Exhibit 10.1

 

EXECUTION VERSION

 

SECURITIES PURCHASE AGREEMENT

 

THIS SECURITIES PURCHASE AGREEMENT (the “Agreement”) is made as of April 14,
2016, 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 “Company”) and each
purchaser identified on the signature pages hereto (each, including its
successors and assigns, a “Purchaser” and collectively, the “Purchasers”).

 

RECITALS

 

A. The Company and each Purchaser is executing and delivering this Agreement in
reliance upon the exemption from securities registration afforded by Section
4(a)(2) of the Securities Act of 1933, as amended (the “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. Each Purchaser, severally and not jointly, wishes to purchase, and the
Company wishes to sell at multiple closings, upon the terms and conditions
stated in this Agreement, the Notes (in the form amended hereto Exhibit A) and
the 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 each Purchaser hereby
agrees 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) “2016 Shareholder Meeting Conditions” means that in connection with the
Company’s 2016 Annual Meeting of Stockholders to be held by June 6, 2016 (the
“2016 Meeting”), each Purchaser is satisfied in its sole discretion that (i) the
2016 Meeting will have occurred and will have been 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 stockholders will be
asked to approve, including, but not limited to the amendment to the Company’s
Articles of Incorporation increasing the Company’s authorized shares of Common
Stock to, (the “Amendment”) and authorizing a reverse stock split, which
proposals will be set forth in the Company’s Proxy Statement contained in its
Definitive Schedule 14A to be duly and timely filed with the Commission, will be
approved and (iii) the Amendment will be filed with the Secretary of State of
the State of Nevada and is currently in effect.

 

 

 

(d) “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.

 

(e) “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.

 

(f) “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.

 

(g) “Closing” means a time of issuance and sale by the Company of the Notes and
Warrants to the Purchasers.

 

(h) “Closing Date” means a date the Notes and Warrants are purchased by the
Purchasers from the Company.

 

(i) “Collateral Date” has the meaning set forth in the Security Agreement.

 

(j) “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.

 

(k) “Common Stock” means (i) the Company’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.

 

(l) “Common Stock Equivalents” means any capital stock or other security of the
Company 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 Company (including, without limitation, Common Stock).

 

(m) “Conversion Date” has the meaning set forth in the Notes.

 

(n) “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
extent 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 Company issuable upon exercise,
exchange and/or conversion of such Common Stock Equivalents.

 

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(o) “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 Purchasers on all of the assets of the Company (the “Purchasers
UCC-1”) to be filed with the Secretary of State of Nevada on or about the First
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 Purchasers as secured parties perfecting
all Liens the Purchasers have on the Collateral, (which security interests and
Liens of the Purchasers shall be senior to all Indebtedness of the Company, the
Perfection Certificate dated the date hereof from Company to the Purchasers (in
the form annexed hereto as Exhibit I), the Patent and Trademark Security
Agreement (annexed hereto as Exhibit J) all of the issued and outstanding
capital stock of each Subsidiary of the Company (the “Pledged Securities”),
which Pledged Securities are being pledged, by the Company to the Purchasers to
secure the Company’s obligations to the Purchasers under the Notes and all
documents necessary to transfer the Pledged Securities to the Purchasers as
provided in the Security Agreement (collectively with the Pledged Securities,
the “Pledge Documents”) 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.

 

(p) “Dollar(s)” and “$” means lawful money of the United States.

 

(q) “Equity Conditions” shall have the meaning set forth in the Notes.

 

(r) “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.

 

(s) “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.

 

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(t) “Event of Default” shall have the meaning set forth in the Notes.

 

(u) “First Closing” means the time of issuance and sale by the Company of the
first tranche of Notes and Warrants to the Purchasers.

 

(v) “First Closing Date” means the date the first tranche of Notes and Warrants
are purchased by the Purchasers from the Company.

 

(w) “GAAP” means generally accepted accounting principles in the United States
of America as in effect from time to time.

 

(x) “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 Purchasers 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.

 

(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 Company, the
Purchasers,           ,and          and certain other persons named therein, the
form of which is annexed hereto as Exhibit F.

 

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(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) “Purchaser UCC Filings” shall have the meaning set forth in the definition
of “Documents” set forth in this Section 1.

 

(cc) “Lock-Up Agreement” has the meaning set forth in the definition of
“Documents” set forth in this Section 1, form of which is annexed hereto as
Exhibit H .

 

(dd) “Liabilities” means all direct or indirect liabilities, Indebtedness and
obligations of any kind of Company to the Purchasers, 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 each Purchaser’s rights, remedies and powers
under this Agreement, the Notes and/or the other Documents.

 

(ee) “Note Maturity Date” means the earliest of the date (i) three hundred
sixty-five (365) 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 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 30% 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 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 Company as of the date hereof are no longer the
majority number of directors; and/or (vii) a Qualified Offering.

 

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(gg) “Material Adverse Effect” means a material adverse effect on (a) the
business, assets, property, operations, or condition (financial or otherwise) of
Company, (b) the validity or enforceability of this Agreement or any of the
other Documents or (c) the rights or remedies of the Purchasers hereunder or
thereunder.

 

(hh) “Notes” means all of the 10% Senior Secured Convertible Promissory Notes
due April 14, 2017 of the Company owned by the Purchasers, which, subject to the
terms and conditions set forth in this Agreement, shall purchase from the
Company pursuant to this Agreement, the form of Note is annexed hereto as
Exhibit A. and any and all Note(s) issued in exchange, transfer or replacement
of the 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
Purchasers, the Company and the Company’s Subsidiaries and all documents filed
to perfect the Purchasers’ security interest in the Patents and Trademark, both
terms as defined in such agreement, which is annexed into as Exhibit J.

 

(jj) “OFAC” means the United States Department of the Treasury’s Office of
Foreign Assets Control.

 

(kk) “OFAC Regulations” means the regulations promulgated by OFAC, as amended
from time to time.

 

(ll) “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 Company.

 

(mm) “Permitted Indebtedness” means (i) Indebtedness of the Company evidenced by
the Notes, this Agreement and/or any other Document in favor of the Purchasers
including all Liabilities, (ii) Indebtedness of the Company set forth in the
Company’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.

 

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(nn) “Permitted Liens” means (i) any Lien for taxes not yet due or delinquent or
being contested in good faith by appropriate proceedings for which adequate
reserves have been established in accordance with GAAP, (ii) any statutory Lien
arising in the ordinary course of business by operation of law with respect to a
liability that is not yet due or delinquent, (iii) any Lien created by operation
of law, such as materialmen’s liens, mechanics’ liens and other similar liens,
arising in the ordinary course of business with respect to a liability that is
not yet due or delinquent or that are being contested in good faith by
appropriate proceedings, (iv) Liens (a) upon or in any equipment acquired or
held by the Company 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 14, 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 Company and since such date such Liens and security interests related
hereto has not been amended, supplemented and/or otherwise modified, and (vii)
the UCC Financing Statements dated September 30,2015 filed with, among other
jurisdictions, the Secretary of State of Nevada perfecting the $6,076,556 of
Indebtedness represented by the September 30, 2015 Notes provided such Lien was
in existence since on or about the original date such September 30, 2015 Notes
were purchased from the Company and since such date such Liens and security
interests related hereto has not been amended, supplemented and/or otherwise
modified.

 

(oo) “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).

 

(pp) “Pledged Securities” has the meaning set forth in the definition of
“Documents”

 

(qq) “Principal Market” means the market or exchange on which the Common Stock
is listed or quoted for trading on the date in question

 

(rr) “Purchase Price” means the price to be paid by each Purchaser to purchase
such Purchaser’s Note and Warrants.

 

(ss) The “Required Reserve Amount” has the meaning set forth in Section 4.1(s).

 

(tt) “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, $30,000,000, 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.

 

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(uu) “Registration Rights Agreement” means that certain registration rights
agreement, date the date hereof, by and between the Company and the Purchasers
pursuant to which the Company shall register the Underlying Shares for resale
under the Securities Act, the form of which is annexed hereto as Exhibit C.

 

(vv) “Second Closing” means the time of issuance and sale by the Company of the
second tranche of Notes and Warrants to the Purchasers.

 

(ww) “Second Closing Date” means the date the second tranche of Notes and
Warrants are purchased by the Purchasers from the Company.

 

(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 Warrants purchased pursuant to this
Agreement and all Underlying Shares and any securities of the Company 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 Company to the Purchasers.

 

(aaa) “Security Agreement” means the Security Agreement dated on or about the
date hereof by and among the Company, the Subsidiaries of the Company, and the
Purchaser 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 Company to the Purchasers under the
Documents including, but not limited to, the Notes are secured by the Collateral
which security interest in the Collateral shall be perfected by the Purchasers
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) “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).

 

(ccc) “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 Company’s
Subsidiaries are set forth on Schedule 3.1(a) hereto.

 

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(ddd) “Third Closing” means the time of issuance and sale by the Company of the
third tranche of Notes and Warrants to the Purchasers.

 

(eee) “Third Closing Date” means the date the third tranche of Notes and
Warrants are purchased by the Purchasers from the Company.

 

(fff) “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 Purchasers.

 

(ggg) “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).

 

(hhh) “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.

 

(iii) “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 Notes, in the form of Exhibit D attached
hereto.

 

(jjj) “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 Purchasers’ 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.

 

(kkk) “Underlying Shares” means all Conversion Shares and Warrant Shares.

 

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(lll) “Variable Rate Transaction” shall have the meaning set forth in Section
4.02(n) of this Agreement.

 

(mmm) “Warrant(s)” means the five (5) year Common Stock Purchase Warrants of the
Company, the form of which is annexed hereto as Exhibit B.

 

(nnn) “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 Company not defined in Section 1.1 and accounting
terms partly defined in Section 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 Company 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.

 

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ARTICLE 2
PURCHASE AND SALE OF THE NOTES AND WARRANTS

 

2.1 First Closing. The First Closing shall occur at 10:00 am (EDT) on the First
Closing Date at the offices of Robinson Brog Leinwand Greene Genovese & Gluck
P.C., 875 Third Avenue, 9th Floor, New York, New York 10022, on the first (1st)
Trading Day on which the conditions to the First Closing set forth in Article V
hereof are satisfied or waived in writing as provided elsewhere herein, or on
such other date and time as agreed to by the Company and each Purchaser.

 

2.2 Second Closing. The Second Closing shall occur at 10:00 am (EDT) on the
Second Closing Date at the offices of Robinson Brog Leinwand Greene Genovese &
Gluck P.C., 875 Third Avenue, 9th Floor, New York, New York 10022, on the first
(1st) Trading Day after the registration statement (the “Registration
Agreement”) that is the subject of the Registration Rights Agreement has been
filed with the SEC (and with respect to which no stop order has been issued) and
on which the other conditions to the Second Closing set forth in Article V
hereof are satisfied or waived in writing as provided elsewhere herein, or on
such other date and time as agreed to by the Company and each Purchaser.

 

2.3 Third Closing. The Third Closing shall occur at 10:00 am (EDT) on the Third
Closing Date at the offices of Robinson Brog Leinwand Greene Genovese & Gluck
P.C., 875 Third Avenue, 9th Floor, New York, New York 10022, on the sixty-first
(61st) day after the registration statement (the “Registration Agreement”) that
is the subject of the Registration Rights Agreement. The Registration Statement
has been declared effective by the SEC (and with respect to which no stop order
has been issued) and on which the other conditions to the Third Closing set
forth in Article V hereof are satisfied or waived in writing as provided
elsewhere herein, or on such other date and time as agreed to by the Company and
each Purchaser.

 

2.4 Conditions to Purchase of Notes and Warrants. Subject to the terms and
conditions of this Agreement, the Purchaser will at the applicable Closing, on
the applicable Closing Date, purchase from the Company 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 applicable conditions in Article V have been
satisfied.

 

2.5 Purchase Price and Payment of the Purchase Price for the Notes and Warrant.
The Purchase Price for the Notes and Warrants to be purchased by the Purchasers
at the applicable Closing shall be as set forth on Schedule 1 and shall be paid
at the applicable Closing, (less all of the Purchasers’ Expenses (as defined
below)), by the Purchaser by wire transfer of immediately available funds to the
Company in accordance with the Company’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.

 

 11 

 

 

2.6 Purchasers’ Cost and Expenses. On the applicable Closing Date, all direct
and indirect costs and expenses of the Purchasers 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 legal fees and expenses
of the Purchasers’ legal counsel (collectively, the “Purchasers’ Expenses”),
shall be due and payable from the Company to the Purchasers; and the Purchasers
shall subtract from their respective Purchase Price to be paid to the Company
for the purchase of the Notes and Warrants, all of such Purchasers’ Expenses.
Although the Purchasers’ Expenses are the sole responsibility and obligation of
the Company, but are being subtracted by the Purchasesr from their respective
Purchase Prices actually paid to the Company, such Purchasers’ 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 Company
to the Purchasers.

 

2.7 Disbursements of Funds. The parties acknowledge and agree that the net
Purchase Price from the purchase and sale of the Notes and Warrants contemplated
hereunder will be held in and disbursed from escrow in accordance with one or
more separate agreements that will be disclosed in one or more Current Reports
on Form 8-K. In connection with the first two tranches
and          (“          “), shall by mutual agreement determine all matters
concerning the disbursement of or take back of the escrowed funds. In connection
with the third tranche,       in its sole discretion determine all matters
concerning the disbursement of or take back of the remaining escrowed funds.

 

ARTICLE 3
REPRESENTATIONS AND WARRANTIES; OTHER ITEMS

 

3.1 Representation and Warranties. 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
(but in no event shall qualify any indemnity obligation of the Company,
hereunder), the Company (which for purposes of this Section 3 means the Company
and all of its Subsidiaries), represents and warrants to each Purchaser that on
each Closing Date:

 

(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, Etc. The Company 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.

 

 12 

 

 

(c) Authorization: No Conflict. The execution, delivery and performance of the
Documents and the transactions contemplated thereby by the Company, including,
but not limited to, the sale and issuance of the Note and the Warrants 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 the Warrants and
of the sale and issuance the Conversion Shares into which the Notes are
convertible and the Warrant Shares issuable upon exercise of the Warrant (i) are
within the Company’s corporate powers, (ii) have been duly authorized by all
necessary action by or on behalf of the Company (and/or its stockholders to the
extent required by law), (iii) the Company 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) the Company’s organizational documents; and/or (3) any agreement
binding upon the Company or any of the Company’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 the Company’s properties or revenues pursuant to any law, rule, regulation or
ordinance or otherwise.

 

(d) Validity and Binding Nature. The Documents to which the Company is a party
are the legal, valid and binding obligations of the Company, enforceable against
the Company 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. The Company has good and marketable title to all assets
owned by Company.

 

(f) No Violations of Laws. The Company 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. The Company 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 the Company have been filed with the appropriate governmental agencies
and all taxes due and payable by the Company 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 the Company
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 the Company
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.

 

 13 

 

 

(j) Federal Laws and Regulations. The Company is not (i) an “investment company”
or a company “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 the Company ends on December 31 of each
year.

 

(l) Subsidiaries; Etc. All Subsidiaries of the Company 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, the Company’s jurisdiction of organization and the
location of Company’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 the Company and (ii) own the
percentage of each and every class of issued and outstanding capital stock,
other ownership interests and/or securities of the Company and the voting power
over said capital stock, other ownership interests and/or securities of the
Company.

 

(n) Rule 506(d) Bad Actor Disqualification Representations and Covenants.

 

(i) No Disqualification Events. Neither the Company, nor any of its
predecessors, affiliates, any manager, executive officer, other officer of the
Company 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 Company’s
outstanding voting equity securities, calculated on the basis of voting power,
nor any promoter (as that term is defined in Rule 405 under the Securities Act)
connected with the Company in any capacity as of the date of this Agreement and
on the Closing Date (each, a “Company Covered Person” and, together, “Company
Covered Persons”) is subject to any of the “Bad Actor” disqualifications
described in Rule 506(d)(1)(i) to (viii) under the Securities Act (a
“Disqualification Event”), except for a Disqualification Event covered by Rule
506(d)(2) or (d)(3). The Company has exercised reasonable care to determine (i)
the identity of each person that is a Company Covered Person; and (ii) whether
any Company Covered Person is subject to a Disqualification Event. The Company
will comply with its disclosure obligations under Rule 506(e).

 

(ii) Other Covered Persons. The Company is not aware of any person (other than
any Company Covered Person) that has been or will be paid (directly or
indirectly) remuneration in connection with the purchase and sale of the Notes
and/or Warrants that is subject to a Disqualification Event (each an “Other
Covered Person”).

 

 14 

 

 

(iii) Reasonable Notification Procedures. With respect to each Company Covered
Person, the Company has established procedures reasonably designed to ensure
that the Company receives notice from each such Company Covered Person of (i)
any Disqualification Event relating to that Company Covered Person, and (ii) any
event that would, with the passage of time, become a Disqualification Event
relating to that Company Covered Person; in each case occurring up to and
including the Closing Date.

 

(iv) Notice of Disqualification Events. The Company will notify the Purchasers
immediately in writing upon becoming aware of (i) any Disqualification Event
relating to any Company Covered Person and (ii) any event that would, with the
passage of time, become a Disqualification Event relating to any Company 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 Purchasers by or on behalf of the
Company 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 the
Company 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 Purchasers for use in connection
with the transactions contemplated hereby and by the other Documents.

 

(p) Solvency. The Company 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 Company 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, the
Company 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, stockholder or
member of the Company 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 Purchasers in writing.

 

 15 

 

 

(r) Intellectual Property. The Company 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 Company 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 Company 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 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 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 Company are set forth in the SEC Reports.

 

(s) Variable Rate Securities. The Company 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. The Company 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 Notes 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. The Company 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 Company has no Indebtedness nor any Liens.

 

(w) Authorization; Enforcement. All corporate action on the part of the Company,
its officers, directors and stockholders necessary for the authorization,
execution and delivery of the Documents and the performance of all obligations
of the Company under the Documents, and have been taken on or prior to the date
hereof. Each of the Documents has 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.

 

 16 

 

 

(x) Valid Issuance of the Notes, the Warrants, and Underlying Shares, Etc. Each
of the Notes and the 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 Purchasers full and sole title and power to the Notes and the
Warrants purchased hereby by the Purchasers, 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 Notes ;
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 Company has reserved from its duly authorized
unissued Common Stock, the Required Reserve Amount, which Required Reserve
Amount shall be continuously determined by the Company to ensure that the
Required Reserve Amount is in reserve with the Transfer Agent at all times. The
Notes, the Warrants, Conversion Shares, and Warrant Shares shall sometimes be
collectively referred to as the “Securities.”

 

(y) Offering. The offer and sale of the Notes and the Warrants as contemplated
by this Agreement, 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 Company 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
Company and all securities of the Company 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 Company 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 Company is obligated to register the sale of any of the Company’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 Company are entitled to
preemptive rights and there are no outstanding debt securities and no contracts,
commitments, understandings, or arrangements by which the Company is or may
become bound to issue additional shares of the capital stock and/or other
securities of the Company 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
Company other than those issued or granted in the ordinary course of business
pursuant to the Company’s equity incentive and/or compensatory plans or
arrangements. Except for customary transfer restrictions contained in agreements
entered into by the Company to sell restricted securities and/or as set forth in
the SEC Reports, the Company 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 Company. 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 Company when any
such securities of the Company were issued complied with all applicable federal
and state securities laws, and no current and/or prior holder of any securities
of the Company 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
Company 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.

 

 17 

 

 

(aa) SEC Reports . The Company is subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act and the Company 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”). In this regard,
the Company’s Annual Report on Form 10-K for 2015 shall be filed by no later
than April 30, 2016 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 Company 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 Company 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 Company, threatened against or
affecting the Company, the Common Stock or any of the Company’s officers or
directors or 5% or greater stockholders in their capacities as such.

 

 18 

 

 

(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 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 Public
Reports pursuant to SEC rules and/or regulations, (iii) the Company has not
altered its method of accounting, (iv) the Company has not declared or made any
dividend or distribution of cash or other property to its stockholders or
purchased, redeemed or made any agreements to purchase or redeem any shares of
its capital stock and (v) the Company has not issued any equity securities to
any officer, director or affiliate, except pursuant to existing Company stock
option plans. The Company does not have pending before the Commission any
request for confidential treatment of information. Except for the issuance of
the Securities contemplated by this Agreement, 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 business,
properties, operations, assets or financial condition, that would be required to
be disclosed by the Company under applicable securities laws at the time this
representation is made or deemed made that has not been publicly disclosed at
least one Trading Day prior to the date that this representation is made.

 

(hh) Disclosure. Except with respect to the material terms and conditions of the
transactions contemplated by the Documents, the Company confirms that neither it
nor any other Person acting on its behalf has provided any Purchaser or its
agents or counsel with any information that constitutes material, non-public
information. The Company understands and confirms that each Purchaser 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 Company to the
Purchasers in the Documents and/or in the SEC Reports regarding, among other
matters relating to the Company, 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
Company acknowledges and agrees that none of the Purchasers does make nor has it
has 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 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 the issuance and/or sale
of the Securities to be integrated with prior offerings of securities by the
Company for purposes of (i) the Securities Act which would require the
registration of any such Securities and/or securities of the Company under the
Securities Act, or (ii) any stockholder approval provisions of any Trading
Market on which any of the securities of the Company are listed, eligible for
quotation and/or designated.

 

(jj) Bankruptcy Status; Indebtedness. The Company 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 Company, or for which the Company has commitments, is set
forth in the SEC Reports.

 

 19 

 

 

(kk) 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.

 

(ll) No Consents, Etc. No direct or indirect consent, approval, authorization or
similar item is required to be obtained by the Company to enter into this
Agreement, the Notes, the Warrants, 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 Notes, the Warrants, and/or any of the other Documents to
which it is a party.

 

(mm) Listing of Securities. All Underlying Shares have been approved for listing
or quotation on the Trading Market, subject only to notice of issuance.

 

(nn) Dilutive Effect. The Company 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 Company 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 the number of Warrant Shares issuable 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
Company.

 

(oo) Application of Takeover Protections; Rights Agreement. The Company and its
board of directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, 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 the
laws of the jurisdiction of its formation which is or could become applicable to
the Purchasers as a result of the transactions contemplated by this Agreement
and/or the other Documents, including, without limitation, the Company’s
issuance of the Securities and each Purchaser’s ownership of the Securities. The
Company 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 Company.

 

(pp) Manipulation of Price. 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, or that could reasonably be expected to cause or 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.

 

 20 

 

 

(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 Company 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 Company 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 Company, 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 Company has not engaged
any placement agent or other agent in connection with the sale of the
Securities.

 

(tt) Acknowledgment Regarding each Purchaser’s Purchase of Notes and Warrants.
The Company acknowledges and agrees that each Purchaser 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 such Purchaser is not
(i) an officer or director of the Company, (ii) an Affiliate of the Company or
(iii) to the knowledge of the Company, 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 Company further acknowledges that each Purchaser is not acting
as a financial advisor or fiduciary of the Company (or in any similar capacity)
with respect to the Documents and the transactions contemplated hereby and
thereby, and any advice given by such Purchaser or any of its representatives or
agents in connection with the Documents and the transactions contemplated hereby
and thereby is merely incidental to such Purchaser’s purchase of the Securities.
The Company further represents to each Purchaser that the Company’s decision to
enter into the Documents has been based solely on the independent evaluation by
the Company and its representatives.

 

(uu) Acknowledgment Regarding Purchaser’s Trading Activity. Anything in this
Agreement or elsewhere herein to the contrary notwithstanding (except for
Sections 7.10 and 4.1(p) 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
Documents

 

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(vv) Off Balance Sheet Arrangements. There is no transaction, arrangement, or
other relationship between the Company and an unconsolidated or other off
balance sheet entity that is required to be disclosed by the Company in its
Exchange Act filings and is not so disclosed or that otherwise would be
reasonably likely to have a Material Adverse Effect.

 

(ww) Subsidiary Rights. The Company has the unrestricted right to vote, and
(subject to limitations imposed by applicable law) to receive dividends and
distributions on, all capital securities of its Subsidiaries as owned by the
Company or any Subsidiary.

 

(xx) Internal Accounting and Disclosure Controls. The Company 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 Company 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
Company 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
Company in the reports that it files or submits under the Exchange Act is
accumulated and communicated to the Company’s management, including its
principal executive officer or officers and its principal financial officer or
officers, as appropriate, to allow timely decisions regarding required
disclosure. Except as disclosed in the SEC Reports, during the twelve months
prior to the date hereof the Company 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 Company

 

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ARTICLE 4

COVENANTS

 

4.1 Affirmative Covenants. Commencing on the Initial Closing Date and until all
the Liabilities are paid in full and this Agreement, Company covenants and
agrees that:

 

(a) Financial Statements and Certificates. While any amounts are owed to the
Purchaser from the Company (including, but not limited to, any Liability),
Company will furnish the following to the Purchaser, all in form and scope
acceptable to the Purchaser, unless such information is included in the
Company’s most recent SEC Reports:

 

(i) within 105 days after the close of each fiscal year of Company, a copy of
the annual report of Company 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 Company, prepared in conformity with GAAP, duly prepared
by certified public accountants of recognized standing selected by Company and
reasonably approved by the Purchaser;

 

(ii) within 45 days after the end of each fiscal quarter, (A) a copy of an
unaudited financial statement of Company prepared in the same manner as the
report referred to in paragraph (i) above, signed by the chief financial officer
of Company 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 Company, stating that Company 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 Company, stating that Company 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 Company that could
have a Material Adverse Effect; and

 

(v) such other information as the Purchasers from time to time reasonably
requests.

 

(b) Books, Records and Inspections. Company shall (i) maintain complete and
accurate books and records; (ii) permit access by each Purchaser 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 the Company.

 

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(c) Insurance. The Company 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 Purchaser loss payable clauses in form and substance reasonably
satisfactory to the Purchasers, naming each Purchaser as a Purchaser loss payee,
mortgagee and/or additional insured, as its interest may appear, and providing
that such policies and Purchaser 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 Purchasers. All insurance proceeds received by any Purchaser may be retained
by such Purchaser, in its sole discretion, for application to the payment of the
Liabilities as the Purchaser may determine.

 

(d) Taxes and Liabilities. The Company 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; Company Names. The Company 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 Purchasers. Company shall give Purchasers thirty (30) days’ prior
written notice before Company changes its name or does business under any other
name.

 

(f) Employee Benefit Plans, Etc. The Company 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. The Company shall at all times maintain good and marketable
title to all of its assets necessary for the operation of its business.

 

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(h) Maintenance of Intellectual Property Rights. The Company will take all
reasonable action necessary or advisable to maintain all of the Intellectual
Property Rights of the Company that are necessary or material to the conduct of
its business in full force and effect.

 

(i) Locations. The Company shall give the Purchasers 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 date hereof and after each 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 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 after the
date hereof, the Company represents to the Purchasers that the Company shall
have publicly disclosed all material, non-public information delivered to the
Purchasers, if any, 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 Documents. The Company shall afford each Purchaser and its
counsel with a reasonable opportunity to review and comment upon, shall consult
with each Purchaser and its counsel on the form and substance of, and shall give
due consideration to all such comments from each Purchaser and its counsel on,
any press release, SEC filing or any other public disclosure made by or on
behalf of the Company relating to such Purchaser, the Documents and/or the
transactions contemplated by any Document, prior to the issuance, filing or
public disclosure thereof, and the Company shall not issue, file or publicly
disclose any such information to which any Purchaser 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.
Notwithstanding the foregoing, the Company shall not publicly disclose the name
of any Purchaser, or include the name of any Purchaser in any filing with the
Commission or any regulatory agency or Trading Market, without the prior written
consent of such Purchaser, except: (a) as required by federal securities law in
connection with the filing of final Documents with the Commission and (b) to the
extent such disclosure is required by law or Trading Market regulations, in
which case the Company shall provide the Purchasers with prior notice of such
disclosure permitted under this clause (b)

 

 25 

 

 

(2) Except with respect to the material terms and conditions of the transactions
contemplated by the Documents, which shall be disclosed pursuant to Section
4.1(j)(1), the Company covenants and agrees that neither it, nor any other
Person acting on its behalf will provide any Purchaser or its agents or counsel
with any information that constitutes, or the Company reasonably believes
constitutes, material non-public information, unless prior thereto such
Purchaser shall have consented to the receipt of such information and agreed
with the Company to keep such information confidential. The Company understands
and confirms that each Purchaser shall be relying on the foregoing covenant in
effecting transactions in securities of the Company. To the extent that the
Company delivers any material, non-public information to a Purchaser without
such Purchaser’s consent, the Company hereby covenants and agrees that such
purchaser shall not have any duty of confidentiality to Company, any of its
Subsidiaries, or any of their respective officers, directors, agents, employees
or Affiliates, or a duty to the Company, and of it Subsidiaries or any of their
respective officers, directors, agents, employees or Affiliates not to trade on
the basis of, such material, non-public information, provided that the Purchaser
shall remain subject to applicable law. To the extent that any notice provided
pursuant to any Document constitutes, or contains, material, non-public
information regarding the Company or any Subsidiaries, the Company shall
simultaneously file such notice with the Commission pursuant to a Current Report
on Form 8-K. Such Purchaser 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 each Purchaser shall be relying on the foregoing covenants and
obligations in effecting transactions in securities of the Company.

 

(k) Notices. Company shall, after receipt of knowledge thereof, give prompt
written notice to the Purchasers 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 Company 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 Company (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 any Purchaser, 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 Company 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 the Company setting forth details of the occurrence referred to therein and
stating what action the Company proposes to take with respect thereto.

 

 26 

 

 

(l) Environmental Laws. The Company 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. The Company 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 each Purchaser may
reasonably request for the purposes of implementing or effectuating the
provisions of this Agreement and the other Documents. Upon the exercise by any
Purchaser 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, Company will
execute and deliver, or will cause the execution and delivery of, all
applications, certifications, instruments and other documents and papers that
such Purchaser may be required to obtain from Company for such governmental
consent, approval, recording, qualification or authorization.

 

(n) Reservation of Shares. So long as any Securities are owned beneficially
and/or of record by any Purchaser or any transferee thereof, the Company
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) 100% and when, if,
and as available, 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/or any transferee
thereof), free from preemptive rights or any other actual contingent purchase
rights of Persons other than the applicable Purchaser (and any other holders of
any Notes and/or Warrants transferred from a Purchaser), 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 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), and (iii) and/or other amounts owed under the
Documents, including Liabilities to the Purchasers from the Company (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 or the Alternative Conversion Price, as the case may be, plus (II) the
quotient of (A) the sum of all shares of Common Stock issuable upon exercise of
all Warrants and/or other warrants owed by the Purchasers or any transferee
thereof, divided by (B) the lower of (i) the Exercise Price (as defined in the
Warrants) on the Closing Date, and (ii) if the Exercise Price 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 Company shall be required to calculate the Required Minimum on the first
Trading Day of each month that any Securities are outstanding and provide such
calculation to each Purchaser and the Transfer Agent promptly. For purposes of
calculating the Required Minimum, Company 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 warrants) will remain
unexercised for 5 years.

 

 27 

 

 

(o) Amendments to Articles of Incorporation. The Company shall increase its
authorized but unissued and non-reserved shares of Common Stock pursuant to and
in accordance with all applicable state and federal rules, laws, regulations by
filing a Certificate of Amendment with the proper authorities in Nevada (the
“Increase”), which Increase shall be completed and effective no later than on or
before June 6, 2016. The Company and the Investor acknowledge and agree that the
failure of the Increase to be effective on or before June 6, 2016 shall
constitute an Event of Default under the Note and a Material Adverse Effect and
in addition to such other remedies available to the Purchasers, the Company
shall pay to each Purchaser two (2%) percent of such Purchaser’s aggregate
principal amount of Notes outstanding owned by such Purchaser. This provision
shall also apply to each other time the Company does not have the Required
Reserve Amount, except the period from notice to the Company to the effective
date of any Required Reserve Amount shall be no more than 60 days.

 

(p) Certain Transactions and Confidentiality.

 

(i) 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 Current Report as described in Section 4.1(j). 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 Current Report as described in Section 4.1(j),
such Purchaser will maintain the confidentiality of the existence and terms of
this transaction and the information included in the 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 4.1(j), (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 4.1(j) and (iii)
no Purchaser shall have any duty of confidentiality or duty not to trade in the
securities of the Company to the Company or its Subsidiaries after the issuance
of the initial press release as described in Section 4.1(j); provided, however,
each Purchaser agrees, severally and not jointly with any other Purchasers, that
(i) such Purchaser will not enter into any Net Short Sales (as hereinafter
defined) from the period commencing on the Closing Date and ending on the date
that such Purchaser no longer holds any Notes or Warrants. For purposes of this
Section 4.1(p), a “Net Short Sale” by any Purchaser shall mean a sale of Common
Stock by such Purchaser that is marked as a short sale and that is made at a
time where there is no equivalent offsetting long position in Common Stock held
by such Purchaser. For purposes of determining whether there is an equivalent
offsetting long position in Common Stock held by the Purchaser, Underlying
Shares that have not yet been converted pursuant to the Notes and Warrant Shares
that have not yet been exercised pursuant to the Warrants shall be deemed to be
held long by the Purchaser, and the amount of shares of Common Stock held in a
long position shall be all unconverted Underlying Shares and unexercised Warrant
Shares (ignoring any exercise and conversion limitations included in the
Warrants and Notes) issuable to such Purchaser on such date, plus any shares of
Common Stock or Common Stock Equivalents otherwise then held by such Purchaser.
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. For the avoidance of doubt, except as described in Section
4.1(p)(ii) below, no Purchaser shall perform a Net Short Sale.

 

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(ii) Notwithstanding anything to the contrary contained in Section 4.1(p)(i)
above, in the event that the Company does not or is unable to honor a notice of
conversion in connection with (i) any Purchaser of the Notes (subject to the
Company’s obligations to honor a notice of conversion as set forth in the
Notes), (ii) any Purchaser that holds the Company’s Series E Convertible
Preferred Stock (subject to the Company’s obligations to honor a notice of
conversion as set forth in the applicable certificate of designation, as
amended), or (iii) any Purchaser that holds the Company's Series H Convertible
Preferred Stock (subject to the Company’s obligations to honor a notice of
conversion as set forth in the applicable certificate of designation, as
amended); then, such Purchaser in each case shall be entitled to perform a Net
Short Sale. In the event that the Company subsequently honors a notice of
conversion within two (2) Trading Days after the time permitted under the Notes
or the applicable certificate of designation, as amended (the “Default Cure”),
then such Purchaser must close out the Net Short Sale within (3) Trading Days of
such Purchaser’s receipt of written notice from the Company of the Default Cure.

 

4.2 Negative Covenants. Until all the Liabilities are paid in full, Company
covenants and agrees that:

 

(a) Restricted Payments. Except to the Purchasers, the Company 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
Company directly and/or indirectly make any payment to any officer, director, or
5% or greater beneficial holder of the Company’s voting stock or Common Stock or
an affiliate of the Company 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 Purchasers, the Company 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 Purchasers, the
Company 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 Company 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 Company 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 Company in
the ordinary course of business; provided, however, that in the event that the
Company wishes to effect a transaction under this Section 4.2(d) it shall, prior
to undertaking such effort, provide each Purchaser 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 Company shall deliver
to each Purchaser a written notice of any material terms and/or changes since
the prior notice given to the Company 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 each Purchaser’s consent, which consent will not be unreasonably
withheld. The Company 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.

 

 29 

 

 

(e) Change in Nature of Business. The Company shall not, directly or indirectly,
engage in any business substantially different from the business conducted by
the Company on the Closing Date or any business substantially related or
incidental thereto. The Company shall not, directly or indirectly, modify its or
their corporate structure for any purpose.

 

(f) Indebtedness. Company shall not incur or permit to exist any Indebtedness,
except for Permitted Indebtedness.

 

(g) Liens. Company 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. The Company 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. The Company 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. The Company 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. The Company shall not permit any proceeds of the Notes 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. The Company 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. The Company shall not create or become obligated under any Plan.

 

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(n) No Variable Rate Transactions, Etc. For as long as any Notes and/or Warrants
remain outstanding, the Company shall not directly or indirectly (i)(I)
consummate any exchange of any Indebtedness and/or securities of the Company for
any other securities and/or Indebtedness of the Company, (II) cooperate with any
person to effect any exchange of securities and/or Indebtedness of the Company
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 Company and/or amend any non-convertible Indebtedness of the
Company to make it convertible into securities of the Company, (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 Company 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 Company 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.” Each Purchaser shall be entitled to obtain injunctive relief
against the Company to preclude any Variable Rate Transaction (without the need
for the posting of any bond or similar item, which the Company hereby expressly
and irrevocably waives the requirement for), which remedy shall be in addition
to any right of any Purchaser to collect damages.

 

(o) Transactions with Affiliates. The Company 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 Company will not, and will not permit any Subsidiary to,
create or acquire any additional Subsidiary. The Company 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 Company nor any
Subsidiary shall have any foreign Subsidiaries.

 

4.3 Additional Covenant. The Company will satisfy the 2016 Shareholder Meeting
Conditions in accordance with the terms thereof.

 

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ARTICLE 5
CLOSING CONDITIONS

 

5.1 Closing Conditions of each Purchaser. Each Purchaser’s obligation to enter
into the Documents and purchase the Note and Warrants at the First Closing, the
Second Closing, and Third Closing (as applicable and to the extent not
previously fulfilled) is subject to the fulfillment of each and every one of the
following conditions prior to or contemporaneously with such Purchaser entering
into the Documents and purchasing the Note and Warrants at the applicable
Closing (unless waived by such Purchaser in writing in its sole and absolute
discretion):

 

(a) Delivery of Documents. Each Purchaser shall have received from the Company
each of the following (together with all Exhibits, Schedules, annexes to each of
the following), in form and substance reasonably satisfactory to such Purchaser
and its counsel, and where applicable, duly executed and recorded (to the extent
required):

 

(i) certificates of the Chief Executive Officer and Secretary of Company and
certifying as of the applicable Closing Date to (a) copies of the Certificate of
Incorporation and by-laws of the Company, as restated or amended as of the date
of this Agreement; (b) all actions taken and consents made by the Company and
its Board of Directors and stockholders, 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 Company authorized to sign the
Documents, together with a sample of the true signature of each such Person; (d)
that all representatives and warranties of the Company made herein and/or in any
of the other Documents are true and correct in all respects; (e) that all
covenants of the Company to be fulfilled herein and/or in any of the other
Documents have been fulfilled and complied with in all respects; (f) all Equity
Conditions have been met; and (g) that no default or Event of Default has
occurred or is continuing under this Agreement, any of the other Documents, or
any of the Company’s material agreements;

 

(ii) this Agreement;

 

(iii) the Notes issuable at the applicable Closing;

 

(iv) the Warrants issuable at the applicable Closing;

 

(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:

 

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(xi) certificates of good standing obtained prior to the applicable Closing for
Company and each Subsidiary in the jurisdiction of each of such Persons
incorporation or formation, in the principal places in which Company conducts
business and in places in which each such Person owns real estate;

 

(xii) the fully executed Transfer Agent Instruction Letter obtained prior to the
applicable Closing;

 

(xiii) the Perfection Certificate obtained prior to the applicable Closing;

 

(xiv) All Purchaser UCC Documents with proof of filing thereof;

 

(xv) a legal opinion of the Company’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 each Purchaser obtained prior to the applicable Closing;

 

(xvi) Such other documents, certificates, opinions, instruments and/or other
items reasonable requested by each Purchaser and/or its legal counsel in
connection with the applicable Closing.

 

(b) Approvals. The receipt by each Purchaser of all governmental and third party
approvals necessary in connection with the continuing operations of Company, 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
purchase of the Notes.

 

(i) Representations and Warranties. Each of the representations and warranties
made by Company 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 applicable 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 Equity Condition Failure. (A) 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 and
Warrants to each Purchasers of the performance of any other transaction set
forth or contemplated by any of the Documents; (B) no Equity Condition failure
has occurred or is continuing; and (C) 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 under any of the Company’s material agreements. For the purposes
of this Agreement and the other Documents, the Company’s agreements with Lonza
Walkerville, Inc., as it may be amended or otherwise modified from time-to-
time, is deemed a material agreement.

 

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(iii) Fees, Etc. The Purchasers’ Expenses shall have been received by the
Purchasers’ counsel.

 

(iv) Compliance with Laws. The Company 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
Company 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 Company to the Purchasers).

 

(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
Company, or any of the officers, directors or affiliates of the Company, 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, and as required, without regard to any limitations on the
conversion of the Note and/or on exercise of the Warrants, 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
Company 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.

 

 34 

 

 

(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 Company 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 Company 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 Company 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) Completion of Due Diligence. Each Purchaser shall have completed its legal,
business and financial due diligence of the Company to its full satisfaction and
are fully satisfied with the results thereof.

 

(xii) 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 each Purchaser.

 

(xiii) Leak-Out Agreements. Each Purchaser has entered into Leak-Up Agreements.

 

(xiv) Purchasers UCC Documents. All Purchasers UCC Documents shall be in form
and substantially satisfactory to the Purchasers and shall have been filed with
the Secretary of State.

 

5.2 Closing Conditions of Company. The obligation of the Company to sell and
issue the Notes and Warrants to the Purchasers at the applicable Closing is
subject to the fulfillment, to the Company’s reasonable satisfaction, prior to
or contemporary at the applicable Closing, of each of the following conditions
(unless waived by the Company):

 

(a) 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.

 

 35 

 

 

(b) Receipt of the Purchase Price. The Company shall receive at or substantially
simultaneously with the applicable Closing, the Purchase Price of each Purchaser
set forth on Schedule 1 hereto (less all of the Purchasers’ Expenses).

 

ARTICLE 6
MISCELLANEOUS

 

6.1 No Waiver; Modifications In Writing. No failure or delay on the part of any
Purchaser 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 any Purchaser to any departure by the Company therefrom, shall be
effective unless the same shall be in writing and signed by such Purchaser. Any
waiver of any provision of the Documents and any consent by any Purchaser to any
departure by Company 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 the Company in any case shall entitle the
Company to any other or further notice or demand in similar or other
circumstances.

 

6.2 Set-Off. Each Purchaser shall have the right to set-off, appropriate and
apply toward payment of any of the Liabilities, in such order of application as
such Purchaser may from time to time and at any time elect, any cash, credit,
deposits, accounts, securities and any other property of Company which is in
transit to or in the possession, custody or control of such Purchaser, or any
agent, bailee, or Affiliate of such Purchaser. Company hereby grants to
Purchaser 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 Company: 

 

Amarantus Bioscience Holdings, Inc. 

655 Montgomery Street, Suite 900 

San Francisco, CA 94111 

Attn: Gerald Commissiong 

Fax: (408) 852-4427 

Telephone: (415) 688-4484 

Email: gerald.commissiong@amarantus.com 

 

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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 Purchasers: 

 

With copies to 

(which shall not constitute notice): 

 

Robinson Brog Leinwand Greene Genovese & Gluck P.C. 

875 Third Avenue, 9th Floor 

New York, New York 10022 

Attention: David E. Danovitch, Esq. 

Phone: (212) 603-6391 

Fax No.: (212) 956-2164 

Email: ded@robinsonbrog.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, Company agrees to pay (A) on the applicable Closing Date
all of the Purchasers’ Expenses, including the non-accountable sum of $25,000 to
for its legal fees and expenses; and (B) following the applicable Closing Date,
all fees and expenses incurred by the Purchasers (including, but not limited to,
outside counsel to the Purchasers) in connection with the administration and
enforcement of the Documents and/or and the purchase of the Notes. In addition,
Company 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 each Purchaser 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 any Purchaser, Company, to the extent and in the manner directed
by Purchaser, will resist and defend such suit or proceeding or cause the same
to be resisted and defended by counsel approved by such Purchaser. If Company
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 Company contained in this Agreement and/or any other Document
shall be breached, the such Purchaser 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 Purchaser
shall be repayable to such Purchaser by Company immediately upon such
Purchaser’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
such Purchaser to the date of repayment in full, and any such amounts due and
owing to such Purchaser shall be deemed to be part of the Liabilities secured
hereunder and under the other Documents. The obligations of Company under this
6.4 shall survive the termination of this Agreement and the discharge of the
other obligations of Company under the Documents.

 

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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, Company agrees to indemnify, pay and hold each Purchaser, and such
Purchaser’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 such Purchaser, the such Purchaser’s agreement to
purchase the Note, the use or intended use of the proceeds thereof or the
exercise of any right or remedy hereunder or under the other Documents (the
“Indemnified Liabilities”); provided that Company 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 such Purchaser and/or any of its 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 Company 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 such Purchaser’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, each Purchaser, Company and their respective successors,
assigns, representatives and heirs. Company shall not assign any of its rights
nor delegate any of its obligations under Documents without the prior written
consent of such Purchaser. The Purchaser may delegate any of its obligations
under the Documents without the prior written consent of Company, such Purchaser
may assign any of its rights, hereunder, and/or in any of the other Documents,
subject only to compliance with the federal securities laws.

 

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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 Purchasers make no covenants to Company, including, but not
limited to, any commitments to provide any additional financing to Company.

 

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
Purchaser shall govern and control.

 

6.13 Customer Identification - USA Patriot Act Notice; OFAC and Bank Secrecy
Act. Purchaser hereby notifies Company that pursuant to the requirements of the
Act and such Purchaser’s policies and practices, Purchaser is required to
obtain, verify and record certain information and documentation that identifies
Company, which information includes the name and addresses of Company and such
other information that will allow the Purchaser to identify Company in
accordance with the Act. In addition, Company shall (a) ensure that no person
who owns a controlling interest in or otherwise controls Company 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 Notes
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.

 

 39 

 

 

6.14 JURISDICTION; WAIVER. THE COMPANY ACKNOWLEDGES THAT THIS AGREEMENT IS BEING
SIGNED BY THE PURCHASER IN PARTIAL CONSIDERATION OF THE PURCHASERS’ RIGHT TO
ENFORCE IN THE JURISDICTION STATED BELOW THE TERMS AND PROVISION OF THIS
AGREEMENT AND THE DOCUMENTS. THE COMPANY 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. THE COMPANY WAIVES ANY RIGHTS TO COMMENCE ANY ACTION AGAINST THE
PURCHASER IN ANY JURISDICTION EXCEPT NEW YORK, NEW YORK. THE PURCHASER AND THE
COMPANY 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. THE COMPANY 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 THE COMPANY AT THE ADDRESS SET FORTH IN SECTION 6.3 OR AT SUCH
OTHER ADDRESS OF WHICH EACH PURCHASER SHALL HAVE BEEN NOTIFIED PURSUANT THERETO.
THE COMPANY AGREES THAT SUCH SERVICE, TO THE FULLEST EXTENT PERMITTED BY LAW (i)
SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON THE COMPANY
IN ANY SUIT, ACTION OR PROCEEDING, AND (ii) SHALL BE TAKEN AND HELD TO BE VALID
PERSONAL SERVICE UPON AND PERSONAL DELIVERY TO THE COMPANY. SOLELY TO THE EXTENT
PROVIDED BY APPLICABLE LAW, SHOULD THE COMPANY, 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, THE
COMPANY SHALL BE DEEMED IN DEFAULT AND AN ORDER AND/OR JUDGMENT MAY BE ENTERED
BY THE COURT AGAINST AS DEMANDED OR PRAYED FOR IN SUCH SUMMONS, COMPLAINT,
PROCESS OR PAPERS. NOTHING HEREIN SHALL AFFECT THE PURCHASERS’ RIGHT TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.

 

6.16 Survival. The representations, and warranties of Company 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
Company 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 Purchaser set forth in this Agreement and/or in any of the other
Documents.

 

6.17 No Integration. Neither the Company, nor any of its affiliates, nor any
person acting on behalf of the Company 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 Company will take all action that is appropriate or
necessary to assure that its offerings of other securities will not be
integrated for purposes of the Securities Act or the rules and regulations of
the Trading Market, with the issuance of Securities contemplated herein.

 

 40 

 

 

6.18 No Frustration. From and after the date hereof and so long as the Note is
outstanding, the Company, nor any of its respective officers, employees,
directors, agents or other representatives, will, without the prior written
consent of the Purchaser (which consent may be withheld, delayed or conditioned
in the Purchaser’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 Company 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 Company shall indemnify and hold
harmless the Purchaser 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 Company 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”) Company shall ensure the Purchaser 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 Company
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 Company shall fail to take such action as is reasonably requested by
the Purchaser to enable the Purchaser 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 Company’s transfer agent as may be reasonably requested from time to time by
the Purchaser and otherwise fully cooperate with Purchaser and Purchaser’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
Purchaser’s other available remedies, the Company shall pay to the Purchaser, 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
Purchaser 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 Purchaser to transfer the Securities pursuant to Rule 144 under the
Securities Act. The payments to which the Purchaser 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.

 

 41 

 

 

ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF EACH PURCHASER

 

7.1 Authorization. Such Purchaser 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. Such Purchaser is an
“accredited investor” as that term is defined in Rule 501(a) of Regulation D.

 

7.3 Reliance on Exemptions. Such Purchaser 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
Company is relying in part upon the truth and accuracy of, and such Purchaser’s
compliance with, the representations, warranties, agreements, acknowledgments
and understandings of such Purchaser set forth herein in order to determine the
availability of such exemptions and the eligibility of such Purchaser to acquire
the Note.

 

7.4 Information. Such Purchaser has been furnished with all materials relating
to the business, finances and operations of the Company and materials relating
to the offer and sale of the Note and Warrants, which have been requested by
such Purchaser. Such Purchaser has been afforded the opportunity to ask
questions of the Company. Neither such inquiries nor any other due diligence
investigations conducted by such Purchaser shall modify, amend or affect such
Purchaser’s right to rely on the Company’s representations and warranties
contained herein. Such Purchaser understands that its investment in the Note and
Warrants involves a high degree of risk. Such Purchaser has sought such
accounting, legal and tax advice as it has considered necessary to make an
informed investment decision with respect to its acquisition of its Note and
Warrants. The Purchaser is relying solely on their own accounting, legal and tax
advisors, and not on any statements of the Company or any of its agents or
representatives, for such accounting, legal and tax advice with respect to its
acquisition of the Note and Warrants.

 

7.5 No Governmental Review. Such Purchaser 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, the Warrants,
or the fairness or suitability of the investment in the Note nor have such
authorities passed upon or endorsed the merits of the offering of the Note and
Warrants.

 

7.6 Validity; Enforcement; No Conflicts. This Agreement and each Document to
which such Purchaser is a party have been duly and validly authorized, executed
and delivered on behalf of such Purchaser and shall constitute the legal, valid
and binding obligations of such Purchaser enforceable against such Purchaser 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.

 

 42 

 

 

7.7 Organization and Standing. Such Purchaser 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. Such Purchaser represents and warrants, to the best of
its 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 such Purchaser or such Purchaser’s assets before
any court or governmental agency (nor is there any threat thereof) which would
impair in any way such Purchaser’s ability to enter into and fully perform its
commitments and obligations under this Agreement or the transactions
contemplated hereby.

 

7.10 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 or to such Purchaser’s representatives, including,
without limitation, its officers, directors, partners, legal and other advisors,
employees, agents and Affiliates, 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.

 

 43 

 

 

7.11 Transfer or Resale. Such Purchaser 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) such Purchaser shall have delivered to the Company an
opinion of counsel, in a form reasonably acceptable to the Company, to the
effect that such Securities to be sold, assigned or transferred may be sold,
assigned or transferred pursuant to an exemption from such registration, or (C)
such Purchaser provides the Company with reasonable assurance that such
Securities can be sold, assigned or transferred pursuant to Rule 144 or Rule
144A promulgated under the 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 Company 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
such Purchaser in effecting a pledge of Securities shall not be required to
provide the Company with any notice thereof or otherwise make any delivery to
the Company pursuant to this Agreement or any other Document, including, without
limitation, this Section 7.11.

 

7.12 Legends. Such Purchaser understands that the certificates or other
instruments representing the Notes and the Warrants, and until such time as the
resale of the Conversion Shares have been registered under the Securities Act,
the stock certificates representing the Conversion Shares and 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 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, 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 Company 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
Company with an opinion of counsel, in a form reasonably acceptable to the
Company, to the effect that such sale, assignment or transfer of the Securities
may be made without registration under the applicable requirements of the
Securities Act, or (iii) the Securities can be sold, assigned or transferred
pursuant to Rule 144 or Rule 144A. The Company shall cause its counsel to issue
a legal opinion to the Transfer Agent if required by the Transfer Agent to
effect the removal of the legend hereunder. The Company 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]

 

 44 

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered as of the date first above written.

 

COMPANY: AMARANTUS BIOSCIENCE HOLDINGS, INC.          By:                Name:  
  Title:   

 

SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT

 

 

 

PURCHASER SIGNATURE PAGES TO AMARANTUS SECURITIES PURCHASE AGREEMENT

 

IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above. 

 

Name of Purchaser: ________________________________________________________ 

 

Signature of Authorized Signatory of Purchaser:
_________________________________

 

Name of Authorized Signatory: _______________________________________________

  

Title of Authorized Signatory: ________________________________________________

  

Email Address of Authorized Signatory: ________________________________________

  

Facsimile Number of Authorized Signatory: ______________________________________

 

Address for Notice to Purchaser: 

 

 

 

Address for Delivery of Securities to Purchaser (if not same as address for
notice):

 

 

 

EIN Number: _______________________

  

SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT

 

 

 

EXHIBIT A

 

Form of Note

 

 

 

 

 

 

 

 

 

EXHIBIT B

 

Form of Warrants

 

 

 

 

 

 

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

 

Perfection Certificate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EXHIBIT J

 

Patent and Trademark Security Agreement

 

 

 

 

 

 

 

 

 

Schedule 1

 

Purchase Price; Securities Purchased

 

Name of Purchaser

First Closing

Purchase Price

for Notes

Being Purchased

First Closing
Aggregate Principal Amount of
Notes being Purchased

First Closing
Number of Warrant Shares
issuable upon exercise of
Warrant Purchased

  $425,000 $472,222

425,000

          $425,000 $472,222

425,000

          $500,000 $555,556 500,000

 

Name of Purchaser

Second Closing

Purchase Price

for Notes

Being Purchased

Second Closing
Aggregate Principal Amount of
Notes being Purchased

Second Closing

Number of Warrant Shares
issuable upon exercise of
Warrant Purchased

  $825,000 $916,667 825,000           $575,000 $638,889 575,000

 

 

 

Name of Purchaser

Third Closing

Purchase Price

for Notes

Being Purchased

Third Closing
Aggregate Principal Amount of
Notes being Purchased

Third Closing
Number of Warrant Shares
issuable upon exercise of
Warrant Purchased

  $1,250,000 $1,388,889 1,250,000

 

*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

 

Dustin Johns 

US 1000 LLC

International Infusion LP