the parties to this Agreement, effective upon the Closing Date,
each party hereto, on behalf of itself and its respective present and former parents, direct and indirect subsidiaries, affiliates,
employees, officers, directors, shareholders, members, equity holders, successors, agents, representatives and assigns (collectively,
"Releasors") hereby releases, waives, forever discharges and holds harmless
the other parties hereto and each of their respective present and former, direct and indirect, parents, subsidiaries, affiliates,
employees, officers, directors, shareholders, members, equity holders, agents, representatives, successors and assigns (collectively,
"Releasees") of and from any and all actions, causes of action, suits,
losses, liabilities, rights, debts, dues, sums of money, accounts, reckonings, obligations, costs, expenses, liens, bonds, bills,
specialties, covenants, contracts, controversies, agreements, promises, variances, trespasses, damages, judgments, extents, executions,
claims, and demands, of every kind and nature whatsoever, whether now known or unknown, foreseen or unforeseen, matured or unmatured,
suspected or unsuspected, in law, admiralty or equity (collectively, "Claims"),
which any of such Releasors ever had, now have, or hereafter can, shall, or may have against any of such Releasees for, upon, or
by reason of any matter, cause, or thing whatsoever from the beginning of time through and including the Closing Date arising out
of or relating to this Agreement and the Original Transaction Documents including, but not limited to, the TA Letters, and the
SPAs and the Documents, except for any surviving obligations as expressly provided for in this Agreement, and Claims relating to
rights, remedies and obligations preserved by, created by or otherwise arising out of this Agreement and/or the Documents.
(b) Each
Releasor understands that it may later discover Claims or facts that may be different from, or in addition to, those that it or
any other Releasor now knows or believes to exist regarding the subject matter of the release contained in this Section 9, and
which, if known at the time of signing this Agreement, may have materially affected this Agreement and such Party's decision to
enter into it and grant the release contained in this Section 9. Nevertheless, the Releasors intend to fully, finally and forever
settle and release all Claims that now exist, may exist or previously existed, as set forth in the release contained in this Section
9, whether known or unknown, foreseen or unforeseen, or suspected or unsuspected, and the release given herein is and will
remain in effect as a complete release, notwithstanding the discovery or existence of such additional or different facts. The Releasors
hereby waive any right or Claim that might arise as a result of such different or additional Claims or facts.
10. Governing
Law. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed
by and construed and enforced in accordance with the internal laws of the Cayman Islands, without regard to the principles of conflict
of laws thereof.
11. Execution.
This Agreement may be executed in two or more counterparts, all of which when taken together will be considered one and the same
agreement and will become effective when counterparts have been signed by each party and delivered to the other party, it being
understood that both parties need not sign the same counterpart. In the event that any signature is delivered by portable document
format, facsimile or electronic transmission, such signature will create a valid and binding obligation of the party executing
(or on whose behalf such signature is executed) with the same force and effect as if such signature page were an original thereof.
12. Entire
Agreement. This Agreement and the Documents contain the entire agreement
and understanding of the parties hereto, and supersedes all prior and contemporaneous
agreements, term sheets, letters, discussions, communications and understandings,
both oral and written, which the parties acknowledge have been merged into this Agreement.
No party, representative, advisor, attorney or agent has relied upon any collateral contract, agreement, assurance, promise,
understanding, statement or representation not expressly set forth herein. The parties hereby absolutely, unconditionally and
irrevocably waive all rights and remedies, at law and in equity, directly or indirectly arising out of or relating to, or which
may arise as a result of, any Person’s reliance on any such statement or assurance.
IN WITNESS WHEREOF,
the parties hereto have caused this Agreement to be duly executed as of the date first above written.
| |
AMARANTUS BIOSCIENCE HOLDINGS, INC. |
| |
|
|
| |
By: |
|
| |
|
Name: Gerald Commissiong |
| |
|
Title: Chief Executive Officer |
| |
|
|
| |
By: |
|
| |
|
Name: Robert E. Farrell |
| |
|
Title: Chief Financial Officer |
| |
DISCOVER GROWTH FUND |
| |
|
| |
By: |
|
| |
|
Name: |
| |
|
Title: |
| |
|
|
| |
By: |
|
| |
|
Name: |
| |
|
Title: |
Exhibit 99.1
Amarantus Closes $5.5 Million Capital
Infusion through the Issuance of a Combination of Preferred Stock and Secured Debt Convertible
Company Simultaneously Repurchases All
Outstanding Series G Convertible Preferred Stock
SAN FRANCISCO, CA, and GENEVA, SWITZERLAND
– October 1, 2015 – Amarantus Bioscience Holdings,
Inc. (OTCQX: AMBS), a biotechnology company developing therapeutic and diagnostic product candidates for orphan indications
and neurology, announced that it has completed the issuance of $2.75 million of newly designated Series H convertible preferred
stock in a registered direct offering and $2.75 million in secured debt in a private placement for a total of $5.5 million to
a single institutional investor. Both the Series H and the newly issued secured convertible debt are convertible into Amarantus
common stock at $2.50 per share, subject to adjustment based on market conditions. In addition, $2.85 million in secured debt
previously issued to Dominion Capital in connection with the acquisition of Cutanogen Corporation has been exchanged for the secured
notes issued in connection with the secured debt financing agreement outlined above. In connection with this series of transactions,
the Company issued approximately 3.8 million warrants to the Series H holders and secured debt holders exercisable for five (5)
years with a fixed strike price of $2.00.
At closing, the Company simultaneously
repurchased all of the remaining 1,260 outstanding Series G convertible shares, having a face value of $6,300,000, and 212,087
common shares held by Discover Growth Fund at closing, for a total of $4.75 million in cash. With the completion of this series
of transactions, Discover Growth Fund no longer holds any securities of the Company and is precluded from trading in the Company’s
securities for a period of two (2) years.
“We are pleased to have completed
this capital infusion to enable the Company to simultaneously repurchase the Series G preferred and remaining common stock held
by Discover. We believe this has removed a significant impediment to our ability to unlock the true value of our rich pipeline
in the financial markets,” said Robert E. Farrell, Chief Financial Officer at Amarantus. “While adverse market conditions
have persisted in the entire biotechnology sector, we remain committed to our goal of achieving a national exchange listing, and
believe this transaction is a significant step forward in positioning Amarantus toward reaching that important objective. We continue
our efforts to build value for our shareholders while working closely with key ‘up-listing’ advisors to pursue the
best possible strategy toward reaching a future national exchange listing in this challenging environment, and will update shareholders
accordingly.”
Aegis Capital Corp. served as placement
agent for the private placement.
About Amarantus BioScience Holdings,
Inc.
Amarantus BioScience Holdings (OTCQX: AMBS)
is a biotechnology company developing treatments and diagnostics for diseases in the areas of neurology and orphan diseases. The
Company has an exclusive worldwide license to intellectual property rights associated to Engineered Skin Substitute (ESS), an orphan
drug designated autologous full thickness skin replacement product in development for the treatment of severe burns currently preparing
to enter Phase 2 clinical studies. AMBS also has development rights to eltoprazine, a small molecule currently in a Phase 2b clinical
program for Parkinson's disease levodopa-induced dyskinesia with the potential to expand into adult ADHD and Alzheimer’s
aggression. AMBS owns the intellectual property rights to a therapeutic protein known as mesencephalic-astrocyte-derived neurotrophic
factor (MANF) and is developing MANF as a treatment for orphan ophthalmic disorders, initially in retinitis pigmentosa (RP) and
retinal artery occlusion (RAO). AMBS also owns the discovery of neurotrophic factors (PhenoGuard™) that led to
MANF’s discovery.
AMBS’ Diagnostics division owns the
rights to MSPrecise®, a proprietary next-generation DNA sequencing (NGS) assay for the identification of patients
with relapsing-remitting multiple sclerosis (RRMS) at first clinical presentation, has an exclusive worldwide license to the Lymphocyte
Proliferation test (LymPro Test®) for Alzheimer's disease, which was developed by Prof. Thomas Arendt, Ph.D., from
the University of Leipzig, and owns intellectual property for the diagnosis of Parkinson's disease (NuroPro).
For further information please visit www.Amarantus.com,
or connect with the Company on Facebook, LinkedIn,
Twitter and Google+.
Forward-Looking Statements
Certain statements, other than purely historical
information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results,
and the assumptions upon which those statements are based, are forward-looking statements. These forward-looking statements generally
are identified by the words "believes," "project," "expects," "anticipates," "estimates,"
"intends," "strategy," "plan," "may," "will," "would," "will be,"
"will continue," "will likely result," and similar expressions. Forward-looking statements are based on current
expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from
the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently
uncertain. Factors which could have a material adverse effect on our operations and future prospects on a consolidated basis include,
but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates,
competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating
forward-looking statements and undue reliance should not be placed on such statements.
Investor and Media Contact:
Jenene Thomas
Jenene Thomas Communications, LLC
Investor Relations and Corporate Communications
Advisor
T: (US) 908.938.1475
E: jenene@jenenethomascommunications.com
Source: Amarantus Bioscience Holdings,
Inc.
###
Amarantus Bioscience (CE) (USOTC:AMBS)
Historical Stock Chart
From Mar 2024 to May 2024
Amarantus Bioscience (CE) (USOTC:AMBS)
Historical Stock Chart
From May 2023 to May 2024
