Exhibit 10.1

COMMON STOCK PURCHASE AGREEMENT

COMMON STOCK PURCHASE AGREEMENT (the “Agreement”), dated as of July 5, 2016 by
and between APRICUS BIOSCIENCES, INC., a Nevada corporation (the “Company”), and
ASPIRE CAPITAL FUND, LLC, an Illinois limited liability company (the “Buyer”).
Capitalized terms used herein and not otherwise defined herein are defined in
Section 10 hereof.

WHEREAS:

Subject to the terms and conditions set forth in this Agreement, the Company
wishes to sell to the Buyer, and the Buyer wishes to buy from the Company, up to
Seven Million Dollars ($7,000,000) of the Company’s common stock, par value
$0.001 per share (the “Common Stock”). The shares of Common Stock to be
purchased hereunder are referred to herein as the “Purchase Shares.”

NOW THEREFORE, the Company and the Buyer hereby agree as follows:

1.        PURCHASE OF COMMON STOCK.

Subject to the terms and conditions set forth in this Agreement, the Company has
the right to sell to the Buyer, and the Buyer has the obligation to purchase
from the Company, Purchase Shares as follows:

(a)        Initial Purchase; Commencement of Purchases of Common Stock.
Immediately upon Commencement (as defined below), the Buyer shall purchase from
the Company 2,531,645 Purchase Shares and upon receipt of such Purchase Shares
pay to the Company as the purchase price therefor, via wire transfer, One
Million Dollars ($1,000,000) (such purchase the “Initial Purchase” and such
Purchase Shares are referred to herein as “Initial Purchase Shares”). Upon
issuance and payment therefor as provided herein, such Initial Purchase Shares
shall be validly issued and fully paid and non-assessable. Thereafter, the
purchase and sale of Purchase Shares hereunder shall occur from time to time
upon written notices by the Company to the Buyer on the terms and conditions as
set forth herein following the satisfaction of the conditions (the
“Commencement”) as set forth in Sections 6 and 7 below (the date of satisfaction
of such conditions, the “Commencement Date”).

(b)        The Company’s Right to Require Regular Purchases. Subject to the
terms and conditions of this Agreement, on any given Business Day after the
Commencement Date, the Company shall have the right but not the obligation to
direct the Buyer by its delivery to the Buyer of a Purchase Notice from time to
time, and the Buyer thereupon shall have the obligation, to buy the number of
Purchase Shares specified in such notice, up to a maximum of 100,000 Purchase
Shares, on such Business Day (as long as such notice is delivered on or before
5:00 p.m. Eastern time on such Business Day) (each such purchase, a “Regular
Purchase”) at the Purchase Price on the Purchase Date; however, in no event
shall the Purchase Amount of a Regular Purchase exceed Five Hundred Thousand
Dollars ($500,000) per Business Day, unless the Buyer and the Company mutually
agree. The Company and the Buyer may mutually agree to increase the number of
Purchase Shares that may be sold per Regular Purchase to as much as an
additional 2,000,000 Purchase Shares per Business Day. The Company may deliver
additional Purchase Notices to the Buyer from time to time so long as the most
recent purchase has been completed. The share amounts in the first and second
sentences of this Section 1(b) shall be appropriately adjusted for any
reorganization, recapitalization, non-cash dividend, stock split, reverse stock
split, or other similar transaction.

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(c)        VWAP Purchases. Subject to the terms and conditions of this
Agreement, in addition to purchases of Purchase Shares as described in
Section 1(b) above, with one Business Day’s prior written notice, the Company
shall also have the right but not the obligation to direct the Buyer by the
Company’s delivery to the Buyer of a VWAP Purchase Notice from time to time, and
the Buyer thereupon shall have the obligation, to buy the VWAP Purchase Share
Percentage of the trading volume of the Common Stock on the VWAP Purchase Date
up to the VWAP Purchase Share Volume Maximum on the VWAP Purchase Date (each
such purchase, a “VWAP Purchase”) at the VWAP Purchase Price. The Company may
deliver a VWAP Purchase Notice to the Buyer on or before 5:00 p.m. Eastern time
on a date on which (i) the Company also submitted a Purchase Notice for a
Regular Purchase of at least 100,000 Purchase Shares to the Buyer and (ii) the
Closing Sale Price is higher than $0.30. A VWAP Purchase shall automatically be
deemed completed at such time on the VWAP Purchase Date that the Sale Price
falls below the VWAP Minimum Price Threshold; in such circumstance, the VWAP
Purchase Amount shall be calculated using (i) the VWAP Purchase Share Percentage
of the aggregate shares traded on the Principal Market for such portion of the
VWAP Purchase Date prior to the time that the Sale Price fell below the VWAP
Minimum Price Threshold and (ii) a VWAP Purchase Price calculated using the
volume weighted average price of Common Stock sold during such portion of the
VWAP Purchase Date prior to the time that the Sale Price fell below the VWAP
Minimum Price Threshold. Each VWAP Purchase Notice must be accompanied by
instructions to the Company’s Transfer Agent to immediately issue to the Buyer
an amount of Common Stock equal to the VWAP Purchase Share Estimate, a good
faith estimate by the Company of the number of Purchase Shares that the Buyer
shall have the obligation to buy pursuant to the VWAP Purchase Notice. In no
event shall the Buyer, pursuant to any VWAP Purchase, purchase a number of
Purchase Shares that exceeds the VWAP Purchase Share Estimate issued on the VWAP
Purchase Date in connection with such VWAP Purchase Notice; however, the Buyer
will immediately return to the Company any amount of Common Stock issued
pursuant to the VWAP Purchase Share Estimate that exceeds the number of Purchase
Shares the Buyer actually purchases in connection with such VWAP Purchase. Upon
completion of each VWAP Purchase Date, the Buyer shall submit to the Company a
confirmation of the VWAP Purchase in form and substance reasonably acceptable to
the Company. The Company may deliver additional VWAP Purchase Notices to the
Buyer from time to time so long as the most recent purchase has been completed.

(d)        Payment for Purchase Shares. For each Regular Purchase, the Buyer
shall pay to the Company an amount equal to the Purchase Amount as full payment
for such Purchase Shares via wire transfer of immediately available funds on the
same Business Day that the Buyer receives such Purchase Shares. For each VWAP
Purchase, the Buyer shall pay to the Company an amount equal to the VWAP
Purchase Amount as full payment for such Purchase Shares via wire transfer of
immediately available funds on the third Business Day following the VWAP
Purchase Date. All payments made under this Agreement shall be made in lawful
money of the United States of America via wire transfer of immediately available
funds to such account as the Company may from time to time designate by written
notice in accordance with the provisions of this Agreement. Whenever any amount
expressed to be due by the terms of this Agreement is due on any day that is not
a Business Day, the same shall instead be due on the next succeeding day that is
a Business Day.

(e)        Purchase Price Floor. The Company and the Buyer shall not effect any
sales under this Agreement on any Purchase Date where the Closing Sale Price is
less than the Floor Price. “Floor Price” means $0.10 per share of Common Stock,
which shall be appropriately adjusted for any reorganization, recapitalization,
non-cash dividend, stock split, reverse stock split or other similar
transaction.

 

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(f)        Records of Purchases. The Buyer and the Company shall each maintain
records showing the remaining Available Amount at any given time and the dates
and Purchase Amounts for each purchase, or shall use such other method
reasonably satisfactory to the Buyer and the Company to reconcile the remaining
Available Amount.

(g)        Taxes. The Company shall pay any and all transfer, stamp or similar
taxes that may be payable with respect to the issuance and delivery of any
shares of Common Stock to the Buyer made under this Agreement.

(h)        Compliance with Principal Market Rules. Notwithstanding anything in
this Agreement to the contrary, and in addition to the limitations set forth in
Section 1(e), the total number of shares of Common Stock that may be issued
under this Agreement, including the Commitment Shares (as defined in
Section 4(e) hereof), shall be limited to 12,373,860 shares of Common Stock (the
“Exchange Cap”), which equals 19.99% of the Company’s outstanding shares of
Common Stock as of the date hereof, unless stockholder approval is obtained to
issue more than such 19.99%. The Exchange Cap shall be appropriately adjusted
for any stock dividend, stock split, reverse stock split or similar
transactions. The foregoing limitation shall not apply if stockholder approval
has not been obtained and at any time the Exchange Cap is reached and at all
times thereafter the average price paid for all shares issued under this
Agreement is equal to or greater than $0.382 (the “Minimum Price”), a price
equal to the Consolidated Closing Bid Price on the Business Day prior to the
date hereof (in such circumstance, for purposes of the Principal Market, the
transaction contemplated hereby would not be “below market” and the Exchange Cap
would not apply). The Minimum Price shall be appropriately adjusted for any
stock dividend, stock split, reverse stock split or similar transactions.
Notwithstanding anything to the contrary in this Agreement or otherwise, the
Company shall not be required or permitted to issue, and the Buyer shall not be
required to purchase, any shares of Common Stock under this Agreement if such
issuance would breach the Company’s obligations under the rules or regulations
of the Principal Market. The Company will, in its sole discretion, determine
whether to obtain stockholder approval to issue more than 19.99% of its
outstanding shares of Common Stock.

(i)        Beneficial Ownership Limitation. The Company shall not issue, and the
Buyer shall not purchase any shares of Common Stock under this Agreement, if
such shares proposed to be issued and sold, when aggregated with all other
shares of Common Stock then owned beneficially (as calculated pursuant to
Section 13(d) of the Exchange Act and Rule 13d-3 promulgated thereunder) by the
Buyer and its affiliates would result in the beneficial ownership by the Buyer
and its affiliates of more than 19.99% of the then issued and outstanding shares
of Common Stock of the Company.

(j)        Compliance with Nevada Law. Notwithstanding anything to the contrary
in this Agreement or otherwise, the Company shall not be required or permitted
to issue, and the Buyer shall not be required to purchase, any shares of Common
Stock under this Agreement if such issuance would cause the number of issued and
outstanding shares of Common Stock to exceed the number of shares of Common
Stock then authorized in the Articles of Incorporation (as defined below).

2.         BUYER’S REPRESENTATIONS AND WARRANTIES.

The Buyer represents and warrants to the Company that as of the date hereof and
as of the Commencement Date:

 

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(a)        Investment Purpose. The Buyer is entering into this Agreement and
acquiring the Commitment Shares and the Purchase Shares (the Purchase Shares and
the Commitment Shares are collectively referred to herein as the “Securities”),
for its own account for investment only and not with a view towards, or for
resale in connection with, the public sale or distribution thereof; provided
however, by making the representations herein, the Buyer does not agree to hold
any of the Securities for any minimum or other specific term.

(b)        Accredited Investor Status. The Buyer is an “accredited investor” as
that term is defined in Rule 501(a)(3) of Regulation D under the 1933 Act.

(c)        [Intentionally Omitted.]

(d)        Information. The Buyer has been furnished with all materials relating
to the business, finances and operations of the Company and materials relating
to the offer and sale of the Securities that have been reasonably requested by
the Buyer, including, without limitation, the SEC Documents (as defined in
Section 3(f) hereof). The Buyer understands that its investment in the
Securities involves a high degree of risk. The Buyer (i) is able to bear the
economic risk of an investment in the Securities including a total loss,
(ii) has such knowledge and experience in financial and business matters that it
is capable of evaluating the merits and risks of the proposed investment in the
Securities and (iii) has had an opportunity to ask questions of and receive
answers from the officers of the Company concerning the financial condition and
business of the Company and other matters related to an investment in the
Securities. Neither such inquiries nor any other due diligence investigations
conducted by the Buyer or its representatives shall modify, amend or affect the
Buyer’s right to rely on the Company’s representations and warranties contained
in Section 3 below. The 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. The Buyer understands that no United States
federal or state agency or any other government or governmental agency has
passed on or made any recommendation or endorsement of the Securities or the
fairness or suitability of the investment in the Securities nor have such
authorities passed upon or endorsed the merits of the offering of the
Securities.

(f)        [Intentionally Omitted.]

(g)        Organization. The Buyer is a limited liability company duly organized
and validly existing in good standing under the laws of the jurisdiction in
which it is organized, and has the requisite organizational power and authority
to own its properties and to carry on its business as now being conducted.

(h)        Validity; Enforcement. This Agreement has been duly and validly
authorized, executed and delivered on behalf of the Buyer and is a valid and
binding agreement of the Buyer enforceable against the Buyer in accordance with
its terms, subject as to enforceability to (i) general principles of equity and
to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation
and other similar laws relating to, or affecting generally, the enforcement of
applicable creditors’ rights and remedies and (ii) public policy underlying any
law, rule or regulation (including any federal or state securities law, rule or
regulation) with regards to indemnification, contribution or exculpation. The
execution and delivery of the Transaction Documents by the Buyer and the
consummation by it of the transactions contemplated hereby and thereby do not
conflict with the Buyer’s certificate of

 

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organization or operating agreement or similar documents, and do not require
further consent or authorization by the Buyer, its managers or its members.

(i)        Residency. The Buyer is a resident of the State of Illinois.

(j)        No Prior Short Selling. The Buyer represents and warrants to the
Company that at no time prior to the date of this Agreement has any of the
Buyer, its agents, representatives or affiliates engaged in or effected, in any
manner whatsoever, directly or indirectly, any (i) “short sale” (as such term is
defined in Section 242.200 of Regulation SHO of the Securities Exchange Act of
1934, as amended (the “1934 Act”)) of the Common Stock or (ii) hedging
transaction, which establishes a net short position with respect to the Common
Stock.

3.        REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

The Company represents and warrants to the Buyer that as of the date hereof and
as of the Commencement Date:

(a)        Organization and Qualification. The Company and its “Subsidiaries”
(which for purposes of this Agreement means any entity in which the Company,
directly or indirectly, owns more than 50% of the voting stock or capital stock
or other similar equity interests) are corporations or limited liability
companies duly organized and validly existing in good standing under the laws of
the jurisdiction in which they are incorporated or organized, and have the
requisite corporate or organizational power and authority to own their
properties and to carry on their business as now being conducted. Each of the
Company and its Subsidiaries is duly qualified as a foreign corporation or
limited liability company 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 could not reasonably be
expected to have a Material Adverse Effect. As used in this Agreement, “Material
Adverse Effect” means any material adverse effect on any of: (i) the business,
properties, assets, operations, results of operations or financial condition of
the Company and its Subsidiaries, if any, taken as a whole, or (ii) the
authority or ability of the Company to perform its obligations under the
Transaction Documents (as defined in Section 3(b) hereof). The Company has no
material Subsidiaries except as set forth on Schedule 3(a).

(b)        Authorization; Enforcement; Validity. (i) The Company has the
requisite corporate power and authority to enter into and perform its
obligations under this Agreement, the Registration Rights Agreement and each of
the other agreements entered into by the parties on the Commencement Date and
attached hereto as exhibits to this Agreement (collectively, the “Transaction
Documents”), and to issue the Securities in accordance with the terms hereof and
thereof, (ii) the execution and delivery of the Transaction Documents by the
Company and the consummation by it of the transactions contemplated hereby and
thereby, including without limitation, the issuance of the Commitment Shares and
the reservation for issuance and the issuance of the Purchase Shares issuable
under this Agreement, have been duly authorized by the Company’s Board of
Directors or duly authorized committee thereof, do not conflict with the
Company’s Articles of Incorporation or Bylaws (as defined below), and do not
require further consent or authorization by the Company, its Board of Directors,
except as set forth in this Agreement, or its stockholders, (iii) this Agreement
has been, and each other Transaction Document shall be on the Commencement Date,
duly executed and delivered by the Company and (iv) this Agreement constitutes,
and each other Transaction Document upon its execution on behalf of the Company,
shall constitute, the valid and binding obligations of the Company enforceable
against the

 

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Company in accordance with their terms, except as such enforceability may be
limited by (y) general principles of equity or applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation or similar laws relating to,
or affecting generally, the enforcement of creditors’ rights and remedies and
(z) public policy underlying any law, rule or regulation (including any federal
or states securities law, rule or regulation) with regards to indemnification,
contribution or exculpation. The Board of Directors of the Company or duly
authorized committee thereof has approved the resolutions (the “Signing
Resolutions”) substantially in the form as set forth as Exhibit B attached
hereto to authorize this Agreement and the transactions contemplated hereby. The
Signing Resolutions are valid, in full force and effect and have not been
modified or supplemented in any material respect. The Company has delivered to
the Buyer a true and correct copy of the Signing Resolutions as approved by the
Board of Directors of the Company.

(c)        Capitalization. As of the date hereof, the authorized capital stock
of the Company consists of (i) 150,000,000 shares of Common Stock, par value
$0.001, of which as of the date hereof, 61,900,255 shares are issued and
outstanding, zero shares are held as treasury shares, 20,777,180 shares are
reserved for future issuance pursuant to the Company’s equity incentive plans,
of which approximately 177,331 shares remain available for future option grants
or stock awards, 14,519,169 shares are issuable and reserved for issuance
pursuant to securities (other than stock options or equity based awards issued
pursuant to the Company’s stock incentive plans) exercisable or exchangeable
for, or convertible into, shares of Common Stock and 6,080,680 shares of our
Common Stock are subject to outstanding options and restricted shares, and
(ii) 10,000,000 shares of preferred stock, with per share liquidation
preferences set forth on Schedule 3(c), of which as of the date hereof zero
shares are issued and outstanding. All of such outstanding shares have been, or
upon issuance will be, validly issued and are fully paid and non-assessable.
Except as disclosed in Schedule 3(c), (i) no shares of the Company’s capital
stock are subject to preemptive rights or any other similar rights or any liens
or encumbrances suffered or permitted by the Company, (ii) there are no
outstanding debt securities of the Company or any of its Subsidiaries,
(iii) 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, 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, any
shares of capital stock of the Company or any of its Subsidiaries, (iv) there
are no material agreements or arrangements under which the Company or any of its
Subsidiaries is obligated to register the sale of any of their securities under
the 1933 Act (except the Registration Rights Agreement), (v) 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, (vi) there are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the issuance of
the Securities as described in this Agreement and (vii) the Company does not
have any stock appreciation rights or “phantom stock” plans or agreements or any
similar plan or agreement. The Company has furnished or made available to the
Buyer true and correct copies of the Company’s Articles of Incorporation, as
amended and as in effect on the date hereof (the “Articles of Incorporation”),
and the Company’s Bylaws, as amended and as in effect on the date hereof (the
“Bylaws”).

(d)        Issuance of Securities. The Commitment Shares have been duly
authorized and, upon issuance in accordance with the terms hereof, the
Commitment Shares shall be (i) validly issued, fully

 

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paid and non-assessable and (ii) free from all taxes, liens and charges with
respect to the issuance thereof. Upon issuance and payment therefore in
accordance with the terms and conditions of this Agreement, the Purchase Shares
shall be validly issued, fully paid and non-assessable and free from all taxes,
liens and charges with respect to the issue thereof, with the holders being
entitled to all rights accorded to a holder of Common Stock.

(e)        No Conflicts. Except as disclosed in Schedule 3(e), 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 reservation for issuance and issuance of the
Purchase Shares) will not (i) result in a violation of the Articles of
Incorporation, any certificate of designation relating to any outstanding series
of preferred stock of the Company or the Bylaws 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 the Company or any of its Subsidiaries is a party, or
result, to the Company’s knowledge, in a violation of any law, rule, regulation,
order, judgment or decree (including federal and state securities laws and
regulations and the rules and regulations of the Principal Market 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, except in the case of
conflicts, defaults, terminations, amendments, accelerations, cancellations and
violations under clause (ii), which could not reasonably be expected to result
in a Material Adverse Effect. Except as disclosed in Schedule 3(e), neither the
Company nor its Subsidiaries is in violation of any term of or in default under
its Articles of Incorporation, any certificate of designation relating to any
outstanding series of preferred stock of the Company or Bylaws or their
organizational charter or bylaws, respectively. Except as disclosed in Schedule
3(e), neither the Company nor any of its Subsidiaries is in violation of any
term of or is in default under any material contract, agreement, mortgage,
indebtedness, indenture, instrument, judgment, decree or order or any statute,
rule or regulation applicable to the Company or its Subsidiaries, except for
possible violations, defaults, terminations or amendments that could not
reasonably be expected to have a Material Adverse Effect. The business of the
Company and its Subsidiaries is not being conducted, and shall not be conducted,
in violation of any law, ordinance, or regulation of any governmental entity,
except for possible violations, the sanctions for which either individually or
in the aggregate could not reasonably be expected to have a Material Adverse
Effect. Except as specifically contemplated by this Agreement, reporting
obligations under the 1934 Act, or as required under the 1933 Act or applicable
state securities laws or the filing of a Listing of Additional Shares
Notification Form with the Principal Market, the Company is not required to
obtain any consent, authorization or order of, or make any filing or
registration with, any court or governmental agency or any regulatory or
self-regulatory agency in order for it to execute, deliver or perform any of its
obligations under or contemplated by the Transaction Documents in accordance
with the terms hereof or thereof. Except as disclosed in Schedule 3(e) and for
reporting obligations under the 1934 Act, all consents, authorizations, orders,
filings and registrations which the Company is required to obtain pursuant to
the preceding sentence shall be obtained or effected on or prior to the
Commencement Date. Except as disclosed in Schedule 3(e), the Company is not
subject to any notices or actions from or to the Principal Market other than
routine matters incident to listing on the Principal Market and not involving a
violation of the rules of the Principal Market. Except as disclosed in Schedule
3(e), to the Company’s knowledge, the Principal Market has not commenced any
delisting proceedings against the Company.

(f)        SEC Documents; Financial Statements. Except as disclosed in Schedule
3(f), since March 31, 2015, the Company has filed all reports, schedules, forms,
statements and other documents required

 

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to be filed by it with the SEC pursuant to the reporting requirements of the
1934 Act (all of the foregoing filed prior to the date hereof and all exhibits
included therein and financial statements and schedules thereto and documents
incorporated by reference therein being hereinafter referred to as the “SEC
Documents”). As of their respective dates (except as they have been correctly
amended), 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 (except as they may have
been properly amended), 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 light of the circumstances under which
they were made, not misleading. As of their respective dates (except as they
have been properly amended), 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 (except (i) as may be otherwise indicated in such financial
statements or the notes thereto or (ii) in the case of unaudited interim
statements, to the extent they may exclude footnotes or may be condensed or
summary statements) and fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments). Except as disclosed
in Schedule 3(f) or routine correspondence, such as comment letters and notices
of effectiveness in connection with previously filed registration statements or
periodic reports publicly available on EDGAR, to the Company’s knowledge, the
Company or any of its Subsidiaries are not presently the subject of any inquiry,
investigation or action by the SEC.

(g)        Absence of Certain Changes. Except as disclosed in Schedule 3(g),
since March 31, 2016, there has been no material adverse change in the business,
properties, operations, financial condition or results of operations of the
Company or its Subsidiaries taken as a whole. For purposes of this Agreement,
neither a decrease in cash or cash equivalents nor losses incurred in the
ordinary course of the Company’s business shall be deemed or considered a
material adverse change. The Company has not taken any steps, and does not
currently expect to take any steps, to seek protection pursuant to any
Bankruptcy Law nor does the Company or any of its Subsidiaries have any
knowledge or reason to believe that its creditors intend to initiate involuntary
bankruptcy or insolvency proceedings. The Company is financially solvent and is
generally able to pay its debts as they become due.

(h)        Absence of Litigation. Except as disclosed in Schedule 3(h), to the
Company’s knowledge, there is no action, suit, proceeding, inquiry or
investigation before or by any court, public board, government agency,
self-regulatory organization or body pending or, to the knowledge of the Company
or any of its Subsidiaries, threatened against the Company, the Common Stock or
any of the Company’s Subsidiaries or any of the Company’s or the Company’s
Subsidiaries’ officers or directors in their capacities as such, which could
reasonably be expected to have a Material Adverse Effect (each, an “Action”). A
description of each such Action, if any, is set forth in Schedule 3(h).

(i)        Acknowledgment Regarding Buyer’s Status. The Company acknowledges and
agrees that the Buyer is acting solely in the capacity of arm’s length purchaser
with respect to the Transaction Documents and the transactions contemplated
hereby and thereby. The Company further acknowledges that the Buyer is not
acting as a financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to the Transaction Documents and the transactions
contemplated hereby and thereby and any advice given by the Buyer or any of its
representatives or agents in connection with

 

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the Transaction Documents and the transactions contemplated hereby and thereby
is merely incidental to the Buyer’s purchase of the Securities. The Company
further represents to the 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 and advisors.

(j)        Intellectual Property Rights. To the Company’s knowledge, the Company
and its Subsidiaries own or possess adequate rights or licenses to use all
material trademarks, trade names, service marks, service mark registrations,
service names, patents, patent rights, copyrights, inventions, licenses,
approvals, governmental authorizations, trade secrets and other intellectual
property rights (collectively, “Intellectual Property”) necessary to conduct
their respective businesses as now conducted, except as set forth in Schedule
3(j) or to the extent that the failure to own, possess, license or otherwise
hold adequate rights to use Intellectual Property would not, individually or in
the aggregate, have a Material Adverse Effect. Except as disclosed in Schedule
3(j), to the Company’s knowledge, none of the Company’s active and registered
Intellectual Property have expired or terminated, or, by the terms and
conditions thereof, will expire or terminate within two years from the date of
this Agreement. The Company and its Subsidiaries do not have any knowledge of
any infringement by the Company or its Subsidiaries of any Intellectual Property
of others, or of any such development of similar or identical trade secrets or
technical information by others with respect to the Company’s or its
Subsidiaries’ Intellectual Property and, except as set forth on Schedule 3(j),
there is no claim, action or proceeding being made or brought against, or to the
Company’s knowledge, being threatened against, the Company or its Subsidiaries
regarding Intellectual Property, which could reasonably be expected to have a
Material Adverse Effect.

(k)        Environmental Laws. To the Company’s knowledge, the Company and its
Subsidiaries (i) are in material compliance with any and all applicable foreign,
federal, state and local laws and regulations relating to the protection of
human health and safety or the environment and with respect to hazardous or
toxic substances or wastes, pollutants or contaminants (“Environmental Laws”),
(ii) have received all material permits, licenses or other approvals required of
them under applicable Environmental Laws to conduct their respective businesses
and (iii) are in material compliance with all terms and conditions of any such
permit, license or approval, except where, in each of the three foregoing
clauses, the failure to so comply or receive such approvals could not reasonably
be expected to have, individually or in the aggregate, a Material Adverse
Effect.

(l)        Title. The Company and its Subsidiaries have good and marketable
title to all personal property owned by them that 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 are described in Schedule 3(l) or 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 or could not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect. Any real property and facilities held
under lease by the Company and any of its Subsidiaries, to the Company’s
knowledge, 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.

(m)        Insurance. The Company and each of its Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as management of the Company believes to be reasonable and
customary in the businesses in which the Company and its Subsidiaries are
engaged. To the Company’s knowledge, since January 1, 2014, neither the Company

 

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nor any such Subsidiary has been refused any insurance coverage sought or
applied for and neither the Company nor any such Subsidiary, to the Company’s
knowledge, will be unable to renew its existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar insurers as may
be necessary to continue its business at a cost that would not reasonably be
expected to have a Material Adverse Effect.

(n)        Regulatory Permits. The Company and its Subsidiaries possess all
material certificates, authorizations and permits issued by the appropriate
federal, state or foreign regulatory authorities necessary to conduct their
respective businesses as currently conducted, and neither the Company nor any
such Subsidiary has received any written notice of proceedings relating to the
revocation or modification of any such material certificate, authorization or
permit.

(o)        Tax Status. The Company and each of its Subsidiaries has made or
filed all federal and state income and all other material tax returns, reports
and declarations required by any jurisdiction to which it is subject (unless and
only to the extent that the Company and each of its Subsidiaries has set aside
on its books reserves reasonably adequate for the payment of all unpaid and
unreported taxes or filed valid extensions) and 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 has set aside on its books reserves reasonably
adequate for the payment of all taxes for periods subsequent to the periods to
which such returns, reports or declarations apply. To the Company’s knowledge,
there are no unpaid taxes in any material amount claimed to be due by the taxing
authority of any jurisdiction.

(p)        Transactions With Affiliates. Except as set forth on Schedule 3(p)
and other than the grant or exercise of stock options or any other equity
securities offered pursuant to duly adopted stock or incentive compensation
plans as disclosed on Schedule 3(c), none of the officers, directors or
employees of the Company is presently a party to any transaction with the
Company or any of its Subsidiaries (other than for services as employees,
officers and directors and reimbursement for expenses incurred on behalf of the
Company), 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 officer,
director or such employee or, to the knowledge of the Company, any corporation,
partnership, trust or other entity in which any officer, director, or any such
employee has a material interest or is an officer, director, trustee or general
partner.

(q)        Application of Takeover Protections. The Company and its board of
directors have taken or will take prior to the Commencement Date all necessary
action, if any, in order to render inapplicable any control share acquisition,
business combination, poison pill (including any distribution under a rights
agreement) or other similar anti-takeover provision under the Articles of
Incorporation or the laws of the state of its incorporation, which is or could
become applicable to the Buyer as a result of the transactions contemplated by
this Agreement, including, without limitation, the Company’s issuance of the
Securities and the Buyer’s ownership of the Securities.

(r)        Registration Statement. The Shelf Registration Statement (as defined
in Section 4(a) hereof) has been declared effective by the SEC, and no stop
order has been issued or is pending or, to the knowledge of the Company,
threatened by the SEC with respect thereto. As of the date hereof, the Company
has a dollar amount of securities registered and unsold under the Shelf
Registration

 

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Statement, which is not less than the sum of (i) the Available Amount and
(ii) the market value of the Commitment Shares on the date hereof.

4.         COVENANTS.

(a)         Filing of Form 8-K and Prospectus Supplement. The Company agrees
that it shall, within the time required under the 1934 Act, file a Current
Report on Form 8-K disclosing this Agreement and the transaction contemplated
hereby. The Company shall file within two (2) Business Days from the date hereof
a prospectus supplement to the Company’s existing shelf registration statement
on Form S-3 (File No. 333-198066, the “Shelf Registration Statement”) covering
the sale of the Commitment Shares and Purchase Shares (the “Prospectus
Supplement”) in accordance with the terms of the Registration Rights Agreement
between the Company and the Buyer, dated as of the date hereof (the
“Registration Rights Agreement”). The Company shall use commercially reasonable
efforts to keep the Shelf Registration Statement and any New Registration
Statement (as defined in the Registration Rights Agreement) effective pursuant
to Rule 415 promulgated under the 1933 Act and available for sales of all
Securities to the Buyer until such time as (i) it no longer qualifies to make
sales under the Shelf Registration Statement, (ii) the date on which all the
Securities have been sold under this Agreement and no Available Amount remains
thereunder, or (iii) the Agreement has been terminated. The Shelf Registration
Statement (including any amendments or supplements thereto and prospectuses or
prospectus supplements, including the Prospectus Supplement, contained therein)
shall not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein, or necessary to make the statements
therein, in light of the circumstances in which they were made, not misleading.

(b)         Blue Sky. The Company shall take such action, if any, as is
reasonably necessary in order to obtain an exemption for or to qualify (i) the
initial sale of the Securities to the Buyer under this Agreement and (ii) any
subsequent sale of the Securities by the Buyer, in each case, under applicable
securities or “Blue Sky” laws of the states of the United States in such states
as is reasonably requested by the Buyer from time to time, and shall provide
evidence of any such action so taken to the Buyer.

(c)         Listing. The Company shall promptly secure the listing of all of the
Securities upon each national securities exchange and automated quotation system
that requires an application by the Company for listing, if any, upon which
shares of Common Stock are then listed (subject to official notice of issuance)
and shall maintain such listing, so long as any other shares of Common Stock
shall be so listed. The Company shall use its commercially reasonable efforts to
maintain the Common Stock’s listing on the Principal Market. Neither the Company
nor any of its Subsidiaries shall take any action that would be reasonably
expected to result in the delisting or suspension of the Common Stock on the
Principal Market, unless the Common Stock is immediately thereafter traded on
the New York Stock Exchange, the NYSE MKT, the NASDAQ Global Select Market, the
NASDAQ Capital Market, or the OTCQB or OTCQX market places of the OTC Markets.
The Company shall pay all fees and expenses in connection with satisfying its
obligations under this Section.

(d)         Limitation on Short Sales and Hedging Transactions. The Buyer agrees
that beginning on the date of this Agreement and ending on the date of
termination of this Agreement as provided in Section 11(k), the Buyer and its
agents, representatives and affiliates shall not in any manner whatsoever enter
into or effect, directly or indirectly, any (i) “short sale” (as such term is
defined in Section 242.200 of Regulation SHO of the 1934 Act) of the Common
Stock or (ii) hedging transaction, which establishes a net short position with
respect to the Common Stock.

 

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(e)         Issuance of Commitment Shares. In connection with the Commencement,
the Company shall issue to the Buyer as consideration for the Buyer entering
into this Agreement 1,518,987 shares of Common Stock (the “Commitment Shares”).
The Commitment Shares shall be issued without any restrictive legend whatsoever
or prior sale requirement.

(f)         Due Diligence. The Buyer shall have the right, from time to time as
the Buyer may reasonably deem appropriate, to perform reasonable due diligence
on the Company during normal business hours and subject to reasonable prior
notice to the Company. The Company and its officers and employees shall provide
information and reasonably cooperate with the Buyer in connection with any
reasonable request by the Buyer related to the Buyer’s due diligence of the
Company, including, but not limited to, any such request made by the Buyer in
connection with (i) the filing of the prospectus supplement described in
Section 4(a) hereof and (ii) the Commencement; provided, however, that at no
time is the Company required to disclose material nonpublic information to the
Buyer or breach any obligation of confidentiality or non-disclosure to a third
party or make any disclosure that could cause a waiver of attorney-client
privilege. Each party hereto agrees not to disclose any Confidential Information
of the other party to any third party and shall not use the Confidential
Information of such other party for any purpose other than in connection with,
or in furtherance of, the transactions contemplated hereby. Each party hereto
acknowledges that the Confidential Information shall remain the property of the
disclosing party and agrees that it shall take all reasonable measures to
protect the secrecy of any Confidential Information disclosed by the other
party.

 

  5.

TRANSFER AGENT INSTRUCTIONS.

  All of the Purchase Shares to be issued under this Agreement shall be issued
without any restrictive legend unless the Buyer expressly consents otherwise.
The Company shall issue irrevocable instructions to the Transfer Agent, and any
subsequent transfer agent, to issue Common Stock in the name of the Buyer for
the Purchase Shares (the “Irrevocable Transfer Agent Instructions”). The Company
warrants to the Buyer that no instruction other than the Irrevocable Transfer
Agent Instructions referred to in this Section 5, will be given by the Company
to the Transfer Agent with respect to the Purchase Shares and that the
Commitment Shares and the Purchase Shares shall otherwise be freely transferable
on the books and records of the Company as and to the extent provided in this
Agreement and the Registration Rights Agreement.

 

  6.

CONDITIONS TO THE COMPANY’S RIGHT TO COMMENCE

    

SALES OF SHARES OF COMMON STOCK UNDER THIS AGREEMENT.

  The right of the Company hereunder to commence sales of the Purchase Shares is
subject to the satisfaction of each of the following conditions on or before the
Commencement Date (the date that the Company may begin sales of Purchase
Shares):

 

  (a)

The Buyer shall have executed each of the Transaction Documents and delivered
the same to the Company;

 

  (b)

The representations and warranties of the Buyer shall be true and correct as of
the Commencement 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
in all material respects as of such specific date) and the Buyer shall have
performed, satisfied and

 

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complied in all material respects with the covenants and agreements required by
this Agreement to be performed, satisfied or complied with by the Buyer at or
prior to the Commencement Date, and the Company shall have received a
certificate, executed by a duly authorized officer of the Buyer, dated as of the
Commencement Date, to the foregoing effect; and

 

  (c)

The Prospectus Supplement shall have been delivered to the Buyer and no stop
order with respect to the registration statement covering the sale of shares to
the Buyer shall be pending or threatened by the SEC.

 

  7.

CONDITIONS TO THE BUYER’S OBLIGATION TO MAKE PURCHASES OF SHARES OF COMMON
STOCK.

  The obligation of the Buyer to buy Purchase Shares under this Agreement is
subject to the satisfaction of each of the following conditions on or before the
Commencement Date (the date that the Company may begin sales of Purchase Shares)
and once such conditions have been initially satisfied, there shall not be any
ongoing obligation to satisfy such conditions after the Commencement has
occurred:

(a)         The Company shall have executed each of the Transaction Documents
and delivered the same to the Buyer;

(b)         The Company shall have issued to the Buyer the Initial Purchase
Shares and the Commitment Shares;

(c)         The Common Stock shall be authorized for quotation on the Principal
Market, trading in the Common Stock shall not have been within the last 365 days
suspended by the SEC or the Principal Market, other than a general halt in
trading in the Common Stock by the Principal Market under halt codes indicating
pending or released material news, and the Securities shall be approved for
listing upon the Principal Market;

(d)         The Buyer shall have received the opinion of the Company’s legal
counsel dated as of the Commencement Date in customary form and substance;

(e)         The representations and warranties of the Company shall be true and
correct in all material respects (except to the extent that any of such
representations and warranties is already qualified as to materiality in
Section 3 above, in which case, such representations and warranties shall be
true and correct without further qualification) as of the date of this Agreement
and as of the Commencement 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 in all material respects as of such specific 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 Commencement Date. The Buyer shall have received a certificate, executed
by the CEO, President or CFO of the Company, dated as of the Commencement Date,
to the foregoing effect in the form attached hereto as Exhibit A;

 

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(f)         The Board of Directors of the Company or a duly authorized committee
thereof shall have adopted resolutions substantially in the form attached hereto
as Exhibit B which shall be in full force and effect without any amendment or
supplement thereto as of the Commencement Date;

(g)         The Irrevocable Transfer Agent Instructions, in form acceptable to
the Buyer shall have been delivered to and acknowledged in writing by the
Company and the Buyer and have been delivered to the Transfer Agent;

(h)         The Company shall have delivered to the Buyer a certificate
evidencing the incorporation and good standing of the Company in the State of
Nevada issued by the Secretary of State of the State of Nevada as of a date
within ten (10) Business Days of the Commencement Date;

(j)         [Intentionally Omitted.]

(j)         The Company shall have delivered to the Buyer a secretary’s
certificate executed by the Secretary of the Company, dated as of the
Commencement Date, in the form attached hereto as Exhibit C;

(k)         The Shelf Registration Statement shall have been declared effective
under the 1933 Act by the SEC and no stop order with respect thereto shall be
pending or threatened by the SEC. The Company shall have prepared and delivered
to the Buyer a final and complete form of prospectus supplement, dated and
current as of the Commencement Date, to be used in connection with any issuances
of any Commitment Shares or any Purchase Shares to the Buyer, and to be filed by
the Company within two (2) Business Days after the Commencement Date pursuant to
Rule 424(b). The Company shall have made all filings under all applicable
federal and state securities laws necessary to consummate the issuance of the
Commitment Shares and the Purchase Shares pursuant to this Agreement in
compliance with such laws;

(k)         No Event of Default has occurred and is continuing, or any event
which, after notice and/or lapse of time, would become an Event of Default has
occurred;

(m)         On or prior to the Commencement Date, the Company shall take all
necessary action, if any, and such actions as reasonably requested by the Buyer,
in order to render inapplicable any control share acquisition, business
combination, stockholder rights plan or poison pill (including any distribution
under a rights agreement) or other similar anti-takeover provision under the
Articles of Incorporation or the laws of the state of its incorporation, that is
or could become applicable to the Buyer as a result of the transactions
contemplated by this Agreement, including, without limitation, the Company’s
issuance of the Securities and the Buyer’s ownership of the Securities; and

(n)         The Company shall have provided the Buyer with the information
reasonably requested by the Buyer in connection with its due diligence requests
made prior to, or in connection with, the Commencement, in accordance with the
terms of Section 4(f) hereof.

 

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  8.

INDEMNIFICATION.

  In consideration of the Buyer’s execution and delivery of the Transaction
Documents and acquiring the Securities hereunder and in addition to all of the
Company’s other obligations under the Transaction Documents, the Company shall
defend, protect, indemnify and hold harmless the Buyer and all of its
affiliates, members, officers, directors, and employees, and any of the
foregoing person’s 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 and arising out of or resulting from the
execution, delivery, performance or enforcement of the Transaction Documents or
any other certificate, instrument or document contemplated hereby or thereby,
other than with respect to Indemnified Liabilities which directly and primarily
result from (A) a breach of any of the Buyer’s representations and warranties,
covenants or agreements contained in this Agreement, or (B) the gross
negligence, bad faith or willful misconduct of the Buyer or any other
Indemnitee. To the extent that the foregoing undertaking by the Company may be
unenforceable for any reason, the Company shall make the maximum contribution to
the payment and satisfaction of each of the Indemnified Liabilities which is
permissible under applicable law.

 

  9.

EVENTS OF DEFAULT.

  An “Event of Default” shall be deemed to have occurred at any time as any of
the following events occurs:

  (a)         during any period in which the effectiveness of any registration
statement is required to be maintained pursuant to the terms of the Registration
Rights Agreement, the effectiveness of such registration statement lapses for
any reason (including, without limitation, the issuance of a stop order) or is
unavailable to the Company for sale of all of the Registrable Securities (as
defined in the Registration Rights Agreement) to the Buyer in accordance with
the terms of the Registration Rights Agreement, and such lapse or unavailability
continues for a period of ten (10) consecutive Business Days or for more than an
aggregate of thirty (30) Business Days in any 365-day period, which is not in
connection with a post-effective amendment to any such registration statement or
the filing of a new registration statement; provided, however, that in
connection with any post-effective amendment to such registration statement or
filing of a new registration statement that is required to be declared effective
by the SEC, such lapse or unavailability may continue for a period of no more
than thirty (30) consecutive Business Days, which such period shall be extended
for an additional thirty (30) Business Days if the Company receives a comment
letter from the SEC in connection therewith;

  (b)          the suspension from trading or failure of the Common Stock to be
listed on a Principal Market for a period of three (3) consecutive Business
Days;

 

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(c)         the delisting of the Common Stock from the Principal Market, and the
Common Stock is not immediately thereafter trading on the New York Stock
Exchange, the NYSE MKT, the NASDAQ Global Select Market, the NASDAQ Global
Market, the OTC Bulletin Board, or the OTCQB or OTCQX market places of the OTC
Markets;

(d)         the failure for any reason by the Transfer Agent to issue Purchase
Shares to the Buyer within five (5) Business Days after the applicable Purchase
Date that the Buyer is entitled to receive;

(e)         the breach of any representation, warranty, covenant or other term
or condition under any Transaction Document if such breach could reasonably be
expected to have a Material Adverse Effect and except, in the case of a breach
of a covenant which is reasonably curable, only if such breach continues uncured
for a period of at least five (5) Business Days;

(f)         if any Person commences a proceeding against the Company pursuant to
or within the meaning of any Bankruptcy Law;

(g)         if the Company pursuant to or within the meaning of any Bankruptcy
Law; (A) commences a voluntary case, (B) consents to the entry of an order for
relief against it in an involuntary case, (C) consents to the appointment of a
Custodian of it or for all or substantially all of its property, (D) makes a
general assignment for the benefit of its creditors or (E) becomes insolvent;

(h)         a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that (A) is for relief against the Company in an involuntary
case, (B) appoints a Custodian of the Company or for all or substantially all of
its property, or (C) orders the liquidation of the Company or any Subsidiary; or

(i)         if at any time after the Commencement Date, the Exchange Cap is
reached unless and until stockholder approval is obtained pursuant to
Section 1(h) hereof. The Exchange Cap shall be deemed to be reached at such time
if, upon submission of a Purchase Notice or VWAP Purchase Notice under this
Agreement, the issuance of such shares of Common Stock would exceed that number
of shares of Common Stock which the Company may issue under this Agreement
without breaching the Company’s obligations under the rules or regulations of
the Principal Market.

In addition to any other rights and remedies under applicable law and this
Agreement, including the Buyer termination rights under Section 11(k) hereof, so
long as an Event of Default has occurred and is continuing, or if any event
which, after notice and/or lapse of time, would become an Event of Default, has
occurred and is continuing, or so long as the Closing Sale Price is below the
Floor Price, the Company may not require and the Buyer shall not be obligated to
purchase any shares of Common Stock under this Agreement. If pursuant to or
within the meaning of any Bankruptcy Law, the Company commences a voluntary case
or any Person commences a proceeding against the Company, a Custodian is
appointed for the Company or for all or substantially all of its property, or
the Company makes a general assignment for the benefit of its creditors, (any of
which would be an Event of Default as described in Sections 9(f), 9(g) and 9(h)
hereof) this Agreement shall automatically terminate without any liability or
payment to the Company without further action or notice by any Person. No such
termination of this Agreement under Section 11(k)(i) shall affect the Company’s
or the Buyer’s obligations under this Agreement with respect to pending
purchases and the Company and the Buyer shall complete their respective
obligations with respect to any pending purchases under this Agreement.

 

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  10.

CERTAIN DEFINED TERMS.

  For purposes of this Agreement, the following terms shall have the following
meanings:

  (a)         “1933 Act” means the Securities Act of 1933, as amended.

  (b)         “Available Amount” means initially Seven Million Dollars
($7,000,000) in the aggregate which amount shall be reduced by the Purchase
Amount (including the Initial Purchase) each time the Buyer purchases shares of
Common Stock pursuant to Section 1 hereof.

  (c)         “Bankruptcy Law” means Title 11, U.S. Code, or any similar federal
or state law for the relief of debtors.

  (d)         “Business Day” means any day on which the Principal Market is open
for trading during normal trading hours (i.e., 9:30 a.m. to 4:00 p.m. Eastern
Time), including any day on which the Principal Market is open for trading for a
period of time less than the customary time.

  (e)         “Closing Sale Price” means the last closing trade price for the
Common Stock on the Principal Market as reported by the Principal Market.

  (f)         “Confidential Information” means any information disclosed by
either party to the other party, either directly or indirectly, in writing,
orally or by inspection of tangible objects (including, without limitation,
documents, prototypes, protocols, development plans, commercialization plans,
samples, compounds, formulations, preclinical study and clinical trial results,
plant and equipment), which is designated as “Confidential,” “Proprietary” or
some similar designation. Information communicated orally shall be considered
Confidential Information if such information is confirmed in writing as being
Confidential Information within ten (10) Business Days after the initial
disclosure. Confidential Information may also include information disclosed to a
disclosing party by third parties. Confidential Information shall not, however,
include any information which (i) was publicly known and made generally
available in the public domain prior to the time of disclosure by the disclosing
party; (ii) becomes publicly known and made generally available after disclosure
by the disclosing party to the receiving party through no action or inaction of
the receiving party; (iii) is already in the possession of the receiving party
at the time of disclosure by the disclosing party as shown by the receiving
party’s files and records immediately prior to the time of disclosure; (iv) is
obtained by the receiving party from a third party without a breach of such
third party’s obligations of confidentiality; (v) is independently developed by
the receiving party without use of or reference to the disclosing party’s
Confidential Information, as shown by documents and other competent evidence in
the receiving party’s possession; or (vi) is required by law to be disclosed by
the receiving party, provided that the receiving party gives the disclosing
party prompt written notice of such requirement prior to such disclosure and
assistance in obtaining an order protecting the information from public
disclosure.

(g)         “Custodian” means any receiver, trustee, assignee, liquidator or
similar official under any Bankruptcy Law.

(h)         “Maturity Date” means the date that is twenty-four (24) months from
the Commencement Date.

 

 

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(i)         “Person” means an individual or entity including any limited
liability company, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization and a government or any department or agency
thereof.

(j)         “Principal Market” means the NASDAQ Capital Market; provided
however, that in the event the Company’s Common Stock is ever listed or traded
on the New York Stock Exchange, the NYSE MKT, the NASDAQ Global Select Market,
the NASDAQ Global Market, the OTC Bulletin Board, or under the OTCQB or OTCQX
market places of the OTC Markets, then the “Principal Market” shall mean such
other market or exchange on which the Company’s Common Stock is then listed or
traded.

(k)         “Purchase Amount” means, with respect to any particular purchase
made hereunder, the portion of the Available Amount to be purchased by the Buyer
pursuant to Section 1 hereof as set forth in a valid Purchase Notice or VWAP
Purchase Notice which the Company delivers to the Buyer.

(l)          “Purchase Date” means with respect to any Regular Purchase made
hereunder, the Business Day of receipt by the Buyer of a valid Purchase Notice
that the Buyer is to buy Purchase Shares pursuant to Section 1(b) hereof.

(m)         “Purchase Notice” shall mean an irrevocable written notice from the
Company to the Buyer directing the Buyer to buy Purchase Shares pursuant to
Section 1(b) hereof as specified by the Company therein at the applicable
Purchase Price on the Purchase Date.

(n)         “Purchase Price” means the lesser of (i) the lowest Sale Price of
the Common Stock on the Purchase Date or (ii) the arithmetic average of the
three (3) lowest Closing Sale Prices for the Common Stock during the twelve
(12) consecutive Business Days ending on the Business Day immediately preceding
such Purchase Date (to be appropriately adjusted for any reorganization,
recapitalization, non-cash dividend, stock split, reverse stock split or other
similar transaction).

(o)         “Sale Price” means any trade price for the shares of Common Stock on
the Principal Market during normal trading hours, as reported by the Principal
Market.

(p)         “SEC” means the United States Securities and Exchange Commission.

(q)         “Transfer Agent” means the transfer agent of the Company as set
forth in Section 11(f) hereof or such other person who is then serving as the
transfer agent for the Company in respect of the Common Stock.

(r)         “VWAP Minimum Price Threshold” means, with respect to any particular
VWAP Purchase Notice, the Sale Price on the VWAP Purchase Date equal to the
greater of (i) 80% of the Closing Sale Price on the Business Day immediately
preceding the VWAP Purchase Date or (ii) such higher price as set forth by the
Company in the VWAP Purchase Notice.

(s)         “VWAP Purchase Amount” means, with respect to any particular VWAP
Purchase Notice, the portion of the Available Amount to be purchased by the
Buyer pursuant to Section 1(c) hereof as set forth in a valid VWAP Purchase
Notice which requires the Buyer to buy the VWAP Purchase Share Percentage of the
aggregate shares traded on the Principal Market during normal trading hours on
the VWAP Purchase Date up to the VWAP Purchase Share Volume Maximum, subject to
the VWAP Minimum Price Threshold.

 

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(t)         “VWAP Purchase Date” means, with respect to any VWAP Purchase made
hereunder, the Business Day following the receipt by the Buyer of a valid VWAP
Purchase Notice that the Buyer is to buy Purchase Shares pursuant to
Section 1(c) hereof.

(u)         “VWAP Purchase Notice” shall mean an irrevocable written notice from
the Company to the Buyer directing the Buyer to buy Purchase Shares on the VWAP
Purchase Date pursuant to Section 1(c) hereof as specified by the Company
therein at the applicable VWAP Purchase Price with the applicable VWAP Purchase
Share Percentage specified therein.

(v)         “VWAP Purchase Share Percentage” means, with respect to any
particular VWAP Purchase Notice pursuant to Section 1(c) hereof, the percentage
set forth in the VWAP Purchase Notice which the Buyer will be required to buy as
a specified percentage of the aggregate shares traded on the Principal Market
during normal trading hours up to the VWAP Purchase Share Volume Maximum on the
VWAP Purchase Date subject to Section 1(c) hereof but in no event shall this
percentage exceed thirty percent (30%) of such VWAP Purchase Date’s share
trading volume of the Common Stock on the Principal Market during normal trading
hours.

(w)         “VWAP Purchase Price” means the lesser of (i) the Closing Sale Price
on the VWAP Purchase Date; or (ii) ninety-seven percent (97%) of volume weighted
average price for the Common Stock traded on the Principal Market during normal
trading hours on (A) the VWAP Purchase Date if the aggregate shares traded on
the Principal Market on the VWAP Purchase Date have not exceeded the VWAP
Purchase Share Volume Maximum, or (B) the portion of the VWAP Purchase Date
until such time as the sooner to occur of (1) the time at which the aggregate
shares traded on the Principal Market has exceeded the VWAP Purchase Share
Volume Maximum, or (2) the time at which the sale price of Common Stock falls
below the VWAP Minimum Price Threshold (to be appropriately adjusted for any
reorganization, recapitalization, non-cash dividend, stock split, reverse stock
split or other similar transaction).

(x)         “VWAP Purchase Share Estimate” means the number of shares of Common
Stock that the Company has in its sole discretion irrevocably instructed its
Transfer Agent to issue to the Buyer via the Depository Trust Company (“DTC”)
Fast Automated Securities Transfer Program in connection with a VWAP Purchase
Notice pursuant to Section 1(c) hereof and issued to the Buyer’s or its
designee’s balance account with DTC through its Deposit Withdrawal At Custodian
(DWAC) system on the VWAP Purchase Date (to be appropriately adjusted for any
reorganization, recapitalization, non-cash dividend, stock split, reverse stock
split or other similar transaction).

(y)         “VWAP Purchase Share Volume Maximum” means a number of shares of
Common Stock traded on the Principal Market during normal trading hours on the
VWAP Purchase Date equal to: (i) the VWAP Purchase Share Estimate, divided by
(ii) the VWAP Purchase Share Percentage (to be appropriately adjusted for any
reorganization, recapitalization, non-cash dividend, stock split, reverse stock
split or other similar transaction).

 

  11.

MISCELLANEOUS.

(a)         Governing Law; Jurisdiction; Jury Trial. The corporate laws of the
State of Nevada shall govern all issues concerning the relative rights of the
Company and its stockholders. All other questions concerning the construction,
validity, enforcement and interpretation of this Agreement and the other

 

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Transaction Documents shall be governed by the internal laws of the State of
Illinois, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of Illinois or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than the
State of Illinois. Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in the City of Chicago, for
the adjudication of any dispute hereunder or under the other Transaction
Documents or in connection herewith or therewith, 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 HEREWITH 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 (or
other electronic reproduction) 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 (or other electronic
reproduction) signature.

(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 shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction.

(e)          Entire Agreement. This Agreement and the Registration Rights
Agreement supersede all other prior oral or written agreements between the
Buyer, 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 contain the entire
understanding of the parties with respect to the matters covered herein and
therein and, except as specifically set forth herein or therein, neither the
Company nor the Buyer makes any representation, warranty, covenant or
undertaking with respect to such matters. The Company acknowledges and agrees
that is has not relied on, in any manner whatsoever, any representations or
statements, written or oral, other than as expressly set forth in this
Agreement. The Buyer and the Company agree that that certain Common Stock
Purchase Agreement, dated as of August 12, 2014 by and between the Company and
the Buyer is hereby terminated as of the date hereof.

(f)         Notices. Any notices, consents or other communications required or
permitted to be given under the terms of this Agreement must be in writing and
will be deemed to have been delivered: (i) upon receipt when delivered
personally; (ii) upon receipt when sent by facsimile (provided

 

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confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) one (1) Business Day after timely
deposit with a nationally recognized overnight delivery service, in each case
properly addressed to the party to receive the same. The addresses and facsimile
numbers for such communications shall be:

If to the Company:

Apricus Biosciences, Inc.

11975 El Camino Real, Suite 300

San Diego, CA 92130

Telephone:         858-222-8041

Facsimile:           

Attention:           Richard W. Pascoe, CEO

Email:                

With a copy (which shall not constitute notice) to:

Latham & Watkins LLP

12670 High Bluff Drive

San Diego, CA 92130

Telephone:         858-523-5435

Facsimile:           858-523-5450

Attention:           Cheston J. Larson, Esq.

Email:                 cheston.larson@lw.com

If to the Buyer:

Aspire Capital Fund, LLC

155 North Wacker Drive, Suite 1600

Chicago, IL 60606

Telephone:         312-658-0400

Facsimile:           312-658-4005

Attention:           Steven G. Martin

Email:                 smartin@aspirecapital.com

With a copy to (which shall not constitute delivery to the Buyer):

Morrison & Foerster LLP

2000 Pennsylvania Avenue, NW, Suite 6000

Washington, DC 20006

Telephone:         202-778-1611

Facsimile:           202-887-0763

Attention:           Martin P. Dunn, Esq.

Email :               mdunn@mofo.com

If to the Transfer Agent:

Wells Fargo Shareowner Services

1110 Centre Pointe Curve, Suite 101

Mendota Heights, MN 55120

Telephone:         651-450-4120

Facsimile:           651-450-4078

Attention:           Suzanne M. Swits

Email:                Suzanne.m.swits@wellsfargo.com

 

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or at such other address and/or facsimile number and/or to the attention of such
other person as the recipient party has specified by written notice given to
each other party one (1) Business Day prior to the effectiveness of such change.
Written confirmation of receipt (A) given by the recipient of such notice,
consent or other communication, (B) mechanically or electronically generated by
the sender’s facsimile machine containing the time, date, and recipient
facsimile number or (C) provided by a nationally recognized overnight delivery
service, shall be rebuttable evidence of receipt 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.
The Company shall not assign this Agreement or any rights or obligations
hereunder without the prior written consent of the Buyer, including by merger or
consolidation. The Buyer may not assign its rights or obligations under this
Agreement.

(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.

(i)         Publicity. The Buyer shall have the right to approve before issuance
any press release, SEC filing or any other public disclosure made by or on
behalf of the Company whatsoever with respect to, in any manner, the Buyer, its
purchases hereunder or any aspect of this Agreement or the transactions
contemplated hereby; provided, however, that the Company shall be entitled,
without the prior approval of the Buyer, to make any press release or other
public disclosure (including any filings with the SEC) with respect to such
transactions as is required by applicable law and regulations so long as the
Company and its counsel consult with the Buyer in connection with any such press
release or other public disclosure at least one (1) Business Day prior to its
release. The Buyer must be provided with a copy thereof at least one
(1) Business Day prior to any release or use by the Company thereof.

(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
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.

(k)        Termination. This Agreement may be terminated only as follows:

(i)         By the Buyer any time an Event of Default exists without any
liability or payment to the Company. However, if pursuant to or within the
meaning of any Bankruptcy Law, the Company commences a voluntary case or any
Person commences a proceeding against the Company, a Custodian is appointed for
the Company or for all or substantially all of its property, or the Company
makes a general assignment for the benefit of its creditors, (any of which would
be an Event of Default as described in Sections 9(f), 9(g) and 9(h) hereof) this
Agreement shall automatically terminate without any liability or payment to the
Company without further action or notice by any Person. No such termination of
this Agreement under this Section 11(k)(i) shall affect the Company’s or the
Buyer’s obligations under this Agreement with respect to pending purchases and
the Company and the Buyer shall complete their respective obligations with
respect to any pending purchases under this Agreement.

 

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(ii)          In the event that the Commencement shall not have occurred the
Company shall have the option to terminate this Agreement for any reason or for
no reason without any liability whatsoever of either party to the other party
under this Agreement except as set forth in Section 11(k)(viii) hereof.

(iii)          In the event that the Commencement shall not have occurred within
ten (10) Business Days of the date of this Agreement, due to the failure to
satisfy any of the conditions set forth in Sections 6 and 7 above with respect
to the Commencement, either party shall have the option to terminate this
Agreement at the close of business on such date or thereafter without liability
of either party to any other party; provided, however, that the right to
terminate this Agreement under this Section 11(k)(iii) shall not be available to
either party if such failure to satisfy any of the conditions set forth in
Sections 6 and 7 is the result of a breach of this Agreement by such party or
the failure of any representation or warranty of such party included in this
Agreement to be true and correct in all material respects.

(iv)         At any time after the Commencement Date, the Company shall have the
option to terminate this Agreement for any reason or for no reason by delivering
notice (a “Company Termination Notice”) to the Buyer electing to terminate this
Agreement without any liability whatsoever of either party to the other party
under this Agreement. The Company Termination Notice shall not be effective
until one (1) Business Day after it has been received by the Buyer.

(v)         This Agreement shall automatically terminate on the date that the
Company sells and the Buyer purchases the full Available Amount as provided
herein, without any action or notice on the part of any party and without any
liability whatsoever of any party to any other party under this Agreement.

(vi)         If by the Maturity Date for any reason or for no reason the full
Available Amount under this Agreement has not been purchased as provided for in
Section 1 of this Agreement, this Agreement shall automatically terminate on the
Maturity Date, without any action or notice on the part of any party and without
any liability whatsoever of any party to any other party under this Agreement.

Except as set forth in Sections 11(k)(i) (in respect of an Event of Default
under Sections 9(f), 9(g) and 9(h)), 11(k)(iv) and 11(k)(v), any termination of
this Agreement pursuant to this Section 11(k) shall be effected by written
notice from the Company to the Buyer, or the Buyer to the Company, as the case
may be, setting forth the basis for the termination hereof. The representations
and warranties of the Company and the Buyer contained in Sections 2, 3 and 5
hereof, the indemnification provisions set forth in Section 8 hereof and the
agreements and covenants set forth in Sections 4(e) and 11, shall survive the
Commencement and any termination of this Agreement. No termination of this
Agreement shall affect the Company’s or the Buyer’s rights or obligations
(i) under the Registration Rights Agreement which shall survive any such
termination in accordance with its terms or (ii) under this Agreement with
respect to pending purchases and the Company and the Buyer shall complete their
respective obligations with respect to any pending purchases under this
Agreement.

 (l)         No Financial Advisor, Placement Agent, Broker or Finder. The
Company represents and warrants to the Buyer that it has not engaged any
financial advisor, placement agent, broker or finder in

 

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connection with the transactions contemplated hereby. The Buyer represents and
warrants to the Company that it has not engaged any financial advisor, placement
agent, broker or finder in connection with the transactions contemplated hereby.
Each party shall be responsible for the payment of any fees or commissions, if
any, of any financial advisor, placement agent, broker or finder engaged by such
party relating to or arising out of the transactions contemplated hereby. Each
party shall pay, and hold the other party harmless against, any liability, loss
or expense (including, without limitation, attorneys’ fees and out of pocket
expenses) arising in connection with any such claim.

(m)         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.

(n)         Failure or Indulgence Not Waiver. No failure or delay in the
exercise of any power, right or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such power, right or
privilege preclude other or further exercise thereof or of any other right,
power or privilege.

*     *     *     *     *

 

-24-

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IN WITNESS WHEREOF, the Buyer and the Company have caused this Common Stock
Purchase Agreement to be duly executed as of the date first written above.

 

 

THE COMPANY:

APRICUS BIOSCIENCES, INC.

By:/s/ Richard W. Pascoe            

Name: Richard W. Pascoe

Title: Chief Executive Officer

BUYER:

ASPIRE CAPITAL FUND, LLC

BY: ASPIRE CAPITAL PARTNERS, LLC

BY: SGM HOLDINGS CORP.

By:/s/ Steven G. Martin            

Name: Steven G. Martin

Title: President

 

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SCHEDULES

 

Schedule 3(a)

  

Subsidiaries

Schedule 3(c)

  

Capitalization

Schedule 3(e)

  

Conflicts

Schedule 3(f)

  

1934 Act Filings

Schedule 3(g)

  

Material Changes

Schedule 3(h)

  

Litigation

Schedule 3(j)

  

Intellectual Property

Schedule 3(l)

  

Title

Schedule 3(p)

  

Transactions with Affiliates

EXHIBITS

Exhibit A

  

Form of Officer’s Certificate

Exhibit B

  

Form of Resolutions of Board of Directors of the Company

Exhibit C

  

Form of Secretary’s Certificate

--------------------------------------------------------------------------------

DISCLOSURE SCHEDULES

These disclosure schedules (the “Disclosure Schedules”) have been prepared and
delivered in connection with the execution and delivery of the Common Stock
Purchase Agreement (the “Agreement”), dated as of July 5, 2016, by and between
Aspire Capital Fund, LLC (“Buyer”), and Apricus Biosciences, Inc. (the
“Company”). Capitalized terms used, but not otherwise defined, in these
Disclosure Schedules have the meanings ascribed to them in the Agreement. The
inclusion of any information in the Company Disclosure Schedule shall not be
deemed to be an admission or acknowledgment that such information is required by
the terms hereof to be disclosed, is material, or is outside the ordinary course
of business.

Schedule 3(a)

Subsidiaries

Subsidiaries of Apricus Biosciences, Inc.

  1. 1. NexMed (U.S.A.), Inc., incorporated in Delaware on June 18, 1997.

  2. 2. NexMed Holdings, Inc., incorporated in Delaware on February 28, 1997.

  3. 3. NexMed International Limited, incorporated in the British Virgin Islands
on August 2,

  4. 1996.

  5. 4. Apricus Pharmaceuticals USA, Inc. (formerly Topotarget USA, Inc.),
incorporated in

  6. Delaware on July 12, 2006 and acquired by Apricus Biosciences, Inc. on
December 29,

  7. 2011.

Schedule 3(c)

Capitalization

 

  1. Loan and Security Agreement by and among the Company, NexMed (U.S.A.),
Inc., NexMed Holdings, Inc. and Apricus Pharmaceuticals USA, Inc., as borrowers,
Oxford Finance LLC, as collateral agent, and the lenders party thereto from time
to time, including Oxford Finance LLC and Silicon Valley Bank, dated as of
October 17, 2014 (see Exhibit 10.3 to the Company’s Form 8-K filed with the
Securities and Exchange Commission on October 20, 2014).

  2. Subscription Agreement dated January 12, 2016, among the Company, Sarissa
Capital Domestic Fund LP and Sarissa Capital Offshore Master Fund LP (see
Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the
Securities and Exchange Commission on January 13, 2016).

  3. Subscription Agreement dated January 12, 2016, between the Company and
Aspire Capital (see Exhibit 10.2 to the Company’s Current Report on Form 8-K
filed with the Securities and Exchange Commission on January 13, 2016).

  4. Subscription Agreement dated January 12, 2016, between the Company and
additional purchaser (see Exhibit 10.3 to the Company’s Current Report on Form
8-K filed with the Securities and Exchange Commission on January 13, 2016).

  5. Equity awards issued pursuant to the Company’s 2012 Stock Long Term
Incentive Plan (see Exhibit A of the Registrant’s Definitive Proxy Statement
filed on April 6, 2012).

--------------------------------------------------------------------------------

  6. Equity awards issued pursuant to the Company’s 2006 Stock Incentive Plan
(see Annex A of the Company’s Definitive Proxy Statement filed with the
Securities and Exchange Commission on April 6, 2006).

  7. Warrants issued pursuant to a financing transaction, dated September 17,
2010 (see Exhibit 4.6 of Amendment No. 2 to the Company’s Registration Statement
on Form S-1 (File No. 333-169132) filed with the Securities and Exchange
Commission on September 28, 2010).

  8. Warrants issued pursuant to a financing transaction (see Exhibit 4.7 of
Amendment No. 2 to the Company’s Registration Statement on Form S-1 (File
No. 333-169132) filed with the Securities and Exchange Commission on
September 28, 2010).

  9. Warrants issued pursuant to a financing transaction (see Exhibit 4.1 to the
Company’s Current Report on Form 8-K filed with the Securities and Exchange
Commission on February 13, 2012).

  10. Warrants issued pursuant to a financing transaction (see Exhibit 1.1 to
the Company’s Current Report on Form 8-K filed with the Securities and Exchange
Commission on May 24, 2013).

  11. Warrants issued pursuant to a debt amendment (see Exhibit 4.1 to the
Company’s Current Report on Form 8-K filed with the Securities and Exchange
Commission on October 20, 2014).

  12. Warrants issued pursuant to a loan and security agreement (see Exhibit 4.2
to the Company’s Current Report on Form 8-K filed with the Securities and
Exchange Commission on October 20, 2014).

  13. Warrants issued pursuant to a subscription agreement (see Exhibit 4.1 to
the Company’s Current Report on Form 8-K filed with the Securities and Exchange
Commission on February 12, 2015).

  14. Warrants issued to Sarissa Capital Domestic Fund LP and Sarissa Capital
Offshore Master Fund LP (see Exhibit 4.1 to the Company’s Current Report on Form
8-K filed with the Securities and Exchange Commission on January 13, 2016).

  15. Warrants issued to certain purchasers (see Exhibit 4.2 to the Company’s
Current Report on Form 8-K filed with the Securities and Exchange Commission on
January 13, 2016).

Schedule 3(e)

Conflicts

On June 2, 2016, the Company received a notice from the NASDAQ Listing
Qualifications Staff that the Company no longer satisfies the minimum $35
million market value of listed securities requirement as required for continued
listing on The NASDAQ Capital Market under NASDAQ Listing Rule 5550(b)(2).

On May 10, 2016, the Company received a Nasdaq Staff Deficiency letter
indicating that, for the last thirty consecutive business days, the bid price
for the Company’s common stock had closed below the minimum $1.00 per share
requirement for continued listing on The Nasdaq Capital Market under Nasdaq
Listing Rule 5550(a)(2).

Schedule 3(f)

1934 Act Filings

None.

--------------------------------------------------------------------------------

Schedule 3(g)

Material Changes

On March 31, 2016, Company committed to a cost-reduction plan that includes an
approximately 30% reduction of the Company’s operating expenses and workforce to
better align its workforce with the needs of its business following its recent
announcement that its Phase 2b proof-of-concept study of fispemifene in men with
secondary hypogonadism and sexual dysfunction failed to meet its primary and
secondary endpoints of demonstrating a statistically significant improvement. In
addition, the Company plans to finalize the RayVa™ Phase 2b delivery device and
study protocol, and partner ex-U.S. prior to initiating any future clinical
studies.

This cost-reduction plan is part of a broader strategic re-positioning to focus
on achieving profitability through Vitaros® ex-U.S. revenue growth, obtaining
approval for Vitaros in the U.S. and substantially reducing operating expenses.
The positions impacted are across substantially all of the Company’s functions.

On May 10, 2016, the Company received a Nasdaq Staff Deficiency letter
indicating that, for the last thirty consecutive business days, the bid price
for the Company’s common stock had closed below the minimum $1.00 per share
requirement for continued listing on The Nasdaq Capital Market under Nasdaq
Listing Rule 5550(a)(2).

On June 2, 2016, the Company received a notice from the NASDAQ Listing
Qualifications Staff that the Company no longer satisfies the minimum $35
million market value of listed securities requirement as required for continued
listing on The NASDAQ Capital Market under NASDAQ Listing Rule 5550(b)(2).

Schedule 3(h)

Litigation

See Part II, Item 1 of the Company’s Form 10-Q filed on May 9, 2016.

Schedule 3(j)

Intellectual Property

None.

Schedule 3(l)

Title

None.

Schedule 3(p)

Transactions with Affiliates

None.

--------------------------------------------------------------------------------

EXHIBIT A

FORM OF OFFICER’S CERTIFICATE

This Officer’s Certificate (“Certificate”) is being delivered pursuant to
Section 7(e) of that certain Common Stock Purchase Agreement dated as of July 5,
2016 (the “Common Stock Purchase Agreement”), by and between APRICUS
BIOSCIENCES, INC., a Nevada corporation (the “Company”), and ASPIRE CAPITAL
FUND, LLC, an Illinois limited liability company (the “Buyer”). Terms used
herein and not otherwise defined shall have the meanings ascribed to them in the
Common Stock Purchase Agreement.

The undersigned,                         ,                          of the
Company, hereby certifies as follows:

1.      I am the                          of the Company and make the statements
contained in this Certificate in my capacity as such;

2.      The representations and warranties of the Company are true and correct
in all material respects (except to the extent that any of such representations
and warranties is already qualified as to materiality in Section 3 of the Common
Stock Purchase Agreement, in which case, such representations and warranties are
true and correct without further qualification) as of the date when made and as
of the Commencement Date as though made at that time (except for representations
and warranties that speak as of a specific date);

3.      The Company has performed, satisfied and complied in all material
respects with covenants, agreements and conditions required by the Transaction
Documents to be performed, satisfied or complied with by the Company at or prior
to the Commencement Date.

4.      The Company has not taken any steps, and does not currently expect to
take any steps, to seek protection pursuant to any Bankruptcy Law nor does the
Company or any of its Subsidiaries have any knowledge or reason to believe that
its creditors intend to initiate involuntary bankruptcy or insolvency
proceedings. The Company is financially solvent and is generally able to pay its
debts as they become due.

IN WITNESS WHEREOF, I have hereunder signed my name on this        day of
                    .

 

                                             

  Name:

  Title:

The undersigned as Secretary of APRICUS BIOSCIENCES, INC., a Nevada corporation,
hereby certifies that                      is the duly elected, appointed,
qualified and acting              of                                         
and that the signature appearing above is his/her genuine signature.

 

                                                                   

Secretary

--------------------------------------------------------------------------------

EXHIBIT B

FORM OF COMPANY RESOLUTIONS

FOR SIGNING PURCHASE AGREEMENT

COMMITTED EQUITY FINANCING

WHEREAS, management has reviewed with the Board of Directors (the “Board”) of
Apricus Biosciences, Inc. (the “Company”) the background, terms and conditions
of the transactions subject to the Common Stock Purchase Agreement (the
“Purchase Agreement”) by and between the Company and Aspire Capital Fund, LLC
(“Aspire”), including all material terms and conditions of the transactions
subject thereto, providing for the purchase by Aspire of up to Seven Million
Dollars ($7,000,000) of the Company’s common stock, par value $0.001 per share
(the “Common Stock”); and

WHEREAS, after careful consideration of the Purchase Agreement, the documents
incident thereto and other factors deemed relevant by the Board, the Board has
determined that it is advisable and in the best interests of the Company to
engage in the transactions contemplated by the Purchase Agreement, including,
but not limited to, the sale and issuance by the Company to Aspire of shares of
Common Stock with an aggregate value of up to $7,000,000, including
(i) 1,518,987 shares of Common Stock issued to Aspire as a commitment fee for
entering into the Purchase Agreement (the “Commitment Shares”),
(ii) 2,531,645 shares of Common Stock to be issued and sold to Aspire on the
date of the Purchase Agreement pursuant to the Purchase Agreement (the “Initial
Purchase Shares”), and (iii) such additional shares of Common Stock, if any, to
be issued and sold to Aspire pursuant to the Purchase Agreement (the “Additional
Purchase Shares,” and together with the Commitment Shares and the Initial
Purchase Shares, the “Aspire Shares”).

TRANSACTION DOCUMENTS

NOW, THEREFORE, BE IT RESOLVED, that the transactions described in the Purchase
Agreement are hereby approved and the Chief Executive Officer and Chief
Financial Officer (the “Authorized Officers”) are hereby severally authorized,
empowered and directed, in the name of and on behalf of the Company, to execute
and deliver the Purchase Agreement, and any other agreements or documents
contemplated thereby including, without limitation, a registration rights
agreement (the “Registration Rights Agreement”) providing for the registration
of the shares of the Company’s Common Stock issuable in respect of the Purchase
Agreement on behalf of Aspire, with such amendments, changes, additions and
deletions as the Authorized Officers may deem to be appropriate and approve on
behalf of, the Company, such approval to be conclusively evidenced by the
signature of an Authorized Officer thereon;

RESOLVED FURTHER, that the terms and provisions of the Registration Rights
Agreement by and among the Company and Aspire are hereby approved and the
Authorized Officers are hereby severally authorized, empowered and directed, in
the name of and on behalf of the Company, to execute and deliver the
Registration Rights Agreement (pursuant to the terms of the Purchase Agreement),
with such amendments, changes, additions and deletions as the Authorized Officer
may deem appropriate and approve on behalf of, the Company, such approval to be
conclusively evidenced by the signature of an Authorized Officer thereon;

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RESOLVED FURTHER, that the terms and provisions of the Form of Transfer Agent
Instructions (the “Instructions”) are hereby approved and the Authorized
Officers are hereby severally authorized, empowered and directed, in the name of
and on behalf of the Company, to execute and deliver the Instructions (pursuant
to the terms of the Purchase Agreement), with such amendments, changes,
additions and deletions as the Authorized Officers may deem appropriate and
approve on behalf of, the Company, such approval to be conclusively evidenced by
the signature of an Authorized Officer thereon;

ISSUANCE OF COMMON STOCK

RESOLVED FURTHER, that the Company is hereby authorized to issue the Commitment
Shares to Aspire and that upon issuance of the Commitment Shares pursuant to the
Purchase Agreement, the Commitment Shares shall be duly authorized, validly
issued, fully paid and non-assessable;

RESOLVED FURTHER, that the Company is hereby authorized to issue the Initial
Purchase Shares to Aspire and that upon issuance of the Initial Purchase Shares
pursuant to the Purchase Agreement, the Commitment Shares shall be duly
authorized, validly issued, fully paid and non-assessable;

RESOLVED FURTHER, that the Company is hereby authorized to issue the Additional
Purchase Shares in accordance with the terms of the Purchase Agreement and that,
upon issuance of the Additional Purchase Shares pursuant to the Purchase
Agreement, the Additional Purchase Shares will be duly authorized, validly
issued, fully paid and non-assessable;

RESOLVED FURTHER, that the officers of the Company be, and each of them hereby
is, authorized and directed, for and on behalf of the Company, to execute and
deliver one or more stock certificates representing any Aspire Shares sold
and/or issued under the Purchase Agreement in such form as may be approved by
such officers, or to cause any such Aspire Shares to be delivered through
electronic book entry;

RESOLVED FURTHER, that the consideration for the Aspire Shares, as set forth in
the Purchase Agreement, is deemed to constitute fair and adequate consideration,
and payment in full, for such shares;

RESOLVED FURTHER, that the issuance by the Company of the Aspire Shares pursuant
to the Purchase Agreement is hereby authorized and approved for all purposes
under Nevada Revised Statutes 78.411 through 78.444, inclusive;

RESOLVED FURTHER, that the prior issuances by the Company of shares of Common
Stock (including the outstanding shares of Common Stock as reflected in the
Purchase Agreement or any registration statement or prospectus relating to the
Aspire Shares) are hereby authorized, approved, ratified and confirmed in all
respects, and all such shares have been validly issued and are fully paid and
non-assessable;

LISTING OF SHARES ON THE NASDAQ CAPITAL MARKET

RESOLVED FURTHER, that the officers of the Company with the assistance of
counsel be, and each of them hereby is, authorized and directed to take all
necessary steps and do all other things necessary and appropriate to effect the
listing of the Aspire Shares on the NASDAQ Capital Market;

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GENERAL AUTHORITY

RESOLVED FURTHER, that, without limiting the foregoing, the Authorized Officers
are, and each of them hereby is, authorized and directed to proceed on behalf of
the Company and to take all such steps as deemed necessary or appropriate, with
the advice and assistance of counsel, to cause the Company to consummate the
agreements referred to herein and to perform its obligations under such
agreements; and

RESOLVED FURTHER, that the Authorized Officers be, and each of them hereby is,
authorized, empowered and directed on behalf of and in the name of the Company,
to take or cause to be taken all such further actions and to execute and deliver
or cause to be executed and delivered all such further agreements, amendments,
documents, certificates, reports, schedules, applications, notices, letters and
undertakings and to incur and pay all such fees and expenses as in their
judgment shall be necessary, proper or desirable to carry into effect the
purpose and intent of any and all of the foregoing resolutions, and that all
actions heretofore taken by any officer or director of the Company in connection
with the transactions contemplated by the agreements described herein are hereby
approved, ratified and confirmed in all respects.

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EXHIBIT C

FORM OF SECRETARY’S CERTIFICATE

This Secretary’s Certificate (the “Certificate”) is being delivered pursuant to
Section 7(k) of that certain Common Stock Purchase Agreement dated as of July 5,
2016 (the “Common Stock Purchase Agreement”), by and between APRICUS
BIOSCIENCES, INC., a Nevada corporation (the “Company”) and ASPIRE CAPITAL FUND,
LLC, an Illinois limited liability company (the “Buyer”), pursuant to which the
Company may sell to the Buyer up to Seven Million Dollars ($7,000,000) of the
Company’s Common Stock, par value $0.001 (the “Common Stock”). Terms used herein
and not otherwise defined shall have the meanings ascribed to them in the Common
Stock Purchase Agreement.

The undersigned,                                 , Secretary of the Company,
hereby certifies as follows in his capacity as such:

1.         I am the Secretary of the Company and make the statements contained
in this Secretary’s Certificate.

2.         Attached hereto as Exhibit A and Exhibit B are true, correct and
complete copies of the Company’s bylaws (“Bylaws”) and Articles of Incorporation
(“Articles of Incorporation”), in each case, as amended through the date hereof,
and no action has been taken by the Company, its directors, officers or
stockholders, in contemplation of the filing of any further amendment relating
to or affecting the Bylaws or Articles.

3.         Attached hereto as Exhibit C are true, correct and complete copies of
the resolutions duly adopted by the Board of Directors of the Company on
                    , 2016 at which a quorum was present and acting throughout.
Such resolutions have not been amended, modified or rescinded and remain in full
force and effect and such resolutions are the only resolutions adopted by the
Company’s Board of Directors, or any committee thereof, or the stockholders of
the Company relating to or affecting (i) the entering into and performance of
the Common Stock Purchase Agreement, or the issuance, offering and sale of the
Purchase Shares and the Commitment Shares and (ii) and the performance of the
Company of its obligation under the Transaction Documents as contemplated
therein.

4.         As of the date hereof, the authorized, issued and reserved capital
stock of the Company is as set forth on Exhibit D hereto.

IN WITNESS WHEREOF, I have hereunder signed my name on this        day of
                    .

 

                                         

                                         , Secretary

The undersigned as                          of Apricus Biosciences, Inc., a
Nevada corporation, hereby certifies that                            is the duly
elected, appointed, qualified and acting Secretary of
                                        , and that the signature appearing above
is his/her genuine signature.