Exhibit 10.1

 
SECURITIES PURCHASE AGREEMENT
 
SECURITIES PURCHASE AGREEMENT (the "Agreement"), dated as of January 22, 2018,
by and among GT Biopharma, Inc., a Delaware corporation, with headquarters
located at 1825 K Street, Suite 510, Washington, D.C. 20006 (the "Company"), and
the investors listed on the Schedule of Buyers attached hereto (individually, a
"Buyer" and collectively, the "Buyers").
 
WHEREAS:
 
A. The Company and each Buyer is executing and delivering this Agreement in
reliance upon the exemption from securities registration afforded by Section
4(a)(2) of the Securities Act of 1933, as amended (the "1933 Act"), and Rule
506(b) of Regulation D ("Regulation D") as promulgated by the United States
Securities and Exchange Commission (the "SEC") under the 1933 Act.
 
B. The Company has authorized a new series of senior convertible notes of the
Company, in substantially the form attached hereto as Exhibit A (the "Notes"),
which Notes shall be convertible into the Company's common stock, par value
$0.001 per share (the "Common Stock") (the shares of Common Stock issuable
pursuant to the terms of the Notes, including, without limitation, upon
conversion or otherwise, collectively, the "Conversion Shares"), in accordance
with the terms of the Notes.
 
C. Each Buyer wishes to purchase, and the Company wishes to sell, upon the terms
and conditions stated in this Agreement, (i) that aggregate principal amount of
Notes set forth opposite such Buyer's name in column (3) on the Schedule of
Buyers attached hereto (which aggregate principal amount of Notes for all Buyers
shall be $7,760,510), and (ii) Warrants, in substantially the form attached
hereto as Exhibit B (the "Warrants"), representing the right to acquire that
number of shares of Common Stock set forth opposite such Buyer's name in column
(4) on the Schedule of Buyers (as exercised, collectively, the "Warrant
Shares").
 
D. The Notes will rank senior to all outstanding and future indebtedness of the
Company and its Subsidiaries (as defined below).
 
E. Contemporaneously with the execution and delivery of this Agreement, the
parties hereto are executing and delivering a Registration Rights Agreement,
substantially in the form attached hereto as Exhibit C (the "Registration Rights
Agreement"), pursuant to which the Company has agreed to provide certain
registration rights with respect to the Registrable Securities (as defined in
the Registration Rights Agreement) under the 1933 Act and the rules and
regulations promulgated thereunder, and applicable state securities laws.
 
F. The Notes, the Conversion Shares, the Warrants and the Warrant Shares
collectively are referred to herein as the "Securities".
 
 
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NOW, THEREFORE, the Company and each Buyer hereby agree as follows:
 
1. PURCHASE AND SALE OF NOTES AND WARRANTS.
 
(a) Purchase of Notes and Warrants. Subject to the satisfaction (or waiver) of
the conditions set forth in Sections 6 and 7 below, the Company shall issue and
sell to each Buyer, and each Buyer severally, but not jointly, agrees to
purchase from the Company on the Closing Date (as defined below), (x) a
principal amount of Notes as is set forth opposite such Buyer's name in column
(3) on the Schedule of Buyers and (y) Warrants to acquire up to that number of
Warrant Shares as is set forth opposite such Buyer's name in column (4) on the
Schedule of Buyers (the "Closing").
 
(b) Closing. The date and time of the Closing (the "Closing Date") shall be
10:00 a.m., New York City time, on the date hereof (or such other date and time
as is mutually agreed to by the Company and each Buyer) after notification of
satisfaction (or waiver) of the conditions to the Closing set forth in Sections
6 and 7 below, at the offices of Schulte Roth & Zabel LLP, 919 Third Avenue, New
York, New York 10022.
 
(c) Purchase Price. The aggregate purchase price for the Notes and the Warrants
to be purchased by each Buyer at the Closing (the "Purchase Price") shall be the
amount set forth opposite each Buyer's name in column (5) of the Schedule of
Buyers. Each Buyer shall pay $909.09 for each $1,000 of principal amount of
Notes and related Warrants to be purchased by such Buyer at the Closing. The
Buyers and the Company agree that the Notes and the Warrants constitute an
"investment unit" for purposes of Section 1273(c)(2) of the Internal Revenue
Code of 1986, as amended (the "Code"). The Buyers and the Company mutually agree
that the allocation of the issue price of such investment unit between the Notes
and the Warrants in accordance with Section 1273(c)(2) of the Code and Treasury
Regulation Section 1.1273-2(h) shall be an aggregate amount of $75.06164 per
$909.09 of Purchase Price to be allocated to the Warrants and the balance of the
Purchase Price allocated to the Notes, and neither the Buyers nor the Company
shall take any position inconsistent with such allocation in any tax return or
in any judicial or administrative proceeding in respect of taxes.
 
(d) Form of Payment. On the Closing Date, (i) each Buyer shall pay its Purchase
Price to the Company for the Notes and the Warrants to be issued and sold to
such Buyer at the Closing (less, in the case of Empery Asset Master Ltd.
("Empery"), the amounts withheld pursuant to Section 4(g)), by wire transfer of
immediately available funds in accordance with the Company's written wire
instructions and (ii) the Company shall deliver to each Buyer the Notes
(allocated in the principal amounts as such Buyer shall request) which such
Buyer is then purchasing hereunder along with the Warrants (allocated in the
amounts as such Buyer shall request) which such Buyer is purchasing hereunder,
in each case duly executed on behalf of the Company and registered in the name
of such Buyer or its designee.
 
 
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2. BUYER'S REPRESENTATIONS AND WARRANTIES. Each Buyer, severally and not
jointly, represents and warrants with respect to only itself that, as of the
date hereof and as of the Closing Date:
 
(a) No Public Sale or Distribution. Such Buyer is (i) acquiring the Notes and
the Warrants and (ii) upon exercise of the Warrants (other than pursuant to a
Cashless Exercise (as defined in the Warrants)) will acquire the Warrant Shares
issuable upon exercise of the Warrants, for its own account and not with a view
towards, or for resale in connection with, the public sale or distribution
thereof, except pursuant to sales registered or exempted under the 1933 Act;
provided, however, that by making the representations herein, such Buyer does
not agree to hold any of the Securities for any minimum or other specific term
and reserves the right to dispose of the Securities at any time in accordance
with or pursuant to a registration statement or an exemption under the 1933 Act.
Such Buyer is acquiring the Securities hereunder in the ordinary course of its
business. Such Buyer does not presently have any agreement or understanding,
directly or indirectly, with any Person (as defined below) to distribute any of
the Securities. For purposes of this Agreement, "Person" means an individual, a
limited liability company, a partnership, a joint venture, a corporation, a
trust, an unincorporated organization, any other entity and any government or
any department or agency thereof.
 
(b) Accredited Investor Status. Such Buyer is an "accredited investor" as that
term is defined in Rule 501(a) of Regulation D.
 
(c) Reliance on Exemptions. Such Buyer understands that the Securities are being
offered and sold to it in reliance on specific exemptions from the registration
requirements of United States federal and state securities laws and that the
Company is relying in part upon the truth and accuracy of, and such Buyer's
compliance with, the representations, warranties, agreements, acknowledgments
and understandings of such Buyer set forth herein in order to determine the
availability of such exemptions and the eligibility of such Buyer to acquire the
Securities.
 
(d) Information. Such Buyer and its advisors, if any, have been furnished with
all materials relating to the business, finances and operations of the Company
and materials relating to the offer and sale of the Securities that have been
requested by such Buyer. Such Buyer and its advisors, if any, have been afforded
the opportunity to ask questions of the Company. Neither such inquiries nor any
other due diligence investigations conducted by such Buyer or its advisors, if
any, or its representatives shall modify, amend or affect such Buyer's right to
rely on the Company's representations and warranties contained herein. Such
Buyer understands that its investment in the Securities involves a high degree
of risk. Such Buyer has sought such accounting, legal and tax advice as it has
considered necessary to make an informed investment decision with respect to its
acquisition of the Securities.
 
(e) No Governmental Review. Such Buyer understands that no United States federal
or state agency or any other government or governmental agency has passed on or
made any recommendation or endorsement of the Securities or the fairness or
suitability of the investment in the Securities nor have such authorities passed
upon or endorsed the merits of the offering of the Securities.
 
 
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(f) Transfer or Resale. Such Buyer understands that except as provided in the
Registration Rights Agreement: (i) the Securities have not been and are not
being registered under the 1933 Act or any state securities laws, and may not be
offered for sale, sold, assigned or transferred unless (A) subsequently
registered thereunder, (B) such Buyer shall have delivered to the Company an
opinion of counsel, in a generally acceptable form, to the effect that such
Securities to be sold, assigned or transferred may be sold, assigned or
transferred pursuant to an exemption from such registration, or (C) such Buyer
provides the Company with reasonable assurance that such Securities can be sold,
assigned or transferred pursuant to Rule 144 or Rule 144A promulgated under the
1933 Act, 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 1933 Act) may require compliance
with some other exemption under the 1933 Act or the rules and regulations of the
SEC thereunder; and (iii) neither the Company nor any other Person is under any
obligation to register the Securities under the 1933 Act or any state securities
laws or to comply with the terms and conditions of any exemption thereunder.
Notwithstanding the foregoing, the Securities may be pledged in connection with
a bona fide margin account or other loan or financing arrangement secured by the
Securities and such pledge of Securities shall not be deemed to be a transfer,
sale or assignment of the Securities hereunder, and no Buyer effecting a pledge
of Securities shall be required to provide the Company with any notice thereof
or otherwise make any delivery to the Company pursuant to this Agreement or any
other Transaction Document (as defined in Section 3(b)), including, without
limitation, this Section 2(f).
 
(g) Legends. Such Buyer understands that the certificates or other instruments
representing the Notes and the Warrants and, until such time as the resale of
the Conversion Shares and the Warrant Shares have been registered under the 1933
Act as contemplated by the Registration Rights Agreement, the stock certificates
representing the Conversion Shares and the Warrant Shares, except as set forth
below, shall bear a restrictive legend in substantially the following form (and
a stop-transfer order may be placed against transfer of such stock
certificates):
 
[NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE [CONVERTIBLE] [EXERCISABLE]
HAVE BEEN][THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN]
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION
OF COUNSEL SELECTED BY THE HOLDER, IN A GENERALLY ACCEPTABLE FORM, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE
144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES
MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR
FINANCING ARRANGEMENT SECURED BY THE SECURITIES.
 
 
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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 The Depository Trust Company ("DTC"), if (i) such Securities are
registered for resale under the 1933 Act, (ii) in connection with a sale,
assignment or other transfer, such holder provides the Company with an opinion
of counsel, in a generally acceptable form, to the effect that such sale,
assignment or transfer of the Securities may be made without registration under
the applicable requirements of the 1933 Act, or (iii) the Securities can be
sold, assigned or transferred pursuant to Rule 144 or Rule 144A. The Company
shall be responsible for the fees of its transfer agent and all DTC fees
associated with such issuance. The Company shall cause its counsel to issue a
legal opinion to the Transfer Agent promptly if required by the Transfer Agent,
and/or to any Buyer if requested by such Buyer, to effect the removal of the
legend hereunder.
 
(h) Validity; Enforcement. This Agreement and the Registration Rights Agreement
have been duly and validly authorized, executed and delivered on behalf of such
Buyer and shall constitute the legal, valid and binding obligations of such
Buyer enforceable against such Buyer in accordance with their respective terms,
except as such enforceability may be limited by general principles of equity or
to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation
and other similar laws relating to, or affecting generally, the enforcement of
applicable creditors' rights and remedies.
 
(i) No Conflicts. The execution, delivery and performance by such Buyer of this
Agreement and the Registration Rights Agreement and the consummation by such
Buyer of the transactions contemplated hereby will not (i) result in a violation
of the organizational documents of such Buyer or (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which such Buyer is a party, or (iii) result in a violation of any
law, rule, regulation, order, judgment or decree (including federal and state
securities laws) applicable to such Buyer, except in the case of clauses (ii)
and (iii) above, for such conflicts, defaults, rights or violations which would
not, individually or in the aggregate, reasonably be expected to have a material
adverse effect on the ability of such Buyer to perform its obligations
hereunder.
 
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
 
The Company makes the following representations and warranties to each of the
Buyers, as of the date hereof and as of the Closing Date, subject to the
disclosures of the Company set forth in the disclosure schedules delivered to
the Buyers as of the date hereof (the “Disclosure Schedules”). The Disclosure
Schedules shall be arranged in sections corresponding to the numbered and
lettered sections and subsections contained in this Section 3 and certain other
sections of this Agreement.
 
 
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(a) Organization and Qualification. Each of the Company and each of its
"Subsidiaries" (which for purposes of this Agreement means any entity in which
the Company, directly or indirectly, owns any of the capital stock or holds an
equity or similar interest) are entities duly organized and validly existing and
in good standing under the laws of the jurisdiction in which they are formed,
and have the requisite power and authorization to own their properties and to
carry on their business as now being conducted and as presently proposed to be
conducted. Each of the Company and each of its Subsidiaries is duly qualified as
a foreign entity to do business and is in good standing in every jurisdiction in
which its ownership of property or the nature of the business conducted by it
makes such qualification necessary, except to the extent that the failure to be
so qualified or be in good standing would not reasonably be expected to have a
Material Adverse Effect. As used in this Agreement, "Material Adverse Effect"
means any material adverse effect on the business, properties, assets,
liabilities, operations, results of operations, condition (financial or
otherwise) or prospects of the Company and its Subsidiaries, individually or
taken as a whole, or on the transactions contemplated hereby or on the other
Transaction Documents or by the agreements and instruments to be entered into in
connection herewith or therewith, or on the authority or ability of the Company
to perform any of its obligations under any of the Transaction Documents (as
defined below). The Company has no Subsidiaries except as set forth on Schedule
3(a).
 
(b) Authorization; Enforcement; Validity. The Company has the requisite power
and authority to enter into and perform its obligations under this Agreement,
the Notes, the Warrants, the Registration Rights Agreement, the Irrevocable
Transfer Agent Instructions (as defined in Section 5(b)) and each of the other
agreements entered into by the parties hereto in connection with the
transactions contemplated by this Agreement (collectively, the "Transaction
Documents") and to issue the Securities in accordance with the terms hereof and
thereof. The execution and delivery of this Agreement and the other Transaction
Documents by the Company and the consummation by the Company of the transactions
contemplated hereby and thereby, including, without limitation, the issuance of
the Notes and the Warrants, and the reservation for issuance and the issuance of
the Conversion Shares and the reservation for issuance and issuance of Warrant
Shares issuable upon exercise of the Warrants have been duly authorized by the
Company's Board of Directors and (other than the filing with the SEC of one or
more Registration Statements (as defined in the Registration Rights Agreement)
in accordance with the requirements of the Registration Rights Agreement, the
filing of a Form D with the SEC and other filings as may be required by state
securities agencies) no further filing, consent, or authorization is required by
the Company, its Board of Directors or its stockholders. This Agreement and the
other Transaction Documents have been duly executed and delivered by the
Company, and constitute the legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their respective terms,
except as such enforceability may be limited by general principles of equity or
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally, the enforcement of applicable
creditors' rights and remedies.
 
 
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(c) Issuance of Securities. The issuance of the Notes and the Warrants are duly
authorized and, upon issuance, shall be validly issued and free from all
preemptive or similar rights, taxes, liens, charges and other encumbrances with
respect to the issue thereof. As of the Closing, a number of shares of Common
Stock shall have been duly authorized and reserved for issuance which equals or
exceeds (the "Required Reserved Amount") the sum of (i) 200% of the maximum
number of Conversion Shares issued and issuable pursuant to the Notes based on
the Conversion Price (as defined in the Notes) (without taking into account any
limitations on the issuance thereof pursuant to the terms of the Notes) and (ii)
the maximum number of Warrant Shares issued and issuable pursuant to the
Warrants, each as of the Trading Day (as defined in the Warrants) immediately
preceding the applicable date of determination (without taking into account any
limitations on the exercise of the Warrants set forth in the Warrants). As of
the date hereof, there are 699,882,002 shares of Common Stock authorized and
unissued. Upon conversion of the Notes in accordance with the Notes or exercise
of the Warrants in accordance with the Warrants, as the case may be, the
Conversion Shares and the Warrant Shares, respectively, will be validly issued,
fully paid and nonassessable and free from all preemptive or similar rights,
taxes, liens, charges and other encumbrances with respect to the issue thereof,
with the holders being entitled to all rights accorded to a holder of Common
Stock. Assuming the accuracy of each of the representations and warranties set
forth in Section 2 of this Agreement, the offer and issuance by the Company of
the Securities is exempt from registration under the 1933 Act.
 
(d) No Conflicts. The execution, delivery and performance of the Transaction
Documents by the Company and the consummation by the Company of the transactions
contemplated hereby and thereby (including, without limitation, the issuance of
the Notes and the Warrants and reservation for issuance and issuance of the
Conversion Shares and the Warrant Shares) will not (i) result in a violation of
the Certificate of Incorporation (as defined in Section (3(r)) or Bylaws (as
defined in Section (3(r)), any memorandum of association, certificate of
incorporation, certificate of formation, bylaws, any certificate of designations
or other constituent documents of the Company or any of its Subsidiaries, any
capital stock of the Company or any of its Subsidiaries or the articles of
association or bylaws of the Company or any of its Subsidiaries or (ii) conflict
with, or constitute a default (or an event which with notice or lapse of time or
both would become a default) in any respect under, or give to others any rights
of termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which the Company or any of its Subsidiaries is a
party, or (iii) result in a violation of any law, rule, regulation, order,
judgment or decree (including other foreign, federal and state securities laws
and regulations and the rules and regulations of the OTC QB (the "Principal
Market") and including all applicable laws of the State of Delaware and any
foreign, federal and state laws, rules and regulations) applicable to the
Company or any of its Subsidiaries or by which any property or asset of the
Company or any of its Subsidiaries is bound or affected.
 
(e) Consents. The Company is not required to obtain any consent, authorization
or order of, or make any filing or registration with (other than the filing with
the SEC of one or more Registration Statements in accordance with the
requirements of the Registration Rights Agreement, a Form D with the SEC and
other filings as may be required by state securities agencies), any court,
governmental agency or any regulatory or self-regulatory agency or any other
Person in order for it to execute, deliver or perform any of its obligations
under or contemplated by the Transaction Documents, in each case in accordance
with the terms hereof or thereof. All consents, authorizations, orders, filings
and registrations which the Company is required to obtain pursuant to the
preceding sentence have been obtained or effected on or prior to the Closing
Date (or in the case of the filings detailed above, will be made timely after
the Closing Date), and the Company is unaware of any facts or circumstances that
might prevent the Company from obtaining or effecting any of the registration,
application or filings pursuant to the preceding sentence. The Company is not in
violation of the listing requirements of the Principal Market and has no
knowledge of any facts or circumstances that would reasonably lead to delisting
or suspension of the Common Stock in the foreseeable future. The issuance by the
Company of the Securities shall not have the effect of delisting or suspending
the Common Stock from the Principal Market.
 
 
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(f) Acknowledgment Regarding Buyer's Purchase of Securities. The Company
acknowledges and agrees that each Buyer is acting solely in the capacity of an
arm's length purchaser with respect to the Transaction Documents and the
transactions contemplated hereby and thereby and that no Buyer is (i) an officer
or director of the Company or any of its Subsidiaries, (ii) an "affiliate" of
the Company or any of its Subsidiaries (as defined in Rule 144) 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 Securities Exchange
Act of 1934, as amended (the "1934 Act")). The Company further acknowledges that
no Buyer is acting as a financial advisor or fiduciary of the Company or any of
its Subsidiaries (or in any similar capacity) with respect to the Transaction
Documents and the transactions contemplated hereby and thereby, and any advice
given by a Buyer or any of its representatives or agents in connection with the
Transaction Documents and the transactions contemplated hereby and thereby is
merely incidental to such Buyer's purchase of the Securities. The Company
further represents to each Buyer that the Company's decision to enter into the
Transaction Documents has been based solely on the independent evaluation by the
Company and its representatives.
 
(g) No General Solicitation; Placement Agent's Fees. Neither the Company, nor
any of its Subsidiaries or affiliates, nor any Person acting on its or their
behalf, has engaged in any form of general solicitation or general advertising
(within the meaning of Regulation D) in connection with the offer or sale of the
Securities. The Company shall be responsible for the payment of any placement
agent's fees, financial advisory fees, or brokers' commissions (other than for
persons engaged by any Buyer or its investment advisor) relating to or arising
out of the transactions contemplated hereby, including, without limitation, any
placement agent fees payable to Oppenheimer & Co. Inc., as placement agent (the
"Placement Agent") in connection with the sale of the Securities. The Company
shall pay, and hold each Buyer harmless against, any liability, loss or expense
(including, without limitation, attorney's fees and out-of-pocket expenses)
arising in connection with any such claim. The Company acknowledges that it has
engaged the Placement Agent in connection with the sale of the Securities. Other
than the Placement Agent, neither the Company nor any of its Subsidiaries has
engaged any placement agent or other agent in connection with the sale of the
Securities.
 
(h) No Integrated Offering. None of the Company, its Subsidiaries, any of their
affiliates, nor any Person acting on their behalf has, directly or indirectly,
made any offers or sales of any security or solicited any offers to buy any
security, under circumstances that would require registration of the issuance of
any of the Securities under the 1933 Act, whether through integration with prior
offerings or otherwise, or cause this offering of the Securities to require
approval of stockholders of the Company for purposes of the 1933 Act or any
applicable stockholder approval provisions, including, without limitation, under
the rules and regulations of any exchange or automated quotation system on which
any of the securities of the Company are listed or designated for quotation.
None of the Company, its Subsidiaries, their affiliates nor any Person acting on
their behalf will take any action or steps referred to in the preceding sentence
that would require registration of the issuance of any of the Securities under
the 1933 Act or cause the offering of any of the Securities to be integrated
with other offerings for purposes of any such applicable stockholder approval
provisions.
 
 
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(i) Dilutive Effect. The Company understands and acknowledges that the number of
Conversion Shares issuable pursuant to terms of the Notes 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 is absolute and unconditional regardless of the
dilutive effect that such issuance may have on the ownership interests of other
stockholders of the Company.
 
(j) Application of Takeover Protections; Rights Agreement. The Company and its
board of directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, interested shareholder, business
combination, poison pill (including, without limitation, any distribution under
a rights agreement) or other similar anti-takeover provision under the
Certificate of Incorporation, Bylaws or other organizational documents or the
laws of the jurisdiction of its formation which is or could become applicable to
any Buyer as a result of the transactions contemplated by this Agreement,
including, without limitation, the Company's issuance of the Securities and any
Buyer's ownership of the Securities. The Company 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 or any of its
Subsidiaries.
 
(k) SEC Documents; Financial Statements. Except as disclosed in Schedule 3(k),
during the two (2) years prior to the date hereof, the Company has timely filed
all reports, schedules, forms, statements and other documents required to be
filed by it with the SEC pursuant to the reporting requirements of the 1934 Act
(all of the foregoing filed prior to the date hereof or prior to the Closing
Date, and all exhibits included therein and financial statements, notes and
schedules thereto and documents incorporated by reference therein being
hereinafter referred to as the "SEC Documents"). All of the SEC Documents are
available on the EDGAR system. As of their respective filing dates, the SEC
Documents complied in all material respects with the requirements of the 1934
Act and the rules and regulations of the SEC promulgated thereunder applicable
to the SEC Documents, and none of the SEC Documents, at the time they were filed
with the SEC, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading. As of their respective filing dates, the financial
statements of the Company included in the SEC Documents complied as to form in
all material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto. Such financial statements
have been prepared in accordance with generally accepted accounting principles,
consistently applied, during the periods involved ("GAAP") (except (i) as may be
otherwise indicated in such financial statements or the notes thereto, or (ii)
in the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements) and fairly present in all
material respects the financial position of the Company and its Subsidiaries as
of the dates thereof and the results of its operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments which will not be material either individually or in
the aggregate). No other information provided by or on behalf of the Company to
any of the Buyers which is not included in the SEC Documents, including, without
limitation, information referred to in Section 2(d) of this Agreement or in the
disclosure schedules to this Agreement, contains any untrue statement of a
material fact or omits to state any material fact necessary in order to make the
statements therein, in the light of the circumstance under which they are or
were made, not misleading.
 
 
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(l) Absence of Certain Changes. Except as disclosed in Schedule 3(l), since
December 31, 2016, there has been no material adverse change and no material
adverse development in the business, assets, liabilities, properties,
operations, condition (financial or otherwise), results of operations or
prospects of the Company or any of its Subsidiaries. Except as disclosed in
Schedule 3(l), since December 31, 2016, neither the Company nor any of its
Subsidiaries has (i) declared or paid any dividends, (ii) sold any assets,
individually or in the aggregate, in excess of $250,000 outside of the ordinary
course of business or (iii) had capital expenditures, individually or in the
aggregate, in excess of $250,000. Neither the Company nor any of its
Subsidiaries has taken any steps to seek protection pursuant to any law or
statute relating to bankruptcy, insolvency, reorganization, receivership,
liquidation or winding up nor does the Company or any Subsidiary have any
knowledge or reason to believe that any of its respective creditors intend to
initiate involuntary bankruptcy proceedings or any actual knowledge of any fact
that would reasonably lead a creditor to do so. The Company and its
Subsidiaries, individually and on a consolidated basis, after giving effect to
the transactions contemplated hereby to occur at the Closing, will not be
Insolvent (as defined below). For purposes of this Section 3(l), "Insolvent"
means, with respect to any Person, (i) the present fair saleable value of such
Person's assets is less than the amount required to pay such Person's total
Indebtedness (as defined in Section 3(s)), (ii) such Person is unable to pay its
debts and liabilities, subordinated, contingent or otherwise, as such debts and
liabilities become absolute and matured, (iii) such Person intends to incur or
believes that it will incur debts that would be beyond its ability to pay as
such debts mature or (iv) such Person has unreasonably small capital with which
to conduct the business in which it is engaged as such business is now conducted
and is proposed to be conducted.
 
(m) No Undisclosed Events, Liabilities, Developments or Circumstances. No event,
liability, development or circumstance has occurred or exists, or is
contemplated to occur with respect to the Company, its Subsidiaries or their
respective business, properties, prospects, operations or financial condition,
that would be required to be disclosed by the Company under applicable
securities laws on a registration statement on Form S-1 filed with the SEC
relating to an issuance and sale by the Company of its Common Stock and which
has not been publicly announced.
 
(n) Conduct of Business; Regulatory Permits. Neither the Company nor any of its
Subsidiaries is in violation of any term of or in default under any certificate
of designations of any outstanding series of preferred stock of the Company (if
any), its Articles of Incorporation or Bylaws or their organizational charter or
memorandum of association or certificate of incorporation or articles of
association or bylaws, respectively. Neither the Company nor any of its
Subsidiaries is in violation of any judgment, decree or order or any statute,
ordinance, rule or regulation applicable to the Company or any of its
Subsidiaries, and neither the Company nor any of its Subsidiaries will conduct
its business in violation of any of the foregoing, except for possible
violations which could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. Without limiting the generality of
the foregoing, the Company is not in violation of any of the rules, regulations
or requirements of the Principal Market and has no knowledge of any facts or
circumstances that would reasonably lead to delisting or suspension of the
Common Stock by the Principal Market in the foreseeable future. Except as set
forth in Schedule 3(n), during the two (2) years prior to the date hereof, the
Common Stock has been designated for quotation on the Principal Market. Except
as set forth in Schedule 3(n), during the two (2) years prior to the date
hereof, (i) trading in the Common Stock has not been suspended by the SEC or the
Principal Market and (ii) the Company has received no communication, written or
oral, from the SEC or the Principal Market regarding the suspension or delisting
of the Common Stock from the Principal Market. The Company and its Subsidiaries
possess all certificates, authorizations and permits issued by the appropriate
federal, state or foreign regulatory authorities necessary to conduct their
respective businesses, except where the failure to possess such certificates,
authorizations or permits would not have, individually or in the aggregate, a
Material Adverse Effect, and neither the Company nor any such Subsidiary has
received any notice of proceedings relating to the revocation or modification of
any such certificate, authorization or permit.
 
 
10

 
 
(o) Foreign Corrupt Practices. Neither the Company, nor any of its Subsidiaries,
nor, to the Company's knowledge, any director, officer, agent, employee or other
Person acting on behalf of the Company or any of its Subsidiaries has, in the
course of its actions for, or on behalf of, the Company or any of its
Subsidiaries (i) used any corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expenses relating to political activity; (ii)
made any direct or indirect unlawful payment to any foreign or domestic
government official or employee from corporate funds; (iii) violated or is in
violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as
amended; or (iv) made any unlawful bribe, rebate, payoff, influence payment,
kickback or other unlawful payment to any foreign or domestic government
official or employee.
 
(p) Sarbanes-Oxley Act. The Company is in compliance in all material respects
with any and all applicable requirements of the Sarbanes-Oxley Act of 2002, as
amended, 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.
 
(q) 
 
Transactions With Affiliates. Except as set forth on Schedule 3(q), none of the
officers, directors or employees of the Company or any of its Subsidiaries is
presently a party to any transaction with the Company or any of its Subsidiaries
(other than for ordinary course services as employees, officers or directors),
including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any such
officer, director or employee or, to the knowledge of the Company or any of its
Subsidiaries, any corporation, partnership, trust or other entity in which any
such officer, director, or employee has a substantial interest or is an officer,
director, employee, trustee or partner.
 
 
11

 
 
(r) Equity Capitalization. As of the date hereof, the authorized capital stock
of the Company consists of (i) 750,000,000 shares of Common Stock, of which as
of the date hereof, 50,117,978 shares are issued and outstanding, 150,000 shares
are reserved for issuance pursuant to the Company's stock option and purchase
plans and 1,163,548 shares are reserved for issuance pursuant to securities
(other than the aforementioned options, the Notes and the Warrants) exercisable
or exchangeable for, or convertible into, Common Stock, (ii) 15,000,000 shares
of preferred stock, par value $0.001 per share, of which (w) 92,230 shares are
designated as Series C preferred stock, 92,230 of which are issued and
outstanding, (x) 25,000 shares are designated as Series H preferred stock, 0 of
which are issued and outstanding, (y) 1,666,667 shares are designated as Series
I preferred stock, 0 of which are issued and outstanding and (z) (w) 2,000,000
shares are designated as Series J preferred stock, 1,163,548 of which are issued
and outstanding and (iii) there are 23,956,712 shares of Common Stock held by
non-affiliates of the Company. All of such outstanding shares have been, or upon
issuance will be, validly issued and are fully paid and nonassessable. Except as
disclosed in (i) Schedule 3(r)(i), none of the Company's capital stock is
subject to preemptive rights or any other similar rights or any liens or
encumbrances suffered or permitted by the Company; (ii) Schedule 3(r)(ii), there
are no outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into, or exercisable or exchangeable for, any shares of capital
stock of the Company or any of its Subsidiaries, or contracts, commitments,
understandings or arrangements by which the Company or any of its Subsidiaries
is or may become bound to issue additional shares of capital stock of the
Company or any of its Subsidiaries or options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, or exercisable or exchangeable for, any
shares of capital stock of the Company or any of its Subsidiaries; (iii)
Schedule 3(r)(iii), there are no outstanding debt securities, notes, credit
agreements, credit facilities or other agreements, documents or instruments
evidencing Indebtedness of the Company or any of its Subsidiaries or by which
the Company or any of its Subsidiaries is or may become bound; (iv) Schedule
3(r)(iv), there are no financing statements securing obligations in any material
amounts, either singly or in the aggregate, filed in connection with the Company
or any of its Subsidiaries; (v) Schedule 3(r)(v) or pursuant to the Registration
Rights Agreement, there are no agreements or arrangements under which the
Company or any of its Subsidiaries is obligated to register the sale of any of
their securities under the 1933 Act; (vi) Schedule 3(r)(vi), there are no
outstanding securities or instruments of the Company or any of its Subsidiaries
which contain any redemption or similar provisions, and there are no contracts,
commitments, understandings or arrangements by which the Company or any of its
Subsidiaries is or may become bound to redeem a security of the Company or any
of its Subsidiaries; (vii) Schedule 3(r)(vii), there are no securities or
instruments containing anti-dilution or similar provisions that will be
triggered by the issuance of the Securities; (viii) Schedule 3(r)(viii), neither
the Company nor any Subsidiary has any stock appreciation rights or "phantom
stock" plans or agreements or any similar plan or agreement; and (ix) Schedule
3(r)(ix), the Company and its Subsidiaries have no liabilities or obligations
required to be disclosed in the SEC Documents but not so disclosed in the SEC
Documents, other than those incurred in the ordinary course of the Company's or
any of its Subsidiary's' respective businesses and which, individually or in the
aggregate, do not or would not have a Material Adverse Effect. The SEC Documents
contain true, correct and complete copies of the Company's Certificate of
Incorporation, as amended and as in effect on the date hereof (the "Certificate
of Incorporation"), and the Company's Bylaws, as amended and as in effect on the
date hereof (the "Bylaws"), and the terms of all securities convertible into, or
exercisable or exchangeable for shares of Common Stock and the material rights
of the holders thereof in respect thereto.
 
 
12

 
 
(s) Indebtedness and Other Contracts. Neither the Company nor any of its
Subsidiaries (i) except as disclosed in Schedule 3(s)(i), has any outstanding
Indebtedness (as defined below), (ii) except as disclosed in Schedule 3(s)(ii),
is a party to any contract, agreement or instrument, the violation of which, or
default under which, by the other party(ies) to such contract, agreement or
instrument could reasonably be expected to result in a Material Adverse Effect,
(iii) except as disclosed in Schedule 3(s)(iii), is in violation of any term of
or in default under any contract, agreement or instrument relating to any
Indebtedness, except where such violations and defaults would not result,
individually or in the aggregate, in a Material Adverse Effect, or (iv) except
as disclosed in Schedule 3(s)(iv), is a party to any contract, agreement or
instrument relating to any Indebtedness, the performance of which, in the
judgment of the Company's officers, has or is expected to have a Material
Adverse Effect. Schedule 3(s) provides a detailed description of the material
terms of any such outstanding Indebtedness. For purposes of this Agreement: (x)
"Indebtedness" of any Person means, without duplication (A) all indebtedness for
borrowed money, (B) all obligations issued, undertaken or assumed as the
deferred purchase price of property or services, including, without limitation,
"capital leases" in accordance with GAAP (other than trade payables entered into
in the ordinary course of business consistent with past practice), (C) all
reimbursement or payment obligations with respect to letters of credit, surety
bonds and other similar instruments, (D) all obligations evidenced by notes,
bonds, debentures or similar instruments, including obligations so evidenced
incurred in connection with the acquisition of property, assets or businesses,
(E) all indebtedness created or arising under any conditional sale or other
title retention agreement, or incurred as financing, in either case with respect
to any property or assets acquired with the proceeds of such indebtedness (even
though the rights and remedies of the seller or bank under such agreement in the
event of default are limited to repossession or sale of such property), (F) all
monetary obligations under any leasing or similar arrangement which, in
connection with GAAP, consistently applied for the periods covered thereby, is
classified as a capital lease, (G) all indebtedness referred to in clauses (A)
through (F) above secured by (or for which the holder of such Indebtedness has
an existing right, contingent or otherwise, to be secured by) any mortgage, deed
of trust, lien, pledge, charge, security interest or other encumbrance of any
nature whatsoever in or upon any property or assets (including accounts and
contract rights) with respect to any asset or property owned by any Person, even
though the Person which owns such assets or property has not assumed or become
liable for the payment of such indebtedness, and (H) all Contingent Obligations
in respect of indebtedness or obligations of others of the kinds referred to in
clauses (A) through (G) above; and (y) "Contingent Obligation" means, as to any
Person, any direct or indirect liability, contingent or otherwise, of that
Person with respect to any Indebtedness, lease, dividend or other obligation of
another Person if the primary purpose or intent of the Person incurring such
liability, or the primary effect thereof, is to provide assurance to the obligee
of such liability that such liability will be paid or discharged, or that any
agreements relating thereto will be complied with, or that the holders of such
liability will be protected (in whole or in part) against loss with respect
thereto.
 
 
13

 
 
(t) Absence of Litigation. There is no action, suit, proceeding, inquiry or
investigation before or by the Principal Market, 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 or any of
its Subsidiaries, the Common Stock or any of the Company's Subsidiaries or any
of the Company's or its Subsidiaries' officers or directors, whether of a civil
or criminal nature or otherwise, in their capacities as such, except as set
forth in Schedule 3(t). The matters set forth in Schedule 3(t) would not
reasonably be expected to have a Material Adverse Effect.
 
(u) Insurance. The Company and each of its Subsidiaries are insured against such
losses and risks and in such amounts as management of the Company believes to be
prudent and customary in the businesses in which the Company and its
Subsidiaries are engaged. Neither the Company nor any such Subsidiary has been
refused any insurance coverage sought or applied for. The Company believes that
it either will be able to renew its existing insurance coverage as and when such
coverage expires or obtain similar coverage from similar insurers as may be
necessary to continue its business, in each case, at a cost that would not
reasonably be expected to have a Material Adverse Effect.
 
(v) Employee Relations.
 
(i)           Neither the Company nor any of its Subsidiaries is a party to any
collective bargaining agreement or employs any member of a union. The Company
and its Subsidiaries believe that their relations with their respective
employees are good. No executive officer of the Company or any of its
Subsidiaries (as defined in Rule 501(f) of the 1933 Act) has notified the
Company or any such Subsidiary that such officer intends to leave the Company or
any such Subsidiary or otherwise terminate such officer's employment with the
Company or any such Subsidiary. No executive officer of the Company or any of
its Subsidiaries, to the knowledge of the Company or any of its Subsidiaries,
is, or is now expected to be, in violation of any material term of any
employment contract, confidentiality, disclosure or proprietary information
agreement, non-competition agreement, or any other contract or agreement or any
restrictive covenant, and, to the knowledge of the Company, the continued
employment of each such executive officer does not subject the Company or any of
its Subsidiaries to any liability with respect to any of the foregoing matters.
 
(ii)           The Company and its Subsidiaries are in compliance with all
federal, state, local and foreign laws and regulations respecting labor,
employment and employment practices and benefits, terms and conditions of
employment and wages and hours, except where failure to be in compliance would
not, either individually or in the aggregate, reasonably be expected to result
in a Material Adverse Effect.
 
(w) Title. The Company and its Subsidiaries have good and marketable title in
fee simple to all real property and good and marketable title to all personal
property owned by them which is material to the business of the Company and its
Subsidiaries, in each case free and clear of all liens, encumbrances and defects
except such as do not materially affect the value of such property and do not
interfere with the use made and proposed to be made of such property by the
Company and any of its Subsidiaries. Any real property and facilities held under
lease by the Company and any of its Subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as are not material and
do not interfere with the use made and proposed to be made of such property and
buildings by the Company and its Subsidiaries.
 
 
14

 
 
(x) Intellectual Property Rights. The Company and its Subsidiaries own or
possess adequate rights or licenses to use all trademarks, trade names, service
marks, service mark registrations, service names, original works of authorship,
patents, patent rights, copyrights, inventions, licenses, approvals,
governmental authorizations, trade secrets and other intellectual property
rights and all applications and registrations therefor ("Intellectual Property
Rights") necessary to conduct their respective businesses as now conducted and
as presently proposed to be conducted. Each of patents owned by the Company or
any of its Subsidiaries is listed on Schedule 3(x)(i). Except as set forth in
Schedule 3(x)(ii), none of the Company's or its Subsidiaries' Intellectual
Property Rights have expired or terminated or have been abandoned or are
expected to expire or terminate or are expected to be abandoned, within three
years from the date of this Agreement. The Company does not have any knowledge
of any infringement by the Company or its Subsidiaries of Intellectual Property
Rights of others. There is no claim, action or proceeding being made or brought,
or to the knowledge of the Company or any of its Subsidiaries, being threatened,
against the Company or any of its Subsidiaries regarding its Intellectual
Property Rights. Neither the Company nor any of its Subsidiaries is aware of any
facts or circumstances which might give rise to any of the foregoing
infringements or claims, actions or proceedings. The Company and its
Subsidiaries have taken reasonable security measures to protect the secrecy,
confidentiality and value of all of their Intellectual Property Rights.
 
(y) Environmental Laws. The Company and its Subsidiaries (i) are in compliance
with any and all Environmental Laws (as hereinafter defined), (ii) have received
all permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (iii) are in
compliance with all terms and conditions of any such permit, license or approval
where, in each of the foregoing clauses (i), (ii) and (iii), the failure to so
comply could be reasonably expected to have, individually or in the aggregate, a
Material Adverse Effect. The term "Environmental Laws" means all federal, state,
local or foreign laws relating to pollution or protection of human health or the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata), including, without limitation,
laws relating to emissions, discharges, releases or threatened releases of
chemicals, pollutants, contaminants, or toxic or hazardous substances or wastes
(collectively, "Hazardous Materials") into the environment, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials, as well as all
authorizations, codes, decrees, demands or demand letters, injunctions,
judgments, licenses, notices or notice letters, orders, permits, plans or
regulations issued, entered, promulgated or approved thereunder.
 
(z) Subsidiary Rights. The Company or one of its Subsidiaries has the
unrestricted right to vote, and (subject to limitations imposed by applicable
law) to receive dividends and distributions on, all capital securities of its
Subsidiaries as owned by the Company or such Subsidiary.
 
 
15

 
 
(aa) Investment Company Status. Neither the Company nor any Subsidiary is, and
upon consummation of the sale of the Securities, and for so long any Buyer holds
any Securities, will be, an "investment company," a company controlled by an
"investment company" or an "affiliated person" of, or "promoter" or "principal
underwriter" for, an "investment company" as such terms are defined in the
Investment Company Act of 1940, as amended.
 
(bb) Tax Status. The Company and each of its Subsidiaries (i) has made or filed
all U.S. federal, state and foreign income and all other tax returns, reports
and declarations required by any jurisdiction to which it is subject, (ii) has
paid all taxes and other governmental assessments and charges that are material
in amount, shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith and (iii) has set aside
on its books provision reasonably adequate for the payment of all taxes for
periods subsequent to the periods to which such returns, reports or declarations
apply. There are no unpaid taxes in any material amount claimed to be due by the
taxing authority of any jurisdiction, and the officers of the Company know of no
basis for any such claim.
 
(cc) Internal Accounting and Disclosure Controls. The Company and each of its
Subsidiaries maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with 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 1934 Act) that are effective in ensuring that information
required to be disclosed by the Company in the reports that it files or submits
under the 1934 Act is recorded, processed, summarized and reported, within the
time periods specified in the rules and forms of the SEC, including, without
limitation, controls and procedures designed to ensure that information required
to be disclosed by the Company in the reports that it files or submits under the
1934 Act is accumulated and communicated to the Company's management, including
its principal executive officer or officers and its principal financial officer
or officers, as appropriate, to allow timely decisions regarding required
disclosure. During the twelve months prior to the date hereof neither the
Company nor any of its Subsidiaries has received any notice or correspondence
from any accountant relating to any material weakness in any part of the system
of internal accounting controls of the Company or any of its Subsidiaries.
 
(dd) 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 1934
Act filings and is not so disclosed or that otherwise would be reasonably likely
to have a Material Adverse Effect.
 
(ee) Ranking of Notes. Except as set forth in Schedule 3(ee), no Indebtedness of
the Company or any of its Subsidiaries is senior to or ranks pari passu with the
Notes in right of payment, whether with respect of payment of redemptions,
interest, damages or upon liquidation or dissolution or otherwise.
 
 
16

 
 
(ff) Eligibility for Registration. As of the date hereof, the Company is
eligible to register the Conversion Shares and the Warrant Shares for resale by
the Buyers using Form S-3 promulgated under the 1933 Act.
 
(gg) Transfer Taxes. On the Closing Date, all stock transfer or other taxes
(other than income or similar taxes) which are required to be paid in connection
with the sale and transfer of the Securities to be sold to each Buyer hereunder
will be, or will have been, fully paid or provided for by the Company, and all
laws imposing such taxes will be or will have been complied with.
 
(hh) 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) other than the
Placement Agent, sold, bid for, purchased, or paid any compensation for
soliciting purchases of, any of the Securities, or (iii) other than the
Placement Agent, paid or agreed to pay to any person any compensation for
soliciting another to purchase any other securities of the Company.
 
(ii) Acknowledgement Regarding Buyers' Trading Activity. The Company
acknowledges and agrees that (i) none of the Buyers has been asked to agree, nor
has any Buyer 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) any Buyer,
and counter-parties in "derivative" transactions to which any such Buyer is a
party, directly or indirectly, presently may have a "short" position in the
Common Stock, and (iii) each Buyer 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 one or more
Buyers may engage in hedging and/or trading activities at various times during
the period that the Securities are outstanding, including, without limitation,
during the periods that the value of the Conversion Shares and/or the Warrant
Shares are being determined and (b) such hedging and/or trading activities, if
any, can reduce the value of the existing stockholders' equity interest in the
Company both at and after the time the hedging and/or trading activities are
being conducted. The Company acknowledges that such aforementioned hedging
and/or trading activities do not constitute a breach of this Agreement, the
Notes, the Warrants or any of the documents executed in connection herewith.
 
(jj) U.S. Real Property Holding Corporation. The Company is not, has never been,
and so long as any Securities remain outstanding, shall not become, a U.S. real
property holding corporation within the meaning of Section 897 of the Code and
the Company shall so certify upon any Buyer's request.
 
(kk) Bank Holding Company Act. Neither the Company nor any of its Subsidiaries
or affiliates is subject to the Bank Holding Company Act of 1956, as amended
(the "BHCA") and to regulation by the Board of Governors of the Federal Reserve
System (the "Federal Reserve"). Neither the Company nor any of its Subsidiaries
or affiliates owns or controls, directly or indirectly, five percent (5%) or
more of the outstanding shares of any class of voting securities or twenty-five
percent (25%) or more of the total equity of a bank or any entity that is
subject to the BHCA and to regulation by the Federal Reserve. Neither the
Company nor any of its Subsidiaries or affiliates exercises a controlling
influence over the management or policies of a bank or any entity that is
subject to the BHCA and to regulation by the Federal Reserve.
 
 
17

 
 
(ll) No Additional Agreements. Neither the Company nor any of its Subsidiaries
has any agreement or understanding with any Buyer with respect to the
transactions contemplated by the Transaction Documents other than as specified
in the Transaction Documents.
 
(mm) Disclosure. Except for discussions specifically regarding the offer and
sale of the Securities, the Company confirms that neither it nor any other
Person acting on its behalf has provided any of the Buyers or their agents or
counsel with any information that constitutes or could reasonably be expected to
constitute material, nonpublic information concerning the Company or any of its
Subsidiaries, other than the existence of the transactions contemplated by this
Agreement and the other Transaction Documents. The Company understands and
confirms that each of the Buyers will rely on the foregoing representations in
effecting transactions in securities of the Company. All disclosure provided to
the Buyers regarding the Company and its Subsidiaries, their businesses and the
transactions contemplated hereby, including the schedules to this Agreement,
furnished by or on behalf of the Company or any of its Subsidiaries is true and
correct and does not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements made therein,
in the light of the circumstances under which they were made, not misleading.
All of the written information furnished after the date hereof by or on behalf
of the Company or any of its Subsidiaries to you pursuant to or in connection
with this Agreement and the other Transaction Documents, taken as a whole, will
be true and correct in all material respects as of the date on which such
information is so provided and will not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they are
made, not misleading. Each press release issued by the Company or any of its
Subsidiaries during the twelve (12) months preceding the date of this Agreement
did not at the time of release contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. No event or circumstance has occurred or
information exists with respect to the Company or any of its Subsidiaries or its
or their business, properties, liabilities, prospects, operations (including
results thereof) or conditions (financial or otherwise), which, under applicable
law, rule or regulation, requires public disclosure by the Company at or before
the date hereof or announcement by the Company but which has not been so
publicly announced or disclosed. The Company acknowledges and agrees that no
Buyer makes or has made any representations or warranties with respect to the
transactions contemplated hereby other than those specifically set forth in
Section 2.
 
(nn) Shell Company Status. The Company is not, and has never been, an issuer
identified in Rule 144(i)(1) of the 1933 Act.
 
 
18

 
 
(oo) Stock Option Plans. Each stock option granted by the Company was granted
(i) in accordance with the terms of the applicable stock option plan of the
Company and (ii) with an exercise price at least equal to the fair market value
of the Common Stock on the date such stock option would be considered granted
under GAAP and applicable law. No stock option granted under the Company's stock
option plan has been backdated. The Company has not knowingly granted, and there
is no and has been no policy or practice of the Company to knowingly grant,
stock options prior to, or otherwise knowingly coordinate the grant of stock
options with, the release or other public announcement of material information
regarding the Company or its Subsidiaries or their financial results or
prospects.
 
(pp) No Disagreements with Accountants and Lawyers. There are no material
disagreements of any kind presently existing, or reasonably anticipated by the
Company to arise, between the Company and the accountants and lawyers formerly
or presently employed by the Company and the Company is current with respect to
any fees owed to its accountants and lawyers which could affect the Company's
ability to perform any of its obligations under any of the Transaction
Documents.
 
(qq) Compliance with Anti-Money Laundering Laws. The operations of the Company
and its Subsidiaries are and have been conducted at all times in compliance with
applicable financial recordkeeping and reporting requirements and all other
applicable U.S. and non-U.S. anti-money laundering laws and regulations,
including, but not limited to, those of the Currency and Foreign Transactions
Reporting Act of 1970, as amended, the USA Patriot Act of 2001 and the
applicable money laundering statutes of all applicable jurisdictions, the rules
and regulations thereunder and any related or similar rules, regulations or
guidelines, issued, administered or enforced by any governmental agency
(collectively, the "Anti-Money Laundering Laws"), and no action, suit or
proceeding by or before any court or governmental agency, authority or body or
any arbitrator involving the Company or any of its Subsidiaries with respect to
the Anti-Money Laundering Laws is pending or, to the knowledge of the Company,
threatened.
 
(rr) No Conflicts with Sanctions Laws. Neither the Company nor any of the
Subsidiaries has made any contribution or other payment to any official of, or
candidate for, any federal, state or foreign office in violation of any law
which violation is required to be disclosed in the Prospectus. Neither the
Company nor any of its Subsidiaries, nor, to the knowledge of the Company, any
director, officer, employee, agent, affiliate or other person associated with or
acting on behalf of the Company or any of its Subsidiaries or affiliates is, or
is directly or indirectly owned or controlled by, a Person that is currently the
subject or the target of any sanctions administered or enforced by the U.S.
government (including, without limitation, the Office of Foreign Assets Control
of the U.S. Department of the Treasury ("OFAC") or the U.S. Departments of State
or Commerce and including, without limitation, the designation as a "specially
designated national" or "blocked person"), the United Nations Security Council
("UNSC"), the European Union, Her Majesty's Treasury ("HMT") or any other
relevant sanctions authority (collectively, "Sanctions"), or is the Company, any
of its Subsidiaries located, organized or resident in a country or territory
that is the subject or target of a comprehensive embargo or Sanctions
prohibiting trade with the country or territory, including, without limitation,
Cuba, Iran, North Korea, Sudan and Syria (each, a "Sanctioned Country"); no
action of the Company or any of its Subsidiaries in connection with (i) the
execution, delivery and performance of this Agreement and the other Transaction
Documents, (ii) the issuance and sale of the Securities or (iii) the direct or
indirect use of proceeds from the Securities or the consummation of any other
transaction contemplated hereby or by the other Transaction Documents or the
fulfillment of the terms hereof or thereof, will result in the proceeds of the
transactions contemplated hereby and by the other Transaction Documents being
used, or loaned, contributed or otherwise made available, directly or
indirectly, to any Subsidiary, joint venture partner or other person or entity,
for the purpose of (i) unlawfully funding or facilitating any activities of or
business with any person that, at the time of such funding or facilitation, is
the subject or target of Sanctions, (ii) unlawfully funding or facilitating any
activities of or business in any Sanctioned Country or (iii) in any other manner
that will result in a violation by any Person (including any Person
participating in the transaction, whether as underwriter, advisor, investor or
otherwise) of Sanctions. For the past five years, the Company and its
Subsidiaries have not knowingly engaged in and are not now knowingly engaged in
any dealings or transactions with any person that at the time of the dealing or
transaction is or was the subject or the target of Sanctions or with any
Sanctioned Country.
 
 
19

 
 
(ss) Anti-Bribery. Neither the Company, nor any of its Subsidiaries or
affiliates, nor, to the knowledge of the Company, any director, officer, agent,
employee or other person associated with or acting on behalf of the Company, or
any of its Subsidiaries or affiliates, has (i) used any funds for any unlawful
contribution, gift, entertainment or other unlawful expense relating to
political activity, (ii) made any direct or indirect unlawful payment to any
foreign or domestic government official or employee, to any employee or agent of
a private entity with which the Company does or seeks to do business (a "Private
Sector Counterparty") or to foreign or domestic political parties or campaigns
from corporate funds, (iii) violated or is in violation of any provision of any
applicable law or regulation implementing the OECD Convention on Combating
Bribery of Foreign Public Officials in International Business Transactions or
any applicable provision of the U.S. Foreign Corrupt Practices Act of 1977, as
amended (the "FCPA"), the U.K Bribery Act 2010, or any other similar law of any
other jurisdiction in which the Company operates its business, including, in
each case, the rules and regulations thereunder, (iv) taken, is currently taking
or will take any action in furtherance of an offer, payment, gift or anything
else of value, directly or indirectly, to any person while knowing that all or
some portion of the money or value will be offered, given or promised to anyone
to improperly influence official action, to obtain or retain business or
otherwise to secure any improper advantage or (v) otherwise made any bribe,
rebate, payoff, influence payment, unlawful kickback or other unlawful payment;
the Company and each of its respective Subsidiaries has instituted and has
maintained, and will continue to maintain, policies and procedures reasonably
designed to promote and achieve compliance with the laws referred to in (iii)
above and with this representation and warranty; and none of the Company, nor
any of its Subsidiaries or affiliates will directly or indirectly use the
proceeds of the convertible securities or lend, contribute or otherwise make
available such proceeds to any subsidiary, affiliate, joint venture partner or
other person or entity for the purpose of financing or facilitating any activity
that would violate the laws and regulations referred to in (iii) above.
 
(tt) No Disqualification Events. With respect to Securities to be offered and
sold hereunder in reliance on Rule 506(b) under the 1933 Act ("Regulation D
Securities"), none of the Company, any of its predecessors, any affiliated
issuer, any director, executive officer, other officer of the Company
participating in the offering hereunder, any beneficial owner of 20% or more of
the Company's outstanding voting equity securities, calculated on the basis of
voting power, nor any promoter (as that term is defined in Rule 405 under the
1933 Act) connected with the Company in any capacity at the time of sale (each,
an "Issuer Covered Person" and, together, "Issuer Covered Persons") is subject
to any of the "Bad Actor" disqualifications described in Rule 506(d)(1)(i) to
(viii) under the 1933 Act (a "Disqualification Event"), except for a
Disqualification Event covered by Rule 506(d)(2) or (d)(3). The Company has
exercised reasonable care to determine whether any Issuer Covered Person is
subject to a Disqualification Event. The Company has complied, to the extent
applicable, with its disclosure obligations under Rule 506(e), and has furnished
to the Buyers a copy of any disclosures provided thereunder.
 
 
20

 
 
(uu) Other Covered Persons. The Company is not aware of any Person (other than
the Placement Agent) that has been or will be paid (directly or indirectly)
remuneration for solicitation of Buyers or potential purchasers in connection
with the sale of any Regulation D Securities.
 
4. COVENANTS.
 
(a) Best Efforts. Each party shall use its best efforts timely to satisfy each
of the covenants and the conditions to be satisfied by it as provided in
Sections 6 and 7 of this Agreement.
 
(b) Form D and Blue Sky. If required by applicable Law, the Company agrees to
file a Form D with respect to the Securities as required under Regulation D. The
Company shall, on or before the Closing Date, take such action as the Company
shall reasonably determine is necessary in order to obtain an exemption for or
to qualify the Securities for sale to the Buyers at the Closing pursuant to this
Agreement under applicable securities or "Blue Sky" laws of the states of the
United States (or to obtain an exemption from such qualification), and shall
provide evidence of any such action so taken to the Buyers on or prior to the
Closing Date. The Company shall make all filings and reports relating to the
offer and sale of the Securities required under applicable securities or "Blue
Sky" laws of the states of the United States following the Closing Date.
 
(c) Reporting Status. Until the date on which the Buyers shall have sold all of
the Conversion Shares and Warrant Shares and none of the Notes or Warrants are
outstanding (the "Reporting Period"), the Company shall timely file all reports
required to be filed with the SEC pursuant to the 1934 Act, and the Company
shall not terminate its status as an issuer required to file reports under the
1934 Act even if the 1934 Act or the rules and regulations thereunder would no
longer require or otherwise permit such termination, and the Company shall take
all actions necessary to maintain its eligibility to register the Conversion
Shares and Warrant Shares for resale by the Investors on Form S-3.
 
(d) Use of Proceeds. The Company will use the proceeds from the sale of the
Securities solely as set forth on Schedule 4(d).
 
(e) [Intentionally Omitted]
 
 
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(f) Listing. The Company shall promptly secure the listing of all the
Registrable Securities, upon each national securities exchange and automated
quotation system, if any, upon which the Common Stock then listed (subject to
official notice of issuance) and shall maintain such listing of all Registrable
Securities from time to time issuable under the terms of the Transaction
Documents. Until the earlier of three (3) years from the date hereof or when
Securities are no longer held by any Buyers or registered in the names of any
Buyer on the books and records of the Company, (i) the Company shall maintain
the authorization for quotation of the Common Stock on the Principal Market or
any other Eligible Market (as defined in the Warrants) and (ii) the Company
shall use commercially reasonable efforts to avoid the delisting or suspension
of the Common Stock on the Principal Market. The Company shall pay all fees and
expenses in connection with satisfying its obligations under this Section 4(f).
 
(g) Fees. The Company shall reimburse Empery (a Buyer) or its designee(s) (in
addition to any other expense amounts paid to any Buyer or its counsel prior to
the date of this Agreement) for all costs and expenses incurred in connection
with the transactions contemplated by the Transaction Documents (including all
legal fees and disbursements in connection therewith, documentation and
implementation of the transactions contemplated by the Transaction Documents and
due diligence in connection therewith), which amount may be withheld by such
Buyer from its purchase price for any Notes purchased at the Closing to the
extent not previously reimbursed by the Company and which shall not exceed
$60,000 without the prior approval of the Company. The Company shall be
responsible for the payment of any placement agent's fees, financial advisory
fees, or broker's commissions (other than for Persons engaged by any Buyer)
relating to or arising out of the transactions contemplated hereby, including,
without limitation, any fees or commissions payable to the Placement Agent. The
Company shall pay, and hold each Buyer harmless against, any liability, loss or
expense (including, without limitation, reasonable attorney's fees and
out-of-pocket expenses) arising in connection with any claim relating to any
such payment. Except as otherwise set forth in the Transaction Documents, each
party to this Agreement shall bear its own expenses in connection with the sale
of the Securities to the Buyers.
 
(h) Pledge of Securities. The Company acknowledges and agrees that the
Securities may be pledged by an Investor in connection with a bona fide margin
agreement or other loan or financing arrangement that is secured by the
Securities. The pledge of Securities shall not be deemed to be a transfer, sale
or assignment of the Securities hereunder, and no Investor effecting a pledge of
Securities shall be required to provide the Company with any notice thereof or
otherwise make any delivery to the Company pursuant to this Agreement or any
other Transaction Document, including, without limitation, Section 2(f) hereof;
provided that an Investor and its pledgee shall be required to comply with the
provisions of Section 2(f) hereof in order to effect a sale, transfer or
assignment of Securities to such pledgee. The Company hereby agrees to execute
and deliver such documentation as a pledgee of the Securities may reasonably
request in connection with a pledge of the Securities to such pledgee by an
Investor.
 
(i) Disclosure of Transactions and Other Material Information. On or before 9:00
a.m., New York City time, on the first Business Day after this Agreement has
been executed, the Company shall issue a press release reasonably acceptable to
the Buyers and file a Current Report on Form 8-K describing the terms of the
transactions contemplated by the Transaction Documents in the form required by
the 1934 Act and attaching the material Transaction Documents (including,
without limitation, this Agreement (and all schedules and exhibits to this
Agreement), the form of the Registration Rights Agreement, the form of the
Warrants and the form of Notes as exhibits to such filing (including all
attachments), the "8-K Filing"). From and after the filing of the 8-K Filing
with the SEC, no Buyer shall be in possession of any material, nonpublic
information received from the Company, any of its Subsidiaries or any of their
respective officers, directors, employees, affiliates or agents, that is not
disclosed in the 8-K Filing. In addition, effective upon the filing of the 8-K
Filing, the Company acknowledges and agrees that any and all confidentiality or
similar obligations under any agreement, whether written or oral, between the
Company, any of its Subsidiaries or any of their respective officers, directors,
employees, affiliates or agents, on the one hand, and any of the Buyers or any
of their affiliates, on the other hand, shall terminate and be of no further
force or effect. The Company shall not, and shall cause each of its Subsidiaries
and its and each of their respective officers, directors, employees, affiliates
and agents, not to, provide any Buyer with any material, nonpublic information
regarding the Company or any of its Subsidiaries from and after the date hereof
and for so long as any Buyer beneficially owns any Notes or Warrants without the
express prior written consent of such Buyer. If such Buyer has, or believes it
has, received any such material, nonpublic information regarding the Company or
any of its Subsidiaries from the Company, any of its Subsidiaries or any of
their respective officers, directors, employees, affiliates or agents at a time
when any Buyer beneficially owns any Notes or Warrants, it may provide the
Company with written notice thereof. The Company shall, within two (2) Trading
Days of receipt of such notice, make public disclosure of such material,
nonpublic information. To the extent that the Company delivers any material,
nonpublic information to a Buyer without such Buyer's consent at a time when any
Buyer beneficially owns any Notes or Warrants, the Company hereby covenants and
agrees that such Buyer shall not have any duty of confidentiality to the
Company, any of its Subsidiaries or any of their respective officers, directors,
employees, affiliates or agent with respect to, or a duty to the Company, any of
its Subsidiaries or any of their respective officers, directors, employees,
affiliates or agent not to trade on the basis of, such material, nonpublic
information. Subject to the foregoing, neither the Company, its Subsidiaries nor
any Buyer shall issue any press releases or any other public statements with
respect to the transactions contemplated hereby; provided, however, that the
Company shall be entitled, without the prior approval of any Buyer, to make any
press release or other public disclosure with respect to such transactions (i)
in substantial conformity with the 8-K Filing and contemporaneously therewith
and (ii) as is required by applicable law and regulations (provided that in the
case of clause (i) each Buyer shall be consulted by the Company in connection
with any such press release or other public disclosure prior to its release).
Except for the Registration Statement required to be filed pursuant to the
Registration Rights Agreement, without the prior written consent of any
applicable Buyer, neither the Company nor any of its Subsidiaries or affiliates
shall disclose the name of such Buyer in any filing, announcement, release or
otherwise. As used herein, "Business Day" means any day other than Saturday,
Sunday or other day on which commercial banks in The City of New York are
authorized or required by law to remain closed.
 
 
22

 
 
(j) Additional Notes; Variable Securities. So long as any Buyer beneficially
owns any Notes, the Company will not issue any Notes other than to the Buyers as
contemplated hereby and the Company shall not issue any other securities that
would cause a breach or default under the Notes. For so long as any Notes remain
outstanding, the Company shall not, in any manner, (i) issue or sell any rights,
warrants or options to subscribe for or purchase Common Stock or directly or
indirectly convertible into or exchangeable or exercisable for Common Stock at a
price which varies or may vary with the market price of the Common Stock,
including by way of one or more reset(s) to any fixed price unless the
conversion, exchange or exercise price of any such security cannot be less than
the then applicable Conversion Price (as defined in the Notes) with respect to
the Common Stock into which any Note is convertible or the then applicable
Exercise Price (as defined in the Warrants) with respect to the Common Stock
into which any Warrant is exercisable or (ii) enter into any agreement, or issue
any securities pursuant to any agreement, including, without limitation, an
equity line of credit, at-the-market offering or similar agreement, whereby the
Company may issue securities at a future determined price.
 
(k) Corporate Existence. So long as any Buyer beneficially owns any Notes or
Warrants, the Company shall (i) maintain its corporate existence and (ii) not be
party to any Fundamental Transaction (as defined in the Notes) unless the
Company is in compliance with the applicable provisions governing Fundamental
Transactions set forth in the Notes and the Warrants.
 
(l) Reservation of Shares. So long as any Buyer owns any Securities, the Company
shall take all action necessary to at all times have authorized, and reserved
for the purpose of issuance, no less than the Required Reserve Amount. If at any
time the number of shares of Common Stock authorized and reserved for issuance
is not sufficient to meet the Required Reserved Amount, the Company will
promptly take all corporate action necessary to authorize and reserve a
sufficient number of shares, including, without limitation, calling a special
meeting of stockholders to authorize additional shares to meet the Company's
obligations under Section 3(c), in the case of an insufficient number of
authorized shares, obtain stockholder approval of an increase in such authorized
number of shares, and voting the management shares of the Company in favor of an
increase in the authorized shares of the Company to ensure that the number of
authorized shares is sufficient to meet the Required Reserved Amount.
 
(m) Conduct of Business. The business of the Company and its Subsidiaries shall
not be conducted in violation of any law, ordinance or regulation of any
governmental entity, except where such violations would not result, either
individually or in the aggregate, in a Material Adverse Effect.
 
(n) Public Information. At any time during the period commencing from the six
(6) month anniversary of the Closing Date and ending at such time that all of
the Securities, if a registration statement is not available for the resale of
all of the Securities, may be sold without restriction or limitation pursuant to
Rule 144 and without the requirement to be in compliance with Rule 144(c)(1), if
the Company shall (i) fail for any reason to satisfy the requirements of Rule
144(c)(1), including, without limitation, the failure to satisfy the current
public information requirement under Rule 144(c) or (ii) if the Company has ever
been an issuer described in Rule 144(i)(1)(i) or becomes such an issuer in the
future, and the Company shall fail to satisfy any condition set forth in Rule
144(i)(2) (a "Public Information Failure") then, as partial relief for the
damages to any holder of Securities by reason of any such delay in or reduction
of its ability to sell the Securities (which remedy shall not be exclusive of
any other remedies available at law or in equity), the Company shall pay to each
such holder an amount in cash equal to two percent (2.0%) of the aggregate
Purchase Price of such holder's Securities on the day of a Public Information
Failure and on every thirtieth day (pro rated for periods totaling less than
thirty days) thereafter until the earlier of (i) the date such Public
Information Failure is cured and (ii) such time that such Public Information
Failure no longer prevents a holder of Securities from selling such Securities
pursuant to Rule 144 without any restrictions or limitations. The payments to
which a holder shall be entitled pursuant to this Section 4(n) are referred to
herein as "Public Information Failure Payments." Public Information
Failure Payments shall be paid on the earlier of (I) the last day of the
calendar month during which such Public Information Failure Payments are
incurred and (II) the third Business Day after the event or failure giving rise
to the Public Information Failure Payments is cured. In the event the Company
fails to make Public Information Failure Payments in a timely manner, such
Public Information Failure Payments shall bear interest at the rate of 1.5% per
month (prorated for partial months) until paid in full.
 
 
23

 
 
(o) Additional Issuances of Securities.
 
(i) For purposes of this Section 4(o), the following definitions shall apply.
 
(1) "Convertible Securities" means any stock or securities (other than Options)
convertible into or exercisable or exchangeable for shares of Common Stock.
 
(2) "Options" means any rights, warrants or options to subscribe for or purchase
shares of Common Stock or Convertible Securities.
 
(3) "Common Stock Equivalents" means, collectively, Options and Convertible
Securities.
 
(4) "Subsequent Placement" means any direct or indirect, offer, sale, grant any
option to purchase, or other disposition of any of its or its Subsidiaries'
equity or equity equivalent securities, including without limitation any debt,
preferred stock or other instrument or security whether or not such security is,
at any time during its life and under any circumstances, convertible into or
exchangeable or exercisable for Common Stock or Common Stock Equivalents.
 
(ii) From the date hereof until the date that is thirty (30) days following the
time of the registration of all of the Registrable Securities pursuant to and in
accordance with the Registration Rights Agreement and the Company shall have no
knowledge of any fact that would cause the Registration Statements required
pursuant to the Registration Rights Agreement not to be effective and available
for the resale of all remaining Registrable Securities in accordance with the
terms of the Registration Rights Agreement, the Company will not directly or
indirectly, file any registration statement with the SEC other than the
Registration Statement and shall not file any Prospectus Supplement with respect
to any Subsequent Placement (as defined below).
 
 
24

 
 
(iii) From the Closing Date until the earlier of (x) the second (2nd)
anniversary of the Closing Date and (y) the first (1st) day following the date
that the Company raises aggregate gross proceeds of at least $20,000,000 in one
or more Subsequent Placement(s) occurring after the Closing Date, the Company
will not, directly or indirectly, effect any Subsequent Placement unless the
Company shall have first complied with this Section 4(o)(iii).
 
(1) The Company shall deliver to each Buyer an irrevocable written notice
(the "Offer Notice") of any proposed or intended issuance or sale or exchange
(the "Offer") of the securities being offered (the "Offered Securities") in a
Subsequent Placement, which Offer Notice shall (w) identify and describe the
Offered Securities, (x) describe the price and other terms upon which they are
to be issued, sold or exchanged, and the number or amount of the Offered
Securities to be issued, sold or exchanged, (y) identify the persons or entities
(if known) to which or with which the Offered Securities are to be offered,
issued, sold or exchanged and (z) offer to issue and sell to or exchange with
such Buyers at least thirty-five percent (35%) of the Offered Securities,
allocated among such Buyers (a) based on such Buyer's pro rata portion of the
aggregate principal amount of Notes purchased hereunder (the "Basic Amount") and
(b) with respect to each Buyer that elects to purchase its Basic Amount, any
additional portion of the Offered Securities attributable to the Basic Amounts
of other Buyers as such Buyer shall indicate it will purchase or acquire should
the other Buyers subscribe for less than their Basic Amounts (the
"Undersubscription Amount"), which process shall be repeated until the Buyers
shall have an opportunity to subscribe for any remaining Undersubscription
Amount.
 
(2) To accept an Offer, in whole or in part, such Buyer must deliver a written
notice to the Company prior to the end of the second (2nd) Business Day after
such Buyer's receipt of the Offer Notice (the "Offer Period"), setting forth the
portion of such Buyer's Basic Amount that such Buyer elects to purchase and, if
such Buyer shall elect to purchase all of its Basic Amount, the
Undersubscription Amount, if any, that such Buyer elects to purchase (in either
case, the "Notice of Acceptance"). If the Basic Amounts subscribed for by all
Buyers are less than the total of all of the Basic Amounts, then each Buyer who
has set forth an Undersubscription Amount in its Notice of Acceptance shall be
entitled to purchase, in addition to the Basic Amounts subscribed for, the
Undersubscription Amount it has subscribed for; provided, however, that if the
Undersubscription Amounts subscribed for exceed the difference between the total
of all the Basic Amounts and the Basic Amounts subscribed for (the "Available
Undersubscription Amount"), each Buyer who has subscribed for any
Undersubscription Amount shall be entitled to purchase only that portion of the
Available Undersubscription Amount as the Basic Amount of such Buyer bears to
the total Basic Amounts of all Buyers that have subscribed for Undersubscription
Amounts, subject to rounding by the Company to the extent its deems reasonably
necessary. Notwithstanding anything to the contrary contained herein, if the
Company desires to modify or amend the terms and conditions of the Offer prior
to the expiration of the Offer Period, the Company may deliver to the Buyers a
new Offer Notice and the Offer Period shall expire on the second (2nd) Business
Day after such Buyer's receipt of such new Offer Notice.
 
 
25

 
 
(3) The Company shall have five (5) Business Days from the expiration of the
Offer Period above to offer, issue, sell or exchange all or any part of such
Offered Securities as to which a Notice of Acceptance has not been given by the
Buyers (the "Refused Securities") pursuant to a definitive agreement (the
"Subsequent Placement Agreement"), but only to the offerees described in the
Offer Notice (if so described therein) and only upon terms and conditions
(including, without limitation, unit prices and interest rates) that are not
more favorable to the acquiring Person or Persons or less favorable to the
Company than those set forth in the Offer Notice and (ii) to publicly announce
(a) the execution of such Subsequent Placement Agreement and (b) either (x) the
consummation of the transactions contemplated by such Subsequent Placement
Agreement or (y) the termination of such Subsequent Placement Agreement, which
shall be filed with the SEC on a Current Report on Form 8-K with such Subsequent
Placement Agreement and any documents contemplated therein filed as exhibits
thereto.
 
(4) In the event the Company shall propose to sell less than all the Refused
Securities (any such sale to be in the manner and on the terms specified in
Section 4(o)(iii)(3) above), then each Buyer may, at its sole option and in its
sole discretion, reduce the number or amount of the Offered Securities specified
in its Notice of Acceptance to an amount that shall be not less than the number
or amount of the Offered Securities that such Buyer elected to purchase pursuant
to Section 4(o)(iii)(2) above multiplied by a fraction, (i) the numerator of
which shall be the number or amount of Offered Securities the Company actually
proposes to issue, sell or exchange (including Offered Securities to be issued
or sold to Buyers pursuant to Section 4(o)(iii)(3) above prior to such
reduction) and (ii) the denominator of which shall be the original amount of the
Offered Securities. In the event that any Buyer so elects to reduce the number
or amount of Offered Securities specified in its Notice of Acceptance, the
Company may not issue, sell or exchange more than the reduced number or amount
of the Offered Securities unless and until such securities have again been
offered to the Buyers in accordance with Section 4(o)(iii)(1) above.
 
(5) Upon the closing of the issuance, sale or exchange of all or less than all
of the Refused Securities, the Buyers shall acquire from the Company, and the
Company shall issue to the Buyers, the number or amount of Offered Securities
specified in the Notices of Acceptance, as reduced pursuant to Section
4(o)(iii)(3) above if the Buyers have so elected, upon the terms and conditions
specified in the Offer. Notwithstanding anything to the contrary contained in
this Agreement, if the Company does not consummate the closing of the issuance,
sale or exchange of all or less than all of the Refused Securities, within five
(5) Business Days of the expiration of the Offer Period, the Company shall issue
to the Buyers, the number or amount of Offered Securities specified in the
Notice of Acceptance, as reduced pursuant to Section 4(o)(iii)(4) above if the
Buyers have so elected, upon the terms and conditions specified in the Offer.
The purchase by the Buyers of any Offered Securities is subject in all cases to
the preparation, execution and delivery by the Company and the Buyers of a
purchase agreement relating to such Offered Securities reasonably satisfactory
in form and substance to the Buyers and their respective counsel.
 
 
26

 
 
(6) Any Offered Securities not acquired by the Buyers or other persons in
accordance with Section 4(o)(iii)(3) above may not be issued, sold or exchanged
until they are again offered to the Buyers under the procedures specified in
this Agreement.
 
(7) The Company and the Buyers agree that if any Buyer elects to participate in
the Offer, (x) neither the Subsequent Placement Agreement with respect to such
Offer nor any other transaction documents related thereto (collectively, the
"Subsequent Placement Documents") shall include any term or provisions whereby
any Buyer shall be required to agree to any restrictions in trading as to any
securities of the Company owned by such Buyer prior to such Subsequent Placement
and (y) any registration rights set forth in such Subsequent Placement Documents
shall be similar in all material respects to the registration rights contained
in the Registration Rights Agreement.
 
(8) Notwithstanding anything to the contrary in this Section 4(o) and unless
otherwise agreed to by the Buyers, the Company shall either confirm in writing
to the Buyers that the transaction with respect to the Subsequent Placement has
been abandoned or shall publicly disclose its intention to issue the Offered
Securities, in either case in such a manner such that the Buyers will not be in
possession of material non-public information, by the fifth (5th) Business Day
following delivery of the Offer Notice. If by the fifth (5th) Business Day
following delivery of the Offer Notice no public disclosure regarding a
transaction with respect to the Offered Securities has been made, and no notice
regarding the abandonment of such transaction has been received by the Buyers,
such transaction shall be deemed to have been abandoned and the Buyers shall not
be deemed to be in possession of any material, non-public information with
respect to the Company. Should the Company decide to pursue such transaction
with respect to the Offered Securities, the Company shall provide each Buyer
with another Offer Notice and each Buyer will again have the right of
participation set forth in this Section 4(o)(iii). The Company shall not be
permitted to deliver more than one such Offer Notice to the Buyers in any 60 day
period (other than the Offer Notices contemplated by the last sentence of
Section 4(o)(iii)(2) of this Agreement).
 
(iv) The restrictions contained in subsections (ii) and (iii) of this Section
4(o) shall not apply in connection with the issuance of any Excluded Securities
(as defined in the Warrants).
 
(p) Notice of Disqualification Events. The Company will notify the Buyers in
writing, prior to the Closing Date of (i) any Disqualification Event relating to
any Issuer Covered Person and (ii) any event that would, with the passage of
time, become a Disqualification Event relating to any Issuer Covered Person.
 
(q) FAST Compliance. While any Notes or Warrants are outstanding, the Company
shall maintain a transfer agent that participates in the DTC Fast Automated
Securities Transfer Program.
 
 
27

 
 
(r) Closing Documents. On or prior to thirty (30) calendar days after the
Closing Date, the Company agrees to deliver, or cause to be delivered, to each
Buyer and Schulte Roth & Zabel LLP a complete closing set of the executed
Transaction Documents, Securities and any other documents required to be
delivered to any party pursuant to Section 7 hereof or otherwise.
 
5. REGISTER; TRANSFER AGENT INSTRUCTIONS.
 
(a) Register. The Company shall maintain at its principal executive offices (or
such other office or agency of the Company as it may designate by notice to each
holder of Securities), a register for the Notes and the Warrants in which the
Company shall record the name and address of the Person in whose name the Notes
and the Warrants have been issued (including the name and address of each
transferee), the principal amount of Notes held by such Person, the number of
Conversion Shares issuable pursuant to the terms of the Notes and the number of
Warrant Shares issuable upon exercise of the Warrants held by such Person. The
Company shall keep the register open and available at all times during business
hours for inspection of any Buyer or its legal representatives.
 
(b) Transfer Agent Instructions. The Company shall issue irrevocable
instructions to its transfer agent, and any subsequent transfer agent, in the
form of Exhibit D attached hereto (the "Irrevocable Transfer Agent
Instructions") to issue certificates or credit shares to the applicable balance
accounts at DTC, registered in the name of each Buyer or its respective
nominee(s), for the Conversion Shares and the Warrant Shares issued at the
Closing or pursuant to the terms of the Notes or exercise of the Warrants in
such amounts as specified from time to time by each Buyer to the Company upon
conversion of the Notes or exercise of the Warrants. The Company warrants that
no instruction other than the Irrevocable Transfer Agent Instructions referred
to in this Section 5(b), and stop transfer instructions to give effect to
Section 2(f) hereof, will be given by the Company to its transfer agent, and
that the Securities shall otherwise be freely transferable on the books and
records of the Company as and to the extent provided in this Agreement and the
other Transaction Documents. If a Buyer effects a sale, assignment or transfer
of the Securities in accordance with Section 2(f), the Company shall permit the
transfer and shall promptly instruct its transfer agent to issue one or more
certificates or credit shares to the applicable balance accounts at DTC in such
name and in such denominations as specified by such Buyer to effect such sale,
transfer or assignment. In the event that such sale, assignment or transfer
involves the Conversion Shares or the Warrant Shares sold, assigned or
transferred pursuant to an effective registration statement or pursuant to Rule
144, the transfer agent shall issue such Securities to the Buyer, assignee or
transferee, as the case may be, without any restrictive legend. The Company
acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to a Buyer. Accordingly, the Company acknowledges that the
remedy at law for a breach of its obligations under this Section 5(b) will be
inadequate and agrees, in the event of a breach or threatened breach by the
Company of the provisions of this Section 5(b), that a Buyer shall be entitled,
in addition to all other available remedies, to an order and/or injunction
restraining any breach and requiring immediate issuance and transfer, without
the necessity of showing economic loss and without any bond or other security
being required.
 
 
28

 
 
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
 
The obligation of the Company hereunder to issue and sell the Notes and the
related Warrants to each Buyer at the Closing is subject to the satisfaction, at
or before the Closing Date, of each of the following conditions, provided that
these conditions are for the Company's sole benefit and may be waived by the
Company at any time in its sole discretion by providing each Buyer with prior
written notice thereof:
 
(i) Such Buyer shall have executed each of the Transaction Documents to which it
is a party and delivered the same to the Company.
 
(ii) Such Buyer shall have delivered its Purchase Price to the Company (less, in
the case of Empery, the amounts withheld pursuant to Section 4(g)), for the
Notes and the related Warrants being purchased by such Buyer at the Closing by
wire transfer of immediately available funds pursuant to the wire instructions
provided by the Company.
 
(iii) The representations and warranties of such Buyer shall be true and correct
as of the date when made and as of the Closing Date as though made at that time
(except for representations and warranties that speak as of a specific date
which shall be true and correct as of such specified date), and such Buyer shall
have performed, satisfied and complied in all material respects with the
covenants, agreements and conditions required by this Agreement to be performed,
satisfied or complied with by such Buyer at or prior to the Closing Date.
 
7. CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE.
 
The obligation of each Buyer hereunder to purchase the Notes and the related
Warrants at the Closing is subject to the satisfaction, at or before the Closing
Date, of each of the following conditions, provided that these conditions are
for each Buyer's sole benefit and may be waived by such Buyer at any time in its
sole discretion by providing the Company with prior written notice thereof:
 
(i) The Company and each of its Subsidiaries shall have duly executed and
delivered to such Buyer each of the following documents to which it is a party:
(A) each of the Transaction Documents, (B) the Notes (allocated in such
principal amounts as such Buyer shall request), being purchased by such Buyer at
the Closing pursuant to this Agreement and (C) the related Warrants (allocated
in such amounts as such Buyer shall request) being purchased by such Buyer at
the Closing pursuant to this Agreement.
 
(ii) Such Buyer shall have received the opinion of DLA Piper LLP (US), the
Company's outside counsel, dated as of the Closing Date, in substantially the
form of Exhibit E attached hereto.
 
(iii) The Company shall have delivered to such Buyer a copy of the Irrevocable
Transfer Agent Instructions, in the form of Exhibit D attached hereto, which
instructions shall have been delivered to and acknowledged in writing by the
Company's transfer agent.
 
 
29

 
 
(iv) The Company shall have delivered to such Buyer a certificate evidencing the
formation and good standing of the Company and each of its Subsidiaries in such
entity's jurisdiction of formation issued by the Secretary of State (or
comparable office) of such jurisdiction, as of a date within ten (10) days of
the Closing Date.
 
(v) The Company shall have delivered to such Buyer a certificate evidencing the
Company's qualification as a foreign corporation and good standing issued by the
Secretary of State (or comparable office) of the State of Florida, the State of
California and the District of Columbia (which are the only jurisdictions in
which the Company is required to register as a foreign corporation), as of a
date within ten (10) days of the Closing Date.
 
(vi) The Company shall have delivered to such Buyer a certificate, executed by
the Secretary of the Company and dated as of the Closing Date, as to (i) the
resolutions consistent with Section 3(b) as adopted by the Company's and each of
its Subsidiaries' Board of Directors in a form reasonably acceptable to such
Buyer, (ii) the Certificate of Incorporation of the Company and (iii) the Bylaws
of the Company, each as in effect at the Closing, in the form attached hereto as
Exhibit F.
 
(vii) The representations and warranties of the Company shall be true and
correct in all material respects (except for those representations and
warranties that are qualified by materiality or Material Adverse Effect, which
shall be accurate in all respects) as of the date when made and as of the
Closing Date as though made at that time (except for representations and
warranties that speak as of a specific date which shall be true and correct as
of such specified date) and the Company shall have performed, satisfied and
complied in all material respects with the covenants, agreements and conditions
required by the Transaction Documents to be performed, satisfied or complied
with by the Company at or prior to the Closing Date (except for covenants,
agreement and conditions that are qualified by materiality or Material Adverse
Effect, which shall be performed, satisfied or complied with, in all respects).
Such Buyer shall have received a certificate, executed by an executive officer
of the Company, dated as of the Closing Date, to the foregoing effect and as to
such other matters as may be reasonably requested by such Buyer in the form
attached hereto as Exhibit G.
 
(viii) The Company shall have delivered to such Buyer a letter from the
Company's transfer agent certifying the number of shares of Common Stock
outstanding as of a date within five (5) days of the Closing Date.
 
(ix)  The Common Stock (I) shall be designated for quotation or listed on the
Principal Market and (II) shall not have been suspended, as of the Closing Date,
by the SEC or the Principal Market from trading on the Principal Market nor
shall suspension by the SEC or the Principal Market have been threatened, as of
the Closing Date, either (A) in writing by the SEC or the Principal Market or
(B) by falling below the minimum listing maintenance requirements of the
Principal Market.
 
(x) The Company shall have obtained all governmental, regulatory or third party
consents and approvals, if any, necessary for the sale of the Securities.
 
 
30

 
 
(xi) Such Buyer shall have received the Company's wire instructions on Company's
letterhead duly executed by an authorized officer of the Company.
 
(xii) The Company shall have delivered to such Buyer such other documents
relating to the transactions contemplated by this Agreement as such Buyer or its
counsel may reasonably request.
 
8. TERMINATION. In the event that the Closing shall not have occurred with
respect to a Buyer on or before five (5) Business Days from the date hereof due
to the Company's or such Buyer's failure to satisfy the conditions set forth in
Sections 6 and 7 above (and the nonbreaching party's failure to waive such
unsatisfied condition(s)), the nonbreaching party shall have the option to
terminate this Agreement with respect to such breaching party at the close of
business on such date by delivering a written notice to that effect to each
other party to this Agreement and without liability of any party to any other
party; provided, however, that if this Agreement is terminated pursuant to this
Section 8, the Company shall remain obligated to reimburse Empery or its
designee(s), as applicable, for the expenses described in Section 4(g) above.
 
9. MISCELLANEOUS.
 
(a) Governing Law; Jurisdiction; Jury Trial. All questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by the internal laws of the State of New York, without giving effect
to any choice of law or conflict of law provision or rule (whether of the State
of New York or any other jurisdictions) that would cause the application of the
laws of any jurisdictions other than the State of New York. Each party hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in The City of New York, Borough of Manhattan, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to such
party at the address for such notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY
WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF
THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
 
(b) Counterparts. This Agreement may be executed in two or more identical
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party; provided that a facsimile or .pdf signature shall
be considered due execution and shall be binding upon the signatory thereto with
the same force and effect as if the signature were an original, not a facsimile
or .pdf signature.
 
 
31

 
 
(c) Headings. The headings of this Agreement are for convenience of reference
and shall not form part of, or affect the interpretation of, this Agreement.
 
(d) Severability. If any provision of this Agreement is prohibited by law or
otherwise determined to be invalid or unenforceable by a court of competent
jurisdiction, the provision that would otherwise be prohibited, invalid or
unenforceable shall be deemed amended to apply to the broadest extent that it
would be valid and enforceable, and the invalidity or unenforceability of such
provision shall not affect the validity of the remaining provisions of this
Agreement so long as this Agreement as so modified continues to express, without
material change, the original intentions of the parties as to the subject matter
hereof and the prohibited nature, invalidity or unenforceability of the
provision(s) in question does not substantially impair the respective
expectations or reciprocal obligations of the parties or the practical
realization of the benefits that would otherwise be conferred upon the parties.
The parties will endeavor in good faith negotiations to replace the prohibited,
invalid or unenforceable provision(s) with a valid provision(s), the effect of
which comes as close as possible to that of the prohibited, invalid or
unenforceable provision(s).
 
(e) Entire Agreement; Amendments. This Agreement and the other Transaction
Documents supersede all other prior oral or written agreements between the
Buyers, the Company, their affiliates and Persons acting on their behalf with
respect to the matters discussed herein, and this Agreement, the other
Transaction Documents and the instruments referenced herein and therein contain
the entire understanding of the parties with respect to the matters covered
herein and therein and, except as specifically set forth herein or therein,
neither the Company nor any Buyer makes any representation, warranty, covenant
or undertaking with respect to such matters. Provisions of this Agreement may be
amended and the observance thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Company and the holders of at least a majority of the
aggregate number of shares of Common Stock issued or issuable under the Notes
and Warrants (without regard to any restriction or limitation on the exercise of
the Warrants or conversion of the Notes contained therein) and shall include (i)
affiliates of Empery Asset Management, LP ("Empery") so long as Empery or any of
its affiliates holds any Securities and (ii) affiliates of Ayrton Capital LLC
("Ayrton") so long as Ayrton or any of its affiliates holds any Securities (the
"Required Holders"). Any amendment or waiver effected in accordance with this
Section 9(e) shall be binding upon each Buyer and holder of Securities and the
Company. No such amendment shall be effective to the extent that it applies to
less than all of the Buyers or holders of Securities. No consideration shall be
offered or paid to any Person to amend or consent to a waiver or modification of
any provision of any of the Transaction Documents unless the same consideration
(other than the reimbursement of legal fees) also is offered to all of the
parties to the Transaction Documents, holders of Notes or holders of the
Warrants, as the case may be. The Company has not, directly or indirectly, made
any agreements with any Buyers relating to the terms or conditions of the
transactions contemplated by the Transaction Documents except as set forth in
the Transaction Documents. Without limiting the foregoing, the Company confirms
that, except as set forth in this Agreement, no Buyer has made any commitment or
promise or has any other obligation to provide any financing to the Company or
otherwise.
 
 
32

 
 
(f) Notices. Any notices, consents, waivers or other communications required or
permitted to be given under the terms of this Agreement or any of the other
Transaction Document's must be in writing and will be deemed to have been
delivered: (i) upon receipt, when delivered personally; (ii) upon delivery, when
sent by facsimile (provided confirmation of transmission is mechanically or
electronically generated and kept on file by the sending party), (iii) upon
delivery, when sent by electronic mail (provided that the sending party does not
receive an automated rejection notice); or (iv) one Business Day after deposit
with an overnight courier service, in each case properly addressed to the party
to receive the same. The addresses, facsimile numbers and e-mail addresses for
such communications shall be:
 
If to the Company:
 
GT Biopharma, Inc.
1825 K Street, Suite 510
Washington, D.C. 20006
Telephone: (800) 304-9888
Facsimile: 202-785-0529
Attention: Steven Weldon
E-mail: sww@gtbiopharma.com
 
With a copy to (for informational purposes only):
 
DLA Piper LLP (US)
401 Congress Ave., Suite 2500
Austin, Texas 78701
Telephone: 512-457-7037
Facsimile: 512-721-2212
Attention: Jenifer Smith
E-mail: jenifer.smith@dlapiper.com
 
If to the Transfer Agent:
 
ComputerShare Trust Company, N.A.
8742 Lucent Blvd, Suite 225
Telephone: 303-262-0787
Facsimile: 303-262-0610
Attention: Stevie Marcus
E-mail: stevie.marcus@computershare.com
 
 
33

 
 
If to a Buyer, to its address, facsimile number and e-mail address set forth on
the Schedule of Buyers, with copies to such Buyer's representatives as set forth
on the Schedule of Buyers,
 
with a copy (for informational purposes only) to:
 
Schulte Roth & Zabel LLP
919 Third Avenue
New York, New York 10022
Telephone: (212) 756-2000
Facsimile: (212) 593-5955
Attention: Eleazer N. Klein, Esq.
E-mail: eleazer.klein@srz.com
 
or to such other address, facsimile number and/or e-mail address and/or to the
attention of such other Person as the recipient party has specified by written
notice given to each other party five (5) days prior to the effectiveness of
such change. Written confirmation of receipt (A) given by the recipient of such
notice, consent, waiver or other communication, (B) mechanically or
electronically generated by the sender's facsimile machine or e-mail containing
the time, date, recipient facsimile number and an image of the first page of
such transmission or (C) provided by an overnight courier service shall be
rebuttable evidence of personal service, receipt by facsimile or receipt from an
overnight courier service in accordance with clause (i), (ii) or (iii) above,
respectively.
 
(g) Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties and their respective successors and assigns,
including any purchasers of the Notes or the Warrants. The Company shall not
assign this Agreement or any rights or obligations hereunder without the prior
written consent of the Required Holders, including by way of a Fundamental
Transaction (unless the Company is in compliance with the applicable provisions
governing Fundamental Transactions set forth in the Notes and the Warrants). A
Buyer may assign some or all of its rights hereunder without the consent of the
Company, in which event such assignee shall be deemed to be a Buyer hereunder
with respect to such assigned rights.
 
(h) No Third Party Beneficiaries. This Agreement is intended for the benefit of
the parties hereto and their respective permitted successors and assigns, and is
not for the benefit of, nor may any provision hereof be enforced by, any other
Person, except that each Indemnitee shall have the right to enforce the
obligations of the Company with respect to Section 9(k).
 
(i) Survival. Unless this Agreement is terminated under Section 8, the
representations and warranties of the Company and the Buyers contained in
Sections 2 and 3, and the agreements and covenants set forth in Sections 4, 5
and 9 shall survive the Closing. Each Buyer shall be responsible only for its
own representations, warranties, agreements and covenants hereunder.
 
(j) Further Assurances. Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all
such other agreements, certificates, instruments and documents, as any other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.
 
 
34

 
 
(k) Indemnification. In consideration of each Buyer's execution and delivery of
the Transaction Documents and acquiring the Securities thereunder and in
addition to all of the Company's other obligations under the Transaction
Documents, the Company shall defend, protect, indemnify and hold harmless each
Buyer and each other holder of the Securities and all of their stockholders,
partners, members, officers, directors, employees and direct or indirect
investors and any of the foregoing Persons' agents or other representatives
(including, without limitation, those retained in connection with the
transactions contemplated by this Agreement) (collectively, the "Indemnitees")
from and against any and all actions, causes of action, suits, claims, losses,
costs, penalties, fees, liabilities and damages, and expenses in connection
therewith (irrespective of whether any such Indemnitee is a party to the action
for which indemnification hereunder is sought), and including reasonable
attorneys' fees and disbursements (the "Indemnified Liabilities"), incurred by
any Indemnitee as a result of, or arising out of, or relating to (a) any
misrepresentation or breach of any representation or warranty made by the
Company in the Transaction Documents or any other certificate, instrument or
document contemplated hereby or thereby, (b) any breach of any covenant,
agreement or obligation of the Company contained in the Transaction Documents or
any other certificate, instrument or document contemplated hereby or thereby or
(c) any cause of action, suit or claim brought or made against such Indemnitee
by a third party (including for these purposes a derivative action brought on
behalf of the Company) and arising out of or resulting from (i) the execution,
delivery, performance or enforcement of the Transaction Documents or any other
certificate, instrument or document contemplated hereby or thereby, (ii) any
transaction financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of the issuance of the Securities, or (iii) the
status of such Buyer or holder of the Securities as an investor in the Company
pursuant to the transactions contemplated by the Transaction Documents. To the
extent that the foregoing undertaking by the Company may be unenforceable for
any reason, the Company shall make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities that is permissible under
applicable law. Except as otherwise set forth herein, the mechanics and
procedures with respect to the rights and obligations under this Section 9(k)
shall be the same as those set forth in Section 6 of the Registration Rights
Agreement. The Company will not be liable to any Buyer under this indemnity: (i)
for any settlement by a Buyer in connection with any claim effected without the
Company’s prior written consent, which consent shall not be unreasonably
withheld, conditioned or delayed; or (ii) to the extent, but only to the extent,
that a claim is attributable to any Buyer’s breach of any of the
representations, warranties, covenants or agreements made by such Buyer in this
Agreement or in the other Transaction Documents.
 
(l) No Strict Construction. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party.
 
(m) Remedies. Each Buyer and each holder of the Securities shall have all rights
and remedies set forth in the Transaction Documents and all rights and remedies
which such holders have been granted at any time under any other agreement or
contract and all of the rights which such holders have under any law. Any Person
having any rights under any provision of this Agreement shall be entitled to
enforce such rights specifically (without posting a bond or other security), to
recover damages by reason of any breach of any provision of this Agreement and
to exercise all other rights granted by law. Furthermore, the Company recognizes
that in the event that it fails to perform, observe, or discharge any or all of
its obligations under the Transaction Documents, any remedy at law may prove to
be inadequate relief to the Buyers. The Company therefore agrees that the Buyers
shall be entitled to seek temporary and permanent injunctive relief in any such
case without the necessity of proving actual damages and without posting a bond
or other security.
 
 
35

 
 
(n) Rescission and Withdrawal Right. Notwithstanding anything to the contrary
contained in (and without limiting any similar provisions of) the Transaction
Documents, whenever any Buyer exercises a right, election, demand or option
under a Transaction Document and the Company does not timely perform its related
obligations within the periods therein provided, then such Buyer may rescind or
withdraw, in its sole discretion from time to time upon written notice to the
Company, any relevant notice, demand or election in whole or in part without
prejudice to its future actions and rights.
 
(o) Payment Set Aside. To the extent that the Company makes a payment or
payments to the Buyers hereunder or pursuant to any of the other Transaction
Documents or the Buyers enforce or exercise their rights hereunder or
thereunder, and such payment or payments or the proceeds of such enforcement or
exercise or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside, recovered from, disgorged by or are
required to be refunded, repaid or otherwise restored to the Company, a trustee,
receiver or any other Person under any law (including, without limitation, any
bankruptcy law, foreign, state or federal law, common law or equitable cause of
action), then to the extent of any such restoration the obligation or part
thereof originally intended to be satisfied shall be revived and continued in
full force and effect as if such payment had not been made or such enforcement
or setoff had not occurred.
 
(p) Independent Nature of Buyers' Obligations and Rights. The obligations of
each Buyer under any Transaction Document are several and not joint with the
obligations of any other Buyer, and no Buyer shall be responsible in any way for
the performance of the obligations of any other Buyer under any Transaction
Document. Nothing contained herein or in any other Transaction Document, and no
action taken by any Buyer pursuant hereto or thereto, shall be deemed to
constitute the Buyers as, and the Company acknowledges that the Buyers do not so
constitute, a partnership, an association, a joint venture or any other kind of
entity, or create a presumption that the Buyers are in any way acting in concert
or as a group, and the Company shall not assert any such claim with respect to
such obligations or the transactions contemplated by the Transaction Documents
and the Company acknowledges that the Buyers are not acting in concert or as a
group with respect to such obligations or the transactions contemplated by the
Transaction Documents. The Company acknowledges and each Buyer confirms that it
has independently participated in the negotiation of the transaction
contemplated hereby with the advice of its own counsel and advisors. Each Buyer
shall be entitled to independently protect and enforce its rights, including,
without limitation, the rights arising out of this Agreement or out of any other
Transaction Documents, and it shall not be necessary for any other Buyer to be
joined as an additional party in any proceeding for such purpose.
 
[Signature Page Follows]
 
 
 
36

 
IN WITNESS WHEREOF, each Buyer and the Company have caused their respective
signature page to this Securities Purchase Agreement to be duly executed as of
the date first written above.
 
 
 
 
COMPANY:
 
 
 
 
 
 
 
GT BIOPHARMA, INC.
 
 
 
 
 
 
 
 
 
 
 
 
 
By:
 
 
 
 
 
Name:
 
 
 
 
Title:
 
 
 
 
 

 
 
 
 
 

[Signature Page to Securities Purchase Agreement]
37

 
IN WITNESS WHEREOF, each Buyer and the Company have caused their respective
signature page to this Securities Purchase Agreement to be duly executed as of
the date first written above.
 
 
 
 
BUYERS:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
By:
 
 
 
 
 
Name:
 
 
 
 
Title:
 
 
 
 
 

 
 
 
 

 
38

 

 
SCHEDULE OF BUYERS
 
(1) 

 
(2)

 
(3) 

 
(4) 

 
(5) 

 
(6) 

Buyer 

 
Address and
Facsimile
Number

 
Aggregate Principal
Amount
of Notes 
 
Number of
Warrant Shares 
 
Purchase
Price 
 
Legal Representative's
Address and
Facsimile Number 
 
 
 
 
 
 
 
 
 
 
 
Empery Asset Master Ltd.
 
 
c/o Empery Asset Management, LP1 Rockefeller Plaza, Suite 1205New York, NY
10020Attention: Ryan M. LaneFacsimile: +1 212 608 3307Telephone: +1 212 608
3300Email: notices@emperyam.com
 
$963,600.96
 
 
210,394
 
 
$876,000.00
 
 
Schulte Roth & Zabel LLP919 Third AvenueNew York, New York 10022Attention:
Eleazer Klein, Esq.Facsimile: (212) 593-5955Telephone: (212) 756-2376
 
 
 
 
 
 
 
 
 
 
 
Empery Tax Efficient, LP
 
 
c/o Empery Asset Management, LP1 Rockefeller Plaza, Suite 1205New York, NY
10020Attention: Ryan M. LaneFacsimile: +1 212 608 3307Telephone: +1 212 608
3300Email: notices@emperyam.com
 
$366,300.37
 
 
79,979
 
 
$333,000.00
 
 
Schulte Roth & Zabel LLP919 Third AvenueNew York, New York 10022Attention:
Eleazer Klein, Esq.Facsimile: (212) 593-5955Telephone: (212) 756-2376
 
 
 

 
 
 
 
 
 
 
 
Empery Tax Efficient II, LP
 
 
c/o Empery Asset Management, LP1 Rockefeller Plaza, Suite 1205New York, NY
10020Attention: Ryan M. LaneFacsimile: +1 212 608 3307Telephone: +1 212 608
3300Email: notices@emperyam.com
 
$870,100.87
 
 
189,979
 
 
$791,000.00
 
 
Schulte Roth & Zabel LLP919 Third AvenueNew York, New York 10022Attention:
Eleazer Klein, Esq.Facsimile: (212) 593-5955Telephone: (212) 756-2376
 
 
 
 
 
 
 
 
 
 
 
Siesta Fiesta Holdings, LLC
 
c/o Siesta Fiesta Holdings, LLC
7924 Midnight Pass Road
Sarasota, FL 34242
Attention: Scott Williams
Facsimile: 407-657-4280
Telephone : 941-724-3504
Email Address: scoot61@comcast.net
 
$55,000.06
 
 
12,009
 
 
$50,000.00
 
 
 
 

 
 
 
 
 
 
 
 
 
 
James Heavener
 
James W. Heavener
3300 University Blvd., Suite 218
Winter Park, FL 32792
Facsimile: 407-657-4280
Telephone : 407-865-4875
Email Address:bheavener@fullsail.com
 
$918,500.92
 
200,547
 
$835,000.00
 
 
 

 
 
 
 
 
 
 
 
 
 
Alto Opportunity Master Fund, SPC - Segregated Master Portfolio B
 
c/o Ayrton Capital LLC
1180 Avenue of Americas, Suite 842
New York, NY 10036
Telephone: +1-646-793-9056
Email: wk@ayrtonllc.com
 
$2,200,002.20
 
 
480,350
 
 
$2,000,000.00
 
 
 
 

 
 
 
 
 
 
 
 
 
 
Adam Kasower
 
25170 Jim Bridger Road
Hidden Hills, CA 91302
Telephone: 818-429-1551
Email: adam@kasower.com
 
$550,000.55
 
 
120,088
 
 
$500,000.00
 
 
 
 

 
 
 
 
 
 
 
 
 
 
Red Mango Enterprises Limited
 
Pictet & Cie (Europe) S.A. Hong Kong Branch, 9/F Chater House 8 Connaught Road
Central, Hong Kong
Facsimile: 852 3131 1808
Telephone: 852 3191 1805
Email Address: mchow@pictet.com
 
$918,500.92
 
 
 
 
200,547
 
 
$835,000.00
 
 
 
 

 
 
 
 
 
 
 
 
 
 
The Rosalinde and Arthur Gilbert Foundation
 
2730 Wilshire Blvd., Suite 301
Santa Monica, CA 90403
Attention: Martin H. Blank, Jr.
Telephone: 310-736-1617
Email: marty@mblank.com
 
$385,000.39
 
 
84,062
 
 
$350,000.00
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The RSZ Trust
 
11620 Wilshire Blvd., Suite 1000
Los Angeles, CA 90025
Attention: Richard S. Ziman
Telephone: 310-966-3802
Email: rziman@rexfordindustrial.com
 
$126,500.13
 
 
27,621
 
 
$115,000.00
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Jeffrey Bronfman Revocable Living Trust
 
1000 Cordova Place #710
Santa Fe, NM 87505
Attention: Jeffrey Bronfman
Telephone: 505-988-5924
Email: jeffreyudv@aol.com
 
$165,000.17
 
 
36,027
 
 
$150,000.00
 
 
 
 

 
 
 
 
 
 
 
 
 
 
Lipp Irrevocable Trust
 
270 18th St.
Santa Monica, CA 90402
Attention: Diane S. Lipp
Telephone: 310-395-2679
Email: dedelipp@gmail.com
 
$44,000.04
 
 
9,607
 
 
$40,000.00
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Robert H. Lipp Separate Property Trust
 
270 18th St.
Santa Monica, CA 90402
Attention: Robert H. Lipp
Telephone: 310-395-2679
Email: roblipp@gam-llc.com
 
$154,000.15
 
 
33,625
 
 
$140,000.00
 
 
 
 

 
 
 
 
 
 
 
 
 
 
Diane S. Lipp Separate Property Trust
 
270 18th St.
Santa Monica, CA 90402
Attention: Diane S. Lipp
Telephone: 310-395-2679
Email: dedelipp@gmail.com
 
$44,000.04
 
 
9,607
 
 
$40,000.00
 
 
 

 
 
 

 
39

 
 
EXHIBITS
 
Exhibit A
Form of Notes
Exhibit B
Form of Warrants
Exhibit C
Form of Registration Rights Agreement
Exhibit D
Form of Irrevocable Transfer Agent Instructions
Exhibit E
Form of Opinion of Company Counsel
Exhibit F
Form of Secretary's Certificate
Exhibit G
Form of Officer's Certificate
 
 
 
SCHEDULES
 
Schedule 3(a)
Subsidiaries
Schedule 3(k)
SEC Documents
Schedule 3(l)
Absence of Certain Changes
Schedule 3(n)
Regulatory Permits
Schedule 3(q)
Transactions with Affiliates
Schedule 3(r)
Equity Capitalization
Schedule 3(s)
Indebtedness and Other Contracts
Schedule 3(t)
Absence of Litigation
Schedule 3(x)
Intellectual Property Rights
Schedule 3(ee)
Ranking of Notes
Schedule 4(d)
Use of Proceeds
 
 
 
 

 
40

 
EXHIBIT A
 
Form of Note
 
(See attached.)
 
 
41

 
EXHIBIT B
 
Form of Warrant
 
(See attached.)
 
 
42

 
EXHIBIT C
 
Form of Registration Rights Agreement
 
(See attached.)
 
 
43

 
EXHIBIT D
 
Form of Irrevocable Transfer Agent Instructions
 
GT BIOPHARMA, INC.
 
January __, 2018
 
Computershare Trust Company, N.A.
250 Royall Street
Canton, MA 02066
Attn: Kathy Heagerty
 
Ladies and Gentlemen:
 
Reference is made to that certain Securities Purchase Agreement, dated as of
January __, 2018 (the "Agreement"), by and among GT Biopharma, Inc., a Delaware
corporation (the "Company"), and the investors named on the Schedule of Buyers
attached thereto (collectively, the "Holders"), pursuant to which the Company is
issuing to the Holders (i) senior convertible notes (the "Notes"), which are
convertible into shares of the common stock of the Company, par value $0.001 per
share (the "Common Stock") and (ii) warrants (the "Warrants"), which are
exercisable to purchase shares of Common Stock.
 
This letter shall serve as our irrevocable authorization and direction to you
(provided that you are the transfer agent of the Company at such time):
 
(i) to issue shares of Common Stock upon conversion of the Notes (the
"Conversion Shares"), promptly upon your receipt of an instruction letter on
Company letterhead and signed by a duly authorized officer of the Company, which
Company shall provide to you upon its receipt of a properly completed and duly
executed Conversion Notice, in the form attached hereto as Exhibit I. The
Company shall instruct you as to whether such shares of Common Stock will
contain a restrictive legend, and the details of such legends, if applicable.
 
 (ii) to issue shares of Common Stock upon exercise of the Warrants (the
"Warrant Shares"), promptly upon your receipt of an instruction letter on
Company letterhead and signed by a duly authorized officer of the Company, which
Company shall provide to you upon its receipt of a properly completed and duly
executed Exercise Notice, in the form attached hereto as Exhibit II. The Company
shall instruct you as to whether such Shares will contain a restrictive legend,
and the details of such legends, if applicable.
 
 
44

 
 
Subject to compliance with Computershare’s issuance, transfer, and restricted
stock processing requirements, including, but not limited to, documents being
submitted in good order, you acknowledge and agree that so long as you have
previously received (a) written confirmation from the Company's legal counsel
that either (i) a registration statement covering resales of the Conversion
Shares and the Warrant Shares has been declared effective by the Securities and
Exchange Commission (the "SEC") under the Securities Act of 1933, as amended
(the "1933 Act"), or (ii) sales of the Conversion Shares and/or the Warrant
Shares may be made in conformity with Rule 144 under the 1933 Act ("Rule 144")
and (b) if applicable, a copy of such registration statement, then within two
(2) business days for routine items of your receipt of a Company issuance
instruction, you shall issue the certificates representing the Conversion Shares
and/or the Warrant Shares, as applicable, registered in the names of such
transferees, and such certificates shall not bear any legend restricting
transfer of the Conversion Shares and/or the Warrant Shares thereby and should
not be subject to any stop-transfer restriction; provided, however, that if such
Conversion Shares and Warrant Shares are not registered for resale under the
1933 Act or able to be sold under Rule 144, then the certificates for such
Conversion Shares and/or Warrant Shares shall bear the following legend:
 
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE
ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL SELECTED BY THE
HOLDER, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER
SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.
NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH
A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE
SECURITIES.
 
A form of written confirmation from the Company's outside legal counsel that a
registration statement covering resales of the Conversion Shares and the Warrant
Shares has been declared effective by the SEC under the 1933 Act is attached
hereto as Exhibit III.
 
The Company issues this instruction in accordance with, and this instruction and
your performance hereunder are subject to, the terms of the Transfer Agency and
Service Agreement currently in effect between you and the Company.
 
 
 
45

 
Please execute this letter in the space indicated to acknowledge your agreement
to act in accordance with these instructions. Should you have any questions
concerning this matter, please contact me at ____________.
 
Very truly yours,
 
GT BIOPHARMA, INC.
 
 
By: ___________________________
Name:
Title:
 
THE FOREGOING INSTRUCTIONS ARE
ACKNOWLEDGED AND AGREED TO
 
this ___ day of January, 2018
 
 
COMPUTERSHARE TRUST COMPANY, N.A.
 
 
By:                                             
 
Name:                      
 
Title:                      
 
 
Enclosures
 
 
 
46

 
EXHIBIT I
 
GT BIOPHARAMA, INC.
 
 
CONVERSION NOTICE
 
Reference is made to the Senior Convertible Note (the "Note") issued to the
undersigned by GT Biopharma, Inc., a Delaware corporation (the "Company"). In
accordance with and pursuant to the Note, the undersigned hereby elects to
convert the Conversion Amount (as defined in the Note) of the Note indicated
below into shares of Common Stock par value $0.001 per share (the "Common
Stock") of the Company, as of the date specified below.
 
Date of Conversion:
 
Aggregate Conversion Amount to be converted or number of Conversion Shares to be
issued upon conversion:
 
Please confirm the following information:
Conversion Price:
 
If Aggregate Conversion Amount is provided above, number of shares of Common
Stock to be issued:
 
Please issue the Common Stock into which the Note is being converted in the
following name and to the following address:
Issue to:
 
 
 
 
 
Facsimile Number and Electronic Mail:
 
Authorization:
 
By:
 
Title:
 
Dated:
 
Account Number:
 
  (if electronic book entry transfer)
 
Transaction Code Number:
 
  (if electronic book entry transfer)
 

 
 
 
 
47

 
EXHIBIT II
 
 
EXERCISE NOTICE
TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS
WARRANT TO PURCHASE COMMON STOCK
 
GT BIOPHARMA, INC.
The undersigned holder hereby exercises the right to purchase _________________
of the shares of Common Stock ("Warrant Shares") of GT Biopharma, Inc., a
Delaware corporation (the "Company"), evidenced by the attached Warrant to
Purchase Common Stock (the "Warrant"). Capitalized terms used herein and not
otherwise defined shall have the respective meanings set forth in the Warrant.
 
1. Form of Exercise Price. The Holder intends that payment of the Exercise Price
shall be made as:
 
____________ 
a "Cash Exercise" with respect to _________________ Warrant Shares; and/or
 
____________ 
a "Cashless Exercise" with respect to _______________ Warrant Shares.
 
2. Payment of Exercise Price. In the event that the holder has elected a Cash
Exercise with respect to some or all of the Warrant Shares to be issued pursuant
hereto, the holder shall pay the Aggregate Exercise Price in the sum of
$___________________ to the Company in accordance with the terms of the Warrant.
 
3. Delivery of Warrant Shares. The Company shall deliver to the holder
__________ Warrant Shares in accordance with the terms of the Warrant.
 
Date: _______________ __, ______
 
 
 
   Name of Registered Holder
 
 
By:           
Name:
Title:
 
 
 
48

 
EXHIBIT III
 
FORM OF NOTICE OF EFFECTIVENESS
 
OF REGISTRATION STATEMENT
 
 
ComputerShare Trust Company, N.A.
[______]
[______]
Attention: [______]
 
Re:            
GT Biopharma, Inc.
 
Ladies and Gentlemen:
 
[We are][I am] counsel to GT Biopharma, Inc., a Delaware corporation (the
"Company"), and have represented the Company in connection with that certain
Securities Purchase Agreement, dated as of January 22, 2018 (the "Securities
Purchase Agreement"), entered into by and among the Company and the buyers named
therein (collectively, the "Holders") pursuant to which the Company issued to
the Holders senior convertible notes (the "Notes") pursuant to which shares of
the Company's common stock, par value $0.001 per share (the "Common Stock") are
issuable thereunder and warrants exercisable for shares of Common Stock (the
"Warrants"). Pursuant to the Securities Purchase Agreement, the Company also has
entered into a Registration Rights Agreement with the Holders (the "Registration
Rights Agreement") pursuant to which the Company agreed, among other things, to
register the resale of the Registrable Securities (as defined in the
Registration Rights Agreement), including the shares of Common Stock issuable
pursuant to the terms of the Notes and upon exercise of the Warrants under the
Securities Act of 1933, as amended (the "1933 Act"). In connection with the
Company's obligations under the Registration Rights Agreement, on ____________
___, 2014, the Company filed a Registration Statement on Form S-3 (File No.
333-_____________) (the "Registration Statement") with the Securities and
Exchange Commission (the "SEC") relating to the Registrable Securities which
names each of the Holders as a selling stockholder thereunder.
 
In connection with the foregoing, [we][I] advise you that a member of the SEC's
staff has advised [us][me] by telephone that the SEC has entered an order
declaring the Registration Statement effective under the 1933 Act at [ENTER TIME
OF EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and [we][I] have no
knowledge, after telephonic inquiry of a member of the SEC's staff, that any
stop order suspending its effectiveness has been issued or that any proceedings
for that purpose are pending before, or threatened by, the SEC and the
Registrable Securities are available for resale under the 1933 Act pursuant to
the Registration Statement.
 
This letter shall serve as our standing instruction to you that the shares of
Common Stock are freely transferable by the Holders pursuant to the Registration
Statement. You need not require further letters from us to effect any future
legend-free issuance or reissuance of shares of Common Stock to the Holders as
contemplated by the Company's Irrevocable Transfer Agent Instructions dated
January [●], 2018.
 
Very truly yours,
 
[ISSUER'S COUNSEL]
 
By:_____________________
 
CC:            
[LIST NAMES OF HOLDERS]
 
 
 
 
 
49

 
EXHIBIT E
 
Form of Opinion of Company Counsel
 
January [__], 2018
 
Each Buyer identified on the signature
pages to the Purchase Agreement (as defined below)
 
RE: GT Biopharma, Inc.
 
Ladies and Gentlemen:
 
We have acted as counsel to GT Biopharma, Inc., a Delaware corporation (the
“Company”), in connection with the execution and delivery of the Securities
Purchase Agreement, dated as of January 22, 2018 (the “Purchase Agreement”), by
and among the Company and each Buyer identified on the signature pages thereto
(the “Buyers”).
 
This opinion is being delivered to you pursuant to Section 7(ii) of the Purchase
Agreement. Capitalized terms used in this opinion and not otherwise defined in
this opinion shall have the meanings ascribed to them in the Purchase Agreement.
 
In connection with the opinions expressed herein, we have made such examination
of law as we considered appropriate or advisable for purposes hereof. We have
also examined originals or copies, certified or otherwise identified to our
satisfaction of:
 
(i) 
executed copies of the Purchase Agreement, the Registration Rights Agreement,
the Notes and the Warrants (collectively, the “Agreements”);
 
(ii) 
the Company’s Second Amended and Restated Certificate of Incorporation, and the
Company’s Amended and Restated Bylaws, each as amended and in effect as of the
date hereof, certified as true, accurate and complete by an officer of the
Company (collectively, the “Organizational Documents”);
 
(iii) 
the Certificate of Designations, Preferences and Rights of Series C Convertible
Preferred Stock, filed with the Securities and Exchange Commission on April 1,
2002, and the Certificate of Designations, Preferences and Rights of Series J
Convertible Preferred Stock, filed with the Securities and Exchange Commission
on November 14, 2017 (collectively, the “Certificates of Designations”);
 
(iv) 
the original or electronically transmitted certificates of good standing and
qualification of the Company and its Subsidiaries issued as of a recent date by
the Secretary of State of Delaware, the Department of State of Florida, the
Department of Consumer and Regulatory Affairs, Corporations Division of the
Government of the District of Columbia and the Secretary of State of California
(the “Good Standing Certificates”);
 
 
50

 
 
(v) 
the records of the proceedings and actions of the Company’s Board of Directors
(the “Board”) with respect to the transactions contemplated by the Purchase
Agreement, certified as true, accurate and complete, and in full force and
effect, by an officer of the Company;
 
(vi) 
a certificate of an officer of the Company (the “Officer Certificate”), dated
the date hereof, as to certain factual matters; and
 
(vii) 
such other certificates, documents and matters as we have deemed necessary and
appropriate to render the opinions set forth in this opinion, subject to the
limitations, assumptions, and qualifications noted in this opinion.
 
All references in this opinion letter to the Agreements shall refer only to the
body of such agreements and the disclosure schedules attached to the Purchase
Agreement, exclusive of any other documents incorporated by reference therein
and no opinion is expressed with respect to any documents or provisions of any
documents which purport to be incorporated by reference in any other document.
 
As to factual matters, we have relied solely upon, and assumed the accuracy,
completeness, and genuineness of, the representations and warranties contained
in the Purchase Agreement, statements made in the Officer’s Certificate,
certificates of public officials and oral and written representations made to us
by officers of the Company. With your permission, we have made no independent
investigation of any of the facts stated in any such certificate or
representation.
 
For purposes of this opinion letter, we have assumed that: (i) each party to the
Agreements (other than the Company) is duly organized, validly existing and in
good standing under the laws of the respective state or jurisdiction in which it
is organized and is duly qualified to engage in the transactions contemplated by
the Agreements; (ii) the execution and delivery of the Agreements, and the
consummation and performance of the transactions contemplated by the Agreements,
by all parties (other than the Company) have been duly authorized by all
necessary actions; (iii) each party to the Agreements (other than the Company)
has the requisite power and authority to perform its obligations under the
Agreements; (iv) each of the Agreements constitutes the legal, valid, and
binding obligations of all parties thereto (other than the Company), enforceable
against such parties (other than the Company) in accordance with their
respective terms; (v) each party to the Agreements (other than the Company) is
in compliance with all applicable laws, rules and regulations governing the
transactions contemplated by the Agreements and the conduct of its respective
businesses and is not subject to any statute, rule, regulation, agreement or
other impediment that requires it to obtain the consent of or to make any
declaration or filing with any governmental authority or any other person in
connection with the transactions contemplated by the Agreements; (vi) all
natural persons who are signatories to the Agreements were legally competent at
the time of execution and delivery of the Agreements; (vii) all signatures on
the Agreements and other documents reviewed by us are genuine; (viii) with
respect to the transactions contemplated by the Agreements, all terms and
conditions of the relationship among the Company and you are correctly and
completely reflected in the Agreements; (ix) there has not been any mutual
mistake of fact or understanding with respect to the Agreements, (x) if you are
a corporation or other entity, that you have filed any required state franchise,
income or similar tax returns and have paid any required state franchise, income
or similar taxes; and (xi) that there are no extrinsic agreements or
understandings among the parties to the Agreements that would modify or
interpret the terms of the Agreements or the respective rights or obligations of
the parties thereunder; and (xii) the Agreements, and the transactions
contemplated thereby, were fair, just and reasonable to the Company at the time
of their authorization, approval or ratification by the Board; and we express no
opinion as to such matters.
 
 
51

 
 
Based upon the foregoing, and subject to the assumptions, qualifications and
limitations set forth herein, we are of the opinion that:
 
G.
The Company is an entity duly formed and validly existing under the laws of the
jurisdiction of its formation and is in good standing under such laws. The
Company is duly qualified as a foreign corporation to do business and is in good
standing in the State of Florida, the Government of the District of Columbia and
the State of California.
 
H.
The Company has the requisite corporate power and authority to execute, deliver
and perform all of its obligations under the Agreements, including, without
limitation, the issuance of the Notes and the Warrants, and, upon conversion of
the Notes, issue the Conversion Shares and, upon exercise of the Warrants, issue
the Warrant Shares, in each case, in accordance with the terms thereof. The
execution and delivery of the Agreements by the Company and the consummation by
it of the transactions contemplated therein (including, without limitation, the
issuance and sale of the Notes and the Warrants) have been duly authorized by
the Board and no further consent or authorization of the Company, the Board or
its stockholders is required therefor. The Agreements have been duly executed
and delivered by the Company. The Agreements constitute valid and binding
agreements or obligations of the Company, enforceable against the Company in
accordance with their respective terms, except as enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, arrangement, moratorium or
other similar laws affecting creditors’ rights, and subject to general equity
principles and to limitations on availability of equitable relief, including
specific performance.
 
I.
The execution and delivery of the Agreements by the Company does not and the
performance by the Company of its obligations thereunder will not conflict with
or violate any provision of the Organizational Documents or any of the
Certificates of Designations, and does not and will not, as the case may be,
conflict with or violate (a) any governmental statute, rule or regulation which
in our experience is typically applicable to transactions of the nature
contemplated by the Agreements, (b) any order, writ, judgment, injunction,
decree, determination or award which has been entered against the Company and of
which we are aware, in each case to the extent the violation of which would
materially and adversely affect the Company, taken as a whole or (c) any of the
agreements listed on Exhibit A attached hereto.
 
J.
When so issued in accordance with the terms of the Notes, the Warrants and the
Organizational Documents, the Conversion Shares and the Warrant Shares will be
duly authorized and validly issued, fully paid and nonassessable upon receipt by
the Company of full consideration therefor. The Conversion Shares and the
Warrant Shares have been duly and validly reserved for issuance by all proper
corporate action.
 
 
52

 
 
K.
Subject to the accuracy of the information provided by the Buyers pursuant to
the Purchase Agreement, the offer and sale of the Notes and the Warrants in
accordance with the Purchase Agreement and the issuance and delivery of the
Conversion Shares and the Warrant Shares in accordance with the terms of the
Notes and Warrants, as applicable, do not require registration under the
Securities Act of 1933, as amended.
 
L.
The execution, delivery and performance by the Company of the Agreements and the
issuance of the Notes, Warrants, Conversion Shares and Warrant Shares
contemplated thereby, do not require any consent, license, permit, waiver,
approval or authorization of, or designation, declaration, registration or
filing with, any U.S. federal court, governmental or regulatory authority, or
self-regulatory organization (other than any filing with the U.S. Securities and
Exchange Commission, state securities regulatory authorities, or the OTC QB that
may be required to be made by the Company) or from the stockholders of the
Company.
 
M.
The Company and its Board of Directors have taken all necessary action, if any,
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
as a result of the Buyers and the Company fulfilling their obligations or
exercising their rights under the Transaction Documents, including without
limitation, the Company's issuance of Notes on the date hereof (and the
Conversion Shares issuable pursuant to the terms thereof ) and the Warrants (and
the Warrant Shares issuable pursuant to the terms thereof) and the Buyers' and
their affiliates' ownership of such securities or any other securities of the
Company acquired by the Buyer or their affiliates.
 
N.
To our knowledge, no action, suit, proceeding, inquiry or investigation before
or by any court, public board or body or any governmental agency or
self-regulatory organization is pending or threatened against the Company or any
of its Subsidiaries or any of their properties or assets.
 
O.
The sale of the Notes and the use of the proceeds thereof as contemplated in the
Transaction Documents will not violate or be inconsistent with the provisions of
Regulation T, U or X of the Board of Governors of the Federal Reserve System of
the United States.
 
Our opinions are qualified as follows:
 
A. Where we render an opinion “to our knowledge” or concerning an item “known to
us” or our opinion otherwise uses a phrase of similar meaning, it is intended to
indicate that, during the course of our representation of the Company, no
information that would give us current actual knowledge of the inaccuracy of
such statement has come to the attention of Jenifer Smith, Jay Buchanan and
Nicole Huang, the attorneys in this firm who have rendered or are rendering
substantive legal services to the Company in the transactions contemplated by
the Purchase Agreement. However, except as otherwise expressly indicated, with
your permission we have not undertaken any independent investigation to
determine the accuracy of such statements and any limited inquiry undertaken by
us during the preparation of this opinion letter should not be regarded as such
an investigation. No inference as to our knowledge of any matters bearing on the
accuracy of any such statement should be drawn from the fact of our
representation of the Company.
 
 
53

 
 
B. The foregoing opinions are limited to the federal laws of the United States
of America, the laws of the State of Texas and the Delaware General Corporation
Law, each as in effect on the date hereof, and which in our experience are
normally applicable to the transactions contemplated by the Purchase Agreement,
but in each case without our having made any special investigation concerning
any other law, rule or regulation (collectively, “Applicable Laws”). The members
of this Firm that have worked on the transaction are not admitted to practice in
the State of Delaware or the State of New York and do not purport to be experts
on the laws of the State of Delaware generally or on the laws of the State of
New York. Our opinions herein with respect to the Delaware General Corporation
Law are based solely upon a review of such laws as reported in standard
compilations and, with your permission, such opinions are based solely on such
limited review. Any opinions herein regarding the Transaction Documents that are
governed by the laws of the State of New York assume that the laws of the State
of New York are identical to the laws of the State of Texas and are limited to
the application of the laws of the State of Texas by the courts located in the
State of Texas, without regard to principles regarding conflicts of laws.
 
C. We express no opinion as to compliance with U.S. federal securities laws
(except as otherwise set forth in this opinion), state or non-U.S. securities
laws, anti-trust, unfair competition, tax, banking, financial services,
insurance, usury, anti-terrorism, anti-money laundering, pension, intellectual
property, health, safety and welfare, environmental, land use, criminal, or
privacy laws. We also express no opinion as to any laws that may apply to a
party to the Agreements due to the nature of any person’s business or activities
or the industry in which such person does business. We express no opinion as to
the Company’s compliance or noncompliance with applicable federal or state
antifraud statutes, laws, rules and regulations, including without limitation,
the accuracy or completeness of the information provided to you in connection
with the offer and sale of the Securities. Furthermore, we express no opinion
regarding (i) laws, rules or regulations applicable to (1) patents, copyrights,
trademarks and other proprietary rights and licenses and (2) health care
regulatory matters or health care reimbursement, or (ii) matters regulated or
administered by the United States Food and Drug Administration.
 
D. We express no opinion concerning the past, present or future value of any
securities.
 
This opinion letter is predicated solely upon laws in existence and facts as we
know them as of the date hereof and is limited to the matters expressly stated
herein, and no opinion is implied or may be inferred beyond the matters
expressly stated herein. We expressly disclaim any obligation to update this
opinion after the date hereof for any reason, including but not limited to, any
new or changed facts or law which come to our attention after the date hereof.
This letter is based upon our professional knowledge and judgment at this time;
however, it is not to be construed as a guaranty, nor is it a warranty that a
court considering such matters would not rule in a manner contrary to the
opinions set forth herein.
 
This opinion letter is intended solely for your benefit solely with respect to
the transactions contemplated by the Purchase Agreement and may not be used by
you for any other purpose and may not be made available to or relied upon by any
other person or entity without our express prior written consent.
 
 
 
54

 
EXHIBIT F
 
Form of Secretary’s Certificate
 
GT BIOPHARMA, INC.
 
SECRETARY’S CERTIFICATE
 
 
The undersigned hereby certifies that he is the duly elected, qualified and
acting Secretary of GT Biopharma, Inc., a Delaware corporation (the "Company"),
and that as such he is authorized to execute and deliver this certificate in the
name and on behalf of the Company and in connection with the Securities Purchase
Agreement, dated as of January 22, 2018, by and among the Company and the
investors listed on the Schedule of Buyers attached thereto (the "Securities
Purchase Agreement"), and further certifies in his official capacity, in the
name and on behalf of the Company, the items set forth below. Capitalized terms
used but not otherwise defined herein shall have the meaning set forth in the
Securities Purchase Agreement.
 
(i)
Attached hereto as Exhibit A is a true, correct and complete copy of the
unanimous written consent of the Board of Directors of the Company, dated
January 22, 2018. The resolutions contained in Exhibit A have not in any way
been amended, modified, revoked or rescinded, have been in full force and effect
since their adoption to and including the date hereof and are now in full force
and effect.
 
(ii)
Attached hereto as Exhibit B is a true, correct and complete copy of the
Certificate of Incorporation of the Company, together with any and all
amendments thereto, and no action has been taken to further amend, modify or
repeal such Certificate of Incorporation, the same being in full force and
effect in the attached form as of the date hereof.
 
(iii)
Attached hereto as Exhibit C is a true, correct and complete copy of the Bylaws
of the Company and any and all amendments thereto, and no action has been taken
to further amend, modify or repeal such Bylaws, the same being in full force and
effect in the attached form as of the date hereof.
 
 
 
 

 
 
55

 
IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of this __ day
of January, 2018.
 
____________________________________
Steven Weldon
Secretary
 
 
I, Kathleen Clarence-Smith, Chief Executive Officer of the Company, hereby
certify that Steven Weldon is the duly elected, qualified and acting Secretary
of the Company and that the signature set forth above is his true signature.
 
___________________________________
Kathleen Clarence-Smith
Chief Executive Officer
 
 
 

 
56

 
EXHIBIT G
 
Form of Officer’s Certificate
 
GT BIOPHARMA, INC.
 
OFFICER'S CERTIFICATE
 
 
The undersigned officer of GT Biopharma, Inc., a Delaware corporation (the
"Company"), hereby represents, warrants and certifies to the Buyers (as defined
below), pursuant to Section 7(vii) of the Agreement (as defined below), as
follows:
 
1. 
The representations and warranties of the Company set forth in Section 3 of the
Securities Purchase Agreement, dated as of January __, 2018 (the "Agreement"),
among the Company and the investors identified on the Schedule of Buyers
attached to the Agreement (the "Buyers"), are true and correct in all material
respects (except for those representations and warranties that are qualified by
materiality or Material Adverse Effect (as defined in the Agreement), which are
accurate in all respects) as of the date hereof (except for representations and
warranties that speak as of a specific date, which are true and correct as of
such specified date).
 
2. 
The Company has performed, satisfied and complied in all material respects with
the covenants, agreements and conditions required by the Transaction Documents
(as defined in the Agreement) to be performed, satisfied and complied with by
the Company as of the date hereof (except for covenants, agreements and
conditions that are qualified by materiality or Material Adverse Effect, which
have been performed, satisfied or complied with, in all respects).
 
Capitalized terms used but not otherwise defined herein shall have the meaning
set forth in the Agreement.
 
IN WITNESS WHEREOF, the undersigned has executed this certificate this ___ day
of January, 2018.
 
 
 
___________________________
Name: Steven Weldon
Title: Chief Financial Officer
 
 
57

 
SCHEDULES
 
These Disclosure Schedules are provided pursuant to Sections 3 and 4 of the
Securities Purchase Agreement dated January 22, 2018 (the “Agreement”) by and
among GT Biopharma, Inc., a Delaware corporation, with headquarters located at
1825 K Street, Suite 510, Washington, D.C. 20006 (the “Company”), and the
investors listed on the Schedule of Buyers attached thereto (individually, a
“Buyer” and collectively, the “Buyers”). Capitalized terms used but not
otherwise defined herein shall have the meanings ascribed to them in the
Agreement.
 
These Disclosure Schedules are qualified in their entirety by the provisions of
the Agreement, and are not intended to constitute, and shall not be construed as
constituting, representations, warranties, or covenants of the Company except as
and only to the extent explicitly provided in the Agreement. Matters reflected
in these Disclosure Schedules are not necessarily limited to matters required by
the Agreement to be reflected in the Disclosure Schedules. All references to
“Section” refer to a section or subsection in the Agreement, unless the context
otherwise requires. The headings in these Disclosure Schedules are for
convenience of reference only and shall not affect the disclosures contained
herein. The disclosures in these Disclosure Schedules shall apply to the
corresponding numbered or lettered sections of the Agreement. Inclusion of a
matter in the Disclosure Schedules with respect to a representation or warranty
that addresses matters having a Material Adverse Effect shall not be deemed an
indication that such matter does or may have a Material Adverse Effect. These
Disclosure Schedules may include matters not required by the terms of the
Agreement to be listed on the Disclosure Schedules, which additional matters are
disclosed for purposes of information only, and inclusion of any such matter
does not mean that all such matters are included.
 
 
 
 
58

 
 
 
Schedule 3(a)

Organization and Qualification
 
Oxis Biotech, Inc.
 
Georgetown Translational Pharmaceuticals, Inc.
 
 
59

 
 
 
Schedule 3(k)
SEC Documents; Financial Statements
 
None.
 
 
 
60

 
 
 
Schedule 3(l)  

Absence of Certain Changes
 
None.
 
 
61

 
 
 
Schedule 3(n)

Conduct of Business; Regulatory Permits
 
None.
 
 
62

 
 
 
Schedule 3(q)

Transactions with Affiliates
 
Master Consulting Agreement by and between the Company and KM Pharmaceuticals
Consulting LLC, dated January 1, 2017.
 
 
 
63

 
 
 
Schedule 3(r)
Equity Capitalization
 
None.
 
 
 
64

 
 
 
Schedule 3(s)
Indebtedness and Other Contracts
 
(i)
 
On November 8, 2010, the Company entered into a financing arrangement with
Gemini Pharmaceuticals, Inc., a product development and manufacturing partner of
the Company, pursuant to which Gemini Pharmaceuticals made a $250,000 strategic
equity investment in the Company and agreed to make a $750,000 purchase order
line of credit facility available to the Company. Gemini Pharmaceuticals has
lent $31,000 to the Company pursuant to such letter of credit facility.
 
65

 
 
Schedule 3(t)

Absence of Litigation
 
On June 23, 2016, the Company was served with a complaint filed in the Circuit
Court of the 13th Judicial Circuit in and for Hillsborough County, FL, Case No.
16-CA-004791. Suit was brought against the Company by Lippert/Heilshorn and
Associates, Inc. who is alleging they are owed compensation for consulting
services provided to the company. They are seeking payment of $73,898. The
Company has engaged legal counsel to answer the complaint.
 
On or immediately before February 15, 2017, MultiCell Immunotherapeutics filed
an arbitration proceeding against the Company with the American Health Lawyers
Association, Claim #3821.  In its statement of claim, MultiCell is seeking
$207,783 plus interest and costs of arbitration pursuant to alleged contract
rights against the Company under a research agreement between the parties. 
Following a hearing held September 1, 2017, the arbitrator awarded MultiCell the
payment amount of $207,783 plus interest in the amount of $34,699. We are having
legal counsel review to determine the extent to which the arbitrator’s award is
legally binding on the Company.
 
 
 
 
66

 
 
Schedule 3(x)
Intellectual Property Rights
 
(i)
 
Appl. No./ Pat./Pub. No.
 
Title
 
Country
 
Status
PCT Patent Application Number PCT/US2016/055722
 
Therapeutic compounds and methods
 
US
 
Pending
U.S. Patent Number 9,371,386
 
Methods and compositions for bi-specific targeting of cd19/cd22
 
US
 
Issued
U.S. Patent Application Number 15/187,579
 
Methods and compositions for bi-specific targeting of cd19/cd22
 
US
 
Pending
U.S. Patent Number 9580382
 
P62­zz chemical inhibitor
 
US
 
Issued
U.S. Patent Application Number 14/727,710
 
P62­zz chemical inhibitor
 
US
 
Pending
Chinese Patent Application 201280048718
 
P62­zz chemical inhibitor
 
US
 
Pending
U.S. Patent Number 7,838,031
 
Method for administering a partial dose using a segmented pharmaceutical tablet
 
US
 
Issued
U.S. Patent Number 7,879,352
 
Scored pharmaceutical tablets comprising a plurality of segments
 
US
 
Issued
U.S. Patent Number 8,158,148
 
Pharmaceutical tablets comprising two or more unitary segments
 
US
 
Issued
U.S. Patent Number 8,231,902 (ABT-054)
 
Segmented pharmaceutical dosage forms
 
US
 
Issued
U.S. Patent Application Number 62/449,599
 
Neostigmine combination for treating Myasthenia Gravis
 
US
 
Pending
U.S. Patent Application Number 62/536,595
 
Method and composition for treating Myasthenia Gravis
 
US
 
Pending
U.S. Patent Application Number 62/536,580
 
Neostigmine pharmaceutical combination for treating Myasthenia Gravis
 
US
 
Pending
PCT Application Number PCT/US/18/12754
 
Use and composition for treating Myasthenia Gravis
 
PCT
 
Claims priority from US
62/443,904
PCT Application Number
 
Use and composition for preventing and treating motion sickness
 
PCT
 
Claims priority from US
62/440,575
PCT/US/17/68944

 
 
 
 
Taiwan Application Number 107100813

 
TW
 
Awaiting FC Report
Taiwan Application Number 107100079

 
TW
 
Awaiting FC Report
US Patent Application Number 62/595,667
 
Use, method, and device for the prevention and treatment of motion sickness
 
US
 
Pending

 
(ii)
 
Appl. No.
 
Title
 
Country
 
Status
U.S. Patent Application Number 62/237,835
 
Therapeutic compounds and its uses
US
 
Expired
U.S. Patent Application Number 61/160,530
 
Methods and compositions for bi-specific targeting of cd19/cd22
US
 
Expired
U.S. Patent Application Number 61/521,287
 
P62­zz chemical inhibitor
US
 
Expired
PCT Patent Application Number PCT/US2012/049911
 
P62­zz chemical inhibitor
PCT
 
Expired
U.S. Patent Application Number 62/443,904
 
Use and composition for treating Myasthenia Gravis
 
US
 
Expired
U.S. Patent Application Number 62/440,575
 
Use and composition for preventing and treating motion sickness
 
US
 
Expired

 
 
67

 
 
 
Schedule 3(cc)

Internal Accounting and Disclosure Controls
 
As of June 30, 2017, management of the Company conducted an assessment of the
effectiveness of the Company’s internal control over financial reporting. In
making this assessment, it used the criteria set forth by the Committee of
Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal
Control—Integrated Framework. In the course of the assessment, material
weaknesses were identified in the Company’s internal control over financial
reporting.
 
Management determined that fundamental elements of an effective control
environment were missing or inadequate as of June 30, 2017. The most significant
issues identified were: 1) lack of segregation of duties due to very small staff
and significant reliance on outside consultants, and 2) risks of executive
override also due to lack of established policies, and small employee staff.
Based on the material weaknesses identified above, management has concluded that
internal control over financial reporting was not effective as of June 30, 2017.
 
 
 
 
68

 
 
 
Schedule 3(ee)
Ranking of Notes
 
None.
 
 
69

 
 
 
Schedule 4(d)
Use of Proceeds
 
The Company intends to use the proceeds from the sale of the Securities for
research and development, general and administrative expenses, commissions and
fees.
 
 
 
70