Exhibit 10.1

 

Matinas biopharma holdings, Inc.

 

(a Delaware corporation)

 

8,000 Shares of Series B Convertible Preferred Stock

 

PLACEMENT AGENCY AGREEMENT

 

June 19, 2018

 

ThinkEquity

A Division of Fordham Financial Management, Inc.

17 State Street, 22nd Floor

New York, NY 10004

 

Ladies and Gentlemen:

 

Matinas BioPharma Holdings, Inc., a Delaware corporation (the “Company”),
proposes to issue and sell to the purchasers (each, a “Purchaser” and,
collectively, the “Purchasers”), pursuant to the terms and conditions of this
Placement Agent Agreement (this “Agreement”) up to an aggregate of 8,000 shares
(the “Shares”) of Series B Convertible Preferred Stock, par value $0.0001 per
share (the “Series B Preferred Stock”). The offering and sale of the Shares of
Series B Preferred Stock is hereinafter referred to as the “Offering.” The
Company hereby confirms its agreement with ThinkEquity, a division of Fordham
Financial Management, Inc. (the “Placement Agent”) to act as Placement Agent in
accordance with the terms and conditions hereof.

 

Each Share of Series B Preferred Stock will have a stated capital of $1,000 per
share and will initially be convertible into 2,000 shares of the Company’s
common stock, $0.0001 par value per share (the “Common Stock”). Such Common
Stock of the Company into which the Shares are convertible are hereinafter
referred to as the “Conversion Shares.” In addition, dividends on the Series B
Preferred Stock will be payable in shares of Common Stock pursuant to the
Certificate of Designation (as defined below). Such Common Stock of the Company
which may be issued as dividends on the Shares are hereinafter referred to as
the “Dividend Shares.” The Shares and, where applicable, the Conversion Shares
and the Dividend Shares, are collectively referred to as the “Securities.”

 

The terms of the Series B Preferred Stock will be set forth in the Certificate
of Designation (the “Certificate of Designation”) to be filed by the Company
with the Secretary of State of the State of Delaware as an amendment to the
Company’s Certificate of Incorporation.

 

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The Company has filed with the Securities and Exchange Commission (the
“Commission”) a shelf registration statement on Form S-3 (No. 333-217106)
covering the public offering and sale of certain securities, including the
Securities, under the Securities Act of 1933, as amended (the “1933 Act”) and
the rules and regulations promulgated thereunder (the “1933 Act Regulations”).
As used herein “Registration Statement,” means such registration statement as
amended by any post-effective amendments thereto, including the exhibits and any
schedules thereto, the documents incorporated or deemed to be incorporated by
reference therein pursuant to Item 12 of Form S-3 under the 1933 Act and the
documents otherwise deemed to be a part thereof pursuant to Rule 430B under the
1933 Act Regulations (the “Rule 430B Information”). Each preliminary prospectus
used in connection with the offering of the Securities, including the documents
incorporated or deemed to be incorporated by reference therein pursuant to Item
12 of Form S-3 under the 1933 Act, are collectively referred to herein as a
“preliminary prospectus.” Promptly after execution and delivery of this
Agreement, the Company will prepare and file a final prospectus relating to the
Securities in accordance with the provisions of Rule 424(b) (“Rule 424(b)”) of
the 1933 Act Regulations. Any registration statement filed pursuant to Rule
462(b) of the 1933 Act Regulations is herein called the “Rule 462(b)
Registration Statement” and, after such filing, the term “Registration
Statement” shall include the Rule 462(b) Registration Statement. The final
prospectus, in the form first furnished or made available to the Placement Agent
for use in connection with the offering of the Securities, including the
documents incorporated or deemed to be incorporated by reference therein
pursuant to Item 12 of Form S-3 under the 1933 Act, are collectively referred to
herein as the “Prospectus.” For purposes of this Agreement, all references to
the Registration Statement, any preliminary prospectus, the Prospectus or any
amendment or supplement to any of the foregoing shall be deemed to include the
copy filed with the Commission pursuant to its Electronic Data Gathering,
Analysis and Retrieval system or any successor system (“EDGAR”).

 

SECTION 1. Agreement to Act as Placement Agent; Placement of Securities. On the
basis of the representations and warranties herein contained and subject to the
terms and conditions herein set forth:

 

(a) Appointment of Placement Agent. The Company hereby authorizes the Placement
Agent to act as its exclusive agent to solicit offers for the purchase of all or
part of the Securities from the Company in connection with the proposed
Offering. Until the Closing Date (as defined in Section 1(e) below) or earlier
upon termination of this Agreement pursuant to Section 9, the Company shall not,
without the prior written consent of the Placement Agent (which consent shall
not be unreasonably withheld, delayed or conditioned), solicit or accept offers
to purchase the Securities otherwise than through the Placement Agent.

 

(b) Reasonable Efforts. The Company hereby acknowledges that the Placement Agent
has agreed, as agent of the Company, to use its reasonable efforts to solicit
offers to purchase the Securities from the Company on the terms and subject to
the conditions set forth in the Prospectus. The Placement Agent shall use
reasonable efforts to assist the Company in obtaining performance by each
Purchaser whose offer to purchase Securities has been solicited by the Placement
Agent and accepted by the Company, but the Placement Agent shall not, except as
otherwise provided in this Agreement, be obligated to disclose the identity of
any potential purchaser or have any liability to the Company in the event any
such purchase is not consummated for any reason. Under no circumstances will the
Placement Agent be obligated to underwrite or purchase any Securities for its
own account and, in soliciting purchases of the Securities, the Placement Agent
shall act solely as the Company’s agent and not as principal.

 

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(c) Solicitation of Offers. Subject to the provisions of this Section 1, offers
for the purchase of the Securities may be solicited by the Placement Agent as
agent for the Company at such times and in such amounts as the Placement Agent
deems reasonably advisable. The Placement Agent shall communicate to the
Company, orally or in writing, each reasonable offer to purchase Securities
received by it as agent of the Company. The Company shall have the sole right to
accept offers to purchase Securities and may reject any such offer, in whole or
in part. The Company shall have the right, in its sole discretion, to reject any
offer to purchase Securities received by it, in whole or in part, and any such
rejection shall not be deemed a breach of this Agreement.

 

(d) Initial Public Offering Price. The Securities are being sold to the
Purchasers at the following initial public offering price: $1,000.00 per Share
of Series B Preferred Stock.

 

(e) Payment. Payment of the purchase price for, and delivery of, the Securities
(the “Closing”) shall be made at the offices of Meister Seelig & Fein LLP
(“Placement Agent Counsel”), 125 Park Avenue, 7th Floor, New York, New York
10017, or at such other place as shall be agreed upon by the Placement Agent and
the Company, at 10:00 a.m. (New York City time) on June 21, 2018, or such other
time not later than ten Business Days after such date as shall be agreed upon by
the Placement Agent and the Company (such time and date of payment and delivery
being herein called “Closing Date”). The term “Business Day” means any day other
than a Saturday, a Sunday or a legal holiday or a day on which banking
institutions are authorized or obligated by law to close in New York, New York.

 

At the Closing, the Company shall deliver the Shares purchased on such Closing
Date to the Placement Agent, which delivery may be made through the facilities
of the Depository Trust Company (“DTC”). Following the delivery of the Shares by
the Placement Agent to the Purchasers against payment therefor, the Placement
Agent shall wire transfer, in immediately available funds, the aggregate
Purchase Price of the Shares purchased on such Closing Date, net of the
Placement Fee (as defined Section 1(f) below) and the expenses set forth in
Section 4 of this Agreement, to the Company. All actions taken at the Closing
shall be deemed to have occurred simultaneously on the Closing Date. Any
Securities for which payment has not been received by the Company, to the extent
they have been delivered to the Placement Agent, shall be returned to the
Company.

 

No Shares which the Company has agreed to sell pursuant to this Agreement shall
be deemed to have been purchased and paid for, or issued and sold by the
Company, until the appropriate corresponding number of Shares shall have been
delivered to the Purchasers or the Placement Agent via DTC against payment
therefor. If the Company shall default in its obligations to deliver the Shares
to the Purchasers or the Placement Agent on behalf of the Purchasers as per such
instructions, the Company shall indemnify and hold the Placement Agent harmless
against any loss, claim, damage or liability directly or indirectly arising from
or as a result of such default by the Company.

 

(f) Placement Fee. As compensation for services rendered, on the Closing Date,
the Placement Agent shall deduct a cash fee (the “Cash Fee”) in an aggregate
amount equal to seven percent (7%) of the gross proceeds received from the sale
of the Securities on the Closing Date. The Cash Fee is hereinafter referred to
herein as the “Placement Fee”. The Placement Agent may retain other brokers or
dealers to act as sub-agents on its behalf in connection with the Offering,
subject to the Company’s prior consent, which consent shall not be unreasonably
withheld, the fees of which shall be paid out of the Placement Fee. Each broker
or dealer retained by the Placement Agent to act as a sub-agent in the Offering
shall be entitled to rely on the representations, warranties and agreements of
the Company contained in this Agreement as of such sub-agent was a party hereto.

 

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(g) Purchase Warrants. The Company hereby agrees to issue and sell to the
Placement Agent (and/or its designees) at the Closing Date an option (“Placement
Agent’s Warrant”) for the purchase of up to an aggregate of 240,000 shares of
Common Stock, representing 1.5% of the Conversion Shares underlying the Shares
sold in the Offering (assuming the sale of 8,000 shares of Series B Preferred
Stock in the Offering), for an aggregate purchase price of $100.00. The
Placement Agent’s Warrant agreement, in the form attached hereto as Exhibit A
(the “Placement Agent’s Warrant Agreement”), shall be exercisable, in whole or
in part, commencing on a date which is one (1) year after the Closing Date and
expiring on the five-year anniversary of the Closing Date at an initial exercise
price per share of Common Stock of $0.75, which is equal to 150% of the initial
conversion price of the Shares. The Placement Agent’s Warrant Agreement and the
shares of Common Stock issuable upon exercise thereof are hereinafter referred
to together as the “Placement Agent’s Securities,” and the shares of Common
Stock included in the Placement Agent’s Securities are sometimes referred to as
the “Warrant Shares.” The Placement Agent understands and agrees that there are
significant restrictions pursuant to FINRA Rule 5110 against transferring the
Placement Agent’s Warrant Agreement and the Warrant Shares during the one (1)
year period following the Closing Date and by its acceptance thereof shall agree
that it will not sell, transfer, assign, pledge or hypothecate the Placement
Agent’s Warrant Agreement, or any portion thereof, or be the subject of any
hedging, short sale, derivative, put or call transaction that would result in
the effective economic disposition of such securities for a period of one (1)
year following the Closing Date to anyone other than (i) an selling agent or a
selected dealer in connection with the Offering, or (ii) a bona fide officer or
partner of the Placement Agent or of any such selling agent or selected dealer;
and only if any such transferee agrees to the foregoing lock-up restrictions.

 

SECTION 2. Representations and Warranties.

 

(a) Representations and Warranties by the Company. The Company meets the
requirements for use of Form S-3 under the 1933 Act, including General
Instruction I.B.1 of such Form S-3. The Company represents and warrants to the
Placement Agent and the Purchasers as of the date hereof, the Applicable Time
(as defined in Section 2(a)(iii)) and the Closing Date, and agrees with the
Placement Agent and the Purchasers, as follows:

 

(i) Registration Statement and Prospectuses. The Registration Statement has been
declared effective under the 1933 Act. No stop order suspending the
effectiveness of the Registration Statement has been issued under the 1933 Act,
no order preventing or suspending the use of any preliminary prospectus or the
Prospectus has been issued and no proceedings for any of those purposes have
been instituted or are pending or, to the Company’s knowledge, contemplated. The
Company has complied with each request (if any) from the Commission for
additional information.

 

The Registration Statement, at the time it became effective, complied in all
material respects with the requirements of the 1933 Act and the 1933 Act
Regulations. Each preliminary prospectus, the Prospectus and any amendment or
supplement thereto, at the time each was filed with the Commission, complied in
all material respects with the requirements of the 1933 Act and the 1933 Act
Regulations. Each preliminary prospectus delivered by the Company to the
Placement Agent for use in connection with the Offering and the Prospectus was
or will be identical to the electronically transmitted copies thereof filed with
the Commission pursuant to EDGAR, except to the extent permitted by Regulation
S-T.

 

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The documents incorporated or deemed to be incorporated by reference in the
Registration Statement, any preliminary prospectus and the Prospectus, when they
became effective or at the time they were or hereafter are filed with the
Commission, complied and will comply in all material respects with the
requirements of the Securities Exchange Act of 1934, as amended (the “1934 Act”)
and the rules and regulations of the Commission under the 1934 Act (the “1934
Act Regulations”).

 

(ii) Accurate Disclosure. Neither the Registration Statement nor any amendment
thereto, at its effective time, or at the Closing Date, contained, contains or
will contain an untrue statement of a material fact or omitted, omits or will
omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading. As of the Applicable Time, neither (A)
the General Disclosure Package nor (B) any individual Issuer Limited Use Free
Writing Prospectus, when considered together with the General Disclosure
Package, included an untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. Neither the
Prospectus nor any amendment or supplement thereto (including any prospectus
wrapper), as of its date, at the time of any filing with the Commission pursuant
to Rule 424(b), or at the Closing Date, included, includes or will include an
untrue statement of a material fact or omitted, omits or will omit to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. The documents
incorporated or deemed to be incorporated by reference in the Registration
Statement, the General Disclosure Package and the Prospectus, at the time the
Registration Statement became effective or when such documents incorporated by
reference were filed with the Commission, as the case may be, when read together
with the other information in the Registration Statement, the General Disclosure
Package, any Limited Use Free Writing Prospectus or the Prospectus, as the case
may be, did not and will not include an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading.

 

The representations and warranties in this Section 2(a)(ii) shall not apply to
statements in or omissions from the Registration Statement (or any amendment
thereto), the General Disclosure Package, the Prospectus (or any amendment or
supplement thereto) or any Issuer Free Writing Prospectus made in reliance upon
and in conformity with written information furnished to the Company by the
Placement Agent expressly for use therein. For purposes of this Agreement, the
only information so furnished shall be the statements contained in the paragraph
under the heading “Plan of Distribution” in the section of the Prospectus
(collectively, the “Placement Agent’s Information”).

 

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(iii) Issuer Free Writing Prospectuses. No Issuer Free Writing Prospectus will
be used in connection with the Offering.

 

As used in this Section 2 and elsewhere in this Agreement:

 

“Applicable Time” means 8:00 a.m., New York City time, on the date of this
Agreement or such other time as agreed by the Company and the Placement Agent.

 

“General Disclosure Package” means any Issuer General Use Free Writing
Prospectuses issued at or prior to the Applicable Time, the most recent
preliminary prospectus that is distributed to prospective purchasers prior to
the Applicable Time and the information included on Schedule A hereto, all
considered together.

 

“Issuer Free Writing Prospectus” means any “issuer free writing prospectus,” as
defined in Rule 433 of the 1933 Act Regulations (“Rule 433”), including, without
limitation, any “free writing prospectus” (as defined in Rule 405 of the 1933
Act Regulations (“Rule 405”)) relating to the Securities that is (i) required to
be filed with the Commission by the Company, (ii) a “road show that is a written
communication” within the meaning of Rule 433(d)(8)(i), whether or not required
to be filed with the Commission, or (iii) exempt from filing with the Commission
pursuant to Rule 433(d)(5)(i) because it contains a description of the
Securities or of the Offering that does not reflect the final terms, in each
case in the form filed or required to be filed with the Commission or, if not
required to be filed, in the form retained in the Company’s records pursuant to
Rule 433(g).

 

“Issuer General Use Free Writing Prospectus” means any Issuer Free Writing
Prospectus that is intended for general distribution to prospective purchasers
(other than a “bona fide electronic road show,” as defined in Rule 433 (the
“Bona Fide Electronic Road Show”)), as evidenced by its being specified in
Schedule B hereto.

 

“Issuer Limited Use Free Writing Prospectus” means any Issuer Free Writing
Prospectus that is not an Issuer General Use Free Writing Prospectus.

 

All references in this Agreement to financial statements and schedules and other
information which is “contained,” “included” or “stated” (or other references of
like import) in the Registration Statement, any preliminary prospectus or the
Prospectus shall be deemed to include all such financial statements and
schedules and other information incorporated or deemed incorporated by reference
in the Registration Statement, any preliminary prospectus or the Prospectus, as
the case may be, prior to the execution and delivery of this Agreement; and all
references in this Agreement to amendments or supplements to the Registration
Statement, any preliminary prospectus or the Prospectus shall be deemed to
include the filing of any document under the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder (collectively, the
“1934 Act”), incorporated or deemed to be incorporated by reference in the
Registration Statement, any preliminary prospectus or the Prospectus, as the
case may be, at or after the execution and delivery of this Agreement.

 

(iv) Intentionally omitted.

 

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(v) Independent Accountants. EisnerAmper LLP, who certified financial statements
and supporting schedules incorporated by reference in the Registration
Statement, the General Disclosure Package and the Prospectus, are independent
public accountants as required by the 1933 Act, the 1933 Act Regulations and the
Public Company Accounting Oversight Board.

 

(vi) Financial Statements; Non-GAAP Financial Measures. The financial statements
included in the Registration Statement, the General Disclosure Package and the
Prospectus, together with the related schedules and notes, present fairly, in
all material respects, the financial position of the Company and its
subsidiaries, at the dates indicated and its results of operations,
stockholders’ equity and cash flows for the periods specified; said financial
statements have been prepared in conformity with U.S. generally accepted
accounting principles (“GAAP”) applied on a consistent basis throughout the
periods involved (except for any preparation of non-GAAP measures). The
supporting schedules, if any, present fairly, in all material respects, in
accordance with GAAP the information required to be stated therein. The pro
forma financial information and the related notes thereto included or
incorporated by reference in each of the Registration Statement, the General
Disclosure Package and the Prospectus has been prepared in accordance with the
Commission’s rules and guidance with respect to pro forma financial information,
and the assumptions underlying such pro forma financial information are
reasonable and are set forth in each of the Registration Statement, the General
Disclosure Package and the Prospectus. Except as included therein, no other
historical or pro forma financial statements or supporting schedules are
required to be included in the Registration Statement, the General Disclosure
Package or the Prospectus under the 1933 Act or the 1933 Act Regulations.

 

(vii) No Material Adverse Change in Business. Except as otherwise stated
therein, since the respective dates as of which information is given in the
Registration Statement, the General Disclosure Package or the Prospectus, (A)
there has been no material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of the
Company or any of its subsidiaries, whether or not arising in the ordinary
course of business (a “Material Adverse Effect”), (B) there have been no
transactions entered into by the Company or any of its subsidiaries, other than
those in the ordinary course of business, which are material to the Company, and
(C) there has been no dividend or distribution of any kind declared, paid or
made by the Company or any of its subsidiaries on any class of its capital
stock.

 

(viii) Good Standing of the Company. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. The Company has requisite corporate power and authority to own, lease
and operate its properties and to conduct its business as described in the
Registration Statement, the General Disclosure Package and the Prospectus and to
enter into and perform its obligations under this Agreement; and the Company is
duly qualified as a foreign corporation to transact business and is in good
standing in each other jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the conduct of
business, except where the failure so to qualify or to be in good standing would
not result in a Material Adverse Effect.

 

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(ix) Subsidiaries. Each of the Company’s subsidiaries has been duly organized
and is validly existing as a corporation or other entity in good standing under
the laws of its jurisdiction of organization, with requisite power and authority
to own or lease its properties and conduct its business as described in the
Registration Statement, the General Disclosure Package and the Prospectus. Each
of the Company’s subsidiaries is duly qualified to transact business in all
jurisdictions in which the conduct of its business requires such qualification,
except where the failure to be so qualified would not have a Material Adverse
Effect. All of the issued shares of capital stock or other ownership interest of
each of the subsidiaries have been duly authorized and validly issued, are fully
paid and non-assessable and are owned directly or indirectly by the Company,
free and clear of all liens, encumbrances, equities or claims, except for such
liens, encumbrances, equities or claims as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. The Company
does not own or control, directly or indirectly, any corporation, association or
other entity other than the subsidiaries listed in Schedule D hereto (each, a
“subsidiary,” and collectively, the “subsidiaries”).

 

(x) Contracts Affecting Capital. There are no transactions, arrangements or
other relationships between and/or among the Company, any of its affiliates (as
such term is defined in Rule 405 of the 1933 Act Regulations) and any
unconsolidated entity, including, but not limited to, any structured finance,
special purpose or limited purpose entity that could reasonably be expected to
materially affect the Company’s or its subsidiaries’ liquidity or the
availability of or requirements for their capital resources required to be
described or incorporated by reference in the Registration Statement, the
General Disclosure Package and the Prospectus which have not been described or
incorporated by reference as required.

 

(xi) Loans to Directors or Officers. There are no outstanding loans, advances
(except normal advances for business expenses in the ordinary course of
business) or guarantees or indebtedness by the Company or its subsidiaries to or
for the benefit of any of the officers or directors of the Company, its
subsidiaries or any of their respective family members, except as disclosed in
the Registration Statement, the General Disclosure Package and the Prospectus.

 

(xii) Smaller Reporting Company; Emerging Growth Company. As of the time of the
initial filing of the Registration Statement, the Company was a “smaller
reporting company,” as defined in Rule 12b-2 of the 1934 Act Regulations. As of
the date of this Agreement, the Company is an “emerging growth company,” as
defined in Rule 12b-2 of the 1934 Act Regulations.

 

(xiii) Capitalization. The Company has an authorized capitalization as set forth
in the Registration Statement, the General Disclosure Package and the Prospectus
as of the date or dates set forth therein. The outstanding shares of capital
stock of the Company have been duly authorized and validly issued and are fully
paid and non-assessable. None of the outstanding shares of capital stock of the
Company were issued in violation of the preemptive or other similar rights of
any securityholder of the Company. Except as described in or expressly
contemplated by the Registration Statement, the General Disclosure Package and
the Prospectus, there are no outstanding rights (including, without limitation,
pre-emptive rights), warrants or options to acquire, or instruments convertible
into or exchangeable for, any shares of capital stock or other equity interest
in the Company, or any contract, commitment, agreement, understanding or
arrangement of any kind relating to the issuance of any capital stock of the
Company, any such convertible or exchangeable securities or any such rights,
warrants or options.

 

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(xiv) Stock Options. With respect to the outstanding stock options (the “Stock
Options”) granted pursuant to the stock-based compensation plans of the Company
(the “Company Stock Plans”), (i) each Stock Option intended to qualify as an
“incentive stock option” under Section 422 of the Internal Revenue Code of 1986,
as amended (the “Code”), so qualified, (ii) each grant of a Stock Option was
duly authorized no later than the date on which the grant of such Stock Option
was by its terms to be effective (the “Grant Date”) by all necessary corporate
action, including, as applicable, approval by the board of directors of the
Company (or a duly constituted and authorized committee thereof) and any
required stockholder approval by the necessary number of votes or written
consents, and the award agreement governing such grant (if any) was duly
executed and delivered by each party thereto, (iii) each such grant was made in
accordance with the terms of the Company Stock Plans and all other applicable
laws and regulatory rules or requirements, except where the failure to comply
with such laws, regulatory rules or requirements would not result in a Material
Adverse Effect, and (iv) each such grant was properly accounted for in
accordance with GAAP in the financial statements (including the related notes)
of the Company included in the Registration Statement, the General Disclosure
Package and the Prospectus, to the extent required under GAAP to be accounted
for in such financial statements.

 

(xv) Authorization of Agreements. This Agreement and the Placement Agent’s
Warrant Agreement have been duly authorized, executed and delivered by the
Company.

 

(xvi) Authorization of Certificate of Designation. The Certificate of
Designation, the proposed form of which has been furnished to you, has been duly
authorized by the Company and will have been duly executed and delivered by the
Company and duly filed with the Secretary of State of the State of Delaware
before the Closing Date. The holders of the Series B Preferred Stock will have
the rights set forth in the Certificate of Designation upon filing of the
Certificate of Designation with the Secretary of State of the State of Delaware.

 

(xvii) Authorization and Description of Securities. The Shares to be purchased
by the Purchasers from the Company and the Placement Agent’s Securities to be
purchased by the Placement Agent from the Company have been duly authorized for
issuance and sale to the Purchasers and the Placement Agent pursuant to this
Agreement and, when issued and delivered by the Company pursuant to this
Agreement against payment of the consideration set forth herein, will be duly
and validly issued, fully paid and non-assessable and will have the rights,
preferences and priorities set forth in the Company’s Certificate of
Incorporation (including the Certificate of Designation). The Conversion Shares
have been duly authorized and reserved for issuance pursuant to the terms of the
Shares, and when issued by the Company upon valid conversion of the Shares, will
be duly and validly issued, fully paid and nonassessable. The Dividend Shares
have been duly authorized and reserved for issuance pursuant to the terms of the
Shares, and when issued by the Company in payment of dividends on the Shares,
will be duly and validly issued, fully paid and nonassessable. The Warrant
Shares have been duly authorized and reserved for issuance and when issued by
the Company pursuant to the terms of the Placement Agent’s Warrant Agreement,
will be duly and validly issued, fully paid and nonassessable. The issuance of
the Shares, Conversion Shares, Dividend Shares and Placement Agent’s Securities
is not subject to any preemptive or other similar rights of any securityholder
of the Company other than those rights that have been disclosed in the
Registration Statement, the General Disclosure Package and the Prospectus and
have been waived. The capital stock of the Company conforms in all material
respects to all statements relating thereto contained in the Registration
Statement, the General Disclosure Package and the Prospectus. No holder of
Securities or the Placement Agent’s Securities will be subject to personal
liability solely by reason of being such a holder.

 

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(xviii) Registration Rights. There are no persons with registration rights or
other similar rights to have any securities registered for sale pursuant to the
Registration Statement or otherwise registered for sale or sold by the Company
under the 1933 Act, other than those rights that have been disclosed in the
Registration Statement, the General Disclosure Package and the Prospectus and
have been waived or satisfied.

 

(xix) Absence of Violations, Defaults and Conflicts. The Company and each of its
subsidiaries is not (A) in violation of its charter or by-laws or other
applicable organizational or governing documents, (B) in default in the
performance or observance of any obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, deed of trust, loan or credit
agreement, note, lease or other agreement or instrument to which the Company or
any of its subsidiaries is a party or by which it may be bound or to which any
of the properties or assets of the Company or any of its subsidiaries is subject
(collectively, “Agreements and Instruments”), except for such defaults that
would not reasonably be expected to, singly or in the aggregate, result in a
Material Adverse Effect, or (C) in violation of any law, statute, rule,
regulation, judgment, order, writ or decree of any arbitrator, court,
governmental body, regulatory body, administrative agency or other authority,
body or agency having jurisdiction over the Company, any of its subsidiaries or
any of their respective properties, assets or operations (each, a “Governmental
Entity”), except for such violations that would not reasonably be expected to,
singly or in the aggregate, result in a Material Adverse Effect. The execution,
delivery and performance of this Agreement, the Placement Agent’s Warrant
Agreement and the consummation of the transactions contemplated herein and
therein and in the Registration Statement, the General Disclosure Package and
the Prospectus (including the issuance and sale of the Securities and the use of
the proceeds from the sale of the Securities as described therein under the
caption “Use of Proceeds” in the Prospectus) and compliance by the Company with
its obligations hereunder and under the Placement Agent’s Warrant Agreement and
the Certificate of Designation have been duly authorized by all necessary
corporate action and do not and will not, whether with or without the giving of
notice or passage of time or both, conflict with or constitute a breach of, or
default or Repayment Event (as defined below) under, or result in the creation
or imposition of any lien, charge or encumbrance upon any properties or assets
of the Company or any of its subsidiaries pursuant to, the Agreements and
Instruments (except for such conflicts, breaches, defaults or Repayment Events
or liens, charges or encumbrances that would not reasonably be expected to,
singly or in the aggregate, result in a Material Adverse Effect), nor will such
action result in any violation of (i) the provisions of the charter, by-laws or
similar organization or governing document of the Company or any of its
subsidiaries or (ii) any law, statute, rule, regulation, judgment, order, writ
or decree of any Governmental Entity, except with respect to clause (ii), such
violations as would not reasonably be expected to, singly or in the aggregate,
result in a Material Adverse Effect. As used herein, a “Repayment Event” means
any event or condition which gives the holder of any note, debenture or other
evidence of indebtedness (or any person acting on such holder’s behalf) the
right to require the repurchase, redemption or repayment of all or a portion of
such indebtedness by the Company or any of its subsidiaries.

 

 10 

 

 

(xx) Absence of Labor Dispute. No labor dispute with the employees of the
Company or any of its subsidiaries exists or, to the knowledge of the Company,
is threatened, and the Company has no knowledge of any existing or imminent
labor dispute by the employees of any of its principal suppliers, manufacturers,
customers or contractors.

 

(xxi) Absence of Proceedings. Except as disclosed in the Registration Statement,
the General Disclosure Package and the Prospectus, there is no action, suit,
proceeding, inquiry or investigation before or brought by any Governmental
Entity now pending or, to the knowledge of the Company, threatened against the
Company or any of its subsidiaries, which would reasonably be expected to,
singly or in the aggregate, result in a Material Adverse Effect, or which would
reasonably be expected to, singly or in the aggregate, materially and adversely
affect the consummation of the transactions contemplated in this Agreement or
the performance by the Company of its obligations hereunder.

 

(xxii) Accuracy of Exhibits. There are no contracts or documents which are
required to be described in the Registration Statement, the General Disclosure
Package or the Prospectus or to be filed as exhibits to the Registration
Statement which have not been so described and filed as required.

 

(xxiii) Absence of Further Requirements. No filing with, or authorization,
approval, consent, license, order, registration, qualification or decree of, any
Governmental Entity is necessary or required for the performance by the Company
of its obligations hereunder, in connection with the offering, issuance or sale
of the Securities hereunder or the consummation of the transactions contemplated
by this Agreement and as contemplated in the Registration Statement, the General
Disclosure Package and the Prospectus, except such as have been already obtained
or as may be required under the 1933 Act, the 1933 Act Regulations, the 1934
Act, the 1934 Act Regulations, the rules of the NYSE American (the “Exchange”)
or state securities laws.

 

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(xxiv) Possession of Licenses and Permits. The Company and each of its
subsidiaries possesses such permits, licenses, certificates, approvals,
clearances, consents and other authorizations (collectively, “Governmental
Licenses”) issued by the appropriate Governmental Entities necessary to conduct
the business now operated by them, except where the failure so to possess would
not reasonably be expected to, singly or in the aggregate, result in a Material
Adverse Effect. The Company and each of its subsidiaries is in compliance with
the terms and conditions of all Governmental Licenses and, to the Company’s
knowledge, no event has occurred which allows, or after notice or lapse of time
would allow, revocation or termination thereof or result in any other material
impairment of the rights of the holder of any Government License, except where
the failure so to comply would not reasonably be expected to, singly or in the
aggregate, result in a Material Adverse Effect. All of the Governmental Licenses
are valid and in full force and effect. Neither the Company nor any of its
subsidiaries (a) has received notice of any ongoing claim, action, suit,
proceeding, hearing, enforcement, investigation, arbitration or other action
from any U.S. or non-U.S. Governmental Entity or third party alleging that any
product, operation or activity is in violation of any Governmental Licenses and
has no knowledge that any such Governmental Entity or third party is considering
any such claim, litigation, arbitration, action, suit, investigation or
proceeding; (b) has received notice that any Governmental Entity has taken, is
taking or intends to take regulatory action, and has no knowledge that any
Governmental Entity is considering such action; and (c) is a party to any
corporate integrity agreement, deferred prosecution agreement, monitoring
agreement, consent decree, settlement order, or similar agreements, or has any
reporting obligations pursuant to any such agreement, plan or correction or
other remedial measure entered into with any Governmental Entity.

 

(xxv) Title to Property. The Company and each of its subsidiaries has good and
marketable title to all real property owned by it and good title or valid leases
to all personal property owned by it, in each case, free and clear of all
mortgages, pledges, liens, security interests, claims, restrictions or
encumbrances (except for customary easements and rights of way) of any kind
except such as (A) are described in the Registration Statement, the General
Disclosure Package and the Prospectus or (B) do not, singly or in the aggregate,
materially affect the value of such property and do not materially interfere
with the use made and proposed to be made of such property by the Company and
its subsidiaries; and all of the leases and subleases material to the business
of the Company and that of its subsidiaries and under which the Company or any
of its subsidiaries holds properties described in the Registration Statement,
the General Disclosure Package or the Prospectus, are in full force and effect,
and neither the Company nor any of its subsidiaries has received any written
notice of any material claim of any sort that has been asserted by anyone
adverse to the rights of the Company or any of its subsidiaries under any of the
leases or subleases mentioned above, or affecting or questioning the rights of
the Company or any of its subsidiaries to the continued possession of the leased
or subleased premises under any such lease or sublease.

 

(xxvi) Possession of Intellectual Property. Except as would not reasonably be
expected to have a Material Adverse Effect, (i) the Company and each of its
subsidiaries owns all right, title and interest in or otherwise have the right
to use all patents, inventions, copyrights, know-how (including trade secrets
and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures), trademarks, service marks, trade names and
other intellectual property rights (collectively, “Intellectual Property”) that
is necessary for, used or held for use in, or otherwise exploited in connection
with, the conduct of the business now operated by them and as proposed to be
operated, and (ii) to the Company’s knowledge, neither the Company nor any of
its subsidiaries is infringing, misappropriating, diluting or otherwise
violating the Intellectual Property of any third party. Except as disclosed in
the Registration Statement, the General Disclosure Package and the Prospectus or
as would not reasonably be expected to have a Material Adverse Effect, (i) no
action, suit, claim, or other proceeding is pending, or to the Company’s
knowledge, is threatened, alleging that the Company or any of its subsidiaries
is infringing, misappropriating, diluting, or otherwise violating the
Intellectual Property of any third party in any respect, and (ii) no action,
suit, claim, or other proceeding is pending, or to the Company’s knowledge, is
threatened, challenging the validity, enforceability, scope, registration,
ownership or use of any Intellectual Property of the Company or any of its
subsidiaries that is, singly or in the aggregate, necessary to its business
(with the exception of office actions in connection with applications for the
registration or issuance of such Intellectual Property).

 

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(xxvii) Environmental Laws. Except as described in the Registration Statement,
the General Disclosure Package and the Prospectus or would not reasonably be
expected to, singly or in the aggregate, result in a Material Adverse Effect,
(A) neither the Company nor any of its subsidiaries is in violation of any
federal, state, local or foreign statute, law, rule, regulation, ordinance,
code, policy or rule of common law or any judicial or administrative
interpretation thereof, including any judicial or administrative order, consent,
decree or judgment, relating to pollution or protection of human health, the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata) or wildlife, including, without
limitation, laws and regulations relating to the release or threatened release
of chemicals, pollutants, contaminants, wastes, toxic substances, hazardous
substances, petroleum or petroleum products, asbestos-containing materials or
mold (collectively, “Hazardous Materials”) or to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials (collectively, “Environmental Laws”), (B) the Company and
each of its subsidiaries has all permits, authorizations and approvals required
under any applicable Environmental Laws and is in compliance with their
requirements, (C) there are no pending or, to the knowledge of the Company,
threatened administrative, regulatory or judicial actions, suits, demands,
demand letters, claims, liens, notices of noncompliance or violation,
investigation or proceedings relating to any Environmental Law against the
Company or any of its subsidiaries and (D) to the knowledge of the Company,
there are no existing events, conditions or facts that would reasonably be
expected to form the basis of an order for clean-up or remediation, or an
action, suit or proceeding by any private party or Governmental Entity, against
or affecting the Company or any of its subsidiaries relating to Hazardous
Materials or any Environmental Laws.

 

(xxviii) Disclosure Controls. Except as described in the Registration Statement,
the General Disclosure Package and the Prospectus, the Company maintains an
effective system of “disclosure controls and procedures” (as defined in Rule
13a-15(e) of the 1934 Act) that complies with the requirements of the 1934 Act
and that has been designed to ensure that information required to be disclosed
by the Company in reports that it files or submits under the 1934 Act is
recorded, processed, summarized and reported within the time periods specified
in the Commission’s rules and forms, including controls and procedures designed
to ensure that such information is accumulated and communicated to the Company’s
management as appropriate to allow timely decisions regarding required
disclosure.

 

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(xxix) Accounting Controls. Except as described in the Registration Statement,
the General Disclosure Package and the Prospectus, the Company maintains
effective internal control over financial reporting (as defined under Rule
13a-15 and 15d-15 of the 1934 Act Regulations) and a system of internal
accounting controls sufficient to provide reasonable assurances that (A)
transactions are executed in accordance with management’s general or specific
authorization; (B) transactions are recorded as necessary to permit preparation
of financial statements in conformity with GAAP and to maintain accountability
for assets; (C) access to assets is permitted only in accordance with
management’s general or specific authorization; (D) the recorded accountability
for assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences and (E) the
interactive data in eXtensible Business Reporting Language incorporated by
reference in the Registration Statement, the General Disclosure Package and the
Prospectus fairly presents the information called for in all material respects
and is prepared in accordance with the Commission’s rules and guidelines
applicable thereto. Except as described in the Registration Statement, the
General Disclosure Package and the Prospectus, since the end of the Company’s
most recent audited fiscal year, there has been (1) no material weakness in the
Company’s internal control over financial reporting (whether or not remediated)
and (2) no change in the Company’s internal control over financial reporting
that has materially affected, or is reasonably likely to materially affect, the
Company’s internal control over financial reporting.

 

(xxx) Payment of Taxes. All United States federal income tax returns of the
Company and each of its subsidiaries required by law to be filed have been filed
and all taxes shown by such returns or otherwise assessed, which are due and
payable, have been paid, except assessments against which appeals have been or
will be promptly taken and as to which adequate reserves have been provided
other than as would not reasonably be expected to, singly or in the aggregate,
have a Material Adverse Effect. The Company and each of its subsidiaries has
filed all other tax returns that are required to have been filed by them
pursuant to applicable foreign, state, local or other law except insofar as the
failure to file such returns would not result in a Material Adverse Effect, and
have paid all taxes due pursuant to such returns or pursuant to any assessment
received by the Company or any such subsidiary, except for such taxes, if any,
as are being contested in good faith and as to which adequate reserves have been
established by the Company or any such subsidiary, other than as would not
reasonably be expected to, singly or in the aggregate, have a Material Adverse
Effect. Except as disclosed in the Registration Statement, the General
Disclosure Package and the Prospectus, the charges, accruals and reserves on the
books of the Company in respect of any income and corporation tax liability for
any years not finally determined are believed to be adequate to meet any
assessments or re-assessments for additional income tax for any years not
finally determined, except to the extent of any inadequacy that would not
reasonably be expected to result in a Material Adverse Effect.

 

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(xxxi) Insurance. The Company carries or is entitled to the benefits of
insurance, with reputable insurers, in such amounts and covering such risks as
is reasonably prudent and customary in the businesses in which it is engaged,
and all such insurance is in full force and effect. The Company has no reason to
believe that it will not be able (A) to renew its existing insurance coverage as
and when such policies expire or (B) to obtain comparable coverage from similar
institutions as may be necessary or appropriate to conduct its business as now
conducted and at a cost that would not result in a Material Adverse Effect. The
Company has not been denied the issuance of any material insurance policies
which it has sought or for which it has applied in the prior three years, except
for any applications still pending.

 

(xxxii) Investment Company Act. The Company is not required, and upon the
issuance and sale of the Securities as herein contemplated and the application
of the net proceeds therefrom as described in the Registration Statement, the
General Disclosure Package and the Prospectus will not be required, to register
as an “investment company” under the Investment Company Act of 1940, as amended
(the “1940 Act”).

 

(xxxiii) Absence of Manipulation. Neither the Company nor any affiliate of the
Company has taken, nor will the Company or any affiliate take, directly or
indirectly, any action which is designed, or would reasonably be expected, to
cause or result in, or which constitutes, the stabilization or manipulation of
the price of any security of the Company to facilitate the sale or resale of the
Securities.

 

(xxxiv) No Integration. The Company has not sold or issued any securities that
would be integrated with the Offering pursuant to the 1933 Act, the 1933 Act
Regulations or the interpretations thereof by the Commission.

 

(xxxv) ERISA. Other than as would not, singly or in the aggregate, reasonably be
expected to result in a Material Adverse Effect and except as disclosed in the
Registration Statement, the General Disclosure Package and the Prospectus, (i)
no “employee benefit plan” (as defined in Section 3(3) of ERISA), for which the
Company would have any liability (whether absolute or contingent) (each a
“Plan”) has experienced a failure to satisfy the “minimum funding standard” (as
defined in Section 302 of the Employee Retirement Income Security Act of 1974,
as amended, (“ERISA”) or Section 412 of the Internal Revenue Code of 1986, as
amended (the “Code”)), or other event of the kind described in Section 4043(c)
of ERISA (other than events with respect to which the 30-day notice requirement
under Section 4043 of ERISA has been waived) or any similar minimum funding
failure event with respect to any Plan (other than a Plan that under applicable
law is required to be funded by a trust or funding vehicle maintained
exclusively by a governmental authority) that is maintained outside of the
United States primarily for the benefit of persons substantially all of whom are
nonresident aliens (ii) each Plan is in compliance in all respects with
applicable law, including, without limitation, ERISA and the Code; (iii) other
than in the ordinary course, neither the Company nor any trade or business,
whether or not incorporated, that, together with the Company, would be deemed to
be a “single employer” within the meaning of Section 4001(b)(1) of ERISA or
Section 414(b), 414(c), 414(m) or 414(o) of the Code has incurred or reasonably
expects to incur any liability with respect to any Plan (A) under Title IV of
ERISA or (B) in respect of any post-employment health, medical or life insurance
benefits for former, current or future employees of the Company, except as
required to avoid excise tax under Section 4980B of the Code and except, on a
case by case basis, limited extensions of health insurance benefits (for a
period of no more than 18 months post-employment) to former employees receiving
severance payments from the Company; and (iv) each Plan that is intended to be
qualified under Section 401(a) of the Code is so qualified and nothing has
occurred, whether by action or by failure to act, which could cause the loss of
such qualification. The Company is not, nor at any time during the last three
years has the Company been, a party to any collective bargaining agreement or
other labor agreement with respect to employees of the Company. There are no
pending, or, to the Company’s knowledge, threatened, activities or proceedings
by any labor union or similar entity to organize any employees of the Company.
No labor dispute with, or labor strike, work stoppage or other material labor
disturbance by, the employees of the Company exists or to the Company’s
knowledge is imminent.

 

 15 

 

 

(xxxvi) Foreign Corrupt Practices Act. Neither the Company, any of its
subsidiaries nor, to the knowledge of the Company, any director, officer, agent,
employee, affiliate or other person acting on behalf of the Company has taken
any action, directly or indirectly, that would result in a violation by such
persons of the Foreign Corrupt Practices Act of 1977, as amended, and the rules
and regulations thereunder (the “FCPA”), including, without limitation, making
use of the mails or any means or instrumentality of interstate commerce
corruptly in furtherance of an offer, payment, promise to pay or authorization
of the payment of any money, or other property, gift, promise to give, or
authorization of the giving of anything of value to any “foreign official” (as
such term is defined in the FCPA) or any foreign political party or official
thereof or any candidate for foreign political office, in contravention of the
FCPA and the Company, its subsidiaries and, to the knowledge of the Company, its
and their respective affiliates have conducted their businesses in compliance
with the FCPA and have instituted and maintain policies and procedures designed
to ensure, and which are reasonably expected to continue to ensure, continued
compliance therewith.

 

(xxxvii) Money Laundering Laws. The operations of the Company and its
subsidiaries are and have been conducted at all times in compliance with
applicable financial recordkeeping and reporting requirements of the Currency
and Foreign Transactions Reporting Act of 1970, as amended, the money laundering
statutes of all applicable jurisdictions, the rules and regulations thereunder
and any related or similar rules, regulations or guidelines, issued,
administered or enforced by any Governmental Entity (collectively, the “Money
Laundering Laws”); and no action, suit or proceeding by or before any
Governmental Entity involving the Company or any of its subsidiaries with
respect to the Money Laundering Laws is pending or, to the knowledge of the
Company, threatened.

 

 16 

 

 

(xxxviii) OFAC. Neither the Company, any of its subsidiaries nor, to the
knowledge of the Company, its or their respective directors, officers, agents,
employees, affiliates or Placement Agents (each, a “Person” ) are currently the
subject of sanctions administered or enforced by the United States Government,
including, without limitation, the U.S. Department of the Treasury’s Office of
Foreign Assets Control (“OFAC”), the United Nations Security Council, the
European Union, Her Majesty’s Treasury, or other relevant sanctions authority
applicable to the Company and its subsidiaries (collectively, “Sanctions”), nor
is the Company or any of its subsidiaries located, organized or resident in a
country or territory that is the subject of Sanctions; and the Company does not
intend to, directly or indirectly, use the proceeds of the sale of the
Securities, or lend, contribute or otherwise make available such proceeds to any
subsidiaries, joint venture partners or other Person, to fund any activities of
or business with any Person, or in any country or territory, that, at the time
of such funding, is the subject of Sanctions or in any other manner that will
result in a violation by any Person (including any Person participating in the
transaction, whether as underwriter, advisor, purchaser or otherwise) of
Sanctions.

 

(xxxix) Lending Relationship. Except as disclosed in the Registration Statement,
the General Disclosure Package and the Prospectus, the Company (A) does not have
any material lending or other relationship with any bank or lending affiliate of
any underwriter and (B) does not intend to use any of the proceeds from the sale
of the Securities to repay any outstanding debt owed to any affiliate of any
underwriter.

 

(xl) Statistical and Market-Related Data. Any statistical and market-related
data included in the Registration Statement, the General Disclosure Package or
the Prospectus are based on or derived from sources that the Company believes,
after reasonable inquiry, to be reliable and accurate in all material respects
and, to the extent required, the Company has obtained the written consent to the
use of such data from such sources.

 

(xli) Accuracy of Descriptions. The statements set forth in the Registration
Statement, the General Disclosure Package and the Prospectus under the captions
“Description of the Securities We Are Offering” and “Description of Capital
Stock,” insofar as they purport to constitute a summary of the terms of the
Series A Preferred Stock of the Company, the Series B Preferred Stock and the
Common Stock (including the Conversion Shares, the Dividend Shares and the
Warrant Shares) are accurate, complete and fair summaries in all material
respects.

 

(xlii) Stock Exchange Listing. The Common Stock is registered pursuant to
Section 12(b) or 12(g) of the 1934 Act and is listed on the Exchange; the
Company has taken no action designed to, or likely to have the effect of,
terminating the registration of the Common Stock under the 1934 Act or delisting
the Common Stock from the Exchange; the Company has not received any notice that
it is out of compliance with the listing or maintenance requirements of the
Exchange and the Company is, and will continue to be, in material compliance
with all such listing and maintenance requirements; and the Company has not
received any notification that the Commission or the Exchange is contemplating
terminating the registration of the Common Stock under the 1934 Act or delisting
the Common Stock from the Exchange.

 

(xliii) Maintenance of Rating. The Company does not have any securities rated by
any “nationally recognized statistical rating organization” (as defined for
purposes of Rule 436(g) under the 1933 Act).

 

(xliv) Related Party Transactions. There are no business relationships or
related-party transactions involving the Company, any of its subsidiaries or any
other person required to be described in the Registration Statement, any
preliminary prospectus, the Prospectus and the General Disclosure Package which
have not been described as required. The General Disclosure Package contains in
all material respects the same description of the matters set forth in the
preceding sentence contained in the Prospectus.

 

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(xlv) Board of Directors. At least one member of the Audit Committee of the
Board of Directors of the Company qualifies as an “audit committee financial
expert,” as such term is defined under Regulation S-K and the listing rules of
the Exchange. In addition, at least a majority of the persons serving on the
Board of Directors qualify as “independent,” as defined under the listing rules
of the Exchange.

 

(xlvi) Brokers. Except for the Placement Agent commissions payable to the
Placement Agent as described in the Registration Statement, the General
Disclosure Package and the Prospectus, there is no broker, finder or other party
that is entitled to receive from the Company any brokerage or finder’s fee or
other fee or commission as a result of any transactions contemplated by this
Agreement.

 

(xlvii) Margin Rules and Securities. The application of the proceeds received by
the Company from the issuance, sale and delivery of the Securities as described
in the Registration Statement, the General Disclosure Package and the Prospectus
will not violate Regulation T, U or X of the Board of Governors of the Federal
Reserve System or any other regulation of such Board of Governors. Further, the
Company owns no “margin securities” as that term is defined in Regulation U of
the Board of Governors, and none of the proceeds of Offering will be used,
directly or indirectly, for the purpose of purchasing or carrying any margin
security, for the purpose of reducing or retiring any indebtedness which was
originally incurred to purchase or carry any margin security or for any other
purpose which might cause any of the shares of Common Stock to be considered a
“purpose credit” within the meanings of Regulation T, U or X of the Federal
Reserve Board.

 

(xlviii) Forward-Looking Statements. No forward-looking statement (within the
meaning of Section 27A of the 1933 Act) contained in the Registration Statement,
the General Disclosure Package or the Prospectus has been made or reaffirmed by
the Company without a reasonable basis or has been disclosed by the Company
other than in good faith.

 

(xlix) Sarbanes-Oxley Act. There is and has been no failure on the part of the
Company or, to the knowledge of the Company, any of the Company’s directors or
officers, in their capacities as such, to comply with any applicable provision
of the Sarbanes-Oxley Act and the rules and regulations promulgated in
connection therewith, including Section 402 related to loans.

 

(l) Lock-Up Agreements. Schedule C hereto contains a complete and accurate list
of the Company’s officers, directors and certain key stockholders (collectively,
the “Lock-Up Parties”). The Company has caused each of the Lock-Up Parties to
deliver to the Placement Agent an executed Lock-Up Agreement, in the form
attached hereto as Exhibit B (the “Lock-Up Agreement”), prior to the execution
of this Agreement.

 

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(li) Transactions Affecting Disclosure to FINRA.

 

  a. FINRA Affiliation. Except as disclosed in the Registration Statement, the
General Disclosure Package and the Prospectus, there are no affiliations or
associations between any member of FINRA and any of the Company’s officers,
directors or 5% or greater securityholders (“Insiders”).         b. Finder’s
Fees. Except as described in the Registration Statement, the General Disclosure
Package and the Prospectus, there are no claims, payments, arrangements,
agreements or understandings relating to the payment of a finder’s, consulting
or origination fee by the Company or any Insider with respect to the sale of the
Securities hereunder or any other arrangements, agreements or understandings of
the Company or, to the Company’s knowledge, any of its shareholders that may
affect the Placement Agent’s compensation, as determined by FINRA.         c.
Payments Within Twelve (12) Months. Except as described in the Registration
Statement, the General Disclosure Package and the Prospectus, the Company has
not made any direct or indirect payments (in cash, securities or otherwise) to:
(i) any person, as a finder’s fee, consulting fee or otherwise, in consideration
of such person raising capital for the Company or introducing to the Company
persons who raised or provided capital to the Company; (ii) any FINRA member; or
(iii) any person or entity that has any direct or indirect affiliation or
association with any FINRA member, within the twelve (12) months prior to the
Closing Date, other than the payment to the Placement Agent as provided
hereunder in connection with the Offering.         d. Use of Proceeds. None of
the net proceeds of the Offering will be paid by the Company to any
participating FINRA member or its affiliates, except as specifically authorized
herein.         e. Information. All information provided by the Company in its
FINRA questionnaire to Placement Agent Counsel, as such term is defined below,
specifically for use by Placement Agent Counsel in connection with its Public
Offering System filings (and related disclosure) with FINRA is true, correct and
complete in all material respects.

 

(b) Officer’s Certificates. Any certificate signed by any officer of the Company
delivered to the Placement Agent or Placement Agent Counsel shall be deemed a
representation and warranty by the Company (and not by such officer in his or
her personal capacity) to the Placement Agent and the Purchasers as to the
matters covered thereby.

 

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SECTION 3. Covenants of the Company. The Company covenants with the Placement
Agent and the Purchasers as follows:

 

(a) Compliance with Securities Regulations and Commission Requests. The Company,
subject to Section 3(b) hereof, will comply with the requirements of Rule 430B,
and will notify the Placement Agent promptly, and confirm the notice in writing,
(i) when any post-effective amendment to the Registration Statement shall have
been filed or been declared effective or any amendment or supplement to the
Prospectus, shall have been filed or distributed, (ii) of the receipt of any
comments from the Commission, (iii) of any request by the Commission for any
amendment to the Registration Statement or any amendment or supplement to the
Prospectus, including any document incorporated or deemed to be incorporated by
reference therein, or for additional information, including, but not limited to,
any request for information concerning any oral or written communication with
potential purchasers and undertaken in reliance on Section 5(d) of the 1933 Act,
(iv) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or any post-effective amendment or
of any order preventing or suspending the use of any preliminary prospectus, the
Prospectus, or of the suspension of the qualification of the Securities for
offering or sale in any jurisdiction, or of the initiation or threatening of any
proceedings for any of such purposes or of any examination pursuant to Section
8(d) or 8(e) of the 1933 Act concerning the Registration Statement, (v) of the
occurrence of any event or development at any time when a prospectus relating to
the Securities is (or, but for the exception afforded by Rule 172 of the 1933
Act Regulations (“Rule 172”), would be) required by the 1933 Act to be delivered
in connection with sales of the Securities (the “Prospectus Delivery Period”) as
a result of which the Prospectus, the General Disclosure Package, as then
amended or supplemented would include any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements therein,
in the light of the circumstances existing when the Prospectus, the General
Disclosure Package, is delivered to a purchaser, not misleading; and (vi) if the
Company becomes the subject of a proceeding under Section 8A of the 1933 Act in
connection with the Offering. The Company will effect all filings required under
Rule 424(b), in the manner and within the time period required by Rule 424(b)
(without reliance on Rule 424(b)(8)), and will take such steps as it deems
necessary to ascertain promptly whether the form of prospectus transmitted for
filing under Rule 424(b) was received for filing by the Commission and, in the
event that it was not, it will promptly file such prospectus. The Company will
use commercially reasonable efforts to prevent the issuance of any such order
suspending the effectiveness of the Registration Statement, preventing or
suspending the use of any preliminary prospectus, the Prospectus or suspending
any such qualification of the Securities and, if any such order is issued, will
use commercially reasonable efforts to obtain as soon as possible the withdrawal
thereof.

 

(b) Continued Compliance with Securities Laws. The Company will comply with the
1933 Act and the 1933 Act Regulations during the Prospectus Delivery Period so
as to permit the completion of the distribution of the Securities as
contemplated in this Agreement and in the Registration Statement, the General
Disclosure Package and the Prospectus. If at any time during the Prospectus
Delivery Period any event shall occur or condition shall exist as a result of
which it is necessary, in the opinion of counsel for the Placement Agent or for
the Company, to (i) amend the Registration Statement in order that the
Registration Statement will not include an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, (ii) amend or supplement the General
Disclosure Package or the Prospectus in order that the General Disclosure
Package or the Prospectus, as the case may be, will not include any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein not misleading in the light of the circumstances
existing at the time it is delivered to a purchaser or (iii) amend the
Registration Statement or amend or supplement the General Disclosure Package or
the Prospectus, as the case may be, in order to comply with the requirements of
the 1933 Act or the 1933 Act Regulations, the Company will promptly (A) give the
Placement Agent notice of such event, (B) prepare any amendment or supplement as
may be necessary to correct such statement or omission or to make the
Registration Statement, the General Disclosure Package or the Prospectus comply
with such requirements and, a reasonable amount of time prior to any proposed
filing or use, furnish the Placement Agent with copies of any such amendment or
supplement and (C) file with the Commission any such amendment or supplement;
provided that the Company shall not file or use any such amendment or supplement
to which the Placement Agent or counsel for the Placement Agent shall reasonably
object unless the Company reasonably believes that the failure to file or use
such amendment or supplement would constitute a violation of law or subject it
to liability. The Company will furnish to the Placement Agent such number of
copies of such amendment or supplement as the Placement Agent may reasonably
request. The Company has given the Placement Agent notice of any filings made
pursuant to the 1934 Act or 1934 Act Regulations within 48 hours prior to the
Applicable Time; the Company will give the Placement Agent notice of its
intention to make any such filing from the Applicable Time to the Closing Date
and will furnish the Placement Agent with copies of any such documents a
reasonable amount of time prior to such proposed filing, as the case may be, and
will not file or use any such document to which the Placement Agent or counsel
for the Placement Agent shall reasonably object unless the Company reasonably
believes that the failure to file or use such amendment or supplement would
constitute a violation of law or subject it to liability.

 

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(c) The Company will not, and will cause its affiliated purchasers (as defined
in Regulation M under the 1934 Act) not to, either alone or with one or more
other persons, bid for or purchase, for any account in which it or any of its
affiliated purchasers has a beneficial interest, any Shares, or attempt to
induce any person to purchase any Shares; and not to, and to cause its
affiliated purchasers not to, make bids or purchase for the purpose of creating
actual, or apparent, active trading in or of raising the price of the Shares;
provided, however, that this clause (c) shall not affect the ability of the
Company’s affiliated purchasers to purchase Shares in the Offering.

 

(d) Delivery of Registration Statements. The Company has furnished or will
deliver to the Placement Agent and to counsel for the Placement Agent, without
charge, signed copies of the Registration Statement as originally filed and each
amendment thereto (including exhibits filed therewith) and signed copies of all
consents and certificates of experts, and will also deliver to the Placement
Agent, without charge, a conformed copy of the Registration Statement as
originally filed and each amendment thereto (without exhibits). The copies of
the Registration Statement and each amendment thereto furnished to the Placement
Agent will be identical to the electronically transmitted copies thereof filed
with the Commission pursuant to EDGAR, except to the extent permitted by
Regulation S-T.

 

(e) Delivery of Prospectuses. The Company has delivered to the Placement Agent,
without charge, as many copies of each preliminary prospectus as the Placement
Agent may reasonably request, and the Company hereby consents to the use of such
copies for purposes permitted by the 1933 Act. The Company will furnish to the
Placement Agent, without charge, during the Prospectus Delivery Period, such
number of copies of the Prospectus (as amended or supplemented) as the Placement
Agent may reasonably request. The Prospectus and any amendments or supplements
thereto furnished to the Placement Agent will be identical to the electronically
transmitted copies thereof filed with the Commission pursuant to EDGAR, except
to the extent permitted by Regulation S-T.

 

 21 

 

 

(f) Blue Sky Qualifications. The Company will use its commercially reasonable
efforts, in cooperation with the Placement Agent, to qualify the Securities for
offering and sale under the applicable securities laws of such states and other
jurisdictions (domestic or foreign) as the Placement Agent may designate and to
maintain such qualifications in effect so long as required to complete the
distribution of the Securities; provided, however, that the Company shall not be
obligated to file any general consent to service of process or to qualify as a
foreign corporation or as a dealer in securities in any jurisdiction in which it
is not so qualified or to subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise so subject.

 

(g) Rule 158. The Company will timely file such reports pursuant to the 1934 Act
as are necessary in order to make generally available to its securityholders as
soon as practicable an earnings statement for the purposes of, and to provide to
the Placement Agent the benefits contemplated by, the last paragraph of Section
11(a) of the 1933 Act.

 

(h) Use of Proceeds. The Company will use the net proceeds received by it from
the sale of the Securities in the manner specified in the Registration
Statement, the General Disclosure Package and the Prospectus under “Use of
Proceeds.”

 

(i) Effective Registration; Listing. The Company will use its reasonable best
efforts to cause the Conversion Shares and the Dividend Shares to continue to be
registered under the 1933 Act for the periods set forth in the Certificate of
Designation; provided however that the Company shall have no obligation to
register such Conversion Shares or Dividend Shares to the extent an exemption
from registration is available under Section 3(a)(9) of the Securities Act and
such shares may be resold without restriction under the Securities Act or such
shares may be issued without legend and resold without restriction under Rule
144 promulgated by the Commission pursuant to the Securities Act, as such Rule
may be amended or interpreted from time to time, or any similar rule or
regulation hereafter adopted by the Commission having substantially the same
purpose and effect as such Rule (“Rule 144”). The Warrant Shares shall be
included in any registration statements filed in connection with the preceding
sentence provided however that the Company shall have no obligation to register
such Warrant Shares to the extent an exemption from registration is available
under Section 3(a)(9) of the Securities Act and such shares may be resold
without restriction under the Securities Act or such shares may be issued
without legend and resold without restriction under Rule 144. The Company will
use its commercially reasonable efforts to cause the Conversion Shares, the
Dividend Shares and the Warrant Shares to be included on the Exchange, subject
to notice of issuance, and to maintain the listing of the Common Stock on the
Exchange.

 

 22 

 

 

(j) Company Lock-Up Agreements.

 

(i) Restrictions on Sales of Capital Stock. The Company, on behalf of itself and
any successor entity, agrees that, without the prior written consent of the
Placement Agent, it will not, for a period of 90 days after the date of this
Agreement (the “Lock-Up Period”), (1) offer, pledge, sell, contract to sell,
sell any option or contract to purchase, purchase any option or contract to
sell, grant any option, right or warrant to purchase, lend, or otherwise
transfer or dispose of, directly or indirectly, any shares of capital stock of
the Company or any securities convertible into or exercisable or exchangeable
for shares of capital stock of the Company; (2) file or caused to be filed any
registration statement with the Commission relating to the offering of any
shares of capital stock of the Company or any securities convertible into or
exercisable or exchangeable for shares of capital stock of the Company; (3)
complete any offering of debt securities of the Company, other than entering
into a line of credit with a traditional bank or (4) enter into any swap or
other arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of capital stock of the Company, whether any
such transaction described in clause (1), (2), (3) or (4) above is to be settled
by delivery of shares of capital stock of the Company or such other securities,
in cash or otherwise.

 

The restrictions contained in this Section 3(j)(i) shall not apply to (A) the
Shares to be sold in the Offering, (B) the issuance by the Company of the
Conversion Shares, the Dividend Shares or the Warrant Shares, (C) the issuance
by the Company of shares of Common Stock upon the exercise of a stock option or
warrant or the conversion of, or as payment of a dividend pursuant to the terms
of, a security outstanding on the date hereof, of which the Placement Agent has
been advised in writing or as have been disclosed in the Registration Statement,
General Disclosure Package or Prospectus, (D) the issuance by the Company of
stock options or shares of capital stock of the Company under any equity
compensation plan of the Company, or (E) the issuance of shares of Common Stock
or other securities in connection with any acquisition, strategic partnership,
joint venture or collaboration..

 

(ii) Restriction on Continuous Offerings. The Company, on behalf of itself and
any successor entity, agrees that, without the prior written consent of the
Placement Agent, it will not, for a period of 30 days after the Closing Date,
directly or indirectly in any “at-the-market” or continuous equity transaction,
including, without limitation, the Controlled Equity Offering with Cantor
Fitzgerald & Co. (“Cantor”) pursuant to the Sale Agreement, dated April 28,
2017, by and between the Company and Cantor, offer to sell, sell, contract to
sell, grant any option to sell or otherwise dispose of shares of capital stock
of the Company or any securities convertible into or exercisable or exchangeable
for shares of capital stock of the Company.

 

(k) Intentionally Omitted.

 

(l) Intentionally Omitted.

 

(m) Reservation of Common Stock. The Company shall reserve and keep available at
all times a sufficient number of shares of Common Stock for purpose of enabling
the Company to issue the Conversion Shares, the Dividend Shares and Warrant
Shares.

 

 23 

 

 

(n) Rule 462(b) Registration Statement. If the Company elects to rely upon Rule
462(b) under the 1933 Act, the Company will file a Rule 462(b) Registration
Statement with the Commission in compliance with Rule 462(b) by 10:00 p.m.,
Washington, D.C. time, on the date of this Agreement, and at the time of filing
either to pay to the Commission the filing fee for the Rule 462(b) Registration
Statement or to give irrevocable instructions for the payment of such fee
pursuant to Rule 111(b) under the 1933 Act.

 

(o) Intentionally Omitted.

 

(p) Intentionally Omitted.

 

(q) Intentionally Omitted.

 

(r) No Fiduciary Duties. The Company acknowledges and agrees that:

 

i. the Placement Agent’s responsibility to the Company is solely contractual in
nature and that neither the Placement Agent or its affiliates or any selling
agent shall be deemed to be acting in a fiduciary capacity, or otherwise owes
any fiduciary duty to the Company or any of its affiliates in connection with
the Offering and the other transactions contemplated by this Agreement;

 

ii. the price of the Securities set forth in this Agreement was established by
the Company following discussions and arms-length negotiations with the
Placement Agent and the Purchasers, and the Company is capable of evaluating and
understanding, and understands and accepts, the terms, risks and conditions of
the transactions contemplated by this Agreement;

 

iii. it has been advised that the Placement Agent and its affiliates are engaged
in a broad range of transactions which may involve interests that differ from
those of the Company and that the Placement Agent has no obligation to disclose
such interests and transactions to the Company by virtue of any fiduciary,
advisory or agency relationship; and

 

iv. it waives, to the fullest extent permitted by law, any claims it may have
against the Placement Agent for breach of fiduciary duty or alleged breach of
fiduciary duty and agrees that the Placement Agent shall have no liability
(whether direct or indirect) to the Company in respect of such a fiduciary duty
claim or to any person asserting a fiduciary duty claim on behalf of or in right
of the Company, including stockholders, employees or creditors of the Company.

 

(s) Transfer Agent. For a period of three (3) years after the date of this
Agreement, the Company shall retain a Transfer Agent and registrar for the
Series B Preferred and the common stock.

 

(t) Intentionally Omitted.

 

 24 

 

 

SECTION 4. Payment of Expenses.

 

(a) General Expenses Related to the Offering. The Company hereby agrees to pay,
or reimburse if paid by the Placement Agent: all expenses incident to the
performance of the obligations of the Company under this Agreement, including,
but not limited to: (a) all filing fees and communication expenses relating to
the registration of the shares of Series B Preferred Stock to be sold in the
Offering with the Commission; (b) all Public Filing System filing fees
associated with the review of the Offering by FINRA; (c) all fees and expenses
relating to the inclusion of the Conversion Shares, the Dividend Shares and the
Warrant Shares on the Exchange; (d) all fees, expenses and disbursements
relating to background checks of the Company’s officers and directors in an
amount not to exceed $5,000 in the aggregate; (e) (g) the costs of all mailing
and printing of the placement documents (including, without limitation, the
Placement Agency Agreement, any Blue Sky Surveys and, if appropriate, any
Agreement Among Underwriters and Selected Dealers’ Agreement), Registration
Statements, Prospectuses and all amendments, supplements and exhibits thereto
and as many preliminary and final Prospectuses as the Placement Agent may
reasonably deem necessary; (h) the $29,500 cost associated with the use of
Ipreo’s book building, prospectus tracking and compliance software for the
Offering; (i) fees and expenses of the transfer agent for the Shares; (j) stock
transfer and/or stamp taxes, if any, payable upon the transfer of securities
from the Company to the Purchasers; (l) the fees and expenses of the Company’s
accountants; (m) the fees and expenses of the Company’s legal counsel and other
agents; (n) fees and expenses of Placement Agent Counsel not to exceed $75,000;
and (o) the costs incident to the authorization, issuance, sale, preparation and
delivery of the Securities to the Purchasers, and any taxes payable in that
connection.

 

(b) Non-Accountable Expenses. The Company further agrees that, in addition to
the expenses payable pursuant to Section 4(a), on the Closing Date the Placement
Agent shall deduct from the gross proceeds of the Offering contemplated herein,
a non-accountable expense allowance equal to one percent (1%) of the gross
proceeds received from the sale of the Shares, less the Advance (as such term is
defined in Section 9(c) hereof), provided, however, that in the event that the
Offering is terminated, the Company agrees to reimburse the Placement Agent
pursuant to Section 9(c) hereof.

 

SECTION 5. Conditions of Placement Agent’s Obligations. The obligations of the
Placement Agent hereunder are subject to the accuracy of the representations and
warranties of the Company contained herein or in certificates of any officer of
the Company delivered pursuant to the provisions hereof, to the performance by
the Company of the covenants and other obligations hereunder, and to the
following further conditions:

 

(a) Effectiveness of Registration Statement; Rule 430B Information. The
Registration Statement, including any Rule 462(b) Registration Statement, has
been declared effective and, at the Closing Date, no stop order suspending the
effectiveness of the Registration Statement or any post-effective amendment
thereto has been issued under the 1933 Act, no order preventing or suspending
the use of any preliminary prospectus or the Prospectus has been issued and no
proceedings for any of those purposes have been instituted or are pending or, to
the Company’s knowledge, contemplated; and the Company has complied with each
request (if any) from the Commission for additional information to the
reasonable satisfaction of counsel to the Company and counsel to the Placement
Agent. A prospectus containing the Rule 430B Information shall have been filed
with the Commission in the manner and within the time frame required by Rule
424(b) without reliance on Rule 424(b)(8) or a post-effective amendment
providing such information shall have been filed with, and declared effective
by, the Commission in accordance with the requirements of Rule 430B.

 

 25 

 

 

(b) No Untrue Statements. The Placement Agent shall not have discovered and
disclosed to the Company on or prior to the Closing Date that the Registration
Statement or any amendment or supplement thereto contains an untrue statement of
a fact which, in the opinion of Placement Agent Counsel, is material or omits to
state any fact which, in the opinion of such counsel, is material and is
required to be stated therein or is necessary to make the statements therein not
misleading, or that the General Disclosure Package, any Issuer Free Writing
Prospectus or the Prospectus or any amendment or supplement thereto contains an
untrue statement of fact which, in the opinion of such counsel, is material or
omits to state any fact which, in the opinion of such counsel, is material and
is necessary in order to make the statements, in the light of the circumstances
in which they were made, not misleading.

 

(c) No Material Adverse Change. Since the date of the latest audited financial
statements included in the Registration Statement, the General Disclosure
Package and the Prospectus or incorporated or deemed to be incorporated by
reference therein as of the date hereof, (i) neither the Company nor any
Subsidiary shall have sustained any loss or interference with its business from
fire, explosion, flood or other calamity, whether or not covered by insurance,
or from any labor dispute or court or governmental action, order or decree,
otherwise than as set forth in the Registration Statement, the General
Disclosure Package and the Prospectus, and (ii) there shall not have been any
change in the capital stock or long-term debt of the Company or any Subsidiary,
or any change, or any development involving a prospective change, in or
affecting the business, management, financial position, stockholders’ equity or
results of operations of the Company, otherwise than as set forth in the
Registration Statement, the General Disclosure Package and the Prospectus, the
effect of which, in any such case described in clause (i) or (ii) of this
paragraph (c) is, in the judgment of the Placement Agent, so material and
adverse as to make it impracticable or inadvisable to proceed with the sale or
delivery of the Securities on the terms and in the manner contemplated in the
General Disclosure Package.

 

(d) Adverse Governmental Actions. No action shall have been taken and no law,
statute, rule, regulation or order shall have been enacted, adopted or issued by
any governmental agency or body which would prevent the issuance or sale of the
Securities or materially and adversely affect or potentially materially and
adversely affect the business or operations of the Company or any subsidiary;
and no injunction, restraining order or order of any other nature by any federal
or state court of competent jurisdiction shall have been issued which would
prevent the issuance or sale of the Securities or materially and adversely
affect or potentially materially and adversely affect the business or operations
of the Company or any subsidiary.

 

(e) Market Conditions. Subsequent to the execution and delivery of this
Agreement there shall not have occurred any of the following: (i) trading in
securities generally on the New York Stock Exchange, the Exchange or the NASDAQ
Stock Market or in the over-the-counter market, or trading in any securities of
the Company on any exchange or in the over-the-counter market shall have been
suspended or materially limited, or minimum or maximum prices or maximum range
for prices shall have been established on any such exchange or such market by
the Commission, by such exchange or market or by any other regulatory body or
governmental authority having jurisdiction, (ii) a banking moratorium shall have
been declared by Federal or state authorities or a material disruption has
occurred in commercial banking or securities settlement or clearance services in
the United States, (iii) the United States shall have become engaged in
hostilities, or the subject of an act of terrorism, or there shall have been an
outbreak of or escalation in hostilities involving the United States, or there
shall have been a declaration of a national emergency or war by the United
States or (iv) there shall have occurred such a material adverse change in
general economic, political or financial conditions (or the effect of
international conditions on the financial markets in the United States shall be
such) as to make it, in the judgment of the Placement Agent, impracticable or
inadvisable to proceed with the sale or delivery of the Securities on the terms
and in the manner contemplated in the Registration Statement, the General
Disclosure Package and the Prospectus.

 

 26 

 

 

(f) Certificate of Designation. The Certificate of Designation shall have been
filed with the Secretary of State of the State of Delaware and become effective
and the Company shall have delivered evidence of such filing and effectiveness
to the Placement Agent in form and substance satisfactory to the Placement
Agent.

 

(g) Opinion of Counsel for Company. At the Closing Date, the Placement Agent
shall have received the favorable opinion and negative assurance statement,
dated as of the Closing Date, of Lowenstein Sandler LLP, counsel for the
Company, in form and substance reasonably satisfactory to the Placement Agent
and its counsel.

 

(h) Opinion of IP Counsel. At the Closing Date, the Placement Agent shall have
received the favorable opinion and negative assurances statement, dated as of
the Closing Date, of MH2 Technology Law Group, LLP, as intellectual property
counsel to the Company, in form and substance reasonably satisfactory to the
Placement Agent and its counsel.

 

(i) Reliance. In rendering such opinions, such counsel may rely: (i) as to
matters involving the application of laws other than the laws of the United
States and jurisdictions in which they are admitted, to the extent such counsel
deems proper and to the extent specified in such opinion, if at all, upon an
opinion or opinions (in form and substance reasonably satisfactory to the
Placement Agent) of other counsel reasonably acceptable to the Placement Agent,
familiar with the applicable laws; and (ii) as to matters of fact, to the extent
they deem proper, on certificates or other written statements of officers of the
Company and officers of departments of various jurisdictions having custody of
documents respecting the corporate existence or good standing of the Company,
provided that copies of any such statements or certificates shall be delivered
to Placement Agent Counsel if requested.

 

(j) Officers’ Certificate. The Company shall have furnished to the Placement
Agent a certificate, dated the Closing Date of its Chief Executive Officer, its
President and its Chief Financial Officer stating that (i) such officers have
carefully examined the Registration Statement, the General Disclosure Package,
and the Prospectus and, in their opinion, the Registration Statement and each
amendment thereto, as of the Applicable Time and as of the Closing Date did not
include any untrue statement of a material fact and did not omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and the General Disclosure Package, as of the Applicable
Time and as of the Closing Date, the Prospectus and each amendment or supplement
thereto, as of the respective date thereof and as of the Closing Date, did not
include any untrue statement of a material fact and did not omit to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances in which they were made, not misleading, (ii) since the
effective date of the Registration Statement, no event has occurred which should
have been set forth in a supplement or amendment to the Registration Statement,
the General Disclosure Package or the Prospectus, (iii) to the best of their
knowledge after reasonable investigation, as of the Closing Date, the
representations and warranties of the Company in this Agreement are true and
correct and the Company has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied hereunder at or prior to the
Closing Date, and (iv) there has not been, subsequent to the date of the most
recent audited financial statements included or incorporated or deemed to be
incorporated by reference in the General Disclosure Package, any material
adverse change in the financial position or results of operations of the
Company, or any change or development that, singularly or in the aggregate,
would involve a material adverse change or a prospective material adverse
change, in or affecting the condition (financial or otherwise), results of
operations, business, assets or prospects of the Company, except as set forth in
the Prospectus.

 

 27 

 

 

(k) Accountant’s Comfort Letter. At the time of the execution of this Agreement,
the Placement Agent shall have received from EisnerAmper LLP a letter, dated
such date, in form and substance satisfactory to the Placement Agent, containing
statements and information of the type ordinarily included in accountants’
“comfort letters” to underwriters with respect to the financial statements and
certain financial information of the Company contained in the Registration
Statement, the General Disclosure Package and the Prospectus.

 

(l) Bring-down Comfort Letter. At the Closing Date, the Placement Agent shall
have received from EisnerAmper LLP a letter, dated as of the Closing Date, to
the effect that they reaffirm the statements made in the letter furnished
pursuant to subsection (k) of this Section 5, except that the specified date
referred to shall be a date not more than three Business Days prior to the
Closing Date.

 

(m) Secretary’s Certificate. At the Closing Date, the Placement Agent shall have
received a certificate of the Company signed by the Secretary of the Company,
dated the Closing Date certifying: (i) that each of the Company’s charter,
bylaws and Certificate of Designation is true and complete, has not been
modified and is in full force and effect; (ii) that the resolutions of the
Company’s Board of Directors relating to the Offering are in full force and
effect and have not been modified; (iii) as to the accuracy and completeness of
all correspondence between the Company or its counsel and the Commission; and
(iv) as to the incumbency of the officers of the Company. The documents referred
to in such certificate shall be attached to such certificate.

 

(n) FINRA Clearance. On or before the date of this Agreement, the Placement
Agent shall have received clearance from FINRA as to the amount of compensation
allowable or payable to the Placement Agent as described in the Registration
Statement.

 

(o) Lock-up Agreements. At the date of this Agreement, the Placement Agent shall
have the Lock-Up Agreements substantially in the form of Exhibit B hereto signed
by each of the Lock-Up Parties.

 

(p) Placement Agent’s Warrant Agreement. On the Closing Date, the Company shall
have delivered to the Placement Agent executed copies of the Placement Agent’s
Warrant Agreement.

 

(q) Additional Documents. At the Closing Date, the Placement Agent and Placement
Agent Counsel shall have been furnished with such documents and opinions as they
may reasonably require for the purpose of enabling them to pass upon the
issuance and sale of the Securities as herein contemplated, or in order to
evidence the accuracy of any of the representations or warranties, or the
fulfillment of any of the conditions, herein contained; and all proceedings
taken by the Company in connection with the issuance and sale of the Securities
as herein contemplated shall be reasonably satisfactory in form and substance to
the Placement Agent and counsel for the Placement Agent.

 

 28 

 

 

(r) Approval of Inclusion. At the Closing Date, the Conversion Shares, the
Dividend Shares and the Warrant Shares shall have been approved for inclusion on
the Exchange.

 

SECTION 6. Indemnification.

 

(a) Indemnification of Placement Agent.

 

  (i) General. Subject to the conditions set forth below, the Company agrees to
indemnify and hold harmless the Placement Agent, its affiliates and each of its
and their respective directors, officers, members, employees, representatives,
partners, shareholders, affiliates, counsel, agents, selected dealers and each
person, if any, who controls any such Placement Agent and such selected dealers
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
(collectively the “Placement Agent Indemnified Parties,” and each an “Placement
Agent Indemnified Party”), against any and all loss, liability, claim, damage
and expense whatsoever (including but not limited to any and all legal or other
expenses reasonably incurred in investigating, preparing or defending against
any litigation, commenced or threatened, or any claim whatsoever, whether
arising out of any action between any of the Placement Agent Indemnified Parties
and the Company or between any of the Placement Agent Indemnified Parties and
any third party, or otherwise) to which they or any of them may become subject
under the 1933 Act, the 1934 Act or any other statute or at common law or
otherwise or under the laws of foreign countries (a “Claim”), (i) arising out of
or based upon any untrue statement or alleged untrue statement of a material
fact contained in (A) the Registration Statement, the General Disclosure
Package, any Preliminary Prospectus or the Prospectus (or in any amendment or
supplement thereto or document incorporated or deemed to be incorporated by
reference therein); (B) any materials or information provided to prospective
purchasers by, or with the approval of, the Company in connection with the
marketing of the Offering, including any “road show” or prospective purchaser
presentations made to prospective purchasers by the Company (whether in person
or electronically); or (C) any application or other document or written
communication (in this Section 5, collectively called “application”) executed by
the Company or based upon written information furnished by the Company in any
jurisdiction in order to qualify the Securities under the securities laws
thereof or filed with the Commission, any state securities commission or agency,
the Exchange or any other national securities exchange; or the omission or
alleged omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, unless such statement or omission
was made in reliance upon, and in conformity with, the Placement Agent’s
Information or (ii) otherwise arising in connection with or allegedly in
connection with the Offering.

 

 29 

 

 

  (ii) Procedure. If any action is brought against a Placement Agent Indemnified
Party in respect of which indemnity may be sought against the Company pursuant
to Section 6(a)(i), such Placement Agent Indemnified Party shall promptly notify
the Company in writing of the institution of such action and the Company shall
assume the defense of such action, including the employment and fees of counsel
(subject to the approval of such Placement Agent Indemnified Party) and payment
of actual expenses if a Placement Agent Indemnified Party requests that the
Company do so. Such Placement Agent Indemnified Party shall have the right to
employ its or their own counsel in any such case, but the fees and expenses of
such counsel shall be at the expense of the such Placement Agent Indemnified
Party unless (i) the employment of such counsel at the expense of the Company
shall have been authorized in writing by the Company in connection with the
defense of such action, or (ii) the Company shall not have employed counsel to
have charge of the defense of such action, or (iii) such indemnified party or
parties shall have reasonably concluded that there may be defenses available to
it or them which are different from or additional to those available to the
Company (in which case the Company shall not have the right to direct the
defense of such action on behalf of the indemnified party or parties), in any of
which events the reasonable fees and expenses of not more than one additional
firm of attorneys selected by the Placement Agent Indemnified Party (in addition
to local counsel) shall be borne by the Company, and shall be advanced by the
Company. The Company shall not be liable for any settlement of any action
effected without its consent (which shall not be unreasonably withheld). In
addition, the Company shall not, without the prior written consent of the
Placement Agent (which shall not be unreasonably withheld), settle, compromise
or consent to the entry of any judgment in or otherwise seek to terminate any
pending or threatened action in respect of which advancement, reimbursement,
indemnification or contribution may be sought hereunder (whether or not such
Placement Agent Indemnified Party is a party thereto) unless such settlement,
compromise, consent or termination (i) includes an unconditional release of each
Placement Agent Indemnified Party, acceptable to such Placement Agent
Indemnified Party, from all liabilities, expenses and claims arising out of such
action for which indemnification or contribution may be sought and (ii) does not
include a statement as to or an admission of fault, culpability or a failure to
act, by or on behalf of any Placement Agent Indemnified Party.

 

  (iii) Indemnification of the Company. The Placement Agent agrees to indemnify
and hold harmless the Company, its directors, its officers who signed the
Registration Statement and persons who control the Company within the meaning of
Section 15 of the 1933 Act or Section 20 of the 1934 Act ((collectively the
“Company Indemnified Parties,” and each a “Company Indemnified Party”) against
any and all loss, liability, claim, damage and expense described in the
foregoing indemnity from the Company to the Placement Agent, as incurred, but
only with respect to untrue statements or omissions, or alleged untrue
statements or omissions made in the Registration Statement, any Preliminary
Prospectus, the General Disclosure Package or Prospectus or any amendment or
supplement thereto or in any application, in reliance upon, and in strict
conformity with, the Placement Agent’s Information. In case any action shall be
brought against any Company Indemnified Party based on any Preliminary
Prospectus, the Registration Statement, the General Disclosure Package or
Prospectus or any amendment or supplement thereto or any application, and in
respect of which indemnity may be sought against the Placement Agent, the
Placement Agent shall have the rights and duties given to the Company, and the
Company Indemnified Party shall have the rights and duties given to the
Placement Agent by the provisions of Section 6(a)(ii). Each Company Indemnified
Party shall promptly notify the Placement Agent of the commencement of any
litigation or proceedings such Company Indemnified Party, in connection with the
issuance and sale of the Securities or in connection with the Registration
Statement, the General Disclosure Package, or the Prospectus.

 

 30 

 

 

SECTION 7. Contribution.

 

(a) Contribution Rights. If the indemnification provided for in Section 6 shall
for any reason be unavailable to or insufficient to hold harmless an indemnified
party under Section 6(a) or 6(b) in respect of any loss, claim, damage or
liability, or any action in respect thereof, referred to therein, then each
indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect thereof, (i) in
such proportion as shall be appropriate to reflect the relative benefits
received by the Company, on the one hand, and the Placement Agent, on the other,
from the Offering of the Securities, or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company, on the one hand, and the
Placement Agent, on the other, with respect to the statements or omissions that
resulted in such loss, claim, damage or liability, or action in respect thereof,
as well as any other relevant equitable considerations. The relative benefits
received by the Company on the one hand and the Placement Agent on the other
with respect to such Offering shall be deemed to be in the same proportion as
the total net proceeds from the Offering of the Securities purchased under this
Agreement (before deducting expenses) received by the Company as set forth in
the table on the cover page of the Prospectus, on the one hand, and the total
Placement Fee received by the Placement Agent in connection with the Offering as
set forth in the table on the cover page of the Prospectus on the other hand.
The relative fault shall be determined by reference to whether the untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact relates to information supplied by the Company or the
Placement Agent, the intent of the parties and their relative knowledge, access
to information and opportunity to correct or prevent such statement or omission.
The Company and the Placement Agent agree that it would not be just and
equitable if contributions pursuant to this Section 7(a) were to be determined
by pro rata allocation or by any other method of allocation that does not take
into account the equitable considerations referred to herein. The amount paid or
payable by an indemnified party as a result of the loss, claim, damage or
liability, or action in respect thereof, referred to above in this Section 7(a)
shall be deemed to include, for purposes of this Section 7(a), any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 7(a) in no event shall the Placement Agent be
required to contribute any amount in excess of the total Placement Fee received
by the Placement Agent less the amount of any damages which the Placement Agent
has otherwise paid or become liable to pay by reason of any untrue or alleged
untrue statement, omission or alleged omission, act or alleged act or failure to
act or alleged failure to act. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the 1933 Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.

 

 31 

 

 

(b) Contribution Procedure. Within fifteen (15) days after receipt by any party
to this Agreement (or its representative) of notice of the commencement of any
action, suit or proceeding, such party will, if a claim for contribution in
respect thereof is to be made against another party (“contributing party”),
notify the contributing party of the commencement thereof, but the failure to so
notify the contributing party will not relieve it from any liability which it
may have to any other party other than for contribution hereunder. In case any
such action, suit or proceeding is brought against any party, and such party
notifies a contributing party or its representative of the commencement thereof
within the aforesaid 15 days, the contributing party will be entitled to
participate therein with the notifying party and any other contributing party
similarly notified. Any such contributing party shall not be liable to any party
seeking contribution on account of any settlement of any claim, action or
proceeding affected by such party seeking contribution on account of any
settlement of any claim, action or proceeding affected by such party seeking
contribution without the written consent of such contributing party. The
contribution provisions contained in this Section 7 are intended to supersede,
to the extent permitted by law, any right to contribution under the 1933 Act,
the 1934 Act or otherwise available

 

SECTION 8. Representations, Warranties and Agreements to Survive. The
indemnities, covenants, agreements, representations, warranties and other
statements of the Company, as set forth in this Agreement or made by the Company
pursuant to this Agreement, shall remain in full force and effect, regardless of
any investigation made by or on behalf of the Placement Agent, the Purchasers or
any person controlling any of them and shall survive delivery of and payment for
the Securities. Notwithstanding any termination of this Agreement, the indemnity
and contribution agreements contained in Sections 6 and 7 and the covenants,
representations, warranties set forth in this Agreement shall not terminate and
shall remain in full force and effect at all times.

 

SECTION 9. Effective Date of Agreement and Termination Thereof.

 

(a) Effective Date. This Agreement shall become effective when both the Company
and the Placement Agent have executed the same and delivered counterparts of
such signatures to the other party.

 

 32 

 

 

(b) Termination. The Placement Agent shall have the right to terminate this
Agreement at any time prior to any Closing Date, (i) if any domestic or
international event or act or occurrence has materially disrupted, or in your
opinion will in the immediate future materially disrupt, general securities
markets in the United States; or (ii) if trading on the New York Stock Exchange,
the Exchange or the Nasdaq Stock Market LLC shall have been suspended or
materially limited, or minimum or maximum prices for trading shall have been
fixed, or maximum ranges for prices for securities shall have been required by
FINRA or by order of the Commission or any other government authority having
jurisdiction; or (iii) if the United States shall have become involved in a new
war or an increase in major hostilities; or (iv) if a banking moratorium has
been declared by a New York State or federal authority; or (v) if a moratorium
on foreign exchange trading has been declared which materially adversely impacts
the United States securities markets; or (vi) if the Company shall have
sustained a material loss by fire, flood, accident, hurricane, earthquake,
theft, sabotage or other calamity or malicious act which, whether or not such
loss shall have been insured, will, in your opinion, make it inadvisable to
proceed with the delivery of the Shares; or (vii) if the Company is in material
breach of any of its representations, warranties or covenants hereunder; or
(viii) if the Placement Agent shall have become aware after the date hereof of
such a material adverse change in the conditions or prospects of the Company, or
such adverse material change in general market conditions as in the Placement
Agent’s judgment would make it impracticable to proceed with the offering, sale
and/or delivery of the Shares. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 8 above and Section 9(c) below.

 

(c) Expenses. Notwithstanding anything to the contrary in this Agreement, in the
event that this Agreement shall not be carried out for any reason whatsoever,
within the time specified herein or any extensions thereof pursuant to the terms
herein, the Company shall be obligated to pay to the Placement Agent actual and
accountable out-of-pocket expenses related to the transactions contemplated
herein then due and payable (including the fees and disbursements of Placement
Agent Counsel) up to $37,500, inclusive of the $25,000 advance for
non-accountable expenses previously paid by the Company to the Placement Agent
(the “Advance”) and upon demand the Company shall pay the full amount thereof to
the Placement Agent; provided, however, that such expense cap in no way limits
or impairs the indemnification and contribution provisions of this Agreement.
Notwithstanding the foregoing, any advance received by the Placement Agent will
be reimbursed to the Company to the extent not actually incurred in compliance
with FINRA Rule 5110(f)(2)(C).

 

SECTION 12. Miscellaneous.

 

(a) Notices. All communications hereunder, except as herein otherwise
specifically provided, shall be in writing and shall be mailed (registered or
certified mail, return receipt requested), personally delivered, sent by
facsimile transmission or e-mail and confirmed and shall be deemed given when so
delivered, faxed, or e-mailed and confirmed or if mailed, two (2) days after
such mailing.

 

 33 

 

 

If to the Placement Agent:

 

ThinkEquity
A Division of Fordham Financial Management, Inc.

17 State Street, 22nd Floor

New York, NY 10005

Attn: Mr. Eric Lord, Head of Investment Banking

Fax No.: 212-349-2550

Email address: el@think-equity.com

 

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

 

Meister Seelig & Fein LLP

125 Park Avenue, 7th Floor

New York, New York 10017

Attn: Kenneth S. Goodwin, Esq.

Fax No.: 646-539-3663

Email address: ksg@msf-law.com

Louis Lombardo, Esq.

Fax No.: 646-930-4710

Email Address: ll@msf-law.com

 

If to the Company:

 

Matinas BioPharma Holdings, Inc.

1545 Route 206 South, Suite 302

Bedminster, NJ 07921

Attn: Mr. Jerome Jabbour, Chief Executive Officer

Fax No.:

Email address: jjabbour@matinasbiopharma.com

 

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

 

Lowenstein Sandler LLP

1251 Avenue of the Americas

New York, NY 10020

Attn: Steven M. Skolnick, Esq.

Fax No.: 973-597-2477

Email address: sskolnick@lowenstein.com

 

(b) Headings. The headings contained herein are for the sole purpose of
convenience of reference, and shall not in any way limit or affect the meaning
or interpretation of any of the terms or provisions of this Agreement.

 

(c) Amendment. This Agreement may only be amended by a written instrument
executed by each of the parties hereto.

 

 34 

 

 

(d) Entire Agreement. This Agreement (together with the other agreements and
documents being delivered pursuant to or in connection with this Agreement)
constitutes the entire agreement of the parties hereto with respect to the
subject matter hereof and thereof, and supersedes all prior agreements and
understandings of the parties, oral and written, with respect to the subject
matter hereof. Notwithstanding anything to the contrary set forth herein, it is
understood and agreed by the parties hereto that all other terms and conditions
of that certain engagement letter between the Company and ThinkEquity, a
division of Fordham Financial Management, Inc., dated May 15, 2018, as amended,
shall remain in full force and effect.

 

(e) Successors; Persons Entitled to Benefit of Agreement. This Agreement shall
inure to the benefit of and be binding upon the Placement Agent, the Company,
and their respective successors and assigns. This Agreement shall also inure to
the benefit of the Purchasers, and each of their respective successors and
assigns, which shall be third party beneficiaries hereof. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any
person, other than the persons mentioned in the preceding sentences, any legal
or equitable right, remedy or claim under or in respect of this Agreement, or
any provisions herein contained, this Agreement and all conditions and
provisions hereof being intended to be and being for the sole and exclusive
benefit of such persons and for the benefit of no other person; except that the
representations, warranties, covenants, agreements and indemnities of the
Company contained in this Agreement shall also be for the benefit of the
Placement Agent Indemnified Parties and the indemnities of the Placement Agent
shall be for the benefit of the Company Indemnified Parties.

 

(f) Governing Law; Consent to Jurisdiction; Trial by Jury. This Agreement shall
be governed by and construed and enforced in accordance with the laws of the
State of New York, without giving effect to conflict of laws principles thereof.
The Company hereby agrees that any action, proceeding or claim against it
arising out of, or relating in any way to this Agreement shall be brought and
enforced in the New York Supreme Court, County of New York, or in the United
States District Court for the Southern District of New York, and irrevocably
submits to such jurisdiction, which jurisdiction shall be exclusive. The Company
hereby waives any objection to such exclusive jurisdiction and that such courts
represent an inconvenient forum. Any such process or summons to be served upon
the Company may be served by transmitting a copy thereof by registered or
certified mail, return receipt requested, postage prepaid, addressed to it at
the address set forth in Section 12(a) hereof. Such mailing shall be deemed
personal service and shall be legal and binding upon the Company in any action,
proceeding or claim. The Company agrees that the prevailing party(ies) in any
such action shall be entitled to recover from the other party(ies) all of its
reasonable attorneys’ fees and expenses relating to such action or proceeding
and/or incurred in connection with the preparation therefor. The Company (on its
behalf and, to the extent permitted by applicable law, on behalf of its
stockholders and affiliates) and the Placement Agent hereby irrevocably waives,
to the fullest extent permitted by applicable law, any and all right to trial by
jury in any legal proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby.

 

(g) Execution in Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which shall be deemed to be an original, but all of which taken together
shall constitute one and the same agreement, and shall become effective when one
or more counterparts has been signed by each of the parties hereto and delivered
to each of the other parties hereto. Delivery of a signed counterpart of this
Agreement by facsimile or email/pdf transmission shall constitute valid and
sufficient delivery thereof.

 

 35 

 

 

(h) Waiver, etc. The failure of any of the parties hereto to at any time enforce
any of the provisions of this Agreement shall not be deemed or construed to be a
waiver of any such provision, nor to in any way effect the validity of this
Agreement or any provision hereof or the right of any of the parties hereto to
thereafter enforce each and every provision of this Agreement. No waiver of any
breach, non-compliance or non-fulfillment of any of the provisions of this
Agreement shall be effective unless set forth in a written instrument executed
by the party or parties against whom or which enforcement of such waiver is
sought; and no waiver of any such breach, non-compliance or non-fulfillment
shall be construed or deemed to be a waiver of any other or subsequent breach,
non-compliance or non-fulfillment.

 

[Remainder of the page intentionally left blank; signature page follows]

 

 36 

 

 

If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement between
the Placement Agent and the Company in accordance with its terms.

 

  Very truly yours,         MATINAS BIOPHARMA HOLDINGS, INC.         By: /s/
Jerome D. Jabbour   Name: Jerome D. Jabbour   Title: Chief Executive Officer

 

Confirmed and Accepted:

 

THINKEQUITY

 

A Division of Fordham Financial Management, Inc.         By: /s/ Eric Lord  
Name: Eric Lord   Title: Head of Investment Banking  

 

 37 

 

 

SCHEDULE A

 

General Use Free Writing Prospectuses

 

None

 

   

 

 

SCHEDULE B

 

Issuer Free Writing Prospectuses

 

None.

 

   

 

 

SCHEDULE C

 

Lock-Up Parties

 

Herbert Conrad       Jerome D. Jabbour       Dominick M. DiPaolo       Raphael
J. Mannino       Gary Gaglione       Eric Ende       James S. Scibetta      
Adam K. Stern       Matthew Wikler       Roelof Rongen  

 

   

 

 

SCHEDULE D

 

Subsidiaries

 

Name   State of Incorporation       Matinas BioPharma, Inc.   Delaware      
Matinas BioPharma Nanotechnologies, Inc.   Delaware

 

   

 

 

EXHIBIT A

 

Form of Placement Agent’s Warrant Agreement

 

THE REGISTERED HOLDER OF THIS PURCHASE WARRANT BY ITS ACCEPTANCE HEREOF, AGREES
THAT IT WILL NOT SELL, TRANSFER OR ASSIGN THIS PURCHASE WARRANT EXCEPT AS HEREIN
PROVIDED AND THE REGISTERED HOLDER OF THIS PURCHASE WARRANT AGREES THAT IT WILL
NOT SELL, TRANSFER, ASSIGN, PLEDGE OR HYPOTHECATE THIS PURCHASE WARRANT FOR A
PERIOD OF ONE YEAR FOLLOWING THE CLOSING DATE (DEFINED BELOW) TO ANYONE OTHER
THAN (I) THINKEQUITY, A DIVISION OF FORDHAM FINANCIAL MANAGEMENT, INC., OR AN
UNDERWRITER OR A SELECTED DEALER IN CONNECTION WITH THE OFFERING, OR (II) A BONA
FIDE OFFICER OR PARTNER OF THINKEQUITY, A DIVISION OF FORDHAM FINANCIAL
MANAGEMENT, INC., OR OF ANY SUCH UNDERWRITER OR SELECTED DEALER.

 

THIS PURCHASE WARRANT IS NOT EXERCISABLE PRIOR TO JUNE 21, 2019. VOID AFTER 5:00
P.M., EASTERN TIME, JUNE 21, 2023.

 

WARRANT TO PURCHASE COMMON STOCK

 

MATINAS BIOPHARMA HOLDINGS, INC.

 

Warrant Shares: _______

 

Initial Exercise Date: June 21, 2019

 

THIS WARRANT TO PURCHASE COMMON STOCK (the “Warrant”) certifies that, for value
received, ThinkEquity, a Division of Fordham Financial Management, Inc. or its
assigns (the “Holder”) is entitled, upon the terms and subject to the
limitations on exercise and the conditions hereinafter set forth, at any time on
or after June 21, 2019 (the “Initial Exercise Date”) and, in accordance with
FINRA Rule 5110(f)(2)(G)(i), prior to at 5:00 p.m. (New York time) on the date
that is five (5) years following the Closing Date (the “Termination Date”) but
not thereafter, to subscribe for and purchase from Matinas BioPharma Holdings,
Inc., a Delaware corporation (the “Company”), up to ______ shares (the “Warrant
Shares”) of common stock, par value $0.0001 per share, of the Company (the
“Common Stock”), as subject to adjustment hereunder. The purchase price of one
share of Common Stock under this Warrant shall be equal to the Exercise Price,
as defined in Section 2(b).

 

 1 

 

 

This Warrant is issued in connection with an offering (the “Offering”) of Series
B Convertible Preferred Stock, par value $0.0001 per share, of the Company.

 

Section 1. Definitions. In addition to the terms defined elsewhere in this
Agreement, the following terms have the meanings indicated in this Section 1:

 

“Affiliate” means any Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with a
Person, as such terms are used in and construed under Rule 405 under the
Securities Act.

 

“Business Day” means any day except any Saturday, any Sunday, any day which is a
federal legal holiday in the United States or any day on which banking
institutions in the State of New York are authorized or required by law or other
governmental action to close.

 

“Closing Date” means the initial closing date of the Offering.

 

“Commission” means the United States Securities and Exchange Commission.

 

“Common Stock Equivalents” means any securities of the Company or the
Subsidiaries which would entitle the holder thereof to acquire at any time
Common Stock, including, without limitation, any debt, preferred stock, right,
option, warrant or other instrument that is at any time convertible into or
exercisable or exchangeable for, or otherwise entitles the holder thereof to
receive, Common Stock

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.

 

“Person” means an individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or subdivision thereof) or other entity
of any kind.

 

“Rule 144” means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended or interpreted from time to time, or
any similar rule or regulation hereafter adopted by the Commission having
substantially the same purpose and effect as such Rule.

 

“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.

 

 2 

 

 

“Trading Day” means a day on which the NYSE American is open for trading.

 

“Trading Market” means any of the following markets or exchanges on which the
Common Stock is listed or quoted for trading on the date in question: the NYSE
American Market, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq
Global Select Market, or the New York Stock Exchange (or any successors to any
of the foregoing).

 

“Transfer Agent” means V Stock Transfer, LLC, the current transfer agent of the
Company, with a mailing address of 18 Lafayette Place, Woodmere, New York 11598
and a facsimile number of (646) 536-3179, and any successor transfer agent of
the Company.

 

“VWAP” means, for any date, the price determined by the first of the following
clauses that applies: (a) if the Common Stock then listed or quoted on a Trading
Market, the daily volume weighted average price of the Common Stock for such
date (or the nearest preceding date) on the Trading Market on which the Common
Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading
Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b)
if OTCQB or OTCQX is not a Trading Market, the volume weighted average price of
a share of Common Stock for such date (or the nearest preceding date) on the
OTCQB or OTCQX as applicable, (c) if Common Stock is not then listed or quoted
for trading on the OTCQB or OTCQX and if prices for Common Stock are then
reported in the “Pink Sheets” published by OTC Markets Group, Inc. (or a similar
organization or agency succeeding to its functions of reporting prices), the
most recent bid price per share of Common Stock so reported, or (d) in all other
cases, the fair market value of the Common Stock as determined by an independent
appraiser selected in good faith by the Holder and reasonably acceptable to the
Company, the fees and expenses of which shall be paid by the Company.

 

Section 2. Exercise.

 

a) Exercise of the purchase rights represented by this Warrant may be made, in
whole or in part, at any time or times on or after the Initial Exercise Date and
on or before the Termination Date by delivery to the Company (or such other
office or agency of the Company as it may designate by notice in writing to the
registered Holder at the address of the Holder appearing on the books of the
Company) of a duly executed facsimile copy (or e-mail attachment) of the Notice
of Exercise Form annexed hereto. Within two (2) Trading Days following the date
of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price
for the shares specified in the applicable Notice of Exercise by wire transfer
or cashier’s check drawn on a United States bank unless the cashless exercise
procedure specified in Section 2(c) below is specified in the applicable Notice
of Exercise. No ink-original Notice of Exercise shall be required, nor shall any
medallion guarantee (or other type of guarantee or notarization) of any Notice
of Exercise form be required. Notwithstanding anything herein to the contrary,
the Holder shall not be required to physically surrender this Warrant to the
Company until the Holder has purchased all of the Warrant Shares available
hereunder and the Warrant has been exercised in full, in which case, the Holder
shall surrender this Warrant to the Company for cancellation within five (5)
Trading Days of the date the final Notice of Exercise is delivered to the
Company. Partial exercises of this Warrant resulting in purchases of a portion
of the total number of Warrant Shares available hereunder shall have the effect
of lowering the outstanding number of Warrant Shares purchasable hereunder in an
amount equal to the applicable number of Warrant Shares purchased. The Holder
and the Company shall maintain records showing the number of Warrant Shares
purchased and the date of such purchases. The Company shall deliver any
objection to any Notice of Exercise Form within two (2) Business Days of receipt
of such notice. The Holder and any assignee, by acceptance of this Warrant,
acknowledge and agree that, by reason of the provisions of this paragraph,
following the purchase of a portion of the Warrant Shares hereunder, the number
of Warrant Shares available for purchase hereunder at any given time may be less
than the amount stated on the face hereof.

 

 3 

 

 

b) Exercise Price. The exercise price per share of the Common Stock under this
Warrant shall be $0.75, subject to adjustment hereunder (the “Exercise Price”).

 

c) Cashless Exercise. If at any time on or after the Initial Exercise Date,
there is no effective registration statement registering, or the prospectus
contained therein is not available for the issuance of the Warrant Shares to the
Holder, then this Warrant may also be exercised, in whole or in part, at such
time by means of a “cashless exercise” in which the Holder shall be entitled to
receive the number of Warrant Shares equal to the quotient obtained by dividing
[(A-B) (X)] by (A), where:

 

  (A) = the VWAP on the Trading Day immediately preceding the date on which
Holder elects to exercise this Warrant by means of a “cashless exercise,” as set
forth in the applicable Notice of Exercise;         (B) = the Exercise Price of
this Warrant, as adjusted hereunder; and         (C) = the number of Warrant
Shares that would be issuable upon exercise of this Warrant in accordance with
the terms of this Warrant if such exercise were by means of a cash exercise
rather than a cashless exercise.

 

If Warrant Shares are issued in such a “cashless exercise,” the parties
acknowledge and agree that in accordance with Section 3(a)(9) of the Securities
Act, the Warrant Shares shall take on the registered characteristics of the
Warrants being exercised, and the holding period of the Warrants being exercised
may be tacked on to the holding period of the Warrant Shares. The Company agrees
not to take any position contrary to this Section 2(c).

 

Notwithstanding anything herein to the contrary, on the Termination Date, this
Warrant shall be automatically exercised via cashless exercise pursuant to this
Section 2(c).

 

 4 

 

 

d) Mechanics of Exercise.

 

i. Delivery of Warrant Shares Upon Exercise. The Company shall cause the Warrant
Shares purchased hereunder to be transmitted by its Transfer Agent to the Holder
by crediting the account of the Holder’s or its designee’s balance account with
The Depository Trust Company through its Deposit or Withdrawal at Custodian
system (“DWAC”) if the Company is then a participant in such system and either
(A) there is an effective registration statement permitting the issuance of the
Warrant Shares to or resale of the Warrant Shares by Holder, or (B) the Warrant
Shares are eligible for resale by the Holder without volume or manner-of-sale
limitations pursuant to Rule 144 and, in either case, the Warrant Shares have
been sold by the Holder prior to the Warrant Share Delivery Date (as defined
below), and otherwise by physical delivery of a certificate, registered in the
Company’s share register in the name of the Holder or its designee, for the
number of Warrant Shares to which the Holder is entitled pursuant to such
exercise to the address specified by the Holder in the Notice of Exercise by the
date that is two (2) Trading Days after the delivery to the Company of the
Notice of Exercise (such date, the “Warrant Share Delivery Date”). If the
Warrant Shares can be delivered via DWAC, the transfer agent shall have received
from the Company, at the expense of the Company, any legal opinions or other
documentation required by it to deliver such Warrant Shares without legend
(subject to receipt by the Company of reasonable back up documentation from the
Holder, including with respect to affiliate status) and, if applicable and
requested by the Company prior to the Warrant Share Delivery Date, the transfer
agent shall have received from the Holder a confirmation of sale of the Warrant
Shares (provided the requirement of the Holder to provide a confirmation as to
the sale of Warrant Shares shall not be applicable to the issuance of unlegended
Warrant Shares upon a cashless exercise of this Warrant if the Warrant Shares
are then eligible for resale pursuant to Rule 144(b)(1)). The Warrant Shares
shall be deemed to have been issued, and Holder or any other person so
designated to be named therein shall be deemed to have become a holder of record
of such shares for all purposes, as of the date the Warrant has been exercised,
with payment to the Company of the Exercise Price (or by cashless exercise, if
permitted) and all taxes required to be paid by the Holder, if any, pursuant to
Section 2(d)(vi) prior to the issuance of such shares, having been paid. If the
Company fails for any reason to deliver to the Holder the Warrant Shares subject
to a Notice of Exercise by the second Trading Day following the Warrant Share
Delivery Date, the Company shall pay to the Holder, in cash, as liquidated
damages and not as a penalty, for each $1,000 of Warrant Shares subject to such
exercise (based on the VWAP of the Common Stock on the date of the applicable
Notice of Exercise), $10 per Trading Day (increasing to $20 per Trading Day on
the fifth Trading Day after such liquidated damages begin to accrue) for each
Trading Day after the second Trading Day following such Warrant Share Delivery
Date until such Warrant Shares are delivered or Holder rescinds such exercise.

 

ii. Delivery of New Warrants Upon Exercise. If this Warrant shall have been
exercised in part, the Company shall, at the request of a Holder and upon
surrender of this Warrant certificate, at the time of delivery of the Warrant
Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder
to purchase the unpurchased Warrant Shares called for by this Warrant, which new
Warrant shall in all other respects be identical with this Warrant.

 

iii. Rescission Rights. If the Company fails to cause its Transfer Agent to
deliver to the Holder the Warrant Shares pursuant to Section 2(d)(i) by the
Warrant Share Delivery Date, then the Holder will have the right to rescind such
exercise; provided, however, that the Holder shall be required to return any
Warrant Shares or Common Stock subject to any such rescinded exercise notice
concurrently with the return to Holder of the aggregate Exercise Price paid to
the Company for such Warrant Shares and the restoration of Holder’s right to
acquire such Warrant Shares pursuant to this Warrant (including, issuance of a
replacement warrant certificate evidencing such restored right).

 

 5 

 

 

iv. Compensation for Buy-In on Failure to Timely Deliver Warrant Shares Upon
Exercise. In addition to any other rights available to the Holder, if the
Company fails to cause its Transfer Agent to transmit to the Holder the Warrant
Shares pursuant to an exercise on or before the Warrant Share Delivery Date, and
if after such date the Holder is required by its broker to purchase (in an open
market transaction or otherwise) or the Holder’s brokerage firm otherwise
purchases, shares of Common Stock to deliver in satisfaction of a sale by the
Holder of the Warrant Shares which the Holder anticipated receiving upon such
exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder the
amount, if any, by which (x) the Holder’s total purchase price (including
brokerage commissions, if any) for the shares of Common Stock so purchased
exceeds (y) the amount obtained by multiplying (1) the number of Warrant Shares
that the Company was required to deliver to the Holder in connection with the
exercise at issue times (2) the price at which the sell order giving rise to
such purchase obligation was executed, and (B) at the option of the Holder,
either reinstate the portion of the Warrant and equivalent number of Warrant
Shares for which such exercise was not honored (in which case such exercise
shall be deemed rescinded) or deliver to the Holder the number of shares of
Common Stock that would have been issued had the Company timely complied with
its exercise and delivery obligations hereunder. For example, if the Holder
purchases Common Stock having a total purchase price of $11,000 to cover a
Buy-In with respect to an attempted exercise of shares of Common Stock with an
aggregate sale price giving rise to such purchase obligation of $10,000, under
clause (A) of the immediately preceding sentence the Company shall be required
to pay the Holder $1,000. The Holder shall provide the Company written notice
indicating the amounts payable to the Holder in respect of the Buy-In and, upon
request of the Company, evidence of the amount of such loss. Nothing herein
shall limit a Holder’s right to pursue any other remedies available to it
hereunder, at law or in equity including, without limitation, a decree of
specific performance and/or injunctive relief with respect to the Company’s
failure to timely deliver shares of Common Stock upon exercise of the Warrant as
required pursuant to the terms hereof.

 

v. No Fractional Shares or Scrip. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. As to any
fraction of a share which the Holder would otherwise be entitled to purchase
upon such exercise, the Company shall, at its election, either pay a cash
adjustment in respect of such final fraction in an amount equal to such fraction
multiplied by the Exercise Price or round up to the next whole share.

 

 6 

 

 

vi. Charges, Taxes and Expenses. Issuance of Warrant Shares shall be made
without charge to the Holder for any issue or transfer tax or other incidental
expense in respect of the issuance of such Warrant Shares, all of which taxes
and expenses shall be paid by the Company, and such Warrant Shares shall be
issued in the name of the Holder or in such name or names as may be directed by
the Holder; provided, however, that in the event that Warrant Shares are to be
issued in a name other than the name of the Holder, this Warrant when
surrendered for exercise shall be accompanied by the Assignment Form attached
hereto duly executed by the Holder and the Company may require, as a condition
thereto, the payment of a sum sufficient to reimburse it for any transfer tax
incidental thereto. The Company shall pay all transfer agent fees required for
same-day processing of any Notice of Exercise and all fees to the Depository
Trust Company (or another established clearing corporation performing similar
functions) required for same-day electronic delivery of the Warrant Shares.

 

vii. Closing of Books. The Company will not close its stockholder books or
records in any manner which prevents the timely exercise of this Warrant,
pursuant to the terms hereof.

 

viii. Signature. This Section 2 and the exercise form attached hereto set forth
the totality of the procedures required of the Holder in order to exercise this
Warrant. Without limiting the preceding sentences, no ink-original exercise form
shall be required, nor shall any medallion guarantee (or other type of guarantee
or notarization) of any exercise form be required in order to exercise this
Warrant. No additional legal opinion, other information or instructions shall be
required of the Holder to exercise this Warrant. The Company shall honor
exercises of this Warrant and shall deliver Shares underlying this Purchase
Warrant in accordance with the terms, conditions and time periods set forth
herein.

 

 7 

 

 

e) Holder’s Exercise Limitations. The Company shall not effect any exercise of
this Warrant, and a Holder shall not have the right to exercise any portion of
this Warrant, pursuant to Section 2 or otherwise, to the extent that after
giving effect to such issuance after exercise as set forth on the applicable
Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any
other Persons acting as a group together with the Holder or any of the Holder’s
Affiliates), would beneficially own in excess of the Beneficial Ownership
Limitation (as defined below). For purposes of the foregoing sentence, the
number of shares of Common Stock beneficially owned by the Holder and its
Affiliates shall include the number of shares of Common Stock issuable upon
exercise of this Warrant with respect to which such determination is being made,
but shall exclude the number of shares of Common Stock which would be issuable
upon (i) exercise of the remaining, nonexercised portion of this Warrant
beneficially owned by the Holder or any of its Affiliates and (ii) exercise or
conversion of the unexercised or nonconverted portion of any other securities of
the Company (including, without limitation, any other Common Stock Equivalents)
subject to a limitation on conversion or exercise analogous to the limitation
contained herein beneficially owned by the Holder or any of its Affiliates.
Except as set forth in the preceding sentence, for purposes of this Section
2(e), beneficial ownership shall be calculated in accordance with Section 13(d)
of the Exchange Act and the rules and regulations promulgated thereunder, it
being acknowledged by the Holder that the Company is not representing to the
Holder that such calculation is in compliance with Section 13(d) of the Exchange
Act and the Holder is solely responsible for any schedules required to be filed
in accordance therewith. To the extent that the limitation contained in this
Section 2(e) applies, the determination of whether this Warrant is exercisable
(in relation to other securities owned by the Holder together with any
Affiliates) and of which portion of this Warrant is exercisable shall be in the
sole discretion of the Holder, and the submission of a Notice of Exercise shall
be deemed to be the Holder’s determination of whether this Warrant is
exercisable (in relation to other securities owned by the Holder together with
any Affiliates) and of which portion of this Warrant is exercisable, in each
case subject to the Beneficial Ownership Limitation, and the Company shall have
no obligation to verify or confirm the accuracy of such determination. In
addition, a determination as to any group status as contemplated above shall be
determined in accordance with Section 13(d) of the Exchange Act and the rules
and regulations promulgated thereunder. For purposes of this Section 2(e), in
determining the number of outstanding shares of Common Stock, a Holder may rely
on the number of outstanding shares of Common Stock as reflected in (A) the
Company’s most recent periodic or annual report filed with the Commission, as
the case may be, (B) a more recent public announcement by the Company or (C) a
more recent written notice by the Company or the Company’s Transfer Agent
setting forth the number of shares of Common Stock outstanding. Upon the written
or oral request of a Holder, the Company shall within two Trading Days confirm
orally and in writing to the Holder the number of shares of Common Stock then
outstanding. In any case, the number of outstanding shares of Common Stock shall
be determined after giving effect to the conversion or exercise of securities of
the Company, including this Warrant, by the Holder or its Affiliates since the
date as of which such number of outstanding shares of Common Stock was reported.
The “Beneficial Ownership Limitation” shall be 9.99% of the number of shares of
the Common Stock outstanding immediately after giving effect to the issuance of
shares of Common Stock issuable upon exercise of this Warrant. The Holder, upon
notice to the Company, may increase or decrease the Beneficial Ownership
Limitation provisions of this Section 2(e), provided that the Beneficial
Ownership Limitation in no event exceeds 9.99% of the number of shares of the
Common Stock outstanding immediately after giving effect to the issuance of
shares of Common Stock upon exercise of this Warrant held by the Holder and the
provisions of this Section 2(e) shall continue to apply. Any increase in the
Beneficial Ownership Limitation will not be effective until the 61st day after
such notice is delivered to the Company. The provisions of this paragraph shall
be construed and implemented in a manner otherwise than in strict conformity
with the terms of this Section 2(e) to correct this paragraph (or any portion
hereof) which may be defective or inconsistent with the intended Beneficial
Ownership Limitation herein contained or to make changes or supplements
necessary or desirable to properly give effect to such limitation. The
limitations contained in this paragraph shall apply to a successor holder of
this Warrant.

 

Section 3. Certain Adjustments.

 

a) Stock Dividends and Splits. If the Company, at any time while this Warrant is
outstanding: (i) pays a stock dividend or otherwise makes a distribution or
distributions on shares of its Common Stock or any other equity or equity
equivalent securities payable in shares of Common Stock (which, for avoidance of
doubt, shall not include any shares of Common Stock issued by the Company upon
exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock
into a larger number of shares, (iii) combines (including by way of reverse
stock split) outstanding shares of Common Stock into a smaller number of shares,
or (iv) issues by reclassification of shares of the Common Stock any shares of
capital stock of the Company, then in each case the Exercise Price shall be
multiplied by a fraction of which the numerator shall be the number of shares of
Common Stock (excluding treasury shares, if any) outstanding immediately before
such event and of which the denominator shall be the number of shares of Common
Stock outstanding immediately after such event, and the number of shares
issuable upon exercise of this Warrant shall be proportionately adjusted such
that the aggregate Exercise Price of this Warrant shall remain unchanged. Any
adjustment made pursuant to this Section 3(a) shall become effective immediately
after the record date for the determination of stockholders entitled to receive
such dividend or distribution and shall become effective immediately after the
effective date in the case of a subdivision, combination or re-classification.
For the purposes of clarification, the Exercise Price of this Warrant will not
be adjusted in the event that the Company or any Subsidiary thereof, as
applicable, sells or grants any option to purchase, or sells or grants any right
to reprice, or otherwise disposes of or issues (or announces any offer, sale,
grant or any option to purchase or other disposition) any Common Stock or Common
Stock Equivalents, at an effective price per share less than the Exercise Price
then in effect.

 

 8 

 

 

b) Subsequent Rights Offerings. In addition to any adjustments pursuant to
Section 3(a) above, if at any time the Company grants, issues or sells any
Common Stock Equivalents or rights to purchase stock, warrants, securities or
other property pro rata to the record holders of any class of shares of Common
Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon
the terms applicable to such Purchase Rights, the aggregate Purchase Rights
which the Holder could have acquired if the Holder had held the number of shares
of Common Stock acquirable upon complete exercise of this Warrant (without
regard to any limitations on exercise hereof, including without limitation, the
Beneficial Ownership Limitation) immediately before the date on which a record
is taken for the grant, issuance or sale of such Purchase Rights, or, if no such
record is taken, the date as of which the record holders of shares of Common
Stock are to be determined for the grant, issue or sale of such Purchase Rights
(provided, however, to the extent that the Holder’s right to participate in any
such Purchase Right would result in the Holder exceeding the Beneficial
Ownership Limitation, then the Holder shall not be entitled to participate in
such Purchase Right to such extent (or beneficial ownership of such shares of
Common Stock as a result of such Purchase Right to such extent) and such
Purchase Right to such extent shall be held in abeyance for the Holder until
such time, if ever, as its right thereto would not result in the Holder
exceeding the Beneficial Ownership Limitation).

 

c) During such time as this Warrant is outstanding, if the Company shall declare
or make any dividend (other than cash dividends) or other distribution of its
assets (or rights to acquire its assets) to holders of shares of Common Stock,
by way of return of capital or otherwise (including, without limitation, any
distribution of shares or other securities, property or options by way of a
dividend, spin off, reclassification, corporate rearrangement, scheme of
arrangement or other similar transaction) (a “Distribution”), at any time after
the issuance of this Warrant, then, in each such case, the Holder shall be
entitled to participate in such Distribution to the same extent that the Holder
would have participated therein if the Holder had held the number of shares of
Common Stock acquirable upon complete exercise of this Warrant (without regard
to any limitations on exercise hereof, including without limitation, the
Beneficial Ownership Limitation) immediately before the date of which a record
is taken for such Distribution, or, if no such record is taken, the date as of
which the record holders of shares of Common Stock are to be determined for the
participation in such Distribution (provided, however, to the extent that the
Holder’s right to participate in any such Distribution would result in the
Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not
be entitled to participate in such Distribution to such extent (or in the
beneficial ownership of any shares of Common Stock as a result of such
Distribution to such extent) and the portion of such Distribution shall be held
in abeyance for the benefit of the Holder until such time, if ever, as its right
thereto would not result in the Holder exceeding the Beneficial Ownership
Limitation). To the extent that this Warrant has not been partially or
completely exercised at the time of such Distribution, such portion of the
Distribution shall be held in abeyance for the benefit of the Holder until the
Holder has exercised this Warrant.

 

 9 

 

 

d) Fundamental Transaction. If, at any time while this Warrant is outstanding,
(i) the Company, directly or indirectly, in one or more related transactions
effects any merger or consolidation of the Company with or into another Person,
(ii) the Company, directly or indirectly, effects any sale, lease, license,
assignment, transfer, conveyance or other disposition of all or substantially
all of its assets in one or a series of related transactions, (iii) any, direct
or indirect, purchase offer, tender offer or exchange offer (whether by the
Company or another Person) is completed pursuant to which holders of Common
Stock are permitted to sell, tender or exchange their shares for other
securities, cash or property and has been accepted by the holders of 50% or more
of the outstanding Common Stock, (iv) the Company, directly or indirectly, in
one or more related transactions effects any reclassification, reorganization or
recapitalization of the Common Stock or any compulsory share exchange pursuant
to which the Common Stock is effectively converted into or exchanged for other
securities, cash or property, or (v) the Company, directly or indirectly, in one
or more related transactions consummates a stock or share purchase agreement or
other business combination (including, without limitation, a reorganization,
recapitalization, spin-off or scheme of arrangement) with another Person or
group of Persons whereby such other Person or group acquires more than 50% of
the outstanding shares of Common Stock (not including any shares of Common Stock
held by the other Person or other Persons making or party to, or associated or
affiliated with the other Persons making or party to, such stock or share
purchase agreement or other business combination) (each a “Fundamental
Transaction”), then, upon any subsequent exercise of this Warrant, the Holder
shall have the right to receive, for each Warrant Share that would have been
issuable upon such exercise immediately prior to the occurrence of such
Fundamental Transaction, at the option of the Holder (without regard to any
limitation in Section 2(e) on the exercise of this Warrant), the number of
shares of Common Stock of the successor or acquiring corporation or of the
Company, if it is the surviving corporation, and any additional consideration
(the “Alternate Consideration”) receivable by holders of Common Stock as a
result of such Fundamental Transaction for each share of Common Stock for which
this Warrant is exercisable immediately prior to such Fundamental Transaction
(without regard to any limitation in Section 2(e) on the exercise of this
Warrant). For purposes of any such exercise, the determination of the Exercise
Price shall be appropriately adjusted to apply to such Alternate Consideration
based on the amount of Alternate Consideration issuable in respect of one share
of Common Stock in such Fundamental Transaction, and the Company shall apportion
the Exercise Price among the Alternate Consideration in a reasonable manner
reflecting the relative value of any different components of the Alternate
Consideration. If holders of Common Stock are given any choice as to the
securities, cash or property to be received in a Fundamental Transaction, then
the Holder shall be given the same choice as to the Alternate Consideration it
receives upon any exercise of this Warrant following such Fundamental
Transaction. The Company shall cause any successor entity in a Fundamental
Transaction in which the Company is not the survivor (the “Successor Entity”) to
assume in writing all of the obligations of the Company under this Warrant in
accordance with the provisions of this Section 3(d) pursuant to written
agreements in form and substance reasonably satisfactory to the Holder and
approved by the Holder (without unreasonable delay) prior to such Fundamental
Transaction and shall, at the option of the Holder, deliver to the Holder in
exchange for this Warrant a security of the Successor Entity evidenced by a
written instrument substantially similar in form and substance to this Warrant
which is exercisable for a corresponding number of shares of capital stock of
such Successor Entity (or its parent entity) equivalent to the shares of Common
Stock acquirable and receivable upon exercise of this Warrant (without regard to
any limitations on the exercise of this Warrant) prior to such Fundamental
Transaction, and with an exercise price which applies the exercise price
hereunder to such shares of capital stock (but taking into account the relative
value of the shares of Common Stock pursuant to such Fundamental Transaction and
the value of such shares of capital stock, such number of shares of capital
stock and such exercise price being for the purpose of protecting the economic
value of this Warrant immediately prior to the consummation of such Fundamental
Transaction), and which is reasonably satisfactory in form and substance to the
Holder. Upon the occurrence of any such Fundamental Transaction, the Successor
Entity shall succeed to, and be substituted for (so that from and after the date
of such Fundamental Transaction, the provisions of this Warrant referring to the
“Company” shall refer instead to the Successor Entity), and may exercise every
right and power of the Company and shall assume all of the obligations of the
Company under this Warrant with the same effect as if such Successor Entity had
been named as the Company herein.

 

e) Calculations. All calculations under this Section 3 shall be made to the
nearest cent or the nearest 1/100th of a share, as the case may be. For purposes
of this Section 3, the number of shares of Common Stock deemed to be issued and
outstanding as of a given date shall be the sum of the number of shares of
Common Stock (excluding treasury shares, if any) issued and outstanding.

 

 10 

 

 

f) Notice to Holder.

 

i. Adjustment to Exercise Price. Whenever the Exercise Price is adjusted
pursuant to any provision of this Section 3, the Company shall promptly mail to
the Holder a notice setting forth the Exercise Price after such adjustment and
any resulting adjustment to the number of Warrant Shares and setting forth a
brief statement of the facts requiring such adjustment.

 

ii. Notice to Allow Exercise by Holder. If (A) the Company shall declare a
dividend (or any other distribution in whatever form) on the Common Stock, (B)
the Company shall declare a special nonrecurring cash dividend on or a
redemption of the Common Stock, (C) the Company shall authorize the granting to
all holders of the Common Stock rights or warrants to subscribe for or purchase
any shares of capital stock of any class or of any rights, (D) the approval of
any stockholders of the Company shall be required in connection with any
reclassification of the Common Stock, any consolidation or merger to which the
Company is a party, any sale or transfer of all or substantially all of the
assets of the Company, or any compulsory share exchange whereby the Common Stock
is converted into other securities, cash or property, or (E) the Company shall
authorize the voluntary or involuntary dissolution, liquidation or winding up of
the affairs of the Company, then, in each case, the Company shall cause to be
mailed a notice to the Holder at its last address as it shall appear upon the
Warrant Register (as defined below) of the Company, at least 20 calendar days
prior to the applicable record or effective date hereinafter specified, stating
(x) the date on which a record is to be taken for the purpose of such dividend,
distribution, redemption, rights or warrants, or if a record is not to be taken,
the date as of which the holders of the Common Stock of record to be entitled to
such dividend, distributions, redemption, rights or warrants are to be
determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of the Common Stock
of record shall be entitled to exchange their shares of the Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer or share exchange; provided that the
failure to provide such notice or any defect therein shall not affect the
validity of the corporate action required to be specified in such notice. To the
extent that any notice provided hereunder constitutes, or contains, material,
non-public information regarding the Company or any of the Subsidiaries, the
Company shall simultaneously file such notice with the Commission pursuant to a
Current Report on Form 8-K. The Holder shall remain entitled to exercise this
Warrant during the period commencing on the date of such notice to the effective
date of the event triggering such notice except as may otherwise be expressly
set forth herein.

 

Section 4. Transfer of Warrant.

 

a) Transferability. Pursuant to FINRA Rule 5110(g)(1), neither this Warrant nor
any Warrant Shares issued upon exercise of this Warrant shall be sold,
transferred, assigned, pledged, or hypothecated, or be the subject of any
hedging, short sale, derivative, put, or call transaction that would result in
the effective economic disposition of the securities by any person for a period
of 180 days immediately following the date of effectiveness or commencement of
sales of the offering pursuant to which this Warrant is being issued, except the
transfer of any security:

 

i. by operation of law or by reason of reorganization of the Company;

 

ii. to any FINRA member firm participating in the offering and the officers or
partners thereof, if all securities so transferred remain subject to the lock-up
restriction in this Section 4(a) for the remainder of the time period;

 

iii. if the aggregate amount of securities of the Company held by the Holder or
related person do not exceed 1% of the securities being offered;

 

iv. that is beneficially owned on a pro-rata basis by all equity owners of an
investment fund, provided that no participating member manages or otherwise
directs investments by the fund, and participating members in the aggregate do
not own more than 10% of the equity in the fund; or

 

v. the exercise or conversion of any security, if all securities received remain
subject to the lock-up restriction in this Section 4(a) for the remainder of the
time period.

 

 11 

 

 

Subject to the foregoing restriction, any applicable securities laws and the
conditions set forth in Section 4(d), this Warrant and all rights hereunder
(including, without limitation, any registration rights) are transferable, in
whole or in part, upon surrender of this Warrant at the principal office of the
Company or its designated agent, together with a written assignment of this
Warrant substantially in the form attached hereto duly executed by the Holder or
its agent or attorney and funds sufficient to pay any transfer taxes payable
upon the making of such transfer. Upon such surrender and, if required, such
payment, the Company shall execute and deliver a new Warrant or Warrants in the
name of the assignee or assignees, as applicable, and in the denomination or
denominations specified in such instrument of assignment, and shall issue to the
assignor a new Warrant evidencing the portion of this Warrant not so assigned,
and this Warrant shall promptly be cancelled. Notwithstanding anything herein to
the contrary, the Holder shall not be required to physically surrender this
Warrant to the Company unless the Holder has assigned this Warrant in full, in
which case, the Holder shall surrender this Warrant to the Company within three
Trading Days of the date the Holder delivers an assignment form to the Company
assigning this Warrant full. The Warrant, if properly assigned in accordance
herewith, may be exercised by a new holder for the purchase of Warrant Shares
without having a new Warrant issued.

 

b) New Warrants. This Warrant may be divided or combined with other Warrants
upon presentation hereof at the aforesaid office of the Company, together with a
written notice specifying the names and denominations in which new Warrants are
to be issued, signed by the Holder or its agent or attorney. Subject to
compliance with Section 4(a), as to any transfer which may be involved in such
division or combination, the Company shall execute and deliver a new Warrant or
Warrants in exchange for the Warrant or Warrants to be divided or combined in
accordance with such notice. All Warrants issued on transfers or exchanges shall
be dated the initial issuance date of this Warrant and shall be identical with
this Warrant except as to the number of Warrant Shares issuable pursuant
thereto.

 

c) Warrant Register. The Company shall register this Warrant, upon records to be
maintained by the Company for that purpose (the “Warrant Register”), in the name
of the record Holder hereof from time to time. The Company may deem and treat
the registered Holder of this Warrant as the absolute owner hereof for the
purpose of any exercise hereof or any distribution to the Holder, and for all
other purposes, absent actual notice to the contrary.

 

d) Representation by the Holder. The Holder, by the acceptance hereof,
represents and warrants that it is acquiring this Warrant and, upon any exercise
hereof, will acquire the Warrant Shares issuable upon such exercise, for its own
account and not with a view to or for distributing or reselling such Warrant
Shares or any part thereof in violation of the Securities Act or any applicable
state securities law, except pursuant to sales registered or exempted under the
Securities Act.

 

Section 5. Miscellaneous.

 

a) No Rights as Stockholder Until Exercise. This Warrant does not entitle the
Holder to any voting rights, dividends or other rights as a stockholder of the
Company prior to the exercise hereof as set forth in Section 2(d)(i).

 

 12 

 

 

b) Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that
upon receipt by the Company of evidence reasonably satisfactory to it of the
loss, theft, destruction or mutilation of this Warrant or any certificate
relating to the Warrant Shares, and in case of loss, theft or destruction, of
indemnity or security reasonably satisfactory to it (which, in the case of the
Warrant, shall not include the posting of any bond), and upon surrender and
cancellation of such Warrant or stock certificate, if mutilated, the Company
will make and deliver a new Warrant or stock certificate of like tenor and dated
as of such cancellation, in lieu of such Warrant or stock certificate.

 

c) Saturdays, Sundays, Holidays, etc. If the last or appointed day for the
taking of any action or the expiration of any right required or granted herein
shall not be a Trading Day, then, such action may be taken or such right may be
exercised on the next succeeding Trading Day.

 

d) Authorized Shares.

 

The Company covenants that, during the period the Warrant is outstanding, it
will reserve from its authorized and unissued Common Stock a sufficient number
of shares to provide for the issuance of the Warrant Shares upon the exercise of
any purchase rights under this Warrant. The Company will take all such
reasonable action as may be necessary to assure that such Warrant Shares may be
issued as provided herein without violation of any applicable law or regulation,
or of any requirements of the Trading Market upon which the Common Stock may be
listed. The Company covenants that all Warrant Shares which may be issued upon
the exercise of the purchase rights represented by this Warrant will, upon
exercise of the purchase rights represented by this Warrant and payment for such
Warrant Shares in accordance herewith, be duly authorized, validly issued, fully
paid and nonassessable and free from all taxes, liens and charges created by the
Company in respect of the issue thereof (other than taxes in respect of any
transfer occurring contemporaneously with such issue).

 

Except and to the extent as waived or consented to by the Holder, the Company
shall not by any action, including, without limitation, amending its certificate
of incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms of this Warrant, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such actions as may be
necessary or appropriate to protect the rights of Holder as set forth in this
Warrant against impairment. Without limiting the generality of the foregoing,
the Company will (i) not increase the par value of any Warrant Shares above the
amount payable therefor upon such exercise immediately prior to such increase in
par value, (ii) take all such action as may be necessary or appropriate in order
that the Company may validly and legally issue fully paid and nonassessable
Warrant Shares upon the exercise of this Warrant, and (iii) shall, so long as
any of the Warrants are outstanding, take all action necessary to reserve and
keep available out of its authorized and unissued shares of Common Stock, solely
for the purpose of effecting the exercise of the Warrants, the number of shares
of Common Stock as shall from time to time be necessary to effect the exercise
of the Warrants then outstanding (without regard to any limitations on
exercise).

 

 13 

 

 

e) Governing Law. This Warrant shall be governed by and construed and enforced
in accordance with, and all questions concerning the construction, validity,
interpretation and performance of this Warrant shall be governed by, the
internal laws of the State of New York, without giving effect to any choice of
law or conflict of law provision or rule (whether of the State of New York or
any other jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of New York.

 

f) Restrictions. The Holder acknowledges that the Warrant Shares acquired upon
the exercise of this Warrant, if not registered, and the Holder does not utilize
cashless exercise, will have restrictions upon resale imposed by state and
federal securities laws.

 

g) Nonwaiver and Expenses. No course of dealing or any delay or failure to
exercise any right hereunder on the part of Holder shall operate as a waiver of
such right or otherwise prejudice the Holder’s rights, powers or remedies.
Without limiting any other provision of this Warrant or the Placement Agency
Agreement, if the Company willfully and knowingly fails to comply with any
provision of this Warrant, which results in any material damages to the Holder,
the Company shall pay to the Holder such amounts as shall be sufficient to cover
any costs and expenses including, but not limited to, reasonable attorneys’
fees, including those of appellate proceedings, incurred by the Holder in
collecting any amounts due pursuant hereto or in otherwise enforcing any of its
rights, powers or remedies hereunder.

 

h) Notices. Any notice, request or other document required or permitted to be
given or delivered to the Holder by the Company shall be delivered in accordance
with the notice provisions of the Placement Agency Agreement.

 

i) Limitation of Liability. No provision hereof, in the absence of any
affirmative action by the Holder to exercise this Warrant to purchase Warrant
Shares, and no enumeration herein of the rights or privileges of the Holder,
shall give rise to any liability of the Holder for the purchase price of any
Common Stock or as a stockholder of the Company, whether such liability is
asserted by the Company or by creditors of the Company.

 

j) Remedies. The Holder, in addition to being entitled to exercise all rights
granted by law, including recovery of damages, will be entitled to specific
performance of its rights under this Warrant. The Company agrees that monetary
damages would not be adequate compensation for any loss incurred by reason of a
breach by it of the provisions of this Warrant and hereby agrees to waive and
not to assert the defense in any action for specific performance that a remedy
at law would be adequate. Notwithstanding the foregoing or anything else herein
to the contrary, if the Company is for any reason unable to issue and deliver
Warrant Shares upon exercise of this Warrant as required pursuant to the terms
hereof, the Company shall have no obligation to “net cash settle” this Warrant.

 

k) Successors and Assigns. Subject to applicable securities laws, this Warrant
and the rights and obligations evidenced hereby shall inure to the benefit of
and be binding upon the successors and permitted assigns of the Company and the
successors and permitted assigns of Holder. The provisions of this Warrant are
intended to be for the benefit of any Holder from time to time of this Warrant
and shall be enforceable by the Holder or holder of Warrant Shares.

 

 14 

 

 

l) Amendment. This Warrant may be modified or amended or the provisions hereof
waived with the written consent of the Company and the Holder.

 

m) Severability. Wherever possible, each provision of this Warrant shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Warrant shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provisions
or the remaining provisions of this Warrant.

 

n) Headings. The headings used in this Warrant are for the convenience of
reference only and shall not, for any purpose, be deemed a part of this Warrant.

 

(Signature Page Follows)

 

 15 

 

 

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its
officer thereunto duly authorized as of the date first above indicated.

 

  MATINAS BIOPHARMA HOLDINGS, INC.         By:     Name: Jerome D. Jabbour  
Title: Chief Executive Officer

 

 16 

 

 

NOTICE OF EXERCISE

 

TO: MATINAS BIOPHARMA HOLDINGS, INC.

 

(1) The undersigned hereby elects to purchase ________ Warrant Shares of the
Company pursuant to the terms of the attached Warrant (only if exercised in
full), and tenders herewith payment of the exercise price in full, together with
all applicable transfer taxes, if any.

 

  (2) Payment shall take the form of (check applicable box):

 

  - in lawful money of the United States; or         - if permitted the
cancellation of such number of Warrant Shares as is necessary, in accordance
with the formula set forth in subsection 2(c), to exercise this Warrant with
respect to the maximum number of Warrant Shares purchasable pursuant to the
cashless exercise procedure set forth in subsection 2(c).

 

(3) Please register and issue said Warrant Shares in the name of the undersigned
or in such other name as is specified below:

 

______________________________

 

The Warrant Shares shall be delivered to the following DWAC Account Number or by
physical delivery of a certificate to:

 

______________________________

 

______________________________

 

______________________________

 

[SIGNATURE OF HOLDER]

 

Name of Investing Entity:
_______________________________________________________

 

Signature of Authorized Signatory of Investing Entity:
_________________________________

 

Name of Authorized Signatory:
___________________________________________________

 

Title of Authorized Signatory:
____________________________________________________

 

Date: ________________________________________________________________________

 

 17 

 

 

ASSIGNMENT FORM

 

(To assign the foregoing warrant, execute this form and supply required
information. Do not use this form to exercise the warrant.)

 

FOR VALUE RECEIVED, [____] all of or [_______] Warrant Shares of the foregoing
Warrant and all rights evidenced thereby are hereby assigned to

 

_______________________________________________ whose address is

 

_______________________________________________________________.

 

_______________________________________________________________

 

Dated: ___________________, _______

 

Holder’s Signature: _____________________________

 

Holder’s Address: ______________________________

 

NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatsoever. Officers of corporations and those acting in a fiduciary or
other representative capacity should file proper evidence of authority to assign
the foregoing Warrant.

 

 18 

 

 

EXHIBIT B

 

Form of Lock-Up Agreement

 

LOCK-UP LETTER AGREEMENT

 

ThinkEquity

A Division of Fordham Financial Management, Inc.

17 State St., 22nd Fl

New York, NY 10004

 

As Placement Agent

 

Ladies and Gentlemen:

 

The undersigned understands that you (the “Placement Agent”) propose to enter
into a Placement Agency Agreement (the “Agreement”) pursuant to which the
Placement Agent will offer, as agent, the shares (the “Stock”) of Series B
Convertible Preferred Stock, par value $0.0001 per share (the “Series B
Preferred Stock”), of Matinas BioPharma Holdings, Inc., a Delaware corporation
(the “Company”), to the public (the “Offering”).

 

In consideration of the execution of the Agreement by the Placement Agent, and
for other good and valuable consideration, the undersigned hereby irrevocably
agrees that, without the prior written consent of the Placement Agent, the
undersigned will not, directly or indirectly, (1) offer for sale, sell, pledge,
or otherwise transfer or dispose of (or enter into any transaction or device
that is designed to, or could be expected to, result in the transfer or
disposition by any person at any time in the future of) any shares of capital
stock of the Company (including, without limitation, shares of common stock, par
value $0.0001 per share, of the Company (“Common Stock”) that may be deemed to
be beneficially owned by the undersigned in accordance with the rules and
regulations of the Securities and Exchange Commission and shares of Common Stock
that may be issued upon exercise of any options or warrants) or securities
convertible into or exercisable or exchangeable for Common Stock, (2) enter into
any swap or other derivatives transaction that transfers to another, in whole or
in part, any of the economic benefits or risks of ownership of shares of capital
stock of the Company, whether any such transaction described in clause (1) or
(2) above is to be settled by delivery of capital stock of the Company or other
securities, in cash or otherwise, (3) except as provided for below, make any
demand for or exercise any right or cause to be filed a registration statement,
including any amendments thereto, with respect to the registration of any shares
of Common Stock or securities convertible into or exercisable or exchangeable
for Common Stock or any other securities of the Company, or (4) publicly
disclose the intention to do any of the foregoing for a period commencing on the
date hereof and ending on the 90th day after the date of the Prospectus relating
to the Offering (such 90-day period, the “Lock-Up Period”).

 

 1 

 

 

The foregoing paragraph shall not apply to (a) transactions relating to shares
of Common Stock or other securities acquired in the open market after the
completion of the Offering, provided that no filing under Section 16(a) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), shall be
required or shall be voluntarily made in connection with such transfers; (b)
bona fide gifts of shares of any class of the Company’s capital stock or any
security convertible into Common Stock, in each case that are made exclusively
between and among the undersigned or members of the undersigned’s family, or
affiliates of the undersigned, including its partners (if a partnership) or
members (if a limited liability company); (c) any transfer of shares of Common
Stock or any security convertible into Common Stock by will or intestate
succession upon the death of the undersigned; (d) transfer of shares of Common
Stock or any security convertible into Common Stock to an immediate family
member (for purposes of this Lock-Up Letter Agreement, “immediate family” shall
mean any relationship by blood, marriage or adoption, not more remote than first
cousin) or any trust, limited partnership, limited liability company or other
entity for the direct or indirect benefit of the undersigned or any immediate
family member of the undersigned; provided that, in the case of clauses (b)- (d)
above, it shall be a condition to any such transfer that (i) the
transferee/donee agrees to be bound by the terms of this Lock-Up Letter
Agreement (including, without limitation, the restrictions set forth in the
preceding sentence) to the same extent as if the transferee/donee were a party
hereto, (ii) each party (donor, donee, transferor or transferee) shall not be
required by law (including without limitation the disclosure requirements of the
Securities Act of 1933, as amended, (the “Securities Act”) and the Exchange Act)
to make, and shall agree to not voluntarily make, any filing or public
announcement of the transfer or disposition prior to the expiration of the
90-day period referred to above, and (iii) the undersigned notifies the
Placement Agent at least two business days prior to the proposed transfer or
disposition; (e) the transfer of shares to the Company to satisfy withholding
obligations for any equity award granted pursuant to the terms of the Company’s
stock option/incentive plans, such as upon exercise, vesting, lapse of
substantial risk of forfeiture, or other similar taxable event, in each case on
a “cashless” or “net exercise” basis (which, for the avoidance of doubt shall
not include “cashless” exercise programs involving a broker or other third
party), provided that as a condition of any transfer pursuant to this clause
(e), that if the undersigned is required to file a report under Section 16(a) of
the Exchange Act, reporting a reduction in beneficial ownership of shares of
Common Stock or any securities convertible into or exercisable or exchangeable
for Common Stock during the Lock-Up Period, the undersigned shall include a
statement in such report, and if applicable an appropriate disposition
transaction code, to the effect that such transfer is being made as a share
delivery or forfeiture in connection with a net value exercise, or as a
forfeiture or sale of shares solely to cover required tax withholding, as the
case may be; (f) transfers of shares of Common Stock or any security convertible
into or exercisable or exchangeable for Common Stock pursuant to a bona fide
third party tender offer made to all holders of the Common Stock, merger,
consolidation or other similar transaction involving a change of control (as
defined below) of the Company, including voting in favor of any such transaction
or taking any other action in connection with such transaction, provided that in
the event that such merger, tender offer or other transaction is not completed,
the Common Stock and any security convertible into or exercisable or
exchangeable for Common Stock shall remain subject to the restrictions set forth
herein; (g) the exercise of warrants or the exercise of stock options granted
pursuant to the Company’s stock option/incentive plans or otherwise outstanding
on the date hereof; provided, that the restrictions shall apply to shares of
Common Stock issued upon such exercise or conversion; (h) the establishment of
any contract, instruction or plan that satisfies all of the requirements of Rule
10b5-1 (a “Rule 10b5-1 Plan”) under the Exchange Act; provided, however, that no
sales of Common Stock or securities convertible into, or exchangeable or
exercisable for, Common Stock, shall be made pursuant to a Rule 10b5-1 Plan
prior to the expiration of the Lock-Up Period; provided further, that the
Company is not required to report the establishment of such Rule 10b5-1 Plan in
any public report or filing with the Commission under the Exchange Act during
the lock-up period and does not otherwise voluntarily effect any such public
filing or report regarding such Rule 10b5-1 Plan; and (i) any demands or
requests for, exercise any right with respect to, or take any action in
preparation of, the registration by the Company under the Act of the
undersigned’s shares of Common Stock, provided that no transfer of the
undersigned’s shares of Common Stock registered pursuant to the exercise of any
such right and no registration statement shall be filed under the Act with
respect to any of the undersigned’s shares of Common Stock during the Lock-Up
Period. For purposes of clause (f) above, “change of control” shall mean the
consummation of any bona fide third party tender offer, merger, purchase,
consolidation or other similar transaction the result of which is that any
“person” (as defined in Section 13(d)(3) of the Exchange Act), or group of
persons, becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 of
the Exchange Act) of a majority of total voting power of the voting stock of the
Company.

 

 2 

 

 

The undersigned also agrees and consents to the entry of stop transfer
instructions with the Company’s transfer agent and registrar against the
transfer of the undersigned’s securities subject to this Lock-Up Letter
Agreement except in compliance with this Lock-Up Letter Agreement.

 

It is understood that, if the Company notifies the Placement Agent that it does
not intend to proceed with the Offering, if the Agreement does not become
effective, or if the Agreement (other than the provisions thereof which survive
termination) shall terminate or be terminated prior to the Offering, the
undersigned will be released from its obligations under this Lock-Up Letter
Agreement.

 

The undersigned understands that the Company and the Placement Agent will
proceed with the Offering in reliance on this Lock-Up Letter Agreement.

 

Whether or not the Offering actually occurs depends on a number of factors,
including market conditions. Any Offering will only be made pursuant to a
Placement Agency Agreement, the terms of which are subject to negotiation
between the Company and the Placement Agent.

 

This Lock-Up Letter Agreement shall automatically terminate upon the earliest to
occur, if any, of (1) the termination of the Agreement before the Offering or
(2) [DATE], in the event that the Agreement has not been executed by that date.

 

[Signature page follows]

 

 3 

 

 

The undersigned hereby represents and warrants that the undersigned has full
power and authority to enter into this Lock-Up Letter Agreement and that, upon
request, the undersigned will execute any additional documents necessary in
connection with the enforcement hereof. Any obligations of the undersigned shall
be binding upon the heirs, personal representative, successors and assigns of
the undersigned.

 

  Very truly yours,         By:     Name:     Title:  

 

Dated: _______________