Exhibit 10.1

 

WARRANT EXERCISE AGREEMENT

 

This Warrant Exercise Agreement (this “Agreement”), dated as of September 23,
2019, is by and between ReShape Lifesciences Inc., a Delaware corporation (the
“Company”), and the undersigned holder (each, a “Holder” and, collectively, the
“Holders”) of Series B Common Stock Purchase Warrants to purchase shares of
common stock of the Company, $0.01 par value per share (the “Common Stock”), at
an exercise price of $0.02 per share, with a term of one year following the
effectuation of a reverse stock split by the Company (the “Original Warrants”).
The Original Warrants were issued pursuant to that certain Securities Purchase
Agreement, dated as of June 13, 2019, between the Company the purchasers party
thereto (the “SPA”).

 

WHEREAS, pursuant to the terms of the Original Warrants, the Holder’s Original
Warrants are exercisable for that number shares of Common Stock as set forth on
the Holder’s signature page hereto next to “Total Issuable Warrant Shares
underlying Original Warrants to be exercised” (the “Total Issuable Warrant
Shares”);

 

WHEREAS, the Company has not effected a reverse stock split since the issuance
of the Original Warrants;

 

WHEREAS, the Company and the Holders wish to enter into this Agreement to
provide that (i) the Holders shall exercise all of such Original Warrants as set
forth herein; (ii) upon exercise of such Original Warrants, the Holder shall
receive from the Company (A) the number of shares of Common Stock issuable upon
exercise of such Original Warrants, subject to the Beneficial Ownership
Limitation set forth in Section 2(e) of the Original Warrant and the Issuable
Maximum set forth in Section 2(f) of the Original Warrants (the “Warrant
Shares”), and/or (B) prefunded warrants in the form of Exhibit A attached hereto
(the “Series F Warrants”), to purchase that number of shares of Common Stock
that could not be issued upon exercise of the Original Warrants due to the
Beneficial Ownership Limitation and the Issuable Maximum, which warrants shall
be exercisable immediately, subject to the Beneficial Ownership Limitation and
the Issuable Maximum set forth in the Series F Warrants, at an exercise price of
$0.001 per share (subject to adjustment as provided therein) until exercised in
full, and (iii) immediately prior to such exercise, in consideration of the
Holder’s exercise of such Original Warrants, the Company shall issue the Holder,
in addition to the securities to which such exercising Holder is entitled,
Series E Warrants in the form of attached hereto as Exhibit B (the “Series E
Warrants”);

 

WHEREAS, the Company and the Holders wish to amend Section 2(f) of the Series A
Warrants and Series C Warrants to reflect the execution of this Agreement; and

 

WHEREAS, the shares of Common Stock underlying the Series E Warrants are
referred to herein as the “Series E Warrant Shares,” and the shares of Common
Stock underlying the Series F Warrants are referred to herein as the “Series F
Warrant Shares,” and the Warrant Shares, the Series E Warrants, the Series E
Warrant Shares, the Series F Warrants and the Series F Warrant Shares are
collectively referred to herein as the “Securities.”

 

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NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for good and valuable consideration the receipt and adequacy of
which are hereby acknowledged, the Holder and the Company agree as follows:

 

ARTICLE I

DEFINITIONS

 

Section 1.1 Definitions.  Capitalized terms not defined in this Agreement shall
have the meanings ascribed to such terms in the Original Warrants.

 

ARTICLE II

EXERCISE OF EXISTING WARRANT

 

Section 2.1            Exercise of Original Warrants.

 

(a)           The Company and the Holder hereby agree that the Holder shall
immediately exercise the Original Warrants with respect to the number of Total
Issuable Warrant Shares set forth on the Holder’s signature page hereto at an
exercise price per share equal to $0.02, pursuant to the terms of the Original
Warrants (the “Warrant Exercise”). Notwithstanding the foregoing, (i) in the
event that the Warrant Exercise would cause the Holder to exceed the Beneficial
Ownership Limitation or the Issuable Maximum, the Company shall only issue such
number of Warrant Shares to the Holder  that would not cause such Holder to
exceed the maximum number of Warrant Shares permitted thereunder, and (ii) to
the extent that the Total Issuable Warrant Shares may not be issued pursuant to
the Beneficial Ownership Limitation and the Issuable Maximum, the Company shall
issue the Holder Series F Warrants to purchase that number of shares of Common
Stock equal to the difference between the Total Issuable Warrant Shares and the
actual number of Warrant Shares issued to the Holder hereunder. Upon the
occurrence of the Warrant Exercise and/or issuance of the Series F Warrants
pursuant to this Section 2.1(a), the Original Warrants shall be cancelled and
such cancellation shall be reflected accordingly on the Warrant Register.

 

(b)           The Holder shall execute and deliver the aggregate cash exercise
price for such exercise of the Original Warrants (which amount shall be reduced
by $0.001 for each Series F Warrant Share underlying any Series F Warrants being
issued to the Holder hereunder) to the bank account set forth on the Company’s
signature page hereto within two (2) Trading Days after the date of this
Agreement, and the Company shall deliver the Warrant Shares and the Series F
Warrants, registered in the name of each Holder, pursuant to instructions set
forth on the Holder’s signature page hereto. The date of the closing of the
exercise of the Original Warrants shall be referred to as the “Closing Date”.

 

(c)           On the Closing Date, the Company shall issue to the Holder
Series E Warrants to purchase such number of Series E Warrant Shares as follows:

 

A Common Stock purchase warrant exercisable into that number of shares of Common
Stock as is equal to 100% of the number of Total Issuable Warrant Shares, with
an

 

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exercise price equal to $0.05, a term of exercise equal to five (5) years
commencing on the Reverse Stock Split Date, in the form attached hereto as
Exhibit B.

 

Section 2.2            Legends; Restricted Securities.

 

(a)           The Holder understands that the Securities are not registered
under the Securities Act of 1933, as amended (the “Securities Act”), or the
securities laws of any state and, may only be disposed of in compliance with
state and federal securities laws. In connection with any transfer of Securities
other than pursuant to an effective registration statement or Rule 144, to the
Company or to an Affiliate of a Holder or in connection with a pledge as
contemplated in Section 2.2(b), the Company may require the transferor thereof
to provide to the Company an opinion of counsel selected by the transferor and
reasonably acceptable to the Company, the form and substance of which opinion
shall be reasonably satisfactory to the Company, to the effect that such
transfer does not require registration of such transferred Securities under the
Securities Act. As a condition of transfer, any such transferee shall agree in
writing to be bound by the terms of this Agreement and that certain Amended and
Restated Registration Rights Agreement, of even date herewith, between the
Company and the Holders (the “Registration Rights Agreement” and together with
this Agreement, the Series E Warrants, the Series F Warrants, the “Transaction
Documents”) and shall have the rights and obligations of a Holder under this
Agreement and the Registration Rights Agreement.

 

(b)           The Holders agree to the imprinting, so long as is required by
this Section 2.2, of a legend on any of the Securities in the following form:

 

“THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO
AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS. THIS SECURITY MAY BE PLEDGED IN CONNECTION
WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN
WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE
501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.”

 

The Company acknowledges and agrees that a Holder may from time to time pledge
pursuant to a bona fide margin agreement with a registered broker-dealer or
grant a security interest in some or all of the Securities to a financial
institution that is an “accredited investor” as defined in Rule 501(a) under the
Securities Act and, if required under the terms of such arrangement, such Holder
may transfer pledged or secured

 

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Securities to the pledgees or secured parties. Such a pledge or transfer would
not be subject to approval of the Company and no legal opinion of legal counsel
of the pledgee, secured party or pledgor shall be required in connection
therewith. Further, no notice shall be required of such pledge. At the
appropriate Holder’s expense, the Company will execute and deliver such
reasonable documentation as a pledgee or secured party of Securities may
reasonably request in connection with a pledge or transfer of the Securities,
including, if the Securities are subject to registration pursuant to the
Registration Rights Agreement, the preparation and filing of any required
prospectus supplement under Rule 424(b)(3) under the Securities Act or other
applicable provision of the Securities Act to appropriately amend the list of
selling stockholders thereunder.

 

(c)           Certificates evidencing the Warrant Shares, the Series E Warrant
Shares and the Series F Warrant Shares shall not contain any legend (including
the legend set forth in Section 2.2(b) hereof), (i) while a registration
statement covering the resale of such securities is effective under the
Securities Act, (ii) following any sale of such Warrant Shares, the Series E
Warrant Shares or the Series F Warrant Shares pursuant to Rule 144 (assuming
cashless exercise of the Warrants, as applicable), (iii) if such Warrant Shares,
the Series E Warrant Shares or the Series F Warrant Shares are eligible for sale
under Rule 144 (assuming cashless exercise of the Warrants, as applicable), or
(iv) if such legend is not required under applicable requirements of the
Securities Act (including judicial interpretations and pronouncements issued by
the staff of the Commission). The Company shall cause its counsel to issue a
legal opinion to the Transfer Agent or the Holder promptly if required by the
Transfer Agent to effect the removal of the legend hereunder, or if requested by
a Purchaser, respectively.  If all or any portion of the Series E Warrants or
the Series F Warrants is exercised at a time when there is an effective
registration statement to cover the resale of the Series E Warrant Shares or the
Series F Warrant Shares, or if such Warrant Shares, the Series E Warrant Shares
or the Series F Warrant Shares may be sold under Rule 144 and the Company is
then in compliance with the current public information required under Rule 144
(assuming cashless exercise of the Warrants, as applicable), or if the Warrant
Shares, the Series E Warrant Shares or the Series F Warrant Shares may be sold
under Rule 144 without the requirement for the Company to be in compliance with
the current public information required under Rule 144 as to such securities or
if such legend is not otherwise required under applicable requirements of the
Securities Act (including judicial interpretations and pronouncements issued by
the staff of the Commission), then such Warrant Shares, the Series E Warrant
Shares or the Series F Warrant Shares shall be issued free of all legends. The
Company agrees that following the Effective Date or at such time as such legend
is no longer required under this Section 2.2(c), it will, no later than the
earlier of (i) two (2) Trading Days and (ii) the number of Trading Days
comprising the Standard Settlement Period (as defined below) following the
delivery by the Holder to the Company or the Transfer Agent of a certificate
representing Warrant Shares, the Series E Warrant Shares or the Series F Warrant
Shares, as the case may be, issued with a restrictive legend (such date, the
“Legend Removal Date”), deliver or cause to be delivered to the Holder a
certificate representing such shares that is free from all restrictive and other
legends.  The Company may not make any notation on its records or give
instructions to the Transfer Agent that enlarge the restrictions on transfer set
forth in this Section 2.2(c). Certificates for the securities subject to legend
removal hereunder

 

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shall be transmitted by the Transfer Agent to the Holder by crediting the
account of the Holder’s prime broker with the Depository Trust Company System as
directed by the Holder. As used herein, “Standard Settlement Period” means the
standard settlement period, expressed in a number of Trading Days, on the
Company’s primary Trading Market with respect to the Common Stock as in effect
on the date of delivery of a certificate representing Shares or Warrants Shares,
as the case may be, issued with a restrictive legend. “Effective Date” means the
earliest of the date that (a) the initial Registration Statement (as defined in
the Registration Rights Agreement) has been declared effective by the
Commission, (b) all of the Warrant Shares, Series E Warrant Shares and Series F
Warrant Shares have been sold pursuant to Rule 144 or may be sold pursuant to
Rule 144 without the requirement for the Company to be in compliance with the
current public information required under Rule 144 and without volume or
manner-of-sale restrictions, (c) following the one year anniversary of the
Closing Date provided that a holder of the Warrant Shares, the Series E Warrant
Shares or the Series F Warrant is not an Affiliate of the Company, or (d) all of
the Warrant Shares, Series E Warrant Shares and Series F Warrant Shares may be
sold pursuant to an exemption from registration under Section 4(a)(1) of the
Securities Act without volume or manner-of-sale restrictions and Company counsel
has delivered to such holders a standing written unqualified opinion that
resales may then be made by such holders of the Warrant Shares, the Series E
Warrant Shares or the Series F Warrant Shares pursuant to such exemption which
opinion shall be in form and substance reasonably acceptable to such holders.

 

(d)           In addition to the Holder’s other available remedies, the Company
shall pay to the Holder, in cash, (i) as partial liquidated damages and not as a
penalty, for each $1,000 of Warrant Shares, the Series E Warrant Shares or the
Series F Warrant Shares (based on the VWAP of the Common Stock on the date such
securities are submitted to the Transfer Agent) delivered for removal of the
restrictive legend and subject to Section 2.2(c), $10 per Trading Day
(increasing to $20 per Trading Day five (5) Trading Days after such damages have
begun to accrue) for each Trading Day after the Legend Removal Date until such
certificate is delivered without a legend and (ii) if the Company fails to
(A) issue and deliver (or cause to be delivered) to the Holder by the Legend
Removal Date a certificate representing the Warrant Shares, the Series E Warrant
Shares or the Series F Warrant Shares so delivered to the Company by the Holder
that is free from all restrictive and other legends and (B) if after the Legend
Removal Date the Holder purchases (in an open market transaction or otherwise)
shares of Common Stock to deliver in satisfaction of a sale by the Holder of all
or any portion of the number of shares of Common Stock, or a sale of a number of
shares of Common Stock equal to all or any portion of the number of share of
Common Stock that the Holder anticipated receiving from the Company without any
restrictive legend, then, an amount equal to the excess of the Holder’s total
purchase price (including brokerage commissions and other out-of-pocket
expenses, if any) for the shares of Common Stock so purchased (including
brokerage commissions and other out-of-pocket expenses, if any) over the product
of (1) such number of Warrant Shares, the Series E Warrant Shares or the
Series F Warrant Shares that the Company was required to deliver to the Holder
by the Legend Removal Date multiplied by (2) the lowest closing sale price of
the Common Stock on any Trading Day during the period commencing on the date of
the delivery by such Purchaser to the Company of the applicable Warrant Shares,
the Series E Warrant Shares or the Series F

 

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Warrant Shares (as the case may be) and ending on the date of such delivery and
payment under this clause (ii).

 

(e)           Each Holder, severally and not jointly with the other Holders,
agrees with the Company that such Holder will sell any Securities pursuant to
either the registration requirements of the Securities Act, including any
applicable prospectus delivery requirements, or an exemption therefrom, and that
if Securities are sold pursuant to a Registration Statement, they will be sold
in compliance with the plan of distribution set forth therein, and acknowledges
that the removal of the restrictive legend from certificates representing
Securities as set forth in this Section 2.2 is predicated upon the Company’s
reliance upon this understanding.

 

Section 2.3            Omnibus Amendment to Series A Warrants and Series C
Warrants. Section 2(f) of each Series A Warrant and Series C Warrant is hereby
amended and restated in its entirety to read as follows:

 

“f)           Issuance Restrictions.  Until the Reverse Stock Split Date, the
Company shall not be required to issue upon exercise of this Warrant a number of
shares of Common Stock, which, when aggregated with any shares of Common Stock
issued (i) upon exercise of this Warrant, (ii) upon exercise of any of the
Company’s other outstanding common stock purchase warrants issued pursuant to
the Purchase Agreement and the Warrant Exercise Agreement, dated as of
September [  ], 2019, by and among the Company and certain warrant holder
signatories thereto (the “Exercise Agreement”), and (iii) pursuant to any
warrants issued to any registered broker-dealer as a fee in connection with the
transactions contemplated by the Purchase Agreement or the Exercise Agreement,
would exceed 231,430,682, subject to adjustment for reverse and forward stock
splits, stock dividends, stock combinations and other similar transactions of
the Common Stock that occur after the date hereof (such number of shares, the
“Issuable Maximum”). The Holder, the holders of the Company’s other outstanding
warrants issued pursuant to the Purchase Agreement and the holders of the
Company’s other outstanding warrants issued pursuant to the Exercise Agreement
shall be entitled to a portion of the Issuable Maximum equal to the quotient
obtained by dividing (x) the Holder’s original Subscription Amount plus the
aggregate cash exercise price expended by the Holder pursuant to the Exercise
Agreement by (y) the aggregate original Subscription Amount of all holders
pursuant to the Purchase Agreement plus the aggregate cash exercise price
expended by all holders pursuant to the Exercise Agreement. In addition, the
Holder may allocate its pro-rata portion of the Issuable Maximum among any of
the outstanding warrants issued pursuant to the Purchase Agreement or the
Exercise Agreement that are held by the Holder in its sole discretion. Such
portion shall be adjusted upward ratably in the event that a holder of the
Company’s warrants no longer holds any such warrants and the amount of shares
issued to such holder pursuant to its warrants was less than such holder’s
pro-rata share of the Issuable Maximum. For avoidance of doubt, until the
Reverse Stock Split Date, warrants issued to any registered broker-dealer as a
fee in connection with the Purchase Agreement or the Exercise Agreement shall
provide that such warrants shall not be allocated any portion of the Issuable
Maximum and shall be unexercisable until the Reverse Stock Split Date.”

 

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Section 2.4            Issuance of Press Release. Prior to 9:30 a.m. (New York
City time) on the date hereof, the Company shall issue a press release
disclosing the material terms of the transactions contemplated hereby and within
the time required by the laws file a Current Report on Form 8-K with the
Commission, which shall include the Transaction Documents (the “8-K Filing”). 
From and after the issuance of the press release, the Company represents to the
Holder that it shall not be in possession of any material, nonpublic information
received from the Company, any of its subsidiaries or any of their respective
officers, directors, employees or agents that is not disclosed in press release.
In addition, effective upon the issuance of the press release, the Company
acknowledges and agrees that any and all confidentiality or similar obligations
under any agreement, whether written or oral, between the Company, any of its
subsidiaries or any of their respective officers, directors, affiliates,
employees or agents, on the one hand, and the Holder or any of its affiliates,
on the other hand, shall terminate.

 

ARTICLE III

REPRESENTATIONS AND WARRANTIES

 

Section 3.1            Representations and Warranties of the Company. The
Company hereby makes the representations and warranties set forth below to the
Holder that as of the date of its execution of this Agreement:

 

(a)           Authorization; Enforcement. The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by this Agreement and otherwise to carry out its obligations
hereunder and thereunder. The execution and delivery of this Agreement by the
Company and the consummation by it of the transactions contemplated hereby have
been duly authorized by all necessary action on the part of such Company and no
further action is required by such Company, its board of directors or its
shareholders in connection therewith. This Agreement has been duly executed by
the Company and, when delivered in accordance with the terms hereof will
constitute the valid and binding obligation of the Company enforceable against
the Company in accordance with its terms except (i) as limited by general
equitable principles and applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement of
creditors’ rights generally, (ii) as limited by laws relating to the
availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may be
limited by applicable law.

 

(b)           Organization. The Company is a duly organized and validly existing
corporation in good standing under the laws of the State of Delaware.

 

(c)           [Reserved].

 

(d)           No Conflicts. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby do not and will not: (i) conflict
with or violate any provision of the Company’s certificate or articles of
incorporation, bylaws or other organizational or charter documents, or
(ii) conflict with, or constitute a default (or an

 

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event that with notice or lapse of time or both would become a default) under,
result in the creation of any lien upon any of the properties or assets of the
Company, or give to others any rights of termination, amendment, acceleration or
cancellation (with or without notice, lapse of time or both) of, any material
agreement, credit facility, debt or other material instrument (evidencing
Company debt or otherwise) or other material understanding to which the Company
is a party or by which any property or asset of the Company is bound or
affected, or (iii) conflict with or result in a violation of any law, rule,
regulation, order, judgment, injunction, decree or other restriction of any
court or governmental authority to which the Company is subject (including
federal and state securities laws and regulations), or by which any property or
asset of the Company is bound or affected.

 

(e)           Disclosure.  Except with respect to the material terms and
conditions of the transactions contemplated by the Transaction Documents, the
Company confirms that neither it nor any other Person acting on its behalf has
provided the Holder or any of its agents or counsel with any information that it
believes constitutes or might constitute material, non-public information. The
Company understands and confirms that the Holder will rely on the foregoing
representation in effecting transactions in securities of the Company. All of
the disclosure furnished by or on behalf of the Company to the Holder regarding
the Company and its subsidiaries, their respective businesses and the
transactions contemplated hereby, including but not limited to the disclosure
set forth in the SEC Reports, is true and correct and does not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements made therein, in light of the circumstances
under which they were made, not misleading. As used herein, “SEC Reports” means
all reports, schedules, forms, statements and other documents required to be
filed by the Company with the Commission pursuant to the reporting requirements
of the Securities Exchange Act of 1934, as amended, including all exhibits
included therein and financial statements, notes and schedules thereto and
documents incorporated by reference therein.

 

(f)            Issuance of Securities.  The issuance of the Series E Warrants
and the Series F Warrants is duly authorized and, upon issuance in accordance
with the terms of this Agreement, the Series E Warrants and the Series F
Warrants shall be validly issued and free from all preemptive or similar rights
(except for those which have been validly waived prior to the date hereof),
taxes, liens and charges and other encumbrances with respect to the issue
thereof.  As of the date hereof, a number of Common Stock shall have been duly
authorized and reserved for issuance which equals or exceeds the maximum number
of Series E Warrant Shares and Series F Warrant Shares issuable upon exercise of
the such warrants.  Upon exercise of the Series E Warrant in accordance with the
terms of the Series E Warrant, the Series E Warrant Shares when issued will be
validly issued, fully paid and nonassessable and free from all preemptive or
similar rights, taxes, liens, charges and other encumbrances with respect to the
issue thereof, with the holders being entitled to all rights accorded to a
holder of Common Stock. Upon exercise of the Series F Warrant in accordance with
the terms of the Series F Warrant, the Series F Warrant Shares when issued will
be validly issued, fully paid and nonassessable and free from all preemptive or
similar rights, taxes, liens, charges and other encumbrances with respect to

 

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the issue thereof, with the holders being entitled to all rights accorded to a
holder of Common Stock. Assuming the accuracy of each of the representations and
warranties set forth in Section 3.2 of this Agreement, the offer and issuance by
the Company of the Series E Warrants and the Series F Warrants is exempt from
registration under the Securities Act.

 

(g)           No General Solicitation.  Neither the Company, nor any of its
subsidiaries or affiliates, nor any Person acting on its or their behalf, has
engaged in any form of general solicitation or general advertising (within the
meaning of Regulation D) in connection with the offer or sale of the Series E
Warrants and the Series F Warrants.

 

(h)           No Disqualification Events.  With respect to Securities to be
offered and sold hereunder in reliance on Rule 506(b) under the Securities Act,
none of the Company, any of its predecessors, any affiliated issuer, any
director, executive officer, other officer of the Company, any beneficial owner
of 20% or more of the Company’s outstanding voting equity securities, calculated
on the basis of voting power, nor any promoter (as that term is defined in
Rule 405 under the Securities Act) connected with the Company in any capacity at
the time of sale (each, an “Issuer Covered Person” and, together, “Issuer
Covered Persons”) is subject to any of the “Bad Actor” disqualifications
described in Rule 506(d)(1)(i) to (viii) under the Securities Act (a
“Disqualification Event”), except for a Disqualification Event covered by
Rule 506(d)(2) or (d)(3). The Company has exercised reasonable care to determine
whether any Issuer Covered Person is subject to a Disqualification Event. The
Company has complied, to the extent applicable, with its disclosure obligations
under Rule 506(e), and has furnished to the Holders a copy of any disclosures
provided thereunder, if any.

 

Section 3.2            Representations and Warranties of the Holder. The Holder
hereby makes the representations and warranties set forth below to the Company
that as of the date of its execution of this Agreement:

 

(a)           Due Authorization. The Holder represents and warrants that (i) the
execution and delivery of this Agreement by it and the consummation by it of the
transactions contemplated hereby have been duly authorized by all necessary
action on its behalf and (ii) this Agreement has been duly executed and
delivered by the Holder and constitutes the valid and binding obligation of the
Holder, enforceable against it in accordance with its terms.

 

(b)           No Conflicts. The execution, delivery and performance of this
Agreement by the Holder and the consummation by the Holder of the transactions
contemplated hereby do not and will not: (i) conflict with or violate any
provision of the Holder’s organizational or charter documents, or (ii) conflict
with or result in a violation of any agreement, law, rule, regulation, order,
judgment, injunction, decree or other restriction of any court or governmental
authority which would interfere with the ability of the Holder to perform its
obligations under this Agreement.

 

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(c)           Access to Information. The Holder acknowledges that it has had the
opportunity to review the Transaction Documents and the SEC Reports and has been
afforded (i) the opportunity to ask such questions as it has deemed necessary
of, and to receive answers from, representatives of the Company concerning the
terms and conditions of the exercise of the Original Warrants and issuance of
the Series E Warrants  and the Series F Warrants and the merits and risks of
investing in the Securities; (ii) access to information about the Company and
its financial condition, results of operations, business, properties, management
and prospects sufficient to enable it to evaluate its investment; and (iii) the
opportunity to obtain such additional information that the Company possesses or
can acquire without unreasonable effort or expense that is necessary to make an
informed investment decision with respect to the investment. The Holder
acknowledges and agrees that neither H.C. Wainwright & Co., LLC (the “Agent”)
nor any Affiliate of the Agent has provided the Holder with any information or
advice with respect to the Securities nor is such information or advice
necessary or desired. Neither the Agent nor any Affiliate of the Agent has made
or makes any representation as to the Company or the quality of the Securities,
and the Agent and any Affiliate of the Agent may have acquired non-public
information with respect to the Company which the Holder agrees need not be
provided to it. In connection with the issuance of the Securities to the Holder,
neither the Agent nor any of its Affiliates has acted as a financial advisor or
fiduciary to the Holder.

 

(d)           Holder Status. The Holder is an “accredited investor” as defined
in Rule 501 under the Securities Act.

 

ARTICLE IV

MISCELLANEOUS

 

Section 4.1            More Favorable Agreement. The Company covenants and
agrees that it has not entered into a warrant exercise agreement with any other
holder of Original Warrants (each, an “Other Holder”) for any material
amendments, modifications or exchanges to the terms of such Original Warrants
(or settlement or exchange of such Original Warrants for other material
consideration) (each a “More Favorable Agreement”), that is more favorable to
such Other Holder than those of the Holder pursuant to this Agreement.  If the
Company enters into a More Favorable Agreement with terms that are materially
different from this Agreement (“material” shall be in the reasonable
determination of the Holder), then (i) the Company shall provide written notice
thereof to the Holder promptly following the occurrence thereof and (ii) the
terms and conditions of this Agreement that shall be, without any further action
by the Holder or the Company, automatically and retroactively to the date
hereof, amended and modified in an economically and legally equivalent manner
such that the Holder shall receive the benefit of such more favorable material
terms and/or conditions (as the case may be) set forth in such More Favorable
Agreement, provided that upon written notice to the Company within five
(5) Business Days of such Company’s written notice, the Holder may elect not to
accept the benefit of any such amended or modified material term or condition,
in which event the material term or condition contained in this Agreement shall
continue to apply to the Holder as it was in effect immediately prior to such
amendment or modification as if such amendment or

 

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modification never occurred with respect to the Holder.  The provisions of this
paragraph shall apply similarly and equally to each More Favorable Agreement. 
The Company shall not enter into any More Favorable Agreement that would
obligate the Company (after taking into consideration this Section 4.1 to issue
to the Holder and the Other Holders, in the aggregate, a number of shares of
Common Stock that would exceed 19.9% of the total number of shares of Common
Stock issued and outstanding as of the date hereof.  The Company will notify the
Holder any time it enters into any agreement with any Other Holder relating to
the Warrants and, at the request of the Holder, provide the Holder with such
agreement for its review.

 

Section 4.2                                    Other Warrant Exercise
Agreement.  The Company acknowledges and agrees that the obligations of the
Holder under this Agreement are several and not joint with the obligations of
any Other Holder under any other agreement related to the exercise of such
Original Warrants (“Other Warrant Exercise Agreement”), and the Holder shall not
be responsible in any way for the performance of the obligations of any Other
Holder or under any such Other Warrant Exercise Agreement.  Nothing contained in
this Agreement, and no action taken by the Holder pursuant hereto, shall be
deemed to constitute the Holder and the Other Holders as a partnership, an
association, a joint venture or any other kind of entity, or create a
presumption that the Holder and the Other Holders are in any way acting in
concert or as a group with respect to such obligations or the transactions
contemplated by this Agreement and the Company acknowledges that the Holder and
the Other Holders are not acting in concert or as a group with respect to such
obligations or the transactions contemplated by this Agreement or any Other
Warrant Exercise Agreement.  The Company and the Holder confirms that the Holder
has independently participated in the negotiation of the transactions
contemplated hereby with the advice of its own counsel and advisors.  The Holder
shall be entitled to independently protect and enforce their rights, including,
without limitation, the rights arising out of this Agreement, and it shall not
be necessary for any Other Holder to be joined as an additional party in any
proceeding for such purpose.

 

Section 4.3                                    Participation in Future
Financing.

 

(a)                                 From the date hereof until the date that is
the twelve (12) months of the Closing Date, upon any issuance by the Company or
any of its subsidiaries of Common Stock, Common Stock Equivalents for cash
consideration, Indebtedness (as defined in the SPA) or a combination of units
hereof (a “Subsequent Financing”), each Holder shall have the right to
participate in up to an amount of the Subsequent Financing equal to 50% of the
Subsequent Financing (the “Participation Maximum”) on the same terms, conditions
and price provided for in the Subsequent Financing.

 

(b)                                 At least eight (8) hours prior to the
pricing of the Subsequent Financing, the Company shall deliver to each Purchaser
a written notice of its intention to effect a Subsequent Financing (“Notice”),
which Notice shall describe in reasonable detail the proposed terms of such
Subsequent Financing, the amount of proceeds intended to be raised thereunder
and the Person or Persons through or with whom such Subsequent Financing is
proposed to be effected and shall include a term sheet or similar document
relating thereto as an attachment.

 

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(c)                                  Any Holder desiring to participate in such
Subsequent Financing must provide written notice to the Company within
eight (8) hours of the time the Company provided the Notice that such Purchaser
is willing to participate in the Subsequent Financing, the amount of such
Holder’s Holder, and representing and warranting that such Holder has such funds
ready, willing, and available for investment on the terms set forth in the
Notice. If the Company receives no such notice from a Holder by that time, such
Holder shall be deemed to have notified the Company that it does not elect to
participate.

 

(d)                                 If after eight (8) hours from the time the
Company provided the Notice, notifications by the Holders of their willingness
to participate in the Subsequent Financing (or to cause their designees to
participate) are, in the aggregate, less than the total amount of the Subsequent
Financing, then the Company may effect the remaining portion of such Subsequent
Financing on the terms and with the Persons set forth in the Notice.

 

(e)                                  If after eight (8) hours from the time the
Company provided the Notice, the Company receives responses to the Notice from
Purchasers seeking to purchase more than the aggregate amount of
the Participation Maximum, each such Purchaser shall have the right to purchase
its Pro Rata Portion (as defined below) of the Participation Maximum. “Pro Rata
Portion” means the ratio of (x) the Holder’s original Subscription Amount plus
the aggregate cash exercise price expended by the Holder pursuant to this
Agreement by (y) the aggregate original Subscription Amount of all Holders
pursuant to the SPA plus the aggregate cash exercise price expended by all
Holders pursuant to this Agreement.

 

(f)                                   The Company and each Holder agree that if
any Holder elects to participate in the Subsequent Financing, the transaction
documents related to the Subsequent Financing shall not include any term or
provision whereby such Holder shall be required to agree to any restrictions on
trading as to any of the Securities received hereunder or be required to consent
to any amendment to or termination of, or grant any waiver, release or the like
under or in connection with, this Agreement, without the prior written consent
of such Holder.

 

(g)                                  Notwithstanding anything to the contrary in
this Section 4.3 and unless otherwise agreed to by such Holder, the Company
shall either confirm in writing to such Holder that the transaction with respect
to the Subsequent Financing has been abandoned or shall publicly disclose its
intention to issue the securities in the Subsequent Financing, in either case in
such a manner such that such Holder will not be in possession of any material,
non-public information, by the tenth (10th) Business Day following delivery of
the Notice. If by such tenth (10th) Business Day, no public disclosure regarding
a transaction with respect to the Subsequent Financing has been made, and no
notice regarding the abandonment of such transaction has been received by such
Holder, such transaction shall be deemed to have been abandoned and such Holder
shall not be deemed to be in possession of any material, non-public information
with respect to the Company or any of its subsidiaries.

 

(h)                                 Notwithstanding the foregoing, this
Section 4.3 shall not apply in respect of an Exempt Issuance. “Exempt Issuance”
means the issuance of (a) shares of Common Stock or options to employees,
officers or directors of the Company pursuant to any stock or option plan duly
adopted for such purpose, by a majority of the non-employee members of the Board
of Directors or a majority of the members of a committee of non-employee
directors

 

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established for such purpose for services rendered to the Company,
(b) securities upon the exercise or exchange of or conversion of any Securities
issued under the SPA and this Agreement and/or other securities exercisable or
exchangeable for or convertible into shares of Common Stock issued and
outstanding on the date of this Agreement, provided that such securities have
not been amended since the date of this Agreement to increase the number of such
securities or to decrease the exercise price, exchange price or conversion price
of such securities (other than in connection with stock splits or combinations)
or to extend the term of such securities, and (c) securities issued pursuant to
acquisitions or strategic transactions approved by a majority of the
disinterested directors of the Company, provided that such securities are issued
as “restricted securities” (as defined in Rule 144) and carry no registration
rights that require or permit the filing of any registration statement in
connection therewith during the prohibition period in Section 4.4(a) herein, and
provided that any such issuance shall only be to a Person (or to the
equityholders of a Person) which is, itself or through its subsidiaries, an
operating company or an owner of an asset in a business synergistic with the
business of the Company and shall provide to the Company additional benefits in
addition to the investment of funds, but shall not include a transaction in
which the Company is issuing securities primarily for the purpose of raising
capital or to an entity whose primary business is investing in securities.

 

Section 4.4                                    Subsequent Offering.

 

(a)                                 From the date hereof until the date that is
the nine (9) months of the Closing Date, without the consent of the Purchasers
that received at least fifty-one (51%) percent of Common Stock or Common Stock
underlying the Securities being issued hereunder, neither the Company nor any
subsidiary shall issue, enter into any agreement to issue or announce the
issuance or proposed issuance of any shares of Common Stock or Common Stock
Equivalents, or file any registration statement covering the issuance or resale
of any shares of Common Stock or Common Stock Equivalents at an effective price
per share of Common Stock less than $0.02 (subject to adjustment for reverse and
forward stock splits, stock dividends, stock combinations and other similar
transactions of the Common Stock that occur after the date of this Agreement).

 

(b)                                 Notwithstanding the foregoing, clause (a) of
this Section 4.4 shall not apply in respect of an Exempt Issuance.

 

Section 4.3                                    Notices.  Any and all notices or
other communications or deliveries required or permitted to be provided
hereunder shall be made by email to the email address of Holders set forth on
Holders’ signature page.

 

Section 4.4                                    Survival.  All warranties and
representations (as of the date such warranties and representations were made)
made herein or in any certificate or other instrument delivered by any party
hereto or on its behalf under this Agreement shall be considered to have been
relied upon by the parties hereto and shall survive the issuance of the Warrant
Shares, the Series E Warrants and the Series F Warrants. This Agreement shall
inure to the benefit of and be binding upon the successors and permitted assigns
of each of the parties; provided, however, that no party may assign this
Agreement or the obligations and rights of such party hereunder without the
prior written consent of the other parties hereto.

 

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Section 4.5                                    Execution.  This Agreement may be
executed in two or more counterparts, all of which when taken together shall be
considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other party, it
being understood that both parties need not sign the same counterpart. In the
event that any signature is delivered by facsimile transmission, such signature
shall create a valid and binding obligation of the party executing (or on whose
behalf such signature is executed) with the same force and effect as if such
facsimile signature page were an original thereof.

 

Section 4.6                                    Severability. If any provision of
this Agreement is held to be invalid or unenforceable in any respect, the
validity and enforceability of the remaining terms and provisions of this
Agreement shall not in any way be affected or impaired thereby and the parties
will attempt to agree upon a valid and enforceable provision that is a
reasonable substitute therefor, and upon so agreeing, shall incorporate such
substitute provision in this Agreement.

 

Section 4.7                                    Governing Law. All questions
concerning the construction, validity, enforcement and interpretation of this
Agreement shall be determined pursuant to the Governing Law provision in
Section 5(e) of the Original Warrants.

 

Section 4.8                                    Entire Agreement. The Agreement,
together with the exhibits and schedules thereto, contain the entire
understanding of the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings, oral or written, with respect
to such matters, which the parties acknowledge have been merged into such
documents, exhibits and schedules.

 

Section 4.9                                    Construction. The headings herein
are for convenience only, do not constitute a part of this Agreement and shall
not be deemed to limit or affect any of the provisions hereof. The language used
in this Agreement will be deemed to be the language chosen by the parties to
express their mutual intent, and no rules of strict construction will be applied
against any party.

 

Section 4.10                             Fees and Expenses. Each party shall pay
the fees and expenses of its advisers, counsel, accountants and other experts,
if any, and all other expenses incurred by such party incident to the
negotiation, preparation, execution, delivery and performance of this Agreement.
The Company shall pay all transfer agent fees, stamp taxes and other taxes and
duties levied in connection with the delivery of any Warrant Shares, Series E
Warrants or the Series F Warrants.

 

Section 4.11                             Registration Obligations.  The Company
shall prepare and file with the Commission a registration statement pursuant to
the Registration Rights Agreement.

 

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IN WITNESS WHEREOF, the undersigned have executed this Warrant Exercise
Agreement as of the date first written above.

 

COMPANY:

 

 

 

RESHAPE LIFESCIENCES INC.

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

Bank Account and Wire Instructions:

 

 

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[HOLDER SIGNATURE PAGES TO RSLS

 

WARRANT EXERCISE AGREEMENT]

 

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

 

Name of Holder:

 

 

 

 

 

Signature of Authorized Signatory of Holder:

 

 

 

 

 

Name of Authorized Signatory:

 

 

 

 

 

Title of Authorized Signatory:

 

 

 

 

 

Email Address of Holder:

 

 

 

 

 

 

 

 

Total Issuable Warrant Shares underlying Original Warrants to be exercised:

 

 

 

 

 

Aggregate Exercise Price of Original Warrant to be Exercised: 

$

 

 

 

 

Warrant Shares:

 

 

 

 

 

Series F Warrant Shares underlying Series F Prefunded Warrants:

 

 

 

 

 

 Series E Warrant Shares underlying Series E Warrants:

 

 

 

 

 

Delivery address of Series E Warrants and the Series F Warrants:

 

 

 

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Exhibit A

 

Form of Series F Warrants

 

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Exhibit B

 

Form of Series E Warrants

 

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