Exhibit 10.2

 

EXECUTION VERSION

 

PURCHASE AGREEMENT

 

THIS PURCHASE AGREEMENT (the “Agreement”), dated as of July 10, 2019, by and
between LEAP THERAPEUTICS, INC., a Delaware corporation (the “Company”), and
LINCOLN PARK CAPITAL FUND, LLC, an Illinois limited liability company (the
“Investor”).

 

WHEREAS:

 

Subject to the terms and conditions set forth in this Agreement, the Company
wishes to sell to the Investor, and the Investor wishes to buy from the Company,
up to Twenty Million Dollars ($20,000,000) of the Company’s common stock, $0.001
par value per share (the “Common Stock”). The shares of Common Stock to be
purchased hereunder are referred to herein as the “Purchase Shares.”

 

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

 

1.                                      CERTAIN DEFINITIONS.

 

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

 

(a)                                 “Accelerated Purchase Date” means, with
respect to any Accelerated Purchase made pursuant to Section 2(b) hereof, the
Business Day immediately following the applicable Purchase Date with respect to
the corresponding Regular Purchase referred to in Section 2(b) hereof.

 

(b)                                 Omitted.

 

(c)                                  “Accelerated Purchase Minimum Price
Threshold” means, with respect to any Accelerated Purchase made pursuant to
Section 2(b) hereof, any minimum per share price threshold set forth in the
applicable Accelerated Purchase Notice.

 

(d)                                 “Accelerated Purchase Notice” means, with
respect to any Accelerated Purchase made pursuant to Section 2(b) hereof, an
irrevocable written notice from the Company to the Investor directing the
Investor to buy a specified Accelerated Purchase Share Amount on the applicable
Accelerated Purchase Date pursuant to Section 2(b) hereof at the applicable
Accelerated Purchase Price.

 

(e)                                  “Accelerated Purchase Price” means, with
respect to any particular Accelerated Purchase made pursuant to
Section 2(b) hereof, the lower of (i) ninety-five percent (95%) of the VWAP for
the period beginning at 9:30:01 a.m., Eastern time, on the applicable
Accelerated Purchase Date, or such other time publicly announced by Principal
Market as the official open (or commencement) of trading on the Principal Market
on such applicable Accelerated Purchase Date (the “Accelerated Purchase
Commencement Time”), and ending at the earliest of (A) 4:00:00 p.m., Eastern
time, on such applicable Accelerated Purchase Date, or such other time publicly
announced by Principal Market as the official close of trading on the Principal
Market on such applicable Accelerated Purchase Date, (B) such time, from and
after the Accelerated Purchase Commencement Time for such Accelerated Purchase,
that total number (or volume) of shares of Common Stock traded on the Principal
Market has exceeded the applicable Accelerated Purchase Share Volume Maximum,
and (C) such time, from and after the Accelerated Purchase Commencement Time for
such Accelerated Purchase, that the Sale Price has fallen below the applicable
Accelerated Purchase Minimum Price Threshold (such earliest of (i)(A),
(i)(B) and (i)(C) above, the “Accelerated Purchase Termination Time”), and
(ii) the Closing Sale Price of the Common Stock on such applicable Accelerated
Purchase Date (each to be appropriately adjusted for any

 

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reorganization, recapitalization, non-cash dividend, stock split, reverse stock
split or other similar transaction).

 

(f)                                   “Accelerated Purchase Share Amount” means,
with respect to an Accelerated Purchase made pursuant to Section 2(b) hereof,
the number of Purchase Shares directed by the Company to be purchased by the
Investor in an Accelerated Purchase Notice, which number of Purchase Shares
shall not exceed the lesser of (i) 300% of the number of Purchase Shares
directed by the Company to be purchased by the Investor pursuant to the
corresponding Regular Purchase Notice for the corresponding Regular Purchase
referred to in clause (i) of the second sentence of Section 2(b) hereof (subject
to the Purchase Share limitations contained in Section 2(a) hereof) and (ii) an
amount equal to (A) the Accelerated Purchase Share Percentage multiplied by
(B) the total number (or volume) of shares of Common Stock traded on the
Principal Market during the period on the applicable Accelerated Purchase Date
beginning at the Accelerated Purchase Commencement Time for such Accelerated
Purchase and ending at the Accelerated Purchase Termination Time for such
Accelerated Purchase.

 

(g)                                  “Accelerated Purchase Share Percentage”
means, with respect to any Accelerated Purchase made pursuant to
Section 2(b) hereof, thirty percent (30%).

 

(h)                                 “Accelerated Purchase Share Volume Maximum”
means, with respect to an Accelerated Purchase made pursuant to
Section 2(b) hereof, a number of shares of Common Stock equal to (i) the
applicable Accelerated Purchase Share Amount to be purchased by the Investor
pursuant to the applicable Accelerated Purchase Notice for such Accelerated
Purchase, divided by (ii) the Accelerated Purchase Share Percentage (to be
appropriately adjusted for any reorganization, recapitalization, non-cash
dividend, stock split, reverse stock split or other similar transaction).

 

(i)                                     “Additional Accelerated Purchase Date”
means, with respect to an Additional Accelerated Purchase made pursuant to
Section 2(c) hereof, the Business Day (i) that is the Accelerated Purchase Date
with respect to the corresponding Accelerated Purchase referred to in
Section 2(b) hereof and (ii) on which the Investor receives, prior to 1:00 p.m.,
Eastern time, on such Business Day, a valid Additional Accelerated Purchase
Notice for such Additional Accelerated Purchase in accordance with this
Agreement.

 

(j)                                    Omitted.

 

(k)                                 “Additional Accelerated Purchase Minimum
Price Threshold” means, with respect to an Additional Accelerated Purchase made
pursuant to Section 2(c) hereof, any minimum per share price threshold set forth
in the applicable Additional Accelerated Purchase Notice.

 

(l)                                     “Additional Accelerated Purchase Notice”
means, with respect to an Additional Accelerated Purchase made pursuant to
Section 2(c) hereof, an irrevocable written notice from the Company to the
Investor directing the Investor to purchase the applicable Additional
Accelerated Purchase Share Amount at the Additional Accelerated Purchase Price
for such Additional Accelerated Purchase in accordance with this Agreement.

 

(m)                             “Additional Accelerated Purchase Price” means,
with respect to an Additional Accelerated Purchase made pursuant to
Section 2(c) hereof, the lower of (i) ninety-five percent (95%) of the VWAP for
the period on the applicable Additional Accelerated Purchase Date, beginning at
the latest of (A) the applicable Accelerated Purchase Termination Time with
respect to the corresponding Accelerated Purchase referred to in
Section 2(b) hereof on such Additional Accelerated Purchase Date, (B) the
applicable Additional Accelerated Purchase Termination Time with respect to the
most recently completed prior Additional Accelerated Purchase on such Additional
Accelerated Purchase Date, as

 

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applicable, and (C) the time at which all Purchase Shares subject to all prior
Accelerated Purchases and Additional Accelerated Purchases (as applicable),
including, without limitation, those that have been effected on the same
Business Day as the applicable Additional Accelerated Purchase Date with respect
to which the applicable Additional Accelerated Purchase relates, have
theretofore been received by the Investor as DWAC Shares in accordance with this
Agreement (such latest of (i)(A), (i)(B) and (i)(C) above, the “Additional
Accelerated Purchase Commencement Time”), and ending at the earliest of (X) 4:00
p.m., Eastern time, on such Additional Accelerated Purchase Date, or such other
time publicly announced by Principal Market as the official close of trading on
the Principal Market on such Additional Accelerated Purchase Date, (Y) such
time, from and after the Additional Accelerated Purchase Commencement Time for
such Additional Accelerated Purchase, that total number (or volume) of shares of
Common Stock traded on the Principal Market has exceeded the applicable
Additional Accelerated Purchase Share Volume Maximum, and (Z) such time, from
and after the Additional Accelerated Purchase Commencement Time for such
Additional Accelerated Purchase, that the Sale Price has fallen below the
applicable Additional Accelerated Purchase Minimum Price Threshold (if any)
(such earliest of (i)(X), (i)(Y) and (i)(Z) above, the “Additional Accelerated
Purchase Termination Time”), and (ii) the Closing Sale Price of the Common Stock
on such Additional Accelerated Purchase Date (each to be appropriately adjusted
for any reorganization, recapitalization, non-cash dividend, stock split,
reverse stock split or other similar transaction).

 

(n)                                 “Additional Accelerated Purchase Share
Amount” means, with respect to an Additional Accelerated Purchase made pursuant
to Section 2(c) hereof, the number of Purchase Shares directed by the Company to
be purchased by the Investor on an Additional Accelerated Purchase Notice, which
number of Purchase Shares shall not exceed the lesser of (i) 300% of the number
of Purchase Shares directed by the Company to be purchased by the Investor
pursuant to the corresponding Regular Purchase Notice for the corresponding
Regular Purchase referred to in clause (i) of the second sentence of
Section 2(c) hereof (subject to the Purchase Share limitations contained in
Section 2(a) hereof) and (ii) an amount equal to (A) the Additional Accelerated
Purchase Share Percentage multiplied by (B) the total number (or volume) of
shares of Common Stock traded on the Principal Market during the period on the
applicable Additional Accelerated Purchase Date beginning at the Additional
Accelerated Purchase Commencement Time for such Additional Accelerated Purchase
and ending at the Additional Accelerated Purchase Termination Time for such
Additional Accelerated Purchase.

 

(o)                                 “Additional Accelerated Purchase Share
Percentage” means, with respect to an Additional Accelerated Purchase made
pursuant to Section 2(c) hereof, thirty percent (30%).

 

(p)                                 “Additional Accelerated Purchase Share
Volume Maximum” means, with respect to an Additional Accelerated Purchase made
pursuant to Section 2(c) hereof, a number of shares of Common Stock equal to
(i) the applicable Additional Accelerated Purchase Share Amount to be purchased
by the Investor pursuant to the applicable Additional Accelerated Purchase
Notice for such Additional Accelerated Purchase, divided by (ii) the Additional
Accelerated Purchase Share Percentage (to be appropriately adjusted for any
reorganization, recapitalization, non-cash dividend, stock split, reverse stock
split or other similar transaction).

 

(q)                                 “Alternate Adjusted Regular Purchase Share
Limit” means, with respect to a Regular Purchase made pursuant to
Section 2(a) hereof, the maximum number of Purchase Shares which, taking into
account the applicable per share Purchase Price therefor calculated in
accordance with this Agreement, would enable the Company to deliver to the
Investor, on the applicable Purchase Date for such Regular Purchase, a Regular
Purchase Notice for a Purchase Amount equal to, or as closely approximating
without exceeding, One Hundred Fifty Thousand Dollars ($150,000).

 

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(r)                                    “Available Amount” means, initially,
Twenty Million Dollars ($20,000,000) in the aggregate, which amount shall be
reduced by the Purchase Amount each time the Investor purchases shares of Common
Stock pursuant to Section 2 hereof.

 

(s)                                   “Average Price” means a price per Purchase
Share (rounded to the nearest tenth of a cent) equal to the quotient obtained by
dividing (i) the aggregate gross purchase price paid by the Investor for all
Purchase Shares purchased pursuant to this Agreement, by (ii) the aggregate
number of Purchase Shares issued pursuant to this Agreement.

 

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

 

(a)                                 “Base Price” means a price per Purchase
Share equal to the sum of (i) the Signing Market Price and (ii) $0.1464 (subject
to adjustment for any reorganization, recapitalization, non-cash dividend, stock
split, reverse stock split or other similar transaction that occurs on or after
the date of this Agreement).

 

(u)                                 “Business Day” means any day on which the
Principal Market is open for trading, including any day on which the Principal
Market is open for trading for a period of time less than the customary time.

 

(v)                                 “Closing Sale Price” means, for any security
as of any date, the last closing sale price for such security on the Principal
Market as reported by the Principal Market.

 

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

 

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

 

(y)                                 “DTC” means The Depository Trust Company, or
any successor performing substantially the same function for the Company.

 

(z)                                  “DWAC Shares” means shares of Common Stock
that are (i) issued in electronic form, (ii) freely tradable and transferable
and without restriction on resale and (iii) timely credited by the Company to
the Investor’s or its designee’s specified Deposit/Withdrawal at Custodian
(DWAC) account

 

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with DTC under its Fast Automated Securities Transfer (FAST) Program, or any
similar program hereafter adopted by DTC performing substantially the same
function.

 

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

 

(bb)                          Omitted.

 

(cc)                            “Fully Adjusted Regular Purchase Share Limit”
means, with respect to any reorganization, recapitalization, non-cash dividend,
stock split or other similar transaction from and after the date of this
Agreement, the Regular Purchase Share Limit (as defined in Section 2(a) hereof)
in effect on the applicable date of determination, after giving effect to the
full proportionate adjustment thereto made pursuant to Section 2(a) hereof for
or in respect of such reorganization, recapitalization, non-cash dividend, stock
split or other similar transaction.

 

(dd)                          “Material Adverse Effect” means any material
adverse effect on (i) the enforceability of any Transaction Document, (ii) the
results of operations, assets, business or financial condition of the Company
and its Subsidiaries, taken as a whole, other than any material adverse effect
that resulted primarily from (A) any change in the United States or foreign
economies or securities or financial markets in general that does not have a
disproportionate effect on the Company and its Subsidiaries, taken as a whole,
(B) any change that generally affects the industry in which the Company and its
Subsidiaries operate that does not have a disproportionate effect on the Company
and its Subsidiaries, taken as a whole, (C) any change arising in connection
with earthquakes, hostilities, acts of war, sabotage or terrorism or military
actions or any escalation or material worsening of any such hostilities, acts of
war, sabotage or terrorism or military actions existing as of the date hereof,
(D) any action taken by the Investor, its affiliates or its or their successors
and assigns with respect to the transactions contemplated by this Agreement,
(E) the effect of any change in applicable laws or accounting rules that does
not have a disproportionate effect on the Company and its Subsidiaries, taken as
a whole, or (F) any change resulting from compliance with terms of this
Agreement or the consummation of the transactions contemplated by this
Agreement, or (iii) the Company’s ability to perform in any material respect on
a timely basis its obligations under any Transaction Document to be performed as
of the date of determination.

 

(ee)                            “Maturity Date” means the first day of the month
immediately following the twenty-four (24) month anniversary of the Commencement
Date (as defined in Section 2(a) below).

 

(ff)                              “PEA Period” means the period commencing at
9:30 a.m., Eastern time, on the twentieth (20th) Business Day immediately prior
to the filing of any post-effective amendment to the Registration Statement (as
defined in Section 5(a) hereof) or New Registration Statement (as such term is
defined in the Registration Rights Agreement), and ending at 9:30 a.m., Eastern
time, on the Business Day immediately following, the effective date of any
post-effective amendment to the Registration Statement (as defined herein) or
New Registration Statement (as such term is defined in the Registration Rights
Agreement).

 

(gg)                            “Person” means an individual or entity including
but not limited to any limited liability company, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization and a government
or any department or agency thereof.

 

(hh)                          “Principal Market” means The Nasdaq Global Market
(or any nationally recognized successor thereto); provided, however, that in the
event the Company’s Common Stock is ever listed or traded on The Nasdaq Capital
Market, The Nasdaq Global Select Market, the New York Stock Exchange,

 

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the NYSE American, the NYSE Arca, the OTC Bulletin Board, the OTCQX operated by
the OTC Markets Group, Inc. or the OTCQB operated by the OTC Markets Group, Inc.
(or any nationally recognized successor to any of the foregoing), then the
“Principal Market” shall mean such other market or exchange on which the
Company’s Common Stock is then listed or traded.

 

(ii)                                  “Purchase Amount” means, with respect to
any Regular Purchase, any Accelerated Purchase or any Additional Accelerated
Purchase made hereunder, the portion of the Available Amount to be purchased by
the Investor pursuant to Section 2 hereof.

 

(jj)                                “Purchase Date” means, with respect to any
Regular Purchase made pursuant to Section 2(a) hereof, the Business Day on which
the Investor receives by 6:00 p.m., Eastern time, of such Business Day a valid
Regular Purchase Notice that the Investor is to buy Purchase Shares pursuant to
Section 2(a) hereof.

 

(kk)                          “Purchase Price” means, with respect to any
Regular Purchase made pursuant to Section 2(a) hereof, the lower of: (i) the
lowest Sale Price on the applicable Purchase Date and (ii) the arithmetic
average of the three (3) lowest Closing Sale Prices for the Common Stock during
the ten (10) consecutive Business Days ending on the Business Day immediately
preceding such Purchase Date (in each case, to be appropriately adjusted for any
reorganization, recapitalization, non-cash dividend, stock split or other
similar transaction that occurs on or after the date of this Agreement).

 

(ll)                                  “Registration Rights Agreement” means that
certain Registration Rights Agreement, of even date herewith between the Company
and the Investor, as amended and in effect from time to time.

 

(mm)                  “Regular Purchase Notice” means, with respect to any
Regular Purchase pursuant to Section 2(a) hereof, an irrevocable written notice
from the Company to the Investor directing the Investor to buy such applicable
amount of Purchase Shares at the applicable Purchase Price as specified by the
Company therein on the applicable Purchase Date for such Regular Purchase.

 

(nn)                          “Sale Price” means any trade price for the shares
of Common Stock on the Principal Market as reported by the Principal Market.

 

(oo)                          “SEC” means the U.S. Securities and Exchange
Commission.

 

(pp)                          “Securities” means, collectively, the Purchase
Shares and the Commitment Shares (as defined in Section 5(e) below).

 

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

 

(rr)                                “Signing Market Price” means $1.8987,
representing the lower of (i) the closing price of the Common Stock on the
Nasdaq Global Market immediately preceding the date of this Agreement or
(ii) the average of the closing price of the Common Stock on the Nasdaq Global
Market for the five Business Days immediately preceding the signing of this
Agreement.

 

(ss)                              “Subsidiary” means any Person the Company
wholly-owns or controls, or in which the Company, directly or indirectly, owns a
majority of the voting stock or similar voting interest, in each case that would
be disclosable pursuant to Item 601(b)(21) of Regulation S-K promulgated under
the Securities Act.

 

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(tt)                                “Transaction Documents” means, collectively,
this Agreement and the schedules and exhibits hereto, the Registration Rights
Agreement and the schedules and exhibits thereto, and each of the other
agreements, documents, certificates and instruments entered into or furnished by
the parties hereto in connection with the transactions contemplated hereby and
thereby.

 

(uu)                          “Transfer Agent” means Continental Stock
Transfer & Trust Company, or such other Person who is then serving as the
transfer agent for the Company in respect of the Common Stock.

 

(vv)                          “VWAP” means in respect of an applicable
Accelerated Purchase Date and an Additional Accelerated Purchase Date, as
applicable, the volume weighted average price of the Common Stock on the
Principal Market, as reported on the Principal Market or by another reputable
source such as Bloomberg, L.P.

 

2.                                      PURCHASE OF COMMON STOCK.

 

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

 

(a)                                 Commencement of Regular Sales of Common
Stock. Upon the satisfaction of the conditions set forth in Sections 7 and 8
hereof (the “Commencement” and the date of satisfaction of such conditions the
“Commencement Date”) and thereafter, the Company shall have the right, but not
the obligation, to direct the Investor, by its delivery to the Investor of a
Regular Purchase Notice from time to time, to purchase up to Fifty Thousand
(50,000) Purchase Shares, subject to adjustment as set forth below in this
Section 2(a) (such maximum number of Purchase Shares, as may be adjusted from
time to time, (the “Regular Purchase Share Limit”), at the Purchase Price on the
Purchase Date (each such purchase, a “Regular Purchase”); provided, however,
that (i) the Regular Purchase Share Limit may be increased by the Company in the
applicable Regular Purchase Notice to up to One Hundred Thousand (100,000)
Purchase Shares, provided that the Closing Sale Price of the Common Stock is not
below $1.00 on the applicable Purchase Date, (ii) the Regular Purchase Share
Limit may be increased by the Company in the applicable Regular Purchase Notice
to up to One Hundred Fifty Thousand (150,000) Purchase Shares, provided that the
Closing Sale Price of the Common Stock is not below $2.00 on the applicable
Purchase Date, (iii) the Regular Purchase Share Limit may be increased by the
Company in the applicable Regular Purchase Notice to up to Two Hundred Thousand
(200,000) Purchase Shares, provided that the Closing Sale Price of the Common
Stock is not below $3.00 on the applicable Purchase Date, and (iv) the Regular
Purchase Share Limit may be increased by the Company in the applicable Regular
Purchase Notice to up to Two Hundred Fifty Thousand (250,000) Purchase Shares,
provided that the Closing Sale Price of the Common Stock is not below $4.00 on
the applicable Purchase Date (all of which share and dollar amounts shall be
appropriately adjusted for any reorganization, recapitalization, non-cash
dividend, stock split or other similar transaction); provided that if, after
giving effect to the full proportionate adjustment to the Regular Purchase Share
Limit therefor, the Fully Adjusted Regular Purchase Share Limit then in effect
would preclude the Company from delivering to the Investor a Regular Purchase
Notice hereunder for a Purchase Amount (calculated by multiplying (X) the number
of Purchase Shares equal to the Fully Adjusted Regular Purchase Share Limit, by
(Y) the Purchase Price per Purchase Share covered by such Regular Purchase
Notice on the applicable Purchase Date therefor) equal to or greater than One
Hundred Fifty Thousand Dollars ($150,000), the Regular Purchase Share Limit for
such Regular Purchase Notice shall not be fully adjusted to equal the applicable
Fully Adjusted Regular Purchase Share Limit, but rather the Regular Purchase
Share Limit for such Regular Purchase Notice shall be adjusted to equal the
applicable Alternate Adjusted Regular Purchase Share Limit as of the applicable
Purchase Date for such Regular Purchase Notice); provided, further, however,
that the Investor’s committed obligation under any single Regular Purchase shall
not exceed One Million Five Hundred Thousand Dollars ($1,500,000). If

 

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the Company delivers any Regular Purchase Notice for a Purchase Amount in excess
of the limitations contained in the immediately preceding sentence, such Regular
Purchase Notice shall be void ab initio to the extent of the amount by which the
amount of Purchase Shares set forth in such Regular Purchase Notice exceeds the
amount of Purchase Shares which the Company is permitted to include in such
Purchase Notice in accordance herewith, and the Investor shall have no
obligation to purchase such excess Purchase Shares in respect of such Regular
Purchase Notice; provided that the Investor shall remain obligated to purchase
the amount of Purchase Shares which the Company is permitted to include in such
Regular Purchase Notice. The Company may deliver Regular Purchase Notices to the
Investor as often as every Business Day, so long as the Company has not failed
to deliver Purchase Shares for all prior Regular Purchases, Accelerated
Purchases and Additional Accelerated Purchases, including, without limitation,
those that have been effected on the same Business Day as the applicable
Purchase Date, and all such Purchase Shares have theretofore been received by
the Investor as DWAC Shares in accordance with this Agreement. Notwithstanding
the foregoing, the Company shall not deliver any Regular Purchase Notices during
the PEA Period.

 

(b)                                 Accelerated Purchases. Subject to the terms
and conditions of this Agreement, beginning one (1) Business Day following the
Commencement Date and thereafter, in addition to purchases of Purchase Shares as
described in Section 2(a) above, the Company shall also have the right, but not
the obligation, to direct the Investor by the Company’s delivery to the Investor
of an Accelerated Purchase Notice from time to time, and the Investor thereupon
shall have the obligation, to buy Purchase Shares at the Accelerated Purchase
Price on the Accelerated Purchase Date in an amount up to the Accelerated
Purchase Share Amount in accordance with this Agreement (each such purchase, an
“Accelerated Purchase”). The Company may deliver an Accelerated Purchase Notice
to the Investor only on a Purchase Date on which (i) the Company also properly
submitted a Regular Purchase Notice providing for a Regular Purchase of a number
of Purchase Shares not less than the Regular Purchase Share Limit then in effect
on such Purchase Date in accordance with this Agreement (including, without
limitation, giving effect to any automatic increase to the Regular Purchase
Share Limit as a result of the Closing Sale Price of the Common Stock exceeding
certain thresholds set forth in Section 2(a) above on such Purchase Date and any
other adjustments to the Regular Purchase Share Limit, in each case pursuant to
Section 2(a) above) and (ii) if all Purchase Shares subject to all prior Regular
Purchases, Accelerated Purchases and Additional Accelerated Purchases,
including, without limitation, those that have been effected on the same
Business Day as the applicable Accelerated Purchase Date with respect to which
the applicable Accelerated Purchase relates, have theretofore been received by
the Investor as DWAC Shares in accordance with this Agreement. If the Company
delivers any Accelerated Purchase Notice directing the Investor to purchase an
amount of Purchase Shares that exceeds the Accelerated Purchase Share Amount
that the Company is then permitted to include in such Accelerated Purchase
Notice, such Accelerated Purchase Notice shall be void ab initio to the extent
of the amount by which the number of Purchase Shares set forth in such
Accelerated Purchase Notice exceeds the Accelerated Purchase Share Amount which
the Company is permitted to include in such Accelerated Purchase Notice in
accordance herewith (which shall be confirmed in an Accelerated Purchase
Confirmation (defined below)), and the Investor shall have no obligation to
purchase such excess Purchase Shares in respect of such Accelerated Purchase
Notice; provided that the Investor shall remain obligated to purchase the
Accelerated Purchase Share Amount which the Company is permitted to include in
such Accelerated Purchase Notice. Within one (1) Business Day after completion
of each Accelerated Purchase Date, the Accelerated Purchase Share Amount and the
applicable Accelerated Purchase Price shall be set forth on a confirmation of
the Accelerated Purchase to be provided to the Company by the Investor (an
“Accelerated Purchase Confirmation”). Notwithstanding the foregoing, the Company
shall not deliver any Accelerated Purchase Notices during the PEA Period.

 

(c)                                  Additional Accelerated Purchases.  Subject
to the terms and conditions of this Agreement, beginning one (1) Business Day
following the Commencement Date and thereafter, in

 

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addition to purchases of Purchase Shares as described in Section 2(a) and
Section 2(b) above, the Company shall also have the right, but not the
obligation, to direct the Investor, by its timely delivery to the Investor of an
Additional Accelerated Purchase Notice on an Additional Accelerated Purchase
Date in accordance with this Agreement, to purchase the applicable Additional
Accelerated Purchase Share Amount at the applicable Additional Accelerated
Purchase Price therefor in accordance with this Agreement (each such purchase,
an “Additional Accelerated Purchase”). The Company may deliver multiple
Additional Accelerated Purchase Notices to the Investor on an Additional
Accelerated Purchase Date; provided, however, that the Company may deliver an
Additional Accelerated Purchase Notice to the Investor only (i) on a Business
Day that is also the Accelerated Purchase Date for an Accelerated Purchase with
respect to which the Company properly submitted to the Investor an Accelerated
Purchase Notice in accordance with this Agreement on the applicable Purchase
Date for a Regular Purchase of a number of Purchase Shares not less than the
Regular Purchase Share Limit then in effect in accordance with this Agreement
(including, without limitation, giving effect to any automatic increase to the
Regular Purchase Share Limit as a result of the Closing Sale Price of the Common
Stock exceeding certain thresholds set forth in Section 2(a) above on such
Purchase Date and any other adjustments to the Regular Purchase Share Limit, in
each case pursuant to Section 2(a) above), and (ii) if all Purchase Shares
subject to all prior Regular Purchases, Accelerated Purchases and Additional
Accelerated Purchases, including, without limitation, those that have been
effected on the same Business Day as the applicable Additional Accelerated
Purchase Date with respect to which the applicable Additional Accelerated
Purchase relates, have theretofore been received by the Investor as DWAC Shares
in accordance with this Agreement. If the Company delivers any Additional
Accelerated Purchase Notice directing the Investor to purchase an amount of
Purchase Shares that exceeds the Additional Accelerated Purchase Share Amount
that the Company is then permitted to include in such Additional Accelerated
Purchase Notice in accordance with the terms of this Agreement, such Additional
Accelerated Purchase Notice shall be void ab initio to the extent of the amount
by which the number of Purchase Shares set forth in such Additional Accelerated
Purchase Notice exceeds the Additional Accelerated Purchase Share Amount that
the Company is then permitted to include in such Additional Accelerated Purchase
Notice in accordance with the terms of this Agreement (which shall be confirmed
in an Additional Accelerated Purchase Confirmation (defined below)), and the
Investor shall have no obligation to purchase such excess Purchase Shares in
respect of such Additional Accelerated Purchase Notice; provided, however, that
the Investor shall remain obligated to purchase the Additional Accelerated
Purchase Share Amount which the Company is permitted to include in such
Additional Accelerated Purchase Notice. Within one (1) Business Day after
completion of each Additional Accelerated Purchase Date, the Investor will
provide to the Company a written confirmation of each Additional Accelerated
Purchase on such Additional Accelerated Purchase Date setting forth the
applicable Additional Accelerated Purchase Share Amount and Additional
Accelerated Purchase Price for each such Additional Accelerated Purchase on such
Additional Accelerated Purchase Date (each, an “Additional Accelerated Purchase
Confirmation”). Notwithstanding the foregoing, the Company shall not deliver any
Additional Accelerated Purchase Notices during the PEA Period.

 

(d)                                 Payment for Purchase Shares. For each
Regular Purchase, the Investor shall pay to the Company an amount equal to the
Purchase Amount with respect to such Regular Purchase as full payment for such
Purchase Shares via wire transfer of immediately available funds on the same
Business Day that the Investor receives such Purchase Shares as DWAC Shares, if
such Purchase Shares are received by the Investor as DWAC Shares before 1:00
p.m., Eastern time, or, if such Purchase Shares are received by the Investor as
DWAC Shares after 1:00 p.m., Eastern time, the next Business Day. For each
Accelerated Purchase and each Additional Accelerated Purchase, the Investor
shall pay to the Company an amount equal to the Purchase Amount with respect to
such Accelerated Purchase and Additional Accelerated Purchase, respectively, as
full payment for such Purchase Shares via wire transfer of immediately available
funds on the same Business Day that the Investor receives such Purchase Shares
as DWAC Shares, if such Purchase Shares are received by the Investor as DWAC
Shares before 1:00 p.m., Eastern time, or, if such Purchase Shares are received
by the Investor as DWAC Shares after 1:00 p.m., Eastern

 

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time, the next Business Day. If the Company or the Transfer Agent shall fail for
any reason or for no reason to electronically transfer any Purchase Shares as
DWAC Shares in respect of a Regular Purchase, an Accelerated Purchase or an
Additional Accelerated Purchase (as applicable) within two (2) Business Days
following the receipt by the Company of the Purchase Price, Accelerated Purchase
Price and Additional Accelerated Purchase Price, respectively, therefor in
compliance with this Section 2(d), and if on or after such Business Day the
Investor purchases (in an open market transaction or otherwise) shares of Common
Stock to deliver in satisfaction of a sale by the Investor of such Purchase
Shares that the Investor anticipated receiving from the Company in respect of
such Regular Purchase, Accelerated Purchase or Additional Accelerated Purchase
(as applicable), then the Company shall, within two (2) Business Days after the
Investor’s request, either (i) pay cash to the Investor in an amount equal to
the Investor’s total purchase price (including brokerage commissions, if any)
for the shares of Common Stock so purchased (the “Cover Price”), at which point
the Company’s obligation to deliver such Purchase Shares as DWAC Shares shall
terminate, or (ii) promptly honor its obligation to deliver to the Investor such
Purchase Shares as DWAC Shares and pay cash to the Investor in an amount equal
to the excess (if any) of the Cover Price over the total Purchase Amount paid by
the Investor pursuant to this Agreement for all of the Purchase Shares to be
purchased by the Investor in connection with such Regular Purchase, Accelerated
Purchase and Additional Accelerated Purchase (as applicable). The Company shall
not issue any fraction of a share of Common Stock upon any Regular Purchase,
Accelerated Purchase or Additional Accelerated Purchase. If the issuance would
result in the issuance of a fraction of a share of Common Stock, the Company
shall round such fraction of a share of Common Stock up or down to the nearest
whole share. All payments made under this Agreement shall be made in lawful
money of the United States of America or wire transfer of immediately available
funds to such account as the Company may from time to time designate by written
notice in accordance with the provisions of this Agreement. Whenever any amount
expressed to be due by the terms of this Agreement is due on any day that is not
a Business Day, the same shall instead be due on the next succeeding day that is
a Business Day.

 

(e)                                  Beneficial Ownership Limitation.
Notwithstanding anything to the contrary contained in this Agreement, the
Company shall not issue or sell, and the Investor shall not purchase or acquire,
any shares of Common Stock under this Agreement which, when aggregated with all
other shares of Common Stock then beneficially owned by the Investor and its
affiliates (as calculated pursuant to Section 13(d) of the Exchange Act and
Rule 13d-3 promulgated thereunder), would result in the beneficial ownership by
the Investor and its affiliates of more than 9.99% of the then issued and
outstanding shares of Common Stock (the “Beneficial Ownership Limitation”). Upon
the written or oral request of the Investor, the Company shall promptly (but not
later than 24 hours) confirm orally or in writing to the Investor the number of
shares of Common Stock then outstanding, and the Investor shall confirm in
writing to the Company whether any proposed Regular Purchase, Accelerated
Purchase or Additional Accelerated Purchase will result Investor exceeding the
Beneficial Ownership Limitation. The Investor and the Company shall each
cooperate in good faith in the determinations required hereby and the
application hereof. The Investor’s written certification to the Company of the
applicability of the Beneficial Ownership Limitation, and the resulting effect
thereof hereunder at any time, in each case in accordance with the terms of this
Section 2(e), shall be conclusive with respect to the applicability thereof and
such result absent manifest error.

 

(f)                                   Compliance with Principal Market Rules.

 

(i)                                     Exchange Cap.  Subject to
Section 2(f)(ii) below, the Company shall not issue or sell any shares of Common
Stock pursuant to this Agreement, and the Investor shall not purchase or acquire
any shares of Common Stock pursuant to this Agreement, to the extent that after
giving effect thereto, the aggregate number of shares of Common Stock that would
be issued pursuant to this Agreement and the transactions contemplated hereby
would be equal to or greater than 4,609,169 shares of Common Stock, representing
19.99% of the shares of Common Stock outstanding on the date of this

 

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Agreement  (which number of shares shall be reduced, on a share-for-share basis,
by the number of shares of Common Stock issued or issuable pursuant to any
transaction or series of transactions that may be aggregated with the
transactions contemplated by this Agreement under applicable rules of the Nasdaq
Global Market or any other Principal Market on which the Common Stock may be
listed or quoted) (the “Exchange Cap”), unless and until the Company elects to
solicit stockholder approval of the issuance of Common Stock as contemplated by
this Agreement and the stockholders of the Company have in fact approved such
issuance in accordance with the applicable rules and regulations of the Nasdaq
Global Market, any other Principal Market on which the Common Stock may be
listed or quoted, and the Company’s Certificate of Incorporation, as amended
(the “Certificate of Incorporation”), and the Company’s Bylaws, as amended (the
“Bylaws”). For the avoidance of doubt, the Company may, but shall be under no
obligation to, request its stockholders to approve the issuance of Common Stock
as contemplated by this Agreement; provided, that if stockholder approval is not
obtained in accordance with this Section 2(f)(i), the Exchange Cap shall be
applicable for all purposes of this Agreement and the transactions contemplated
hereby at all times during the term of this Agreement (except as set forth in
Section 2(f)(ii) below).

 

(ii)                                  At-Market Transaction.  Notwithstanding
Section 2(f)(i) above and subject to the prior approval of the Nasdaq Global
Market or any other Principal Market on which the Common Stock may be listed or
quoted (to the extent required), the Exchange Cap shall not be applicable for
any purposes of this Agreement and the transactions contemplated hereby, solely
to the extent that (and only for so long as) the Average Price shall equal or
exceed the Base Price and in accordance with any other applicable rules of the
Nasdaq Global Market or any other Principal Market on which the Common Stock may
be listed or quoted (it being hereby acknowledged and agreed that the Exchange
Cap shall be applicable for all purposes of this Agreement and the transactions
contemplated hereby at all other times during the term of this Agreement, unless
the stockholder approval referred to in Section 2(f)(i) is obtained).

 

(iii)                               General.  The Company shall not issue any
Securities pursuant to this Agreement if such issuance would reasonably be
expected to result in (A) a violation of the Securities Act or (B) a breach of
the rules and regulations of the Principal Market. Furthermore, the Company
agrees that it shall not issue any Securities pursuant to this Agreement if, at
the time of such issuance (Y) the effectiveness of the Registration Statement
registering the resale of the Securities has lapsed for any reason (including,
without limitation, the issuance of a stop order or similar order) or (Z) the
Registration Statement is unavailable for the resale by the Investor of any or
all of the Securities to be issued to the Investor under the Transaction
Documents. The provisions of this Section 2(f) shall be implemented in a manner
otherwise than in strict conformity with the terms hereof only if necessary to
ensure compliance with the Securities Act and the rules and regulations of the
Principal Market.

 

3.                                      INVESTOR’S REPRESENTATIONS AND
WARRANTIES.

 

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

 

(a)                                 Organization, Authority.  Investor is an
entity duly organized, validly existing and in good standing under the laws of
the jurisdiction of its organization, with the requisite power and authority to
enter into and to consummate the transactions contemplated by this Agreement and
the other Transaction Documents to which it is a party and otherwise to carry
out its obligations hereunder and thereunder.

 

(b)                                 Investment Purpose. The Investor is
acquiring the Securities as principal for its own account, for investment only
and not with a view to or for distributing or reselling such Securities or any

 

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part thereof in violation of the Securities Act or any applicable state
securities law, has no present intention of distributing any of such Securities
in violation of the Securities Act or any applicable state securities law and
has no direct or indirect arrangement or understandings with any other Persons
to distribute or regarding the distribution of such Securities in violation of
the Securities Act or any applicable state securities law (this representation
and warranty not limiting the Investor’s right to sell the Securities at any
time pursuant to the Registration Statement described herein or otherwise in
compliance with applicable federal and state securities laws). The Investor is
acquiring the Securities hereunder in the ordinary course of its business.

 

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

 

(d)                                 Reliance on Exemptions. The Investor
understands that the Securities may be offered and sold to it in reliance on
specific exemptions from the registration requirements of United States federal
and state securities laws and that the Company is relying in part upon the truth
and accuracy of, and the Investor’s compliance with, the representations,
warranties, agreements, acknowledgments and understandings of the Investor set
forth herein in order to determine the availability of such exemptions and the
eligibility of the Investor to acquire the Securities.

 

(e)                                  Information. The Investor understands that
its investment in the Securities involves a high degree of risk. The Investor
(i) is able to bear the economic risk of an investment in the Securities
including a total loss thereof, (ii) has such knowledge and experience in
financial and business matters that it is capable of evaluating the merits and
risks of the proposed investment in the Securities and (iii) has had an
opportunity to ask questions of and receive answers from the officers of the
Company concerning the financial condition and business of the Company and
others matters related to an investment in the Securities. Neither such
inquiries nor any other due diligence investigations conducted by the Investor
or its representatives shall modify, amend or affect the Investor’s right to
rely on the Company’s representations and warranties contained in Section 4
below. The Investor has sought such accounting, legal and tax advice as it has
considered necessary to make an informed investment decision with respect to its
acquisition of the Securities and is not relying on any accounting, legal, tax
or other advice from the Company or its officers, employees, representatives or
advisors. The Investor acknowledges and agrees that the Company neither makes
nor has made any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in Section 4 hereof.

 

(f)                                   No Governmental Review. The Investor
understands that no U.S. federal or state agency or any other government or
governmental agency has passed on or made any recommendation or endorsement of
the Securities or the fairness or suitability of an investment in the Securities
nor have such authorities passed upon or endorsed the merits of the offering of
the Securities.

 

(g)                                  Transfer or Sale. The Investor understands
that (i) the Securities may not be offered for sale, sold, assigned or
transferred unless (A) registered pursuant to the Securities Act or (B) an
exemption exists permitting such Securities to be sold, assigned or transferred
without such registration; (ii) any sale of the Securities made in reliance on
Rule 144 may be made only in accordance with the terms of Rule 144 and further,
if Rule 144 is not applicable, any resale of the Securities under circumstances
in which the seller (or the Person through whom the sale is made) may be deemed
to be an underwriter (as that term is defined in the Securities Act) may require
compliance with some other exemption under the Securities Act or the rules and
regulations of the SEC thereunder.

 

(h)                                 Validity; Enforcement. This Agreement has
been duly and validly authorized, executed and delivered on behalf of the
Investor and is a valid and binding agreement of the Investor enforceable

 

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against the Investor in accordance with its terms, subject as to enforceability
to general principles of equity and to applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation and other similar laws relating to, or
affecting generally, the enforcement of applicable creditors’ rights and
remedies.

 

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

 

(j)                                    No Short Selling. The Investor represents
and warrants to the Company that at no time prior to the date of this Agreement
has any of the Investor, its agents, representatives or affiliates engaged in or
effected, in any manner whatsoever, directly or indirectly, any (i) “short sale”
(as such term is defined in Rule 200 of Regulation SHO of the Exchange Act) of
the Common Stock or (ii) hedging transaction, which establishes a net short
position with respect to the Common Stock.

 

4.                                      REPRESENTATIONS AND WARRANTIES OF THE
COMPANY.

 

The Company represents and warrants to the Investor that, except as set forth in
the disclosure schedules attached hereto, which exceptions shall be deemed to be
a part of the representations and warranties made hereunder, as of the date
hereof and as of the Commencement Date:

 

(a)                                 Organization and Qualification. The Company
and each of its Subsidiaries is an entity duly incorporated or otherwise
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization, with the requisite corporate
power and authority to own and use its properties and assets and to carry on its
business as currently conducted. Neither the Company nor any of its Subsidiaries
is in violation or default of any of the provisions of its respective
Certificate of Incorporation, bylaws or other organizational or charter
documents. Each of the Company and its Subsidiaries is duly qualified to conduct
business and is in good standing as a foreign corporation or other entity in
each jurisdiction in which the nature of the business conducted or property
owned by it makes such qualification necessary, except where the failure to be
so qualified or in good standing, as the case may be, could not reasonably be
expected to have a Material Adverse Effect and no proceeding has been instituted
in any such jurisdiction revoking, limiting or curtailing or seeking to revoke,
limit or curtail such power and authority or qualification. The Company has no
Subsidiaries except as set forth on Exhibit 21.1 to the Company’s Annual Report
on Form 10-K for the year ended December 31, 2018.

 

(b)                                 Authorization; Enforcement; Validity.
(i) The Company has the requisite corporate power and authority to enter into
and perform its obligations under this Agreement and each of the other
Transaction Documents, and to issue the Securities in accordance with the terms
hereof and thereof, (ii) the execution and delivery of the Transaction Documents
by the Company and the consummation by it of the transactions contemplated
hereby and thereby, including without limitation, the issuance of the Commitment
Shares (as defined below in Section 5(e)) and the reservation for issuance and
the issuance of the Purchase Shares issuable under this Agreement, have been
duly authorized by the Company’s Board of Directors and no further consent or
authorization is required by the Company, its Board of Directors or its
stockholders (subject to the provisions of Section 2(f) hereof), (iii) this
Agreement has been, and each other Transaction Document shall be on the
Commencement Date, duly executed and delivered by the Company and (iv) this
Agreement constitutes, and each other Transaction Document upon its execution on
behalf of the Company, shall constitute, the valid and binding obligations of
the Company enforceable against the Company in accordance with their terms,
except as such enforceability may be limited by general principles of equity or
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally, the enforcement of creditors’
rights and remedies. The Board of Directors of the Company has approved the
resolutions (the “Signing Resolutions”) substantially in the form as set forth
as Exhibit C attached hereto to authorize this Agreement and the transactions
contemplated hereby. The Signing Resolutions are valid, in full force and

 

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effect and have not been materially modified or supplemented in any respect. The
Company has delivered to the Investor a true and correct copy of a unanimous
written consent adopting the Signing Resolutions executed by all of the members
of the Board of Directors of the Company. Except as set forth in this Agreement,
no other approvals or consents of the Company’s Board of Directors, any
authorized committee thereof, and/or stockholders (subject to the provisions of
Section 2(f) hereof) is necessary under applicable laws and the Company’s
Certificate of Incorporation and/or Bylaws to authorize the execution and
delivery of this Agreement or any of the transactions contemplated hereby,
including, but not limited to, the issuance of the Commitment Shares and the
issuance of the Purchase Shares.

 

(c)                                  Capitalization. As of the date hereof, the
authorized capital stock of the Company is set forth in the Company’s Quarterly
Report on Form 10-Q for the quarter ended March 31, 2019. Except as disclosed in
the SEC Documents (as defined in Section 4(f) below), (i) no shares of the
Company’s capital stock are subject to preemptive rights or any other similar
rights or any liens or encumbrances suffered or permitted by the Company,
(ii) there are no outstanding debt securities, (iii) except for outstanding
securities of the Company under the equity incentive plans of the Company (the
“Stock Plans”), there are no outstanding options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, any shares of capital stock of the
Company or any of its Subsidiaries, or contracts, commitments, understandings or
arrangements by which the Company or any of its Subsidiaries is or may become
bound to issue additional shares of capital stock of the Company or any of its
Subsidiaries or options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the Company or any of its
Subsidiaries, (iv) there are no agreements or arrangements under which the
Company or any of its Subsidiaries is obligated to register the sale of any of
their securities under the Securities Act (except the Registration Rights
Agreement), (v) there are no outstanding securities or instruments of the
Company or any of its Subsidiaries which contain any redemption or similar
provisions, and there are no contracts, commitments, understandings or
arrangements by which the Company or any of its Subsidiaries is or may become
bound to redeem a security of the Company or any of its Subsidiaries, (vi) there
are no securities or instruments containing anti-dilution or similar provisions
that will be triggered by the issuance of the Securities as described in this
Agreement and (vii) the Company does not have any stock appreciation rights or
“phantom stock” plans or agreements or any similar plan or agreement. The
Company has furnished to the Investor true and correct copies of the Company’s
Certificate of Incorporation, as amended and as in effect on the date hereof
(the “Certificate of Incorporation”), and the Company’s Bylaws, as amended and
as in effect on the date hereof (the “Bylaws”), and summaries of the material
terms of all securities convertible into or exercisable for Common Stock, if
any, (other than outstanding securities of the Company under the Stock Plans)
and copies of any documents containing the material rights of the holders of
such securities in respect thereto that are not disclosed in the SEC Documents.

 

(d)                                 Issuance of Securities. Upon issuance and
payment therefor in accordance with the terms and conditions of this Agreement,
the Purchase Shares shall be validly issued, fully paid and nonassessable and
free from all taxes, liens, charges, restrictions, rights of first refusal and
preemptive rights with respect to the issue thereof, with the holders being
entitled to all rights accorded to a holder of Common Stock. 10,533,522 shares
(subject to equitable adjustment for any reorganization, recapitalization,
non-cash dividend, stock split or other similar transaction) of Common Stock
have been duly authorized and reserved for issuance upon purchase under this
Agreement as Purchase Shares. 330,000 shares of Common Stock (subject to
equitable adjustment for any reorganization, recapitalization, non-cash
dividend, stock split or other similar transaction) have been duly authorized
and reserved for issuance as Commitment Shares (as defined below in
Section 5(e)) in accordance with this Agreement. Upon issuance in accordance
with the terms and conditions of this Agreement, the Commitment Shares shall be
validly issued, fully paid and nonassessable and free from all taxes, liens,

 

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charges, restrictions, rights of first refusal and preemptive rights with
respect to the issue thereof, with the holders being entitled to all rights
accorded to a holder of Common Stock.

 

(e)                                  No Conflicts. The execution, delivery and
performance of the Transaction Documents by the Company and the consummation by
the Company of the transactions contemplated hereby and thereby (including,
without limitation, the reservation for issuance and issuance of the Purchase
Shares and the Commitment Shares) will not (i) result in a violation of the
Certificate of Incorporation, any Certificate of Designations, Preferences and
Rights of any outstanding series of preferred stock of the Company or the Bylaws
or (ii) conflict with, or constitute a default (or an event which with notice or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which the Company or any of its
Subsidiaries is a party, or result in a violation of any law, rule, regulation,
order, judgment or decree (including federal and state securities laws and
regulations and the rules and regulations of the Principal Market applicable to
the Company or any of its Subsidiaries) or by which any property or asset of the
Company or any of its Subsidiaries is bound or affected, except in the case of
conflicts, defaults, terminations, amendments, accelerations, cancellations and
violations under clause (ii), which could not reasonably be expected to have a
Material Adverse Effect. Neither the Company nor its Subsidiaries is in
violation of any term of or in default under its Certificate of Incorporation,
any Certificate of Designation, Preferences and Rights of any outstanding series
of preferred stock of the Company or Bylaws or their organizational charter or
bylaws, respectively. Neither the Company nor any of its Subsidiaries is in
violation of any term of or is in default under any material contract,
agreement, mortgage, indebtedness, indenture, instrument, judgment, decree or
order or any statute, rule or regulation applicable to the Company or its
Subsidiaries, except for possible conflicts, defaults, terminations or
amendments that could not reasonably be expected to have a Material Adverse
Effect. The business of the Company and its Subsidiaries is not being conducted,
and shall not be conducted, in violation of any law, ordinance, regulation of
any governmental entity, except for possible violations, the sanctions for which
either individually or in the aggregate could not reasonably be expected to have
a Material Adverse Effect. Except as specifically contemplated by this Agreement
and as required under the Securities Act or applicable state securities laws and
the rules and regulations of the Principal Market, the Company is not required
to obtain any consent, authorization or order of, or make any filing or
registration with, any court or governmental agency or any regulatory or
self-regulatory agency in order for it to execute, deliver or perform any of its
obligations under or contemplated by the Transaction Documents in accordance
with the terms hereof or thereof. Except as set forth elsewhere in this
Agreement, all consents, authorizations, orders, filings and registrations which
the Company is required to obtain pursuant to the preceding sentence shall be
obtained or effected on or prior to the Commencement Date. Except as disclosed
in the SEC Documents, since one year prior to the date hereof, the Company has
not received nor delivered any notices related to non-compliance with the
rules of the Principal Market. the Principal Market has not commenced any
delisting proceedings against the Company.

 

(f)                                   SEC Documents; Financial Statements. The
Company has filed all reports, schedules, forms, statements and other documents
required to be filed by the Company under the Securities Act and the Exchange
Act, including pursuant to Section 13(a) or 15(d) thereof, for the twelve months
preceding the date hereof (or such shorter period as the Company was required by
law or regulation to file such material) (the foregoing materials, including the
exhibits thereto and documents incorporated by reference therein, being
collectively referred to herein as the “SEC Documents”) on a timely basis or has
received a valid extension of such time of filing and has filed any such SEC
Documents prior to the expiration of any such extension. As of their respective
dates and to the Company’s knowledge, the SEC Documents complied in all material
respects with the requirements of the Securities Act and the Exchange Act, as
applicable. None of the SEC Documents, when filed, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. The
financial

 

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statements of the Company included in the SEC Documents comply in all material
respects with applicable accounting requirements and the rules and regulations
of the SEC with respect thereto as in effect at the time of filing. Such
financial statements have been prepared in accordance with United States
generally accepted accounting principles applied on a consistent basis during
the periods involved (“GAAP”), except as may be otherwise specified in such
financial statements or the notes thereto and except that unaudited financial
statements may not contain all footnotes required by GAAP, and fairly present in
all material respects the financial position of the Company and its consolidated
Subsidiaries as of and for the dates thereof and the results of operations and
cash flows for the periods then ended, subject, in the case of unaudited
statements, to normal, immaterial, year-end audit adjustments. Except as set
forth in the SEC Documents, the Company has received no notices or
correspondence from the SEC for the one year preceding the date hereof. To the
Company’s knowledge, the SEC has not commenced any enforcement proceedings
against the Company or any of its Subsidiaries.

 

(g)                                  Absence of Certain Changes. Except as
disclosed in the SEC Documents, since December 31, 2018, there has been no
material adverse change in the business, properties, operations, financial
condition or results of operations of the Company or its Subsidiaries. The
Company has not taken any steps, and does not currently expect to take any
steps, to seek protection pursuant to any Bankruptcy Law nor does the Company or
any of its Subsidiaries have any knowledge or reason to believe that its
creditors intend to initiate involuntary bankruptcy or insolvency proceedings.

 

(h)                                 Absence of Litigation. There is no action,
suit, proceeding, inquiry or investigation before or by any court, public board,
government agency, self-regulatory organization or body pending or, to the
knowledge of the Company or any of its Subsidiaries, threatened against or
affecting the Company, the Common Stock or any of the Company’s or its
Subsidiaries’ officers or directors in their capacities as such, which could
reasonably be expected to have a Material Adverse Effect.

 

(i)                                     Acknowledgment Regarding Investor’s
Status. The Company acknowledges and agrees that the Investor is acting solely
in the capacity of arm’s length purchaser with respect to the Transaction
Documents and the transactions contemplated hereby and thereby. The Company
further acknowledges that the Investor is not acting as a financial advisor or
fiduciary of the Company (or in any similar capacity) with respect to the
Transaction Documents and the transactions contemplated hereby and thereby and
any advice given by the Investor or any of its representatives or agents in
connection with the Transaction Documents and the transactions contemplated
hereby and thereby is merely incidental to the Investor’s purchase of the
Securities. The Company further represents to the Investor that the Company’s
decision to enter into the Transaction Documents has been based solely on the
independent evaluation by the Company and its representatives and advisors.

 

(j)                                    No General Solicitation; No Aggregated
Offering. Neither the Company, nor any of its affiliates, nor any Person acting
on its or their behalf, has engaged in any form of general solicitation or
general advertising (within the meaning of Regulation D under the Securities
Act) in connection with the offer or sale of the Securities. Neither the
Company, nor any of its affiliates, nor any Person acting on their behalf has,
directly or indirectly, made any offers or sales of any security or solicited
any offers to buy any security, under circumstances that would require
registration of the offer and sale of any of the Securities under the Securities
Act, whether through integration with prior offerings or otherwise, or, subject
to Section 2(f) hereof, cause this offering of the Securities to be aggregated
with prior offerings by the Company in a manner that would require stockholder
approval pursuant to the rules of the Principal Market on which any of the
securities of the Company are listed or designated. Subject to
Section 2(f) hereof, the issuance and sale of the Securities hereunder does not
contravene the rules and regulations of the Principal Market.

 

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(k)                                 Intellectual Property Rights. The Company
and its Subsidiaries own or possess adequate rights or licenses to use all
material trademarks, trade names, service marks, service mark registrations,
service names, patents, patent rights, copyrights, inventions, licenses,
approvals, governmental authorizations, trade secrets and rights necessary to
conduct their respective businesses as now conducted. None of the Company’s
material trademarks, trade names, service marks, service mark registrations,
service names, patents, patent rights, copyrights, inventions, licenses,
approvals, government authorizations, trade secrets or other intellectual
property rights have expired or terminated, or, by the terms and conditions
thereof, could expire or terminate within two years from the date of this
Agreement. The Company and its Subsidiaries do not have any knowledge of any
infringement by the Company or its Subsidiaries of any material trademark, trade
name rights, patents, patent rights, copyrights, inventions, licenses, service
names, service marks, service mark registrations, trade secret or other similar
rights of others, or of any such development of similar or identical trade
secrets or technical information by others, and there is no claim, action or
proceeding being made or brought against, or to the Company’s knowledge, being
threatened against, the Company or its Subsidiaries regarding trademark, trade
name, patents, patent rights, invention, copyright, license, service names,
service marks, service mark registrations, trade secret or other infringement,
which could reasonably be expected to have a Material Adverse Effect.

 

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

 

(m)                             Title. Except as disclosed in the SEC Documents,
the Company and its Subsidiaries have good and marketable title in fee simple to
all real property owned by them and good and marketable title in all personal
property owned by them that is material to the business of the Company and its
Subsidiaries, in each case free and clear of all liens, encumbrances and defects
(“Liens”), except for Liens as do not 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 Liens for the
payment of federal, state or other taxes, the payment of which is neither
delinquent nor subject to penalties. Any real property and facilities held under
lease by the Company and its Subsidiaries are held by them under valid,
subsisting and enforceable leases with which the Company and its Subsidiaries
are in compliance with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property and buildings by the
Company and its Subsidiaries.

 

(n)                                 Insurance. The Company and each of its
Subsidiaries are insured by insurers of recognized financial responsibility
against such losses and risks and in such amounts as management of the Company
believes to be prudent and customary in the businesses in which the Company and
its Subsidiaries are engaged. Neither the Company nor any such Subsidiary has
been refused any insurance coverage sought or applied for and neither the
Company nor any such Subsidiary has any reason to believe that it will not be
able to renew its existing insurance coverage as and when such coverage expires
or to obtain similar coverage from similar insurers as may be necessary to
continue its business at a cost that would not materially and adversely affect
the condition, financial or otherwise, or the earnings, business or operations
of the Company and its Subsidiaries, taken as a whole.

 

(o)                                 Regulatory Permits. The Company and its
Subsidiaries possess all material certificates, authorizations and permits
issued by the appropriate federal, state or foreign regulatory authorities

 

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necessary to conduct their respective businesses, and neither the Company nor
any such Subsidiary has received any notice of proceedings relating to the
revocation or modification of any such certificate, authorization or permit.

 

(p)                                 Tax Status. The Company and each of its
Subsidiaries has made or filed all federal and state income and all other
material tax returns, reports and declarations required by any jurisdiction to
which it is subject (unless and only to the extent that the Company and each of
its Subsidiaries has set aside on its books provisions reasonably adequate for
the payment of all unpaid and unreported taxes) and has paid all taxes and other
governmental assessments and charges that are material in amount, shown or
determined to be due on such returns, reports and declarations, except those
being contested in good faith and has set aside on its books provision
reasonably adequate for the payment of all taxes for periods subsequent to the
periods to which such returns, reports or declarations apply, and except as
could not reasonably be expected to have a Material Adverse Effect. To the
knowledge of the Company, there are no unpaid taxes in any material amount
claimed to be due by the taxing authority of any jurisdiction, and the officers
of the Company know of no basis for any such claim.

 

(q)                                 Transactions With Affiliates. Except as set
forth in the SEC Documents, to the knowledge of the Company, none of the
officers or directors of the Company, the Company’s stockholders, the officers
or directors of any stockholder of the Company, or any family member or
affiliate of any of the foregoing, has either directly or indirectly any
interest in, or is a party to, any transaction that would be required to be
disclosed as a related party transaction pursuant to Rule 404 of Regulation S-K
promulgated under the Securities Act.

 

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

 

(s)                                   Disclosure. Except with respect to the
material terms and conditions of the transactions contemplated by the
Transaction Documents or any other agreements to be entered into by the Company
and the Investor that, in each case, will be timely publicly disclosed by the
Company, the Company confirms that neither it nor any other Person acting on its
behalf has provided the Investor or its agents or counsel with any information
that the Company believes constitutes or might constitute material, non-public
information which is not otherwise disclosed in the Registration Statement or
the SEC Documents. The Company understands and confirms that the Investor will
rely on the foregoing representation in effecting purchases and sales of
securities of the Company. All of the disclosure furnished by or on behalf of
the Company to the Investor regarding the Company, its business and the
transactions contemplated hereby, including the disclosure schedules to this
Agreement, is true and correct in all material respects and does not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements made therein, in light of the circumstances
under which they were made, not misleading. The press releases disseminated by
the Company during the twelve (12) months preceding the date of this Agreement
taken as a whole did not, when issued, contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made and when made, not misleading. The Company
acknowledges and agrees that the Investor neither makes nor has made any
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in Section 3 hereof.

 

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(t)                                    Foreign Corrupt Practices. Neither the
Company, nor to the knowledge of the Company, any agent or other Person acting
on behalf of the Company, has (i) directly or indirectly, used any funds for
unlawful contributions, gifts, entertainment or other unlawful expenses related
to foreign or domestic political activity, (ii) made any unlawful payment to
foreign or domestic government officials or employees or to any foreign or
domestic political parties or campaigns from corporate funds, (iii) failed to
disclose fully any contribution made by the Company (or made by any Person
acting on its behalf of which the Company is aware) which is in violation of
law, or (iv) violated in any material respect any provision of the Foreign
Corrupt Practices Act of 1977, as amended.

 

(u)                                 DTC Eligibility. The Company, through the
Transfer Agent, currently participates in the DTC Fast Automated Securities
Transfer (FAST) Program and the Common Stock can be transferred electronically
to third parties via the DTC Fast Automated Securities Transfer (FAST) Program.

 

(v)                                 Sarbanes-Oxley. The Company is in compliance
with all provisions of the Sarbanes-Oxley Act of 2002, as amended, which are
applicable to it as of the date hereof.

 

(w)                               Certain Fees. No brokerage or finder’s fees or
commissions are or will be payable by the Company to any broker, financial
advisor or consultant, finder, placement agent, investment banker, bank or other
Person with respect to the transactions contemplated by the Transaction
Documents. The Investor shall have no obligation with respect to any fees or
with respect to any claims made by or on behalf of other Persons for fees of a
type contemplated in this Section 4(w) that may be due in connection with the
transactions contemplated by the Transaction Documents.

 

(x)                                 Investment Company. The Company is not
required to be registered as, and immediately after receipt of payment for the
Securities will not be required to be registered as, an “investment company”
within the meaning of the Investment Company Act of 1940, as amended.

 

(y)                                 Listing and Maintenance Requirements. The
Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange
Act, and the Company has taken no action designed to, or which to its knowledge
is likely to have the effect of, terminating the registration of the Common
Stock pursuant to the Exchange Act nor has the Company received any notification
that the SEC is currently contemplating terminating such registration. Except as
disclosed in the SEC Documents, the Company has not, in the twelve (12) months
preceding the date hereof, received any notice from any Person to the effect
that the Company is not in compliance with the listing or maintenance
requirements of the Principal Market. Except as disclosed in the SEC Documents,
the Company is in compliance with all such listing and maintenance requirements.

 

(z)                                  Accountants. The Company’s accountants are
set forth in the SEC Documents and, to the knowledge of the Company, such
accountants are an independent registered public accounting firm as required by
the Securities Act.

 

(aa)                          No Market Manipulation. The Company has not, and
to its knowledge no Person acting on its behalf has, (i) taken, directly or
indirectly, any action designed to cause or to result in the stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of any of the Securities, (ii) sold, bid for, purchased, or, paid any
compensation for soliciting purchases of, any of the Securities, or (iii) paid
or agreed to pay to any Person any compensation for soliciting another to
purchase any other securities of the Company in violation of Regulation M
promulgated under the Exchange Act.

 

(bb)                          Shell Company Status. The Company is not
currently, and has never been, an issuer identified in Rule 144(i)(1) under the
Securities Act.

 

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(cc)                            No Disqualification Events. None of the Company,
its predecessors and  affiliated issuers, and, to the knowledge of the Company,
no director, executive officer, other officer of the Company participating in
the offering contemplated hereby, no beneficial owner of 20% or more of the
Company’s outstanding voting equity securities, calculated on the basis of
voting power, and no promoter (as that term is defined in Rule 405 under the
Securities Act) connected with the Company in any capacity at the time of sale
(each, an “Issuer Covered Person”), is subject to any of the “Bad Actor”
disqualifications described in Rule 506(d)(1)(i) to (viii) under the Securities
Act (a “Disqualification Event”), except for a Disqualification Event covered by
Rule 506(d)(2) or (d)(3) under the Securities Act. Prior to Commencement, the
Company shall have exercised reasonable care to determine whether any Issuer
Covered Person is subject to a Disqualification Event.

 

5.                                      COVENANTS.

 

(a)                                 Filing of Current Report and Registration
Statement. The Company agrees that it shall, within the time required under the
Exchange Act, file with the SEC a report on Form 8-K relating to the
transactions contemplated by, and describing the material terms and conditions
of, the Transaction Documents (the “Current Report”). The Company shall also
file with the SEC, by September 30, 2019, a new registration statement (the
“Registration Statement”) covering the resale of the Purchase Shares and the
Commitment Shares in accordance with the terms of the Registration Rights
Agreement. The Company shall permit the Investor to review and comment upon the
final pre-filing draft version of the Current Report at least two (2) Business
Days prior to its filing with the SEC, and the Company shall not file the
Current Report or the Registration Statement with the SEC in a form to which the
Investor reasonably objects. The Investor shall use its reasonable best efforts
to comment upon the final pre-filing draft version of the Current Report within
one (1) Business Day from the date the Investor receives it from the Company.

 

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

 

(c)                                  Listing/DTC. Subject to
Section 2(f) hereof, the Company shall promptly secure the listing of all of the
Purchase Shares and Commitment Shares to be issued to the Investor hereunder on
the Principal Market (subject to official notice of issuance) and upon each
other national securities exchange or automated quotation system, if any, upon
which the Common Stock is then listed, and shall maintain, so long as any shares
of Common Stock shall be so listed, such listing of all such Securities from
time to time issuable hereunder. The Company shall maintain the listing of the
Common Stock on the Principal Market and shall comply in all respects with the
Company’s reporting, filing and other obligations under the bylaws or rules and
regulations of the Principal Market. Neither the Company nor any of its
Subsidiaries shall take any action that would reasonably be expected to result
in the delisting or suspension of the Common Stock on the Principal Market. The
Company shall promptly, and in no event later than the following Business Day,
provide to the Investor copies of any notices it receives from any Person
regarding the continued eligibility of the Common Stock for listing on the
Principal Market; provided, however, that the Company shall not be required to
provide the Investor copies of any such notice that the Company reasonably
believes constitutes material non-public information and the Company would not
be required to publicly disclose such notice in any report or statement filed
with the SEC under the Exchange Act or the Securities Act. The Company shall pay
all fees and expenses in connection with satisfying its obligations under this
Section 5(c). The Company shall take all action necessary to ensure that its
Common Stock can be transferred electronically as DWAC Shares.

 

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(d)                                 Prohibition of Short Sales and Hedging
Transactions. The Investor agrees that beginning on the date of this Agreement
and ending on the date of termination of this Agreement as provided in
Section 11, the Investor and its agents, representatives and affiliates shall
not in any manner whatsoever enter into or effect, directly or indirectly, any
(i) “short sale” (as such term is defined in Rule 200 of Regulation SHO of the
Exchange Act) of the Common Stock or (ii) hedging transaction, which establishes
a net short position with respect to the Common Stock.

 

(e)                                  Commitment Fee; Issuance of Commitment
Shares. In consideration for the Investor’s execution and delivery of this
Agreement, the Company and the Investor hereby agree that the Company shall make
payment to the Investor of a commitment fee in the amount of $626,571 in
accordance with the provisions of this Section 5(e). The Company shall make
payment of such commitment fee in kind by causing the Transfer Agent to issue
330,000 shares of Common Stock (the “Commitment Shares”) directly to the
Investor on the date of this Agreement.  The Company shall deliver to the
Transfer Agent on the date of this Agreement the Irrevocable Transfer Agent
Instructions in the form set forth in Exhibit E attached hereto.  For the
avoidance of doubt, all of the Commitment Shares shall be fully earned as of the
date of this Agreement, whether or not the Commencement shall occur or any
Purchase Shares are purchased by the Investor under this Agreement and
irrespective of any termination of this Agreement.  The Commitment Shares will
not be issued as DWAC Shares on the date of this Agreement.

 

(f)                                   Due Diligence; Non-Public Information. The
Investor shall have the right, from time to time during the term of this
Agreement as the Investor may reasonably deem appropriate and upon reasonable
advance notice to the Company, to perform reasonable due diligence on the
Company during normal business hours. The Company and its officers and employees
shall provide information and reasonably cooperate with the Investor in
connection with any reasonable request by the Investor related to the Investor’s
due diligence of the Company. Each party hereto agrees not to disclose any
Confidential Information of the other party to any third party and shall not use
the Confidential Information for any purpose other than in connection with, or
in furtherance of, the transactions contemplated hereby. Each party hereto
acknowledges that the Confidential Information shall remain the property of the
disclosing party and agrees that it shall take all reasonable measures to
protect the secrecy of any Confidential Information disclosed by the other
party. The receiving party may disclose Confidential Information to the extent
such information is required to be disclosed by law, regulation or order of a
court of competent jurisdiction or regulatory authority, provided that the
receiving party shall promptly notify the disclosing party when such requirement
to disclose arises, and shall cooperate with the disclosing party so as to
enable the disclosing party to: (i) seek an appropriate protective order; and
(ii) make any applicable claim of confidentiality in respect of such
Confidential Information; and provided, further, that the receiving party shall
disclose Confidential Information only to the extent required by the protective
order or other similar order, if such an order is obtained, and, if no such
order is obtained, the receiving party shall disclose only the minimum amount of
such Confidential Information required to be disclosed in order to comply with
the applicable law, regulation or order. In addition, any such Confidential
Information disclosed pursuant to this section shall continue to be deemed
Confidential Information. Notwithstanding anything in this Agreement or in any
other Transaction Document to the contrary, the Company and the Investor hereby
confirm that neither the Company nor any other Person acting on the Company’s
behalf shall provide the Investor or its agents or counsel with any information
that constitutes or that Company believes might constitute material, non-public
information, unless a simultaneous public announcement thereof is made by the
Company in the manner contemplated by Regulation FD. In the event of a breach of
the foregoing covenant by the Company or any Person acting on its behalf (as
determined in the reasonable good faith judgment of the Investor), in addition
to any other remedy provided herein or in the other Transaction Documents, if
the Investor is holding any securities of the Company at the time of the
disclosure of such material, non-public information, the Investor shall have the
right to make a public disclosure, in the form of a press release, public
advertisement or otherwise, of such material, non-public information without the
prior approval by the Company; provided (i) the Investor shall have first
provided

 

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notice to the Company that it believes it has received information that
constitutes material, non-public information, (ii) the Company shall have at
least twenty-four (24) hours to publicly disclose such material, non-public
information prior to any such disclosure by the Investor, (iii) the Company
shall have failed, in the reasonable good faith judgment of  the Investor, to
demonstrate to the Investor within such time period that such information does
not constitute material, non-public information, and (iv) the Company shall have
failed to publicly disclose such material, non-public information within such
time period. The Investor shall not have any liability to the Company, any of
its Subsidiaries, or any of their respective directors, officers, employees,
stockholders or agents, for any such disclosure. The Company understands and
confirms that the Investor shall be relying on the foregoing covenants in
effecting transactions in securities of the Company.

 

(g)                                  Purchase Records. The Investor and the
Company shall each maintain records showing the remaining Available Amount at
any given time and the dates and Purchase Amounts for each Regular Purchase,
Accelerated Purchase and Additional Accelerated Purchase or shall use such other
method, reasonably satisfactory to the Investor and the Company.

 

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

 

(i)                                     Aggregation.  From and after the date of
this Agreement, neither the Company, nor or any of its affiliates will, and the
Company shall use its reasonable best efforts to ensure that no Person acting on
their behalf will, directly or indirectly, make any offers or sales of any
security or solicit any offers to buy any security, under circumstances that
would cause this offering of the Securities by the Company to the Investor to be
aggregated with other offerings by the Company in a manner that would require
stockholder approval pursuant to the rules of the Principal Market on which any
of the securities of the Company are listed or designated, unless stockholder
approval is obtained before the closing of such subsequent transaction in
accordance with the rules of such Principal Market.

 

(j)                                    Use of Proceeds. The Company will use the
net proceeds from the offering for any corporate purpose at the sole discretion
of the Company.

 

(k)                                 Other Transactions. The Company shall not
enter into, announce or recommend to its stockholders any agreement, plan,
arrangement or transaction in or of which the terms thereof would restrict,
materially delay, conflict with or impair the ability or right of the Company to
perform its obligations under the Transaction Documents, including, without
limitation, the obligation of the Company to deliver the Purchase Shares and the
Commitment Shares to the Investor in accordance with the terms of the
Transaction Documents.

 

(l)                                     Integration. From and after the date of
this Agreement, neither the Company, nor or any of its affiliates will, and the
Company shall use its reasonable best efforts to ensure that no Person acting on
their behalf will, directly or indirectly, make any offers or sales of any
security or solicit any offers to buy any security, under circumstances that
would require registration of the offer and sale by the Company to the Investor
of any of the Securities under the Securities Act.

 

(m)                             Limitation on Variable Rate Transactions. From
and after the date of this Agreement until the earlier of (i) the twenty-four
(24) month anniversary of the date of this Agreement (irrespective of any
earlier termination of this Agreement) and (ii) the termination of this
Agreement other than by the Company pursuant to Section 11(b) or 11(c) hereof,
the Company shall be prohibited from effecting or entering into an agreement to
effect any issuance by the Company or any of its Subsidiaries of Common Stock or
Common Stock Equivalents (or a combination of units thereof) involving a
Variable Rate

 

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Transaction, other than in connection with an Exempt Issuance, if and for so
long as the Investor is holding any securities of the Company. “Common Stock
Equivalents” means any securities of the Company or its Subsidiaries which
entitle the holder thereof to acquire at any time Common Stock, including,
without limitation, any debt, preferred stock, rights, options, warrants 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. “Variable Rate Transaction” means a transaction in which the Company
(i) issues or sells any debt or equity securities that are convertible into,
exchangeable or exercisable for, or include the right to receive additional
shares of Common Stock or Common Stock Equivalents either (A) at a conversion
price, exercise price or exchange rate or other price that is based upon and/or
varies with the trading prices of or quotations for the Common Stock at any time
after the initial issuance of such debt or equity securities, or (B) with a
conversion, exercise or exchange price that is subject to being reset at some
future date after the initial issuance of such debt or equity security or upon
the occurrence of specified or contingent events directly or indirectly related
to the business of the Company or the market for the Common Stock (including,
without limitation, any “full ratchet” or “weighted average” anti-dilution
provisions but not including any standard anti-dilution protection for any
reorganization, recapitalization, non-cash dividend, stock split or other
similar transaction) or (ii) enters into any agreement at any time during the
term of this Agreement, including, but not limited to, an “equity line of
credit”, “at-the-market offering” or other continuous offering or similar
offering of Common Stock or Common Stock Equivalents, whereby the Company may
sell Common Stock or Common Stock Equivalents at a future determined price.
“Exempt Issuance” means the issuance of (a) Common Stock or options to
employees, officers, directors or vendors of the Company pursuant to any stock
or option plan duly adopted for such purpose, by the Board of Directors or a
majority of the members of a committee of directors established for such
purpose, (b) securities upon the exercise or exchange of or conversion of any
Securities issued hereunder and/or other securities exercisable or exchangeable
for or convertible into Common Stock issued and outstanding on the date of this
Agreement, provided that such securities have not been amended since the date of
this Agreement to increase the number of such securities or to decrease the
exercise price, exchange price or conversion price of such securities,
(c) securities in any “at-the-market offering” with or conducted by a registered
broker dealer, (d) securities issued pursuant to acquisitions, divestitures,
partnerships, licenses, collaborations or strategic transactions approved by the
Board of Directors or a majority of the members of a committee of directors
established for such purpose, which acquisitions, divestitures, partnerships,
licenses, collaborations or strategic transactions can have a Variable Rate
Transaction component, provided that any such issuance shall only be to a Person
(or to the equity holders of a Person) which is, itself or through its
subsidiaries, an operating company or an asset in a business synergistic with
the business of the Company and shall provide to the Company additional benefits
in addition to the investment of funds, but shall not include a transaction in
which the Company is issuing securities primarily for the purpose of raising
capital or to an entity whose primary business is investing in securities, and
(e) Securities issued to the Investor pursuant to this Agreement or any other
securities of the Company issued to the Investor or any affiliate of the
Investor pursuant to any other agreement or instrument to which the Investor or
any such affiliate is a party.

 

6.                                      TRANSFER AGENT INSTRUCTIONS.

 

(a)                                 On the date of this Agreement, the Company
shall issue irrevocable instructions to the Transfer Agent substantially in the
form attached hereto as Exhibit E to issue the Commitment Shares in accordance
with the terms of this Agreement (the “Irrevocable Transfer Agent
Instructions”). The certificate(s) or book-entry statement(s) representing the
Commitment Shares, except as set forth below, shall bear the following
restrictive legend (the “Restrictive Legend”):

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES HAVE BEEN ACQUIRED FOR

 

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INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, UNLESS
SOLD PURSUANT TO: (1) RULE 144 UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
(2) AN OPINION OF HOLDER’S COUNSEL, IN A CUSTOMARY FORM, THAT REGISTRATION IS
NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS.

 

(b)                                 On the earlier of (i) the Commencement Date
and (ii) such time that the Investor shall request, provided all conditions of
Rule 144 under the Securities Act are met, the Company shall, no later than one
(1) Business Day following the delivery by the Investor to the Company or the
Transfer Agent of one or more legended certificates or book-entry statements
representing the Commitment Shares (which certificates or book-entry
statement(s) the Investor shall promptly deliver on or prior to the first to
occur of the events described in clauses (i) and (ii) of this sentence), as
directed by the Investor, issue and deliver (or cause to be issued and
delivered) to the Investor, as requested by the Investor, either: (A) a
certificate or book-entry statement representing such Commitment Shares that is
free from all restrictive and other legends or (B) a number of shares of Common
Stock equal to the number of Commitment Shares represented by the
certificate(s) or book-entry statement(s) so delivered by the Investor as DWAC
Shares. The Company shall take all actions to carry out the intent and
accomplish the purposes of the immediately preceding sentence, including,
without limitation, delivering all such legal opinions, consents, certificates,
resolutions and instructions to the Transfer Agent, and any successor transfer
agent of the Company, as may be requested from time to time by the Investor or
necessary or desirable to carry out the intent and accomplish the purposes of
the immediately preceding sentence. On the Commencement Date, the Company shall
issue to the Transfer Agent, and any subsequent transfer agent, (i) irrevocable
instructions in the form substantially similar to those used by the Investor in
substantially similar transactions (the “Commencement Irrevocable Transfer Agent
Instructions”) and (ii) the notice of effectiveness of the Registration
Statement in the form attached as an exhibit to the Registration Rights
Agreement (the “Notice of Effectiveness of Registration Statement”), in each
case to reissue or issue the Commitment Shares and the Purchase Shares in
accordance with the terms of this Agreement and the Registration Rights
Agreement. All Purchase Shares to be issued from and after Commencement to or
for the benefit of the Investor pursuant to this Agreement shall be issued only
as DWAC Shares. The Company represents and warrants to the Investor that, while
this Agreement is effective, no instruction other than the Commencement
Irrevocable Transfer Agent Instructions and the Notice of Effectiveness of
Registration Statement referred to in this Section 6(b) will be given by the
Company to the Transfer Agent with respect to the Commitment Shares or the
Purchase Shares from and after Commencement, and the Commitment Shares and the
Purchase Shares covered by the Registration Statement shall otherwise be freely
transferable on the books and records of the Company. The Company agrees that if
the Company fails to fully comply with the provisions of this
Section 6(b) within five (5) Business Days of the Investor providing the
deliveries referred to above, the Company shall, at the Investor’s written
instruction, purchase such shares of Common Stock containing the Restrictive
Legend from the Investor at the greater of the (i) Purchase Price or Accelerated
Purchase Price paid for such shares of Common Stock (as applicable) and (ii) the
Closing Sale Price of the Common Stock on the date of the Investor’s written
instruction.

 

7.                                      CONDITIONS TO THE COMPANY’S RIGHT TO
COMMENCE

 

SALES OF SHARES OF COMMON STOCK.

 

The right of the Company hereunder to commence sales of the Purchase Shares on
the Commencement Date is subject to the satisfaction of each of the following
conditions:

 

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

 

(b)                                 The Registration Statement covering the
resale of the Commitment Shares and Purchase Shares shall have been declared
effective under the Securities Act by the SEC and no stop order with respect to
the Registration Statement shall be pending or threatened by the SEC;

 

(c)                                  All Securities to be issued by the Company
to the Investor under the Transaction Documents shall have been approved for
listing on the Principal Market in accordance with the applicable rules and
regulations of the Principal Market, subject only to official notice of issuance
and to the provisions of Section 2(f) hereof; and

 

(d)                                 The representations and warranties of the
Investor shall be true and correct in all material respects as of the date
hereof and as of the Commencement Date as though made at that time.

 

8.                                      CONDITIONS TO THE INVESTOR’S OBLIGATION
TO PURCHASE SHARES OF COMMON STOCK.

 

The obligation of the Investor to buy Purchase Shares under this Agreement is
subject to the satisfaction of each of the following conditions on or prior to
the Commencement Date and, once such conditions have been initially satisfied,
there shall not be any ongoing obligation to satisfy such conditions after the
Commencement has occurred:

 

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

 

(b)                                 The Company shall have issued or caused to
be issued to the Investor (i) one or more certificates or book-entry statements
representing the Commitment Shares free from all restrictive and other legends
or (ii) a number of shares of Common Stock equal to the number of Commitment
Shares as DWAC Shares, in each case in accordance with
Section 5(e) Section 6(b);

 

(c)                                  The Common Stock shall be listed or quoted
on the Principal Market, trading in the Common Stock shall not be suspended or
to the knowledge of the Company be subject to suspension by the SEC or the
Principal Market, and all Securities to be issued by the Company to the Investor
pursuant to this Agreement shall have been approved for listing or quotation on
the Principal Market in accordance with the applicable rules and regulations of
the Principal Market, subject only to official notice of issuance and to the
provisions of Section 2(f) hereof;

 

(d)                                 The Investor shall have received the
opinions of the Company’s legal counsel dated as of the Commencement Date
substantially in the form of Exhibit A attached hereto;

 

(e)                                  The representations and warranties of the
Company shall be true and correct in all material respects (except to the extent
that any of such representations and warranties is already qualified as to
materiality in Section 4 above, in which case, such representations and
warranties shall be true and correct without further qualification) as of the
date hereof and as of the Commencement Date as though made at that time (except
for representations and warranties that speak as of a specific date, which shall
be true and correct as of such date) and the Company shall have performed,
satisfied and complied with in all material respects the covenants, agreements
and conditions required by the Transaction Documents to be performed, satisfied
or complied with by the Company at or prior to the Commencement Date. The
Investor shall have received a certificate, executed by the CEO, President or
CFO of the Company, dated as of the Commencement Date, to the foregoing effect
in the form attached hereto as Exhibit B;

 

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

 

(g)                                  As of the Commencement Date, the Company
shall have reserved out of its authorized and unissued Common Stock, solely for
the purpose of effecting purchases of Purchase Shares hereunder, 10,533,522
shares of Common Stock;

 

(h)                                 The Commencement Irrevocable Transfer Agent
Instructions and the Notice of Effectiveness of Registration Statement each
shall have been delivered to and acknowledged in writing by the Company and the
Company’s Transfer Agent (or any successor transfer agent);

 

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

 

(j)                                    The Company shall have delivered to the
Investor a certified copy of the Certificate of Incorporation as certified by
the Secretary of State of the State of Delaware within ten (10) Business Days of
the Commencement Date;

 

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

 

(l)                                     The Registration Statement covering the
resale of the Commitment Shares and Purchase Shares shall have been declared
effective under the Securities Act by the SEC and no stop order with respect to
the Registration Statement shall be pending or threatened by the SEC. The
Company shall have prepared and filed with the SEC, not later than two
(2) Business Days after the effective date of the Registration Statement, a
final and complete prospectus (the preliminary form of which shall be included
in the Registration Statement) and shall have delivered to the Investor a true
and complete copy thereof. Such prospectus shall be current and available for
the resale by the Investor of all of the Securities covered thereby. The Current
Report shall have been filed with the SEC, as required pursuant to Section 5(a).
All reports, schedules, registrations, forms, statements, information and other
documents required to have been filed by the Company with the SEC at or during
the 12-month period immediately preceding the Commencement Date pursuant to the
reporting requirements of the Exchange Act shall have been filed with the SEC
within the applicable time periods prescribed for such filings under the
Exchange Act;

 

(m)                             No Event of Default has occurred that has not
been cured by the Company, or any event which, after notice and/or lapse of
time, would become an Event of Default has occurred that has not been cured by
the Company;

 

(n)                                 All federal, state and local governmental
laws, rules and regulations applicable to the transactions contemplated by the
Transaction Documents and necessary for the execution, delivery and performance
of the Transaction Documents and the consummation of the transactions
contemplated thereby in accordance with the terms thereof shall have been
complied with, and all consents, authorizations and orders of, and all filings
and registrations with, all federal, state and local courts or governmental
agencies and all federal, state and local regulatory or self-regulatory agencies
necessary (subject to Section 2(f) hereof) for the execution, delivery and
performance of the Transaction Documents and the consummation of the
transactions contemplated thereby in accordance with the terms thereof shall
have been obtained or made, including, without limitation, in each case those
required under the Securities Act, the Exchange Act, applicable state securities
or “Blue Sky” laws or applicable rules and

 

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regulations of the Principal Market, or otherwise required by the SEC, the
Principal Market or any state securities regulators;

 

(o)                                 No statute, regulation, order, decree, writ,
ruling or injunction shall have been enacted, entered, promulgated, threatened
or endorsed by any federal, state, local or foreign court or governmental
authority of competent jurisdiction which prohibits the consummation of or which
would materially modify or delay any of the transactions contemplated by the
Transaction Documents; and

 

(p)                                 No action, suit or proceeding before any
federal, state, local or foreign arbitrator or any court or governmental
authority of competent jurisdiction shall have been commenced or threatened, and
no inquiry or investigation by any federal, state, local or foreign governmental
authority of competent jurisdiction shall have been commenced or threatened,
against the Company, or any of the officers, directors or affiliates of the
Company, in each case seeking to restrain, prevent or change the transactions
contemplated by the Transaction Documents, or seeking material damages in
connection with such transactions.

 

9.                                      INDEMNIFICATION.

 

In consideration of the Investor’s execution and delivery of the Transaction
Documents and acquiring the Securities hereunder and in addition to all of the
Company’s other obligations under the Transaction Documents, the Company shall
defend, protect, indemnify and hold harmless the Investor and all of its
affiliates, officers, directors, members, managers, employees and direct or
indirect investors and any of the foregoing Person’s agents or other
representatives (including, without limitation, those retained in connection
with the transactions contemplated by this Agreement) (collectively, the
“Indemnitees”) from and against any and all actions, causes of action, suits,
claims, losses, costs, penalties, fees, liabilities and damages, and expenses in
connection therewith (irrespective of whether any such Indemnitee is a party to
the action for which indemnification hereunder is sought), and including
reasonable attorneys’ fees and disbursements (the “Indemnified Liabilities”),
incurred by any Indemnitee as a result of, or arising out of, or relating to,
(a) any misrepresentation or breach of any representation or warranty made by
the Company in the Transaction Documents or any other certificate, instrument or
document contemplated hereby or thereby, (b) any breach of any covenant,
agreement or obligation of the Company contained in the Transaction Documents or
any other certificate, instrument or document contemplated hereby or thereby, or
(c) any cause of action, suit or claim brought or made against such Indemnitee
by a third party and arising out of or resulting from the execution, delivery,
performance or the enforcement of the Transaction Documents or any other
certificate, instrument or document contemplated hereby or thereby, other than,
in the case of clause (c), with respect to Indemnified Liabilities which
directly and primarily result from the fraud, gross negligence or willful
misconduct of an Indemnitee. The indemnity in this Section 9 shall not apply to
amounts paid in settlement of any claim if such settlement is effected without
the prior written consent of the Company, which consent shall not be
unreasonably withheld, conditioned or delayed. To the extent that the foregoing
undertaking by the Company may be unenforceable for any reason, the Company
shall make the maximum contribution to the payment and satisfaction of each of
the Indemnified Liabilities which is permissible under applicable law. Payment
under this indemnification shall be made within thirty (30) days from the date
the Investor makes written request for it. A certificate containing reasonable
detail as to the amount of Indemnified Liabilities to which an Indemnitee is
entitled to indemnification under this Section 9  shall be conclusive evidence,
absent manifest error, of the amount of such Indemnified Liabilities due from
the Company to the Investor. If any action shall be brought against any
Indemnitee in respect of which indemnity may be sought pursuant to this
Agreement, such Indemnitee shall promptly notify the Company in writing, and the
Company shall have the right to assume the defense thereof with counsel of its
own choosing reasonably acceptable to the Indemnitee. Any Indemnitee shall have
the right to employ separate counsel in any such action and participate in the
defense thereof, but the fees and expenses of such counsel shall

 

27

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be at the expense of such Indemnitee, except to the extent that (i) the
employment thereof has been specifically authorized by the Company in writing,
(ii) the Company has failed after a reasonable period of time to assume such
defense and to employ counsel or (iii) in such action there is, in the
reasonable opinion of such separate counsel, a material conflict on any material
issue between the position of the Company and the position of such Indemnitee,
in which case the Company shall be responsible for the reasonable fees and
expenses of no more than one such separate counsel.

 

10.                               EVENTS OF DEFAULT.

 

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

 

(a)                                 the effectiveness of a registration
statement registering the resale of the Securities lapses for any reason
(including, without limitation, the issuance of a stop order or similar order)
or such registration statement (or the prospectus forming a part thereof) is
unavailable to the Investor for resale of any or all of the Securities required
to be registered under the Registration Rights Agreement, and such lapse or
unavailability continues for a period of ten (10) consecutive Business Days or
for more than an aggregate of thirty (30) Business Days in any 365-day period,
but excluding a lapse or unavailability where (i) the Company terminates a
registration statement after the Investor has confirmed in writing that all of
the Securities covered thereby have been resold or (ii) the Company supersedes
one registration statement with another registration statement, including
(without limitation) by terminating a prior registration statement when it is
effectively replaced with a new registration statement covering Securities
(provided in the case of this clause (ii) that all of the Securities covered by
the superseded (or terminated) registration statement that have not theretofore
been resold are included in the superseding (or new) registration statement);

 

(b)                                 the suspension of the Common Stock from
trading on the Principal Market for a period of one (1) Business Day, provided
that the Company may not direct the Investor to purchase any shares of Common
Stock during any such suspension;

 

(c)                                  the delisting of the Common Stock from The
Nasdaq Global Market, provided, however, that the Common Stock is not
immediately thereafter trading on the New York Stock Exchange, The Nasdaq
Capital Market, The Nasdaq Global Select Market, the NYSE American, the NYSE
Arca, the OTC Bulletin Board, the OTCQX operated by the OTC Markets Group, Inc.
or the OTCQB operated by the OTC Markets Group, Inc. (or nationally recognized
successor to any of the foregoing);

 

(d)                                 If at any time after the Commencement Date,
the Exchange Cap is reached unless and until stockholder approval is obtained
pursuant to Section 2(f) hereof. The Exchange Cap shall be deemed to be reached
at such time if, upon submission of a Regular Purchase Notice or Accelerated
Purchase Notice under this Agreement, the issuance of such shares of Common
Stock would exceed that number of shares of Common Stock which the Company may
issue under this Agreement without breaching the Company’s obligations under the
rules or regulations of the Principal Market;

 

(e)                                  the failure for any reason by the Transfer
Agent to issue  Purchase Shares to the Investor within three (3) Business Days
after the applicable Purchase Date, Accelerated Purchase Date or Additional
Accelerated Purchase Date (as applicable) on which the Investor is entitled to
receive such Purchase Shares;

 

(f)                                   the Company breaches any representation,
warranty, covenant or other term or condition under any Transaction Document if
such breach could have a Material Adverse Effect and, except in the

 

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case of a breach of a covenant which is reasonably curable, only if such breach
continues for a period of at least five (5) Business Days;

 

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

 

(h)                                 if the Company, pursuant to or within the
meaning of any Bankruptcy Law, (i) commences a voluntary case, (ii) consents to
the entry of an order for relief against it in an involuntary case,
(iii) consents to the appointment of a Custodian of it or for all or
substantially all of its property, or (iv) makes a general assignment for the
benefit of its creditors or is generally unable to pay its debts as the same
become due;

 

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

 

(j)                                    if at any time the Company is not
eligible to transfer its Common Stock electronically as DWAC Shares.

 

In addition to any other rights and remedies under applicable law and this
Agreement, so long as an Event of Default has occurred and is continuing, or if
any event which, after notice and/or lapse of time, would become an Event of
Default, has occurred and is continuing, the Company shall not deliver to the
Investor any Regular Purchase Notice or Accelerated Purchase Notice.

 

11.                               TERMINATION

 

This Agreement may be terminated only as follows:

 

(a)                                 If pursuant to or within the meaning of any
Bankruptcy Law, the Company commences a voluntary case or any Person commences a
proceeding against the Company, a Custodian is appointed for the Company or for
all or substantially all of its property, or the Company makes a general
assignment for the benefit of its creditors (any of which would be an Event of
Default as described in Sections 10(f), 10(g) and 10(h) hereof), this Agreement
shall automatically terminate without any liability or payment (except as set
forth below) without further action or notice by any Person.

 

(b)                                 In the event that the Commencement shall not
have occurred on or before September 30, 2019, due to the failure to satisfy the
conditions set forth in Sections 7 and 8 above with respect to the Commencement,
either the Company or the Investor shall have the option to terminate this
Agreement at the close of business on such date or thereafter without liability
of any party to any other party (except as set forth below); provided, however,
that the right to terminate this Agreement under this Section 11(b) shall not be
available to any party if such party is then in breach of any covenant or
agreement contained in this Agreement or any representation or warranty of such
party contained in this Agreement fails to be true and correct such that the
conditions set forth in Section 7(d) or Section 8(e), as applicable, could not
then be satisfied.

 

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

 

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

 

(e)                                  If, for any reason or for no reason, the
full Available Amount has not been purchased in accordance with Section 2 of
this Agreement by the Maturity Date, this Agreement shall automatically
terminate on the Maturity Date, without any action or notice on the part of any
party and without any liability whatsoever of any party to any other party under
this Agreement (except as set forth below).

 

Except as set forth in Sections 11(a) (in respect of an Event of Default under
Sections 10(g), 10(h) and 10(i)), 11(d) and 11(e), any termination of this
Agreement pursuant to this Section 11 shall be effected by written notice from
the Company to the Investor, or the Investor to the Company, as the case may be,
setting forth the basis for the termination hereof. The representations and
warranties and covenants of the Company and the Investor contained in Sections
3, 4, 5, and 6 hereof, the indemnification provisions set forth in Section 9
hereof and the agreements and covenants set forth in Sections 10, 11 and 12
shall survive the Commencement and any termination of this Agreement, except
that Section 4 and the first sentence of Section 5(f) shall not survive any
termination of this Agreement pursuant to Section 11(b). No termination of this
Agreement shall (i) affect the Company’s or the Investor’s rights or obligations
under (A) this Agreement with respect to pending Regular Purchases, Accelerated
Purchases, and Additional Accelerated Purchases and the Company and the Investor
shall complete their respective obligations with respect to any pending Regular
Purchases, Accelerated Purchases and Additional Accelerated Purchases under this
Agreement and (B) the Registration Rights Agreement, which shall survive any
such termination, or (ii) be deemed to release the Company or the Investor from
any liability for intentional misrepresentation or willful breach of any of the
Transaction Documents.

 

12.                               MISCELLANEOUS.

 

(a)                                 Governing Law; Jurisdiction; Jury Trial. The
corporate laws of the State of Delaware shall govern all issues concerning the
relative rights of the Company and its stockholders. All other questions
concerning the construction, validity, enforcement and interpretation of this
Agreement and the other Transaction Documents shall be governed by the internal
laws of the State of New York, without giving effect to any choice of law or
conflict of law provision or rule (whether of the State of New York or any other
jurisdictions) that would cause the application of the laws of any jurisdictions
other than the State of New York. Each party hereby irrevocably submits to the
exclusive jurisdiction of the state and federal courts sitting in the State of
New York, Borough of Manhattan, for the adjudication of any dispute hereunder or
under the other Transaction Documents or in connection herewith or therewith, or
with any transaction contemplated hereby or discussed herein, and hereby
irrevocably waives, and agrees not to assert in any suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of any such
court, that such suit, action or proceeding is brought in an inconvenient forum
or that the venue of such suit, action or proceeding is improper. Each party
hereby irrevocably waives personal service of process and consents to process
being served in any such suit, action or proceeding by mailing a copy thereof to
such party at the address for such notices to it under this Agreement and agrees
that such service shall constitute good and sufficient service of process and
notice thereof. Nothing contained herein shall be deemed to limit in any way any
right to serve process in any manner permitted by law. EACH PARTY HEREBY
IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY
TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR
ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

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(b)                                 Counterparts. This Agreement may be executed
in two or more identical counterparts, all of which shall be considered one and
the same agreement and shall become effective when counterparts have been signed
by each party and delivered to the other party; provided that a facsimile
signature or signature delivered by e-mail in a “.pdf” format data file shall be
considered due execution and shall be binding upon the signatory thereto with
the same force and effect as if the signature were an original signature.

 

(c)                                  Headings. The headings of this Agreement
are for convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.

 

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

 

(e)                                  Entire Agreement. The Transaction Documents
supersede all other prior oral or written agreements between the Investor, the
Company, their affiliates and Persons acting on their behalf with respect to the
subject matter thereof, and this Agreement, the other Transaction Documents and
the instruments referenced herein contain the entire understanding of the
parties with respect to the matters covered herein and therein and, except as
specifically set forth herein or therein, neither the Company nor the Investor
makes any representation, warranty, covenant or undertaking with respect to such
matters. The Company acknowledges and agrees that is has not relied on, in any
manner whatsoever, any representations or statements, written or oral, other
than as expressly set forth in the Transaction Documents.

 

(f)                                   Notices. Any notices, consents or other
communications required or permitted to be given under the terms of this
Agreement must be in writing and will be deemed to have been delivered: (i) upon
receipt when delivered personally; (ii) upon receipt when sent by facsimile or
email (provided confirmation of transmission is mechanically or electronically
generated and kept on file by the sending party); or (iii) one Business Day
after deposit with a nationally recognized overnight delivery service, in each
case properly addressed to the party to receive the same. The addresses for such
communications shall be:

 

If to the Company:

 

Leap Therapeutics, Inc.

47 Thorndike Street, Suite B1-1
Cambridge, MA 02141

Telephone:                                   617-714-0360

Facsimile:                                         (617) 395-2647

E-mail:                                                        donsi@leaptx.com

Attention:                                         Douglas E. Onsi, Chief
Financial Officer

 

With a copy to (which shall not constitute notice or service of process):

 

Morgan, Lewis &Bockius, LLP

One Federal Street

Boston, MA

Telephone:                                   (617) 951-8000

Facsimile:

 

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E-mail:                                                       
julio.vega@morganlewis.com

Attention:                                         Julio E. Vega, Esq.

 

If to the Investor:

 

Lincoln Park Capital Fund, LLC

440 North Wells, Suite 410

Chicago, IL 60654

Telephone:                                   312.822.9300

Facsimile:                                         312.822.9301

E-mail:                                                       
jscheinfeld@lpcfunds.com/jcope@lpcfunds.com

Attention:                                         Josh Scheinfeld/Jonathan Cope

 

With a copy to (which shall not constitute notice or service of process):

 

K&L Gates, LLP

200 S. Biscayne Blvd., Ste. 3900

Miami, Florida 33131

Telephone:                                   305.539.3306

Facsimile:                                         305.358.7095

E-mail:                                                       
clayton.parker@klgates.com

Attention:                                         Clayton E. Parker, Esq.

 

If to the Transfer Agent:

 

Continental Stock Transfer & Trust Company

1 State Street 30th Floor

New York, New York 10004

Tel:                                                                          
212.845.3296

E-mail:                                                       
mlloyd@continentalstock.com

Attention:                                         Margaret Lloyd, Vice
President & Account Administrator

 

or at such other address and/or facsimile number and/or to the attention of such
other Person as the recipient party has specified by written notice given to
each other party three (3) Business Days prior to the effectiveness of such
change. Written confirmation of receipt (A) given by the recipient of such
notice, consent or other communication, (B) mechanically or electronically
generated by the sender’s facsimile machine or email account containing the
time, date, and recipient facsimile number or email address, as applicable, and
an image of the first page of such transmission or (C) provided by a nationally
recognized overnight delivery service, shall be rebuttable evidence of personal
service, receipt by facsimile, email or receipt from a nationally recognized
overnight delivery service in accordance with clause (i), (ii) or (iii) above,
respectively.

 

(g)                                  Successors and Assigns. This Agreement
shall be binding upon and inure to the benefit of the parties and their
respective successors and assigns. The Company shall not assign this Agreement
or any rights or obligations hereunder without the prior written consent of the
Investor, including by merger or consolidation. The Investor may not assign its
rights or obligations under this Agreement.

 

(h)                                 No Third Party Beneficiaries. This Agreement
is intended for the benefit of the parties hereto and their respective permitted
successors and assigns, and is not for the benefit of, nor may any provision
hereof be enforced by, any other Person.

 

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(i)                                     Publicity. The Company shall afford the
Investor and its counsel with the opportunity to review and comment upon, shall
consult with the Investor and its counsel on the form and substance of, and
shall give due consideration to all such comments from the Investor or its
counsel on, any press release, SEC filing or any other public disclosure by or
on behalf of the Company relating to the Investor, its purchases hereunder or
any aspect of the Transaction Documents or the transactions contemplated
thereby, not less than 24 hours prior to the issuance, filing or public
disclosure thereof. At least 24 hours prior to any release, filing or use by the
Company of any such any such press release, SEC filing or other public
disclosure, the Investor must be provided with a final version of any such press
release, SEC filing or other public disclosure if it has material changes with
respect to Investor or any aspect of Investor’s purchases hereunder or the
transactions contemplated under any of the Transactions Documents from the
version of any such press release, SEC filing or other public disclosure
previously provided for review and commentary by the Investor and its counsel
pursuant to the foregoing provisions of this Section 12(i). The Company agrees
and acknowledges that its failure to fully comply with this provision
constitutes a Material Adverse Effect. Nothing in this section shall be deemed
to modify Section 5(a) hereto or the provisions of the Registration Rights
Agreement.

 

(j)                                    Further Assurances. Each party shall do
and perform, or cause to be done and performed, all such further acts and
things, and shall execute and deliver all such other agreements, certificates,
instruments and documents, as the other party may reasonably request in order to
consummate and make effective, as soon as reasonably possible, the Commencement,
and to carry out the intent and accomplish the purposes of this Agreement and
the consummation of the transactions contemplated hereby.

 

(k)                                 No Financial Advisor, Placement Agent,
Broker or Finder. The Company represents and warrants to the Investor that it
has not engaged any financial advisor, placement agent, broker or finder in
connection with the transactions contemplated hereby. The Investor represents
and warrants to the Company that it has not engaged any financial advisor,
placement agent, broker or finder in connection with the transactions
contemplated hereby. The Company shall be responsible for the payment of any
fees or commissions, if any, of any financial advisor, placement agent, broker
or finder relating to or arising out of the transactions contemplated hereby.
The Company shall pay, and hold the Investor harmless against, any liability,
loss or expense (including, without limitation, reasonable attorneys’ fees and
out of pocket expenses) arising in connection with any such claim.

 

(l)                                     No Strict Construction. The language
used in this Agreement will be deemed to be the language chosen by the parties
to express their mutual intent, and no rules of strict construction will be
applied against any party.

 

(m)                             Remedies, Other Obligations, Breaches and
Injunctive Relief. The Investor’s remedies provided in this Agreement,
including, without limitation, the Investor’s remedies provided in Section 9,
shall be cumulative and in addition to all other remedies available to the
Investor under this Agreement, at law or in equity (including a decree of
specific performance and/or other injunctive relief).  No remedy of the Investor
contained herein shall be deemed a waiver of compliance with the provisions
giving rise to such remedy and nothing herein shall limit the Investor’s right
to pursue actual damages for any failure by the Company to comply with the terms
of this Agreement. The Company acknowledges that a breach by it of its
obligations hereunder will cause irreparable harm to the Investor and that the
remedy at law for any such breach may be inadequate. The Company therefore
agrees that, in the event of any such breach or threatened breach, the Investor
shall be entitled, in addition to all other available remedies, to an injunction
restraining any breach, without the necessity of showing economic loss and
without any bond or other security being required.

 

(n)                                 Enforcement Costs. If: (i) this Agreement or
any other Transaction Document is placed by the Investor in the hands of an
attorney for enforcement or is enforced by the Investor through any

 

33

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legal proceeding, in each case in connection with any of the Company’s
obligations under this Agreement or such other Transaction Document, as
applicable; (ii) an attorney is retained to represent the Investor in any
bankruptcy, reorganization, receivership or other proceedings affecting
creditors’ rights and involving a claim under this Agreement; or (iii) an
attorney is retained to represent the Investor in any other proceedings
whatsoever in connection with this Agreement or any other Transaction Document
by the Company, then the Company shall pay to the Investor, as incurred by the
Investor, all reasonable costs and expenses including attorneys’ fees incurred
in connection therewith, in addition to all other amounts due hereunder.  If:
(1) this Agreement or any other Transaction Document is placed by the Company in
the hands of an attorney for enforcement or is enforced by the Company through
any legal proceeding, in each case in connection with any of the Investor’s
obligations under this Agreement or such other Transaction Document, as
applicable;  (2) an attorney is retained to represent the Company in any
bankruptcy, reorganization, receivership or other proceedings affecting
creditors’ rights and involving a claim under this Agreement; or (3) an attorney
is retained to represent the Company in any other proceedings whatsoever in
connection with this Agreement, then the Investor shall pay to the Company, as
incurred by the Company, all reasonable costs and expenses including reasonable
attorneys’ fees incurred in connection therewith, in addition to all other
amounts due hereunder. All amounts paid hereunder shall be immediately refunded
upon a finding in any such legal proceeding that the party to which costs and
expenses are paid pursuant to this Section 12(n) is in breach of this Agreement
or any other Transaction Document with respect to any matter at issue in such
legal proceeding.

 

(o)                                 Amendment and Waiver; Failure or Indulgence
Not Waiver. No provision of this Agreement may be amended or waived by the
parties from and after the date that is one (1) Business Day immediately
preceding the filing of the Registration Statement with the SEC. Subject to the
immediately preceding sentence, (i) no provision of this Agreement may be
amended other than by a written instrument signed by both parties hereto and
(ii) no provision of this Agreement may be waived other than in a written
instrument signed by the party against whom enforcement of such waiver is
sought. No failure or delay in the exercise of any power, right or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other right, power or privilege.

 

(p)                                 Adjustments for Share Splits. The parties
acknowledge and agree that all share-related numbers contained in this Agreement
shall be adjusted to take into account any reorganization, recapitalization,
non-cash dividend, stock split or other similar transaction effected with
respect to the Common Stock except as specifically stated herein.

 

** Signature Page Follows **

 

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

 

 

THE COMPANY:

 

 

 

LEAP THERAPEUTICS, INC.

 

 

 

 

By:

/s/ Christopher K. Mirabelli

 

Name:

Christopher K. Mirabelli

 

Title:

President and Chief Executive Officer

 

 

 

INVESTOR:

 

 

 

LINCOLN PARK CAPITAL FUND, LLC

 

BY: LINCOLN PARK CAPITAL, LLC

 

BY: ALEX NOAH INVESTORS, INC.

 

 

 

 

By:

/s/ Jonathan Cope

 

Name:

Jonathan Cope

 

Title:

President

 

35

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EXHIBITS

 

Exhibit A                                                                                            
Form of Company Counsel Opinion

Exhibit B                                                                                            
Form of Officer’s Certificate

Exhibit C                                                                                            
Form of Resolutions of Board of Directors of the Company

Exhibit D                                                                                            
Form of Secretary’s Certificate

Exhibit E                                                                                             
Form of Letter to Transfer Agent

 

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EXHIBIT A

 

FORM OF COMPANY COUNSEL OPINION

 

Capitalized terms used herein but not defined herein, have the meaning set forth
in the Purchase Agreement.  Based on the foregoing, and subject to the
assumptions and qualifications set forth herein, we are of the opinion that:

 

1.                                      The Company is a corporation validly
existing and in corporate good standing under the Delaware General Corporation
Law.

 

2.                                      The Company has the corporate power to
execute and deliver, and perform its obligations under, each Transaction
Document to which it is a party.  To our knowledge, the Company has the
corporate power to conduct its business as it is now conducted as described in
the Registration Statement, and to own and use the properties owned and used by
it.

 

3.                                      The execution, delivery and performance
by the Company of the Transaction Documents to which it is a party have been
duly authorized by all necessary corporate action on the part of the Company,
except that the approval of the Company’s stockholders in accordance with the
rules of the Nasdaq Stock Market LLC would be required in the event that the
number of Purchase Shares to be issued pursuant to the Purchase Agreement were
to exceed the Exchange Cap.  The execution and delivery of the Transaction
Documents by the Company, the performance of the obligations of the Company
thereunder and the consummation by it of the transactions contemplated therein
have been duly authorized and approved by the Company’s Board of Directors and
no further consent, approval or authorization of the Company, its Board of
Directors or its stockholders is required, except that the approval of the
Company’s stockholders in accordance with the rules of the Nasdaq Stock Market
LLC would be required in the event that the number of Purchase Shares to be
issued pursuant to the Purchase Agreement were to exceed the Exchange Cap.  The
Transaction Documents to which the Company is a party have been duly executed
and delivered by the Company and are the valid and binding obligations of the
Company, enforceable against the Company in accordance with their terms except
as such enforceability may be limited by general principles of equity or
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting creditor’s rights and remedies.

 

4.                                      The execution, delivery and performance
by the Company of the Transaction Documents, the consummation by the Company of
the transactions contemplated thereby including the offering, sale and issuance
of the Commitment Shares and the Purchase Shares in accordance with the terms
and conditions of the Purchase Agreement, and fulfillment and compliance with
terms of the Transaction Documents, does not and shall not: (i) conflict with,
constitute a breach of or default (or an event which, with the giving of notice
or lapse of time or both, constitutes or could constitute a breach or a
default), under (a) the Certificate of Incorporation or the Bylaws of the
Company, (b) to our knowledge, any material agreement, note, lease, mortgage,
deed or other material instrument to which the Company is a party or by which
the Company or any of its assets are bound and that is filed as an exhibit to
the Registration Statement (collectively, “Material Agreements”), (ii) result in
any violation of the Delaware General Corporation Law or any Federal or New York
law, rule or regulation which, in our experience, is generally applicable to
similar transactions, provided, however, that we express no opinion as to
federal or state securities or “blue sky” laws, or (iii) violate any order,
writ, injunction or decree known to us that is applicable to the Company or any
of its subsidiaries.

 

37

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5.                                      The issuance of the Purchase Shares and
the Commitment Shares pursuant to the terms and conditions of the Transaction
Documents has been duly authorized by all necessary corporate action on the part
of the Company, except that the approval of the Company’s stockholders in
accordance with the rules of the Nasdaq Stock Market LLC would be required in
the event that the number of Purchase Shares to be issued pursuant to the
Purchase Agreement were to exceed the Exchange Cap.  When issued in accordance
with the Purchase Agreement, the Commitment Shares shall be validly issued,
fully paid and non-assessable, and to our knowledge, free of all rights of first
refusal and preemptive rights that may exist under the Delaware General
Corporation Law, the Certificate of Incorporation, the By-Laws, or any provision
of any Material Agreement. 10,533,522 shares of Common Stock have been properly
reserved for issuance as Purchase Shares under the Purchase Agreement. When
issued and paid for in accordance with the Purchase Agreement, the Purchase
Shares shall be validly issued, fully paid and non-assessable, and to our
knowledge, free of all rights of first refusal and preemptive rights that may
exist under the Delaware General Corporation Law, the Certificate of
Incorporation, the By-Laws, or any provision of any Material Agreement.

 

6.                                      Based solely on our review of the
Certificate of Incorporation, as of the date hereof, the authorized capital
stock of the Company consists of   ,   ,    shares of common stock, $0.001 par
value per share, and shares of preferred stock, $0.001 par value per share of
which to our knowledge            and shares, respectively, are issued and
outstanding.

 

7.                                      Assuming the accuracy of the
representations and your compliance with the covenants made by you in the
Transaction Documents, the offering, sale and issuance of the Commitment Shares
and the Purchase Shares to you pursuant to the Transaction Documents is exempt
from registration under the Securities Act.

 

8.                                      No authorization, approval, consent,
filing or other order of any federal or state governmental body, regulatory
agency, or stock exchange or market, or any court, is required to be obtained by
the Company to enter into and perform its obligations under the Transaction
Documents or for the Company to issue and sell the Commitment Shares and the
Purchase Shares as contemplated by the Transaction Documents, except such as
have been obtained or made by the Company and are in full force and effect under
the Securities Act, state securities or “blue sky”  laws or the rules and
regulations of The Nasdaq Stock Market LLC and except for the filing of a Form D
Notice with the SEC and other notifications required by applicable state
securities or “blue sky” laws.

 

9.                                      The Company is not, and after giving
effect to the issuance of the Commitment Shares and the Purchase Shares and the
application of the proceeds as described in the Registration Statement, will not
be required to register as an investment company under the Investment Company
Act of 1940, as amended.

 

10.                               Except as described in the Registration
Statement, none of the Material Agreements grants to any person the right to
require the Company to file a registration statement under the Securities Act
with respect to any securities of the Company owned or to be owned by such
person or to require the Company to include such securities in the securities
registered pursuant to the Registration Statement or in any securities being
registered pursuant to any other registration statement filed by the Company
under the Securities Act.

 

[THE FOLLOWING MAY BE MADE IN A SEPARATE NEGATIVE ASSURANCES LETTER]

 

38

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As counsel to the Company, we reviewed the Registration Statement and the
Prospectus, and participated in conferences with your representatives and your
counsel, officers and other representatives of the Company and representatives
of the Company’s independent public accountants regarding such documents and
information and related matters.

 

The purpose of our professional engagement was not to establish or confirm
factual matters set forth in the Registration Statement or the Prospectus, and
we have not undertaken any obligation to verify independently any of those
factual matters.  Moreover, many of the determinations made in the preparation
of the Registration Statement and the Prospectus involve matters of a non-legal
nature.

 

Subject to the foregoing, and on the basis of the information that we gained in
the course of performing the services referred to above, we confirm to you that
nothing came to our attention that caused us to believe that:  (a) the
Registration Statement, as of its effective date, contained an untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, or (b) the
Prospectus, as of its date and as of the date and time of delivery of this
letter, contained or contains any untrue statement of a material fact or omitted
or omits to state any material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading; provided,
however, that we are not passing upon and do not assume any responsibility for,
nor have we independently verified, the accuracy, completeness or fairness of
the statements contained in the Registration Statement and the Prospectus, and
we do not express any belief with respect to the financial statements, the notes
thereto, and the related schedules and other financial and/or accounting data
derived therefrom, or other financial and/or accounting data or financial and/or
accounting information, or the reports of management’s assessment of the
effectiveness of internal control over financial reporting [or the auditor’s
attestation reports thereon], each as contained in or incorporated by reference
into the Registration Statement or Prospectus.

 

We inform you that the Registration Statement became effective under the
Securities Act on        , 2019 and that no stop order suspending the
effectiveness of the Registration Statement has been issued under the Securities
Act.

 

We are not representing the Company in any pending litigation in which it is a
named defendant that challenges the validity or enforceability of, or seeks to
enjoin the performance of, the Transaction Documents.

 

Further, we confirm to you that the Registration Statement, as of its effective
date, and the Prospectus, as of its date, (except in each case as to the
financial statements, the notes thereto, schedules and other financial and
accounting data included therein or omitted therefrom, as to which we express no
opinion) appeared on its face to comply as to form, in all material respects,
with the requirements of the Securities Act and the rules and regulations of the
SEC thereunder.

 

39

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EXHIBIT B

 

FORM OF OFFICER’S CERTIFICATE

 

This Officer’s Certificate (“Certificate”) is being delivered pursuant to
Section 8(e) of that certain Purchase Agreement dated as of July 10, 2019,
(“Purchase Agreement”), by and between LEAP THERAPEUTICS, INC., a Delaware
corporation (the “Company”), and LINCOLN PARK CAPITAL FUND, LLC (the
“Investor”).  Terms used herein and not otherwise defined shall have the
meanings ascribed to them in the Purchase Agreement.

 

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

 

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

 

2.                                      The representations and warranties of
the Company in Section 4 of the Purchase Agreement are true and correct in all
material respects (except to the extent that any of such representations and
warranties is already qualified as to materiality in Section 4 of the Purchase
Agreement, in which case, such representations and warranties are true and
correct without further qualification) as of the date when made and as of the
Commencement Date as though made at that time (except for representations and
warranties that speak as of a specific date, in which case such representations
and warranties are true and correct as of such date);

 

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

 

4.                                      The Company has not taken any steps, and
does not currently expect to take any steps, to seek protection pursuant to any
Bankruptcy Law nor does the Company or any of its Subsidiaries have any
knowledge or reason to believe that its creditors intend to initiate involuntary
bankruptcy or insolvency proceedings.

 

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

 

 

 

 

Name:

 

Title:

 

The undersigned as Secretary of LEAP THERAPEUTICS, INC., a Delaware corporation,
hereby certifies, solely on behalf of the Company and not in his individual
capacity, that             is the duly elected, appointed, qualified and acting
         of           and that the signature appearing above is his genuine
signature.

 

 

 

 

Secretary

 

40

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EXHIBIT C

 

FORM OF COMPANY RESOLUTIONS

FOR SIGNING PURCHASE AGREEMENT

 

UNANIMOUS WRITTEN CONSENT OF

LEAP THERAPEUTICS INC.

 

In accordance with the corporate laws of the state of Delaware, the undersigned,
being all of the directors of LEAP THERAPEUTICS, INC., a Delaware corporation
(the “Corporation”) do hereby consent to and adopt the following resolutions as
the action of the Board of Directors for and on behalf of the Corporation and
hereby direct that this Consent be filed with the minutes of the proceedings of
the Board of Directors:

 

WHEREAS, there has been presented to the Board of Directors of the Corporation a
draft of the Purchase Agreement (the “Purchase Agreement”) by and between the
Corporation and Lincoln Park Capital Fund, LLC (“Lincoln Park”), providing for
the purchase by Lincoln Park of up to Twenty Million Dollars ($20,000,000) of
the Corporation’s common stock, $0.001 par value per share (the “Common Stock”);
and

 

WHEREAS, after careful consideration of the Purchase Agreement, the documents
incident thereto and other factors deemed relevant by the Board of Directors,
the Board of Directors has determined that it is advisable and in the best
interests of the Corporation to engage in the transactions contemplated by the
Purchase Agreement, including, but not limited to, the issuance of 330,000
shares of Common Stock to Lincoln Park as a commitment fee (the “Commitment
Shares”) and the sale of shares of Common Stock to Lincoln Park up to the
available amount under the Purchase Agreement (the “Purchase Shares”).

 

Transaction Documents

 

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

 

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

 

FURTHER RESOLVED, that the terms and provisions of the forms of Commencement
Irrevocable Transfer Agent Instructions and Notice of Effectiveness of
Registration Statement (collectively, the “Instructions”) are hereby approved
and the Authorized Officers are authorized to execute and deliver the
Instructions on behalf of the Corporation in accordance with the Purchase

 

41

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Agreement, with such amendments, changes, additions and deletions as the
Authorized Officers may deem appropriate and approve on behalf of, the
Corporation, such approval to be conclusively evidenced by the signature of an
Authorized Officer thereon; and

 

Execution of Purchase Agreement

 

FURTHER RESOLVED, that the Corporation be and it hereby is authorized to execute
the Purchase Agreement providing for the purchase of up to Twenty Million
Dollars ($20,000,000) of the Corporation’s common stock; and

 

Issuance of Common Stock

 

FURTHER RESOLVED, that the Corporation is hereby authorized to issue to Lincoln
Park Capital Fund, LLC, 330,000 shares of Common Stock as Commitment Shares and
that upon issuance of the Commitment Shares pursuant to the Purchase Agreement
the Commitment Shares shall be duly authorized, validly issued, fully paid and
nonassessable with no personal liability attaching to the ownership thereof; and

 

FURTHER RESOLVED, that the Corporation is hereby authorized to issue shares of
Common Stock upon the purchase of Purchase Shares up to the Available Amount
under the Purchase Agreement in accordance with the terms of the Purchase
Agreement and that, upon issuance of the Purchase Shares pursuant to the
Purchase Agreement, the Purchase Shares will be duly authorized, validly issued,
fully paid and nonassessable with no personal liability attaching to the
ownership thereof; and

 

FURTHER RESOLVED, that the Corporation shall initially reserve [          ]
shares of Common Stock for issuance as Purchase Shares under the Purchase
Agreement, and the Corporation shall adjust such reserve from time to time as
shall be necessary, proper or desirable to carry into effect the purpose,
obligations under, and intent of the Purchase Agreement.

 

Approval of Actions

 

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

 

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

 

IN WITNESS WHEREOF, the Board of Directors has executed and delivered this
Consent effective as of [           ], 2019.

 

42

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By:

 

 

[          ], Director

 

 

 

 

 

 

By:

 

 

[          ], Director

 

 

 

 

 

 

By:

 

 

[          ], Director

 

 

 

 

 

 

By:

 

 

[          ], Director

 

 

 

 

 

 

By:

 

 

[          ], Director

 

 

 

 

 

 

By:

 

 

[          ], Director

 

 

 

 

 

 

By:

 

 

[          ], Director

 

being all of the directors of LEAP THERAPEUTICS, INC.

 

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EXHIBIT D

 

FORM OF SECRETARY’S CERTIFICATE

 

This Secretary’s Certificate (“Certificate”) is being delivered pursuant to
Section 8(k) of that certain Purchase Agreement dated as of July 10, 2019
(“Purchase Agreement”), by and between LEAP THERAPEUTICS, INC., a Delaware
corporation (the “Company”) and LINCOLN PARK CAPITAL FUND, LLC (the “Investor”),
pursuant to which the Company may sell to the Investor up to Twenty Million
Dollars ($20,000,000) of the Company’s Common Stock, $0.001 par value per share
(the “Common Stock”).  Terms used herein and not otherwise defined shall have
the meanings ascribed to them in the Purchase Agreement.

 

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

 

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

 

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

 

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

 

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

 

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

 

 

 

 

Secretary

 

The undersigned as             of LEAP THERAPEUTICS, INC., a Delaware
corporation, hereby certifies, solely on behalf of the Company and not in his
individual capacity, that              is the duly elected, appointed, qualified
and acting Secretary of          , and that the signature appearing above is his
genuine signature.

 

 

 

 

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EXHIBIT E

 

FORM OF LETTER TO THE TRANSFER AGENT FOR THE ISSUANCE OF THE COMMITMENTS SHARES
AT SIGNING OF THE PURCHASE AGREEMENT

 

[COMPANY LETTERHEAD]

 

, 2019

 

VIA EMAIL TO: mlloyd@continentalstock.com

 

Continental Stock Transfer & Trust Company

1 State Street 30th Floor

New York, New York 10004

Tel:                                                                          
212.845.3296

E-mail:                                                       
mlloyd@continentalstock.com

Attention:                                         Margaret Lloyd, Vice
President & Account Administrator

Re: Issuance of Common Stock to Lincoln Park Capital Fund, LLC

 

Dear [Mr./Ms.] [          ],

 

On behalf of LEAP THERAPEUTICS, INC., (the “Company”), you are hereby instructed
to issue as soon as possible a share certificate representing an aggregate of
[        ] shares of our common stock in the name of Lincoln Park Capital Fund,
LLC.  The share certificate should be dated [         ], 2019.  I have included
a true and correct copy of a unanimous written consent executed by all of the
members of the Board of Directors of the Company adopting resolutions approving
the issuance of these shares.  The share certificate should bear the following
restrictive legend:

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS, UNLESS SOLD PURSUANT TO: (1) RULE 144 UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR (2) AN OPINION OF HOLDER’S
COUNSEL, IN A CUSTOMARY FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT
OR APPLICABLE STATE SECURITIES LAWS.

 

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The share certificate should be sent as soon as possible via overnight mail to
the following address:

 

Lincoln Park Capital Fund, LLC

440 North Wells, Suite 410

Chicago, IL 60654

Attention: Josh Scheinfeld/Jonathan Cope

 

Thank you very much for your help.  Please call me at (617) 617-714-0360 if you
have any questions or need anything further.

 

LEAP THERAPEUTICS, INC.

 

BY:

 

 

Name:

[                ]

 

Title:

[                ]

 

 

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