Exhibit 10.1

 

H-CYTE, INC.

 

SECURED CONVERTIBLE NOTE AND WARRANT PURCHASE AGREEMENT

 

as of April 17, 2020

 

   

 

 

TABLE OF CONTENTS

 

    Page       1. Purchase and Sale of Convertible Notes and Warrants 1   1.1
Sale and Issuance of Convertible Notes and Warrants 1   1.2 Use of Proceeds 2  
1.3 Defined Terms Used in this Agreement 3 2. Representations and Warranties of
the Company 8   2.1 Organization, Good Standing, Corporate Power and
Qualification 8   2.2 Subsidiaries 8   2.3 Authorization 8   2.4 Valid Issuance
9   2.5 Governmental Consents and Filings; Compliance with Law and Other
Instruments 9   2.6 Financial Condition 10   2.7 Price Protection Termination 10
  2.8 Indebtedness 10   2.9 Title to Assets 10   2.10 SEC Reports 11   2.11
Certain Fees 11   2.12 Private Placement 11   2.13 Investment Company 11   2.14
Listing and Maintenance Requirements 11   2.15 No Integrated Offering 12   2.16
Tax Status 12   2.17 No General Solicitation 12   2.18 Foreign Corrupt Practices
12   2.19 No Disagreements with Accountants and Lawyers; Outstanding SEC
Comments 13   2.19 Acknowledgment Regarding Purchasers’ Purchase of Securities
13   2.21 Disqualification 13   2.21 Acknowledgment Regarding Each Purchaser’s
Trading Activities 13   2.17 Regulation M Compliance 14   2.24 Insurance 14  
2.25 Office of Foreign Assets Control 14   2.26 Money Laundering 14   2.23
Takeover Protections 14   2.28 Promotional Stock Activities 15   2.29 Disclosure
15

 

 i 

 

 

TABLE OF CONTENTS

(continued)

 

    Page       3. Representations and Warranties of the Purchasers 15   3.1
Authorization 15   3.2 Purchase Entirely for Own Account 15   3.3 Restricted
Securities 16   3.4 No Public Market 16   3.5 Legends 16   3.6 Accredited
Investor 16   3.7 U.S. Investors 16   3.8 No General Solicitation 16   3.9
Residence 16   3.10 Exculpation Among Purchasers 17 4. Other Agreements of the
Parties 17   4.1 Acknowledgment of Dilution 17   4.1 Furnishing of Information
17   4.1 Integration 17   4.4 Securities Laws Disclosure; Publicity 18   4.5
Shareholder Rights Plan 18   4.5 Non-Public Information 18   4.7 Indemnification
of Purchasers 19   4.8 Reservation and Listing of Securities 20   4.9 Form D;
Blue Sky Filings 20   4.10 Transfer Agent 20   4.11 Corporate Existence 20  
4.12 Equal Treatment of Purchasers 21   4.13 Conversion and Exercise Procedures
21   4.14 Certain Tax Matters 21   4.15 Purchaser Commitment to Qualified
Financing 21   4.16 Hawes Note 22   4.17 Rights Offering Restrictions 22 5.
Conditions to the Purchasers’ Obligations at each Closing 23   5.1
Representations and Warranties True and Correct 23   5.2 Qualifications 23   5.3
Exemption from Registration Requirements 23   5.4 Consents 23   5.5 No Material
Adverse Effect 23

 

 ii 

 

 

TABLE OF CONTENTS

(continued)

 

    Page     6. Conditions to the Company’s Obligations at each Closing 23   6.1
Representations and Warranties 23   6.1 Qualifications 23 7. Agent 23   7.1
Appointment of Agent 23   7.2 Delegation of Duties 24   7.3 Exculpatory
Provisions 24   7.4 Reliance by the Agent 24   7.5 Non-Reliance on Agent 24  
7.6 Indemnification 24   7.7 Agent in its Individual Capacity 25   7.8 No Action
by Other Purchasers 25 8. Miscellaneous 25   8.1 Survival of Warranties 25   8.2
Communications 25   8.3 Transfer; Successors and Assigns 25   8.4 Governing Law
26   8.5 Dispute Resolution 26   8.6 Counterparts; Facsimile Signatures 26   8.7
Titles and Subtitles 26   8.8 Notices 26   8.9 No Finder’s Fees 26   8.10 Fees
and Expenses 27   8.11 Attorneys’ Fees 27   8.12 Amendments and Waivers 27  
8.13 Severability 27   8.14 No Waiver; Remedies Cumulative 27   8.15 Entire
Agreement 27   8.16 Legal Counsel 28   8.17 Acknowledgment 28

 

Exhibit A Form of Note     Exhibit B Form of Warrant     Exhibit C Form of
Security Agreement     Exhibit D Form of Subsidiary Guaranty     Exhibit E Form
of IP Security Agreement     Exhibit F Form of Subordination Agreement

 

 iii 

 

 

SECURED CONVERTIBLE NOTE AND WARRANT PURCHASE AGREEMENT

 

This Secured Convertible Note and Warrant Purchase Agreement (this “Agreement”)
is entered into as of April 17, 2020 (the “Effective Date”), by and among
H-Cyte, Inc., a Nevada corporation (the “Company”), FWHC Bridge, LLC, a Delaware
limited liability company (the “Lead Purchaser”) and any other Purchaser
delivering a counterpart signature page to this Agreement.

 

The parties agree as follows:

 

1. Purchase and Sale of Convertible Notes and Warrants.

 

1.1. Sale and Issuance of Convertible Notes and Warrants .

 

(a) Prior to the Initial Closing (as defined below), the Lead Purchaser advanced
funds to the Company in the amount of $1,000,000 (the “Advance”) and the Company
executed and delivered to the Lead Purchaser an Amended and Restated Demand Note
in the amount of the Advance (the “Advance Note”).

 

(b) The initial purchase and sale of the Notes contemplated by this Section
1.1(a) (the “Initial Closing”) will take place remotely via the exchange of
documents and signatures on the Effective Date. Subject to the terms and
conditions of this Agreement, at the Initial Closing, the Lead Purchaser and the
other Purchasers party hereto on the Effective Date (the “Initial Purchasers”)
will each advance to the Company an amount equal to the “Bridge Funding
Commitment” amount set forth opposite such Initial Purchaser’s name on Schedule
I to this Agreement and the Company will sell and issue to each Initial
Purchaser a secured convertible promissory note, in the form attached as Exhibit
A to this Agreement in the original principal amount of such Initial Purchaser’s
Bridge Funding Commitment. At the Initial Closing, the Company will also execute
and deliver a separate secured convertible promissory note, also in the form
attached as Exhibit A to this Agreement, to the Lead Purchaser in an amount
equal to the Advance provided by the Lead Purchaser to the Company prior to the
Initial Closing, together with any accrued and unpaid interest thereon (the
“Converted Advance Note”), which such Converted Advance Note will serve as an
amendment of and substitution for the Advance Note. The secured convertible
promissory notes issued at the Initial Closing are referred to herein as the
“Initial Notes”. At the Initial Closing, the Company will also execute and
deliver to each holder of an Initial Note a ten-year warrant to purchase shares
of the Company’s Common Stock, each in the form attached as Exhibit B to this
Agreement (the “Initial Warrants”). For further clarity, the Lead Purchaser will
receive two separate Warrants at the Initial Closing, (i) a Warrant with respect
to the Lead Purchaser’s purchase of an Initial Note at the Initial Closing
through the funding of its Bridge Funding Commitment and (ii) a Warrant with
respect to the issuance of the Converted Advance Note to the Lead Purchaser (the
“Converted Advance Warrant”).

 

   

 

 

(c) Following the Initial Closing, the Company may, subject to the approval of
the Lead Purchaser, offer, issue and sell, on the same price, terms and
conditions as those contained in this Agreement, at one or more subsequent
closings (each, an “Additional Closing”), (i) secured convertible promissory
notes, each in the form attached as Exhibit A to this Agreement (the “Additional
Notes” and together with the Initial Notes, the “Notes”) to the Lead Purchaser
and/or one or more additional investors who is a holder of capital stock of the
Company and executes a counterpart signature page to this Agreement (the
“Additional Purchasers” and together with the Lead Purchaser, the “Purchasers”)
and (ii) ten-year warrants to purchase shares of the Company’s Common Stock each
in the form attached as Exhibit B to this Agreement (the “Additional Warrants”
and together with the Initial Warrants, the “Warrants”). Upon any Additional
Closing, Schedule I to this Agreement shall be updated to reflect any Additional
Notes and Additional Warrants purchased at such Additional Closing.

 

(d) Subject to the terms and conditions of this Agreement, at each Closing, the
Company shall deliver to each applicable Purchaser in addition to their Note(s)
and Warrant(s): (i) the Security Agreement substantially in the form attached
hereto as Exhibit C, duly executed by the Company (the “Security Agreement”),
(ii) the Absolute Guaranty of Payment and Performance in the form attached
hereto as Exhibit D (the “Subsidiary Guaranty”), duly executed by each
Subsidiary of the Company, (iii) the Intellectual Property Security Agreement in
the form attached hereto as Exhibit E, duly executed by the Company (the “IP
Security Agreement”) and (iv) Subordination Agreements, each substantially in
the form attached hereto as Exhibit F, duly executed by each of the holders of
outstanding indebtedness of the Company subordinating their indebtedness to the
rights of the Purchasers under their Notes (the “Subordination Agreements”). For
the avoidance of doubt, the Lead Purchaser shall not be required to deliver a
Subordination Agreement with respect to the Hawes Note.

 

(e) Each purchase of Securities by a Purchaser is a separate transaction from
each other purchase of Securities by any other Purchaser. No Purchaser shall
have any obligation to purchase any Securities or otherwise provide any
additional funding to the Company other than as set forth on Schedule I and in
any event on the terms and subject to the conditions in this Agreement. Any and
all obligations of the Purchasers under the Transaction Documents are several
and not joint and several; no Purchaser shall be liable for the failure of any
other Purchaser to purchase any Securities in accordance with this Section 1.1,
for any breach of representation or warranty by any other Purchaser, or for any
other act or omission by any other Purchaser.

 

(f) Each Warrant issued pursuant to this Agreement shall entitle the Purchaser
holding such Warrant the right to purchase up to one hundred percent (100%) of
the aggregate number of shares of Common Stock into which such Purchaser’s Note
may ultimately be converted, provided, that as partial consideration for the
Advance provided by the Lead Purchaser prior to the Effective Date, the
Converted Advance Warrant shall entitle the holder thereof to purchase up to two
hundred percent (200%) of the aggregate number of shares of Common Stock into
which the Converted Advance Note may ultimately be converted. Any Warrant (other
than the Converted Advance Warrant) issued to a Purchaser pursuant this
Agreement is subject to immediate forfeiture and termination upon a Purchaser
Subscription Default with respect to such Purchaser.

 

1.2. Use of Proceeds. In accordance with the directions of the Board, the
Company will use the proceeds from the sale of the Notes for funding the
Company’s payroll and other general corporate purposes and shall not use such
proceeds: (a) for the satisfaction of any portion of the Company’s debt, (b) for
the redemption of any Common Stock or Common Stock Equivalents, (c) for the
settlement of any outstanding litigation, or (d) in violation of FCPA or OFAC
regulations.

 

 2 

 

 

1.3. Defined Terms Used in this Agreement. The following terms used in this
Agreement have the meanings set forth or referenced below.

 

“Acquiring Person” has the meaning set forth in Section 4.5 of this Agreement.

 

“Action” means any action, claim, suit, inquiry, notice of violation, proceeding
or investigation before or by any court, arbitrator, governmental or
administrative agency or regulatory authority (federal, state, county, local or
foreign), whether commenced or threatened.

 

“Additional Closing” has the meaning set forth in Section 1.1(c) of this
Agreement.

 

“Additional Notes” has the meaning set forth in Section 1.1(c) of this
Agreement.

 

“Additional Purchaser” and “Additional Purchasers” has the meaning set forth in
Section 1.1(b) of this Agreement.

 

“Additional Warrants” has the meaning set forth in Section 1.1(c) of this
Agreement.

 

“Advance” has the meaning set forth in Section 1.1(a) of this Agreement.

 

“Advance Note” has the meaning set forth in Section 1.1(a) of this Agreement.

 

“Affiliate” means, with respect to any specified Person, any other Person who or
which, directly or indirectly, Controls, is Controlled by, or is under common
Control with such specified Person, including, without limitation, any general
partner, officer, director, managing member or manager of such Person or any
venture capital fund or family office now or hereafter existing that is
Controlled by one or more general partners, managing members or managers of, or
shares the same management company with, such Person.

 

“Agreement” has the meaning set forth in the first paragraph of this Agreement.

 

“Applicable Law” means any domestic or foreign, federal, state or local statute,
law, ordinance, policy, guidance, rule, administrative interpretation,
regulation, order, writ, injunction, directive, judgment, decree or other legal
requirement, of any governmental authority applicable to the Company or any of
its properties, assets, operations, officers, directors, employees, consultants
or agents.

 

“Backstop Commitment” means the commitment under the Equity Commitment Agreement
to be entered into immediately prior to the commencement of the Rights Offering
among the Company and the Purchasers, pursuant to which the Purchasers (on a pro
rata basis based on the relative principal amount of their respective Notes,
excluding the Converted Advance Note) will agree to purchase shares of preferred
stock in the Company that are not subscribed for by purchasers in the Rights
Offering at the offering price, subject to a cap equal to the Aggregate
Commitment of the Purchasers (excluding amounts funded under the Converted
Advanced Note) as set forth on Schedule I to this Agreement.

 

“Board” means the Board of Directors of the Company.

 

 3 

 

 

“Bridge Funding Commitment” has the meaning set forth in Section 1.1(b) of this
Agreement.

 

“Business Day” means any day other than a Saturday, Sunday or a day on which
banks are required or permitted to be closed in Tampa, Florida.

 

“Certificate” means the Amended and Restated Articles of Incorporation of the
Company, filed with the Secretary of State of Nevada on July 11, 2019, as
amended by (a) the Certificate of Designation of Preferences, Rights and
Limitations of Series A Convertible Preferred Stock of the Company dated as of
February 3, 2017, (b) the Amended and Restated Certificate of Designation of
Preferences, Rights and Limitations of 5% Series B Preferred Stock of the
Company dated as of November 15, 2019, (c) the Certificate of Designation of
Preferences, Rights and Limitations of Series C Convertible Preferred Stock
dated as of October 17, 2018 and (d) the Certificate of Designation of
Preferences, Rights and Limitations of Series D Preferred Stock of the Company
dated as of November 15, 2019.

 

“Closing” means the Initial Closing and each Additional Closing (if any).

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

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

 

“Common Stock” means shares of the Company’s common stock, par value $0.001 per
share.

 

“Common Stock Equivalents” means any securities of the Company or the
Subsidiaries which would entitle the holder thereof to acquire at any time
Common Stock, including, without limitation, the Notes, the Conversion Shares,
the Warrants, 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.

 

“Company” has the meaning set forth in the first paragraph of this Agreement.

 

“Control” as used with respect to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person, whether through ownership of voting securities, by
contract or otherwise.

 

“Conversion Shares” means, collectively, the shares of the Company’s preferred
stock issuable upon conversion of the Notes and the shares of Common Stock
issuable upon conversion of such shares of preferred stock.

 

“Converted Advance Note” has the meaning set forth in Section 1.1(b) of this
Agreement.

 

“Converted Advance Warrant” has the meaning set forth in Section 1.1(b) of this
Agreement.

 

“Disqualifying Event” has the meaning set forth in Section 2.21 of this
Agreement.

 

 4 

 

 

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

 

“Existing Investment Documents” means, collectively, the Investors’ Rights
Agreement, the Right of First Refusal and Co-Sale Agreement, the Voting
Agreement, and the Certificate.

 

“FCPA” means the Foreign Corrupt Practices Act of 1977, as amended.

 

“Financial Statements” has the meaning set forth in Section 2.6 of this
Agreement.

 

“Hawes Note” has the meaning set forth in Section 4.16 of this Agreement.

 

“Indebtedness” means, with respect to any Person, without duplication, such
Person’s (a) obligations for borrowed money, (b) obligations representing the
deferred purchase price of property or services (other than accounts payable
arising in the ordinary course of such Person’s business payable on terms
customary in the trade and not outstanding more than 90 days past the date of
invoice), (c) obligations, whether or not assumed, secured by Liens or payable
out of the proceeds or production from property now or hereafter owned or
acquired by such Person (but the amount of such Indebtedness shall not exceed
the lesser of such Indebtedness or the value of the property subject to such
Lien), (d) obligations which are evidenced by notes, acceptances, or other debt
instruments, (e) obligations of such Person to purchase securities or other
property arising out of or in connection with the sale of the same or
substantially similar securities or property, (f) obligations under capitalized
leases and obligations created or arising under any conditional sale or other
title retention agreement, (g) contingent obligations, (h) obligations under or
relating to hedging or swap instruments, (i) off-balance sheet liabilities, (j)
obligations under sale and leaseback transactions, and (k) the aggregate undrawn
face amount of all letters of credit issued for the account and/or upon the
application of such Person together with all unreimbursed drawings with respect
thereto.

 

“Initial Closing” has the meaning set forth in Section 1.1(b) of this Agreement.

 

“Initial Notes” has the meaning set forth in Section 1.1(b) of this Agreement.

 

“Initial Purchasers” has the meaning set forth in Section 1.1(b) of this
Agreement.

 

“Initial Warrants” has the meaning set forth in Section 1.1(b) of this
Agreement.

 

“Investors’ Rights Agreement” means the Investors’ Rights Agreement, dated as of
November 15, 2019, among the Company and certain stockholders of the Company, as
it may be amended and/or restated.

 

“IP Security Agreement” has the meaning set forth in Section 1.1(b) of this
Agreement.

 

“Lead Purchaser” has the meaning set forth in the first paragraph of this
Agreement.

 

“Lien” means a lien, charge, pledge, security interest, hypothecation, mortgage,
encumbrance, right of first refusal, preemptive right or other restriction.

 

 5 

 

 

“Material Adverse Effect” means a material adverse effect on the business,
assets (including intangible assets), liabilities, financial condition, property
or results of operations of the Company and its Subsidiaries.

 

“Money Laundering Laws” has the meaning set forth in Section 2.26 of this
Agreement.

 

“Notes” has the meaning set forth in Section 1.1(c) of this Agreement.

 

“OFAC” has the meaning set forth in Section 2.25 of this Agreement.

 

“Organizational Change” has the meaning set forth in Section 4.11 of this
Agreement.

 

“Person” means any individual, corporation, partnership, trust, limited
liability company, association or other entity.

 

“Price Protected Securities” has the meaning set forth in Section 2.7 of this
Agreement.

 

“Purchaser” and “Purchasers” has the meaning set forth in Section 1.1(b) of this
Agreement.

 

“Purchaser Party” has the meaning set forth in Section 4.7 of this Agreement.

 

“Purchaser Subscription Default” has the meaning set forth in Section 4.15(c) of
this Agreement.

 

“Qualified Financing” shall mean a Rights Offering conducted by the Company with
aggregate gross cash proceeds to the Company of not less than $3,600,000 (or
such lesser amount approved in writing by the Lead Purchaser), which shall be
calculated exclusive of (a) any amounts converted under the Notes or any other
convertible notes or other monetary obligations which are converted in
connection with such Qualified Financing or (b) any amounts received by the
Company in connection with the Backstop Commitment at the closing, if any, of
the Backstop Commitment.

 

“Qualified Financing Closing” means (a) the date of the closing of the Rights
Offering, assuming all shares of the Company’s preferred stock offered for
subscription through the Rights Offering are subscribed in full and (b) the date
of the closing of the Backstop Commitment, assuming not all shares of the
Company’s preferred stock offered for subscription through the Rights Offering
are subscribed in full.

 

“Qualified Financing Commitment” has the meaning set forth in Section 4.15(a) of
this Agreement.

 

“Required Filings and Approvals” means collectively, (a) the filings required
pursuant to Section 4.4, (b) the notice and/or application(s) to each applicable
Trading Market for the issuance and sale of the Notes and the listing of the
Conversion Shares for trading thereon in the time and manner required thereby
and (c) the filing of a Form D with the Commission and such filings as are
required to be made under applicable state securities laws.

 

 6 

 

 

“Required Minimum” means, as of any date (updated on a monthly basis), the
maximum aggregate number of shares of Common Stock then issuable pursuant to the
Transaction Documents (including any Warrant Shares or Common Stock issuable
upon conversion of Conversion Shares), multiplied by 1.0.

 

“Right of First Refusal and Co-Sale Agreement” means the Right of First Refusal
and Co-Sale Agreement, dated as of November 15, 2019, among the Company and
certain stockholders of the Company, as it may be amended and/or restated.

 

“Rights Offering” means a subscription rights offering to be conducted by
Company following the Effective Date with the principal purpose of raising
capital in which the existing holders of Common Stock of the Company are offered
the right on a pro rata basis to subscribe for shares of the Company’s newly
authorized series of preferred stock, subject to the restrictions set forth in
Section 4.17 of this Agreement.

 

“SEC Reports” has the meaning set forth in Section 2.10 of this Agreement.

 

“Securities” means the Notes, the Warrants, the Conversion Shares and the
Warrant Shares.

 

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

 

“Security Agreement” has the meaning set forth in Section 1.1(b) of this
Agreement.

 

“Series D Preferred Stock” means the Series D Preferred Stock of the Company,
par value $0.001 per share.

 

“Short Sales” means all “short sales” as defined in Rule 200 of Regulation SHO
under the Exchange Act (but shall not be deemed to include the location and/or
reservation of borrowable shares of Common Stock).

 

“Subordination Agreement” has the meaning set forth in Section 1.1(b) of this
Agreement.

 

“Subsidiary” means any direct or indirect corporation, limited or general
partnership, limited liability company, trust, estate, association, joint
venture or other business entity of which (a) more than 30% of (i) the
outstanding capital stock having (in the absence of contingencies) ordinary
voting power to elect a majority of the board of directors or other managing
body of such entity, (ii) in the case of a partnership or limited liability
company, the interest in the capital or profits of such partnership or limited
liability company or (iii) in the case of a trust, estate, association, joint
venture or other entity, the beneficial interest in such trust, estate,
association or other entity business is, at the time of determination, owned or
controlled directly or indirectly through one or more intermediaries, by such
entity, or (b) is under the actual control of the Company.

 

“Subsidiary Guaranty” has the meaning set forth in Section 1.1(b) of this
Agreement.

 

 7 

 

 

“Trading Day” means a day on which the principal Trading Market is open for
trading.

 

“Trading Market” means the following markets or exchanges on which the Common
Stock is listed or quoted for trading on the date in question: the NYSE American
LLC, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global
Select Market, the New York Stock Exchange, the OTC Bulletin Board, the OTCQX or
OTCQB as maintained by OTC Markets, Inc.

 

“Transaction Documents” means this Agreement, the Security Agreement, the
Subsidiary Guaranty, the IP Security Agreement, the Subordination Agreements,
the Notes and the Warrants.

 

“Voting Agreement” means the Amended and Restated Voting Agreement, dated as of
November 15, 2019, among the Company and certain stockholders of the Company, as
it may be further amended and/or restated.

 

“Warrant Shares” means the shares of Common Stock issued and issuable upon
exercise of the Warrants in accordance with the terms of the Transaction
Documents.

 

“Warrants” has the meaning set forth in Section 1.1(c) of this Agreement.

 

2. Representations and Warranties of the Company . The Company represents and
warrants to each Purchaser that the following representations and warranties are
true and complete as of the applicable Closing at which such Purchaser is
acquiring Notes hereunder. For purposes of these representations and warranties
(other than those in Sections 2.1, 2.2, 2.3, and 2.4), the term “Company” shall
include any Subsidiaries of the Company, unless otherwise noted in this
Agreement.

 

2.1. Organization, Good Standing, Corporate Power and Qualification. The Company
is a corporation duly incorporated, validly existing, and in good standing under
the laws of the State of Nevada and has all requisite corporate power and
authority to carry on its business as presently conducted and as proposed to be
conducted. The Company is duly qualified to transact business and is in good
standing in each jurisdiction in which the failure to so qualify would have a
Material Adverse Effect.

 

2.2. Subsidiaries. Except as set forth on Schedule 2.2, the Company does not
currently own or Control, nor has it ever owned or Controlled, directly or
indirectly, any interest in any other corporation, partnership, trust, joint
venture, limited liability company, association, or other business entity. The
Company is not a participant in any joint venture, partnership or similar
arrangement.

 

2.3. Authorization. All corporate action required to be taken by the Board and
the Company’s stockholders in order to authorize the Company to enter into the
Transaction Documents, and to issue the Notes at the Closing, has been taken or
will be taken prior to the Closing. All action on the part of the officers of
the Company necessary for the execution and delivery of the Transaction
Documents, the performance of all obligations of the Company under the
Transaction Documents to be performed as of the Closing, and the issuance and
delivery of the Securities to be issued at the Closing has been taken or will be
taken prior to the Closing other than in connection with the Required Filings
and Approvals. The Transaction Documents, when executed and delivered by the
Company, will constitute valid and legally binding obligations of the Company,
enforceable against the Company in accordance with their respective terms.

 

 8 

 

 

2.4. Valid Issuance. Assuming the accuracy of the representations of the
Purchasers in Section 3 and subject to the filings described in Section
2.5(a)(ii), the Securities will be issued in compliance with all applicable
federal and state securities laws. Subject to (i) Board approval of, and the
filing of an amendment to, amendment and restatement of, or certificate of
designation with respect to, the Certificate in order to establish the series of
preferred stock issuable upon conversion of the Notes, which have been obtained
or will be obtained in a timely manner and (ii) the valid election to convert
the Note into Conversion Shares in accordance with the terms of the Note, the
Conversion Shares will be validly issued, fully paid, and nonassessable, and
free of restrictions on transfer other than restrictions on transfer under the
Transaction Documents and the Existing Investment Documents, applicable federal
and state securities laws, and Liens created by or imposed by the Purchasers.
Based in part on the representations of the Purchasers in Section 3, and subject
to Section 2.5, the Conversion Shares issuable on conversion of the Notes will
be issued in compliance with all applicable federal and state securities laws.

 

2.5. Governmental Consents and Filings; Compliance with Law and Other
Instruments.

 

(a) Assuming the accuracy of the representations made by the Purchasers in
Section 3, no consent, approval, order or authorization of, or registration,
qualification, designation, declaration or filing with, any federal, state or
local governmental authority is required on the part of the Company in
connection with the consummation of the transactions contemplated by the
Transaction Documents, except for (i) Board and stockholder approval of, and the
filing of an amendment to, amendment and restatement of, or certificate of
designation with respect to, the Certificate in order to establish the series of
any preferred stock issuable upon conversion of the Notes, which have been
obtained or will be obtained in a timely manner, and (ii) filings pursuant to
Regulation D of the Securities Act, and applicable state securities laws, which
have been made or will be made in a timely manner.

 

(b) The transactions contemplated by this Agreement and the other Transaction
Documents will not require any authorization, consent, approval, or waiver from,
or notice to, any third person, except such as will have been validly completed
or obtained prior to the Closing other than the Required Filings and Approvals.
The execution, delivery and performance of the Transaction Documents and the
consummation of the transactions contemplated by the Transaction Documents will
not result in any such violation or be in conflict with or constitute, with or
without the passage of time and giving of notice, either (i) a default under any
such provision, instrument, judgment, order, writ, decree, contract or agreement
or (ii) an event which results in the creation of any lien, charge or
encumbrance upon any assets of the Company or the suspension, revocation,
forfeiture, or non-renewal of any material permit or license applicable to the
Company.

 

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2.6. Financial Condition. The Company has delivered to each Purchaser its
unaudited financial statements (including balance sheet, income statement and
statement of cash flows) for the fiscal year ended December 31, 2019 and for the
3-month period ended March 31, 2020 (collectively, the “Financial Statements”).
The Financial Statements fairly present in all material respects the financial
condition and operating results of the Company as of the dates, and for the
periods, indicated therein, subject to normal year-end audit adjustment (none of
which would be material). Except as set forth in Schedule 2.6 hereto, since
December 31, 2019, the Company has not suffered any Material Adverse Effect and
no event has occurred, and no circumstance exists, that could reasonably be
expected to result in a Material Adverse Effect. The Company has no liabilities,
obligations or commitments of any nature whatsoever, asserted or unasserted,
known or unknown, absolute or contingent, accrued or unaccrued, matured or
unmatured or otherwise except those which are adequately reflected or reserved
against in the most recent financial statements other than (i) those which are
adequately reflected or reserved against in the most recent Financial
Statements, (ii) liabilities incurred in the ordinary course of business
subsequent to March 31, 2020; (iii) obligations under contracts and commitments
incurred in the ordinary course of business (other than as a result of a breach
or default of the Company thereunder); and (iv) liabilities and obligations of a
type or nature not required under the U.S. generally accepted accounting
principles to be reflected in the Financial Statements, which, in all such
cases, individually and in the aggregate would not have a Material Adverse
Effect.

 

2.7. Price Protection Termination. Schedule 2.7 sets forth the holders of all
Common Stock or Common Stock Equivalents (including without limitation, any
option, warrant, convertible note or other instrument issued by the Company that
is at any time convertible into or exercisable or exchangeable for, or otherwise
entitles the holder thereof to receive Common Stock) for which the terms of such
securities provide for anti-dilution (whether weighted, full ratchet or
otherwise) or other similar exercise price or conversion price protection
(“Price Protected Securities”). Notwithstanding the foregoing, Price Protected
Securities does not include any shares of Series D Preferred Stock. The Company
has delivered to the Lead Purchaser instruments duly executed by each such
holder of any Price Protected Securities terminating any anti-dilution or other
price protection features set forth in all Price Protected Securities held by
such holder. Other than with respect to the Series D Preferred Stock, there are
no shares of Common Stock or Common Stock Equivalents outstanding, or any
outstanding option, warrant, convertible note or other instrument issued by the
Company that is at any time convertible into or exercisable or exchangeable for,
or otherwise entitles the holder thereof to receive Common Stock that contain
any anti-dilution or other price protection features which was not terminated
prior to the Initial Closing.

 

2.8. Indebtedness. Schedule 2.8 lists (a) all Indebtedness of the Company and
its Subsidiaries (other than Indebtedness under the Notes) as of the Closing
(along with the amounts outstanding thereunder), (b) the Liens that relate to
such Indebtedness and that encumber the assets of the Company and its
Subsidiaries, (c) the name of each lender thereof, and (d) the amount of any
unfunded commitments, if any, available to the Company and its Subsidiaries in
connection with any such Indebtedness facilities.

 

2.9. Title to Assets. The Company has 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, in each
case free and clear of all Liens except for (a) Liens arising under, or
permitted pursuant to, the Security Agreement, as the same may be amended and/or
restated from time to time, (b) 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 (c) Liens for the payment of
federal, state or other taxes, for which appropriate reserves have been made
therefor in accordance with United States generally accepted accounting
principles applied on a consistent basis during the periods involved and the
payment of which is neither delinquent nor subject to penalties. Any real
property and facilities held under lease by the Company are held by it under
valid, subsisting and enforceable leases with which the Company is in
compliance.

 

 10 

 

 

2.10. SEC Reports. The Company has filed all reports, schedules, forms,
statements and other documents, required to be filed by the Company under
Section 13 or 15(d) of the Exchange Act for the two years preceding the
Effective Date (the foregoing materials, in addition to all schedules, forms,
statements and other documents filed with the Securities and Exchange Commission
for the two years preceding the Effective Date, including any amendments
thereto, the exhibits thereto and documents incorporated by reference therein,
being collectively referred to herein as the “SEC Reports”) on a timely basis or
has received a valid extension of such time of filing and has filed any such SEC
Reports prior to the expiration of any such extension. As of their respective
dates, the SEC Reports complied in all material respects with the requirements
of the Securities Act and the Exchange Act, as applicable, and none of the SEC
Reports, 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 Company has never been an issuer
subject to Rule 144(i) under the Securities Act.

 

2.11. 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. No Purchaser shall have
any 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 2.11
that may be due in connection with the transactions contemplated by the
Transaction Documents.

 

2.12. Private Placement. Assuming the accuracy of the Purchasers’
representations and warranties set forth in Section 3, no registration under the
Securities Act is required for the offer and sale of the Securities by the
Company to the Purchasers as contemplated hereby. The issuance and sale of the
Securities hereunder does not contravene the rules and regulations of the
Trading Market.

 

2.13. Investment Company. The Company is not, and is not an Affiliate of, and
immediately after receipt of payment for the Securities, will not be or be an
Affiliate of, an “investment company” within the meaning of the Investment
Company Act of 1940, as amended. The Company shall conduct its business in a
manner so that it will not become subject to the Investment Company Act of 1940,
as amended.

 

2.14. Listing and Maintenance Requirements. Except as disclosed in the SEC
Reports, the Company has not, in the 12 months preceding the Effective Date,
received notice from any Trading Market on which the Common Stock is or has been
listed or quoted to the effect that the Company is not in compliance with the
listing or maintenance requirements of such Trading Market. The Company is
required to and has made current filings under Section 13 or 15(d) of the
Exchange Act. The Common Stock is currently eligible for electronic transfer
through the Depository Trust Company or another established clearing corporation
and the Company is current in payment of the fees to the Depository Trust
Company (or such other established clearing corporation) in connection with such
electronic transfer.

 

 11 

 

 

2.15. No Integrated Offering. Assuming the accuracy of the Purchasers’
representations and warranties set forth in Section 3, neither the Company, nor,
to the Company’s knowledge, any of its Affiliates, nor any Person acting on its
or 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 cause this offering of the Securities to be integrated with prior
offerings by the Company for purposes of the Securities Act which would require
the registration of any such securities under the Securities Act.

 

2.16. Tax Status. Except for matters that would not, individually or in the
aggregate, have or reasonably be expected to result in a Material Adverse
Effect, the Company (a) has made or filed all United States federal, state and
local income and all foreign income and franchise tax returns, reports and
declarations required by any jurisdiction to which it is subject, (b) 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,
and (c) has set aside on its books provision reasonably adequate for the payment
of all material taxes for periods subsequent to the periods to which such
returns, reports or declarations apply. There are no unpaid taxes in any
material amount claimed to be due by the taxing authority of any jurisdiction,
and the officers of the Company or of any Subsidiary know of no basis for any
such claim.

 

2.17. No General Solicitation. Neither the Company nor, to the Company’s
knowledge, any person acting on behalf of the Company has offered or sold any of
the Securities by any form of general solicitation or general advertising. The
Company has offered the Securities for sale only to the Purchasers and certain
other “accredited investors” within the meaning of Rule 501 under the Securities
Act.

 

2.18. Foreign Corrupt Practices. None of the Company or, the knowledge of the
Company, any agent or other person acting on behalf of the Company has: (a)
directly or indirectly, used any funds for unlawful contributions, gifts,
entertainment or other unlawful expenses related to foreign or domestic
political activity, (b) 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, (c) 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 (d) violated in any
material respect any provision of FCPA. The Company further represents that it
has maintained, and has caused each of its Subsidiaries and affiliates to
maintain, systems of internal controls (including, but not limited to,
accounting systems, purchasing systems and billing systems) and written policies
to ensure compliance with the FCPA or any other applicable anti-bribery or
anti-corruption law, and to ensure that all books and records of the Company
accurately and fairly reflect, in reasonable detail, all transactions and
dispositions of funds and assets. Neither the Company nor any of its officers,
directors or employees are the subject of any allegation, voluntary disclosure,
investigation, prosecution or other enforcement action related to the FCPA or
any other anti-corruption law.

 

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2.19. No Disagreements with Accountants and Lawyers; Outstanding SEC Comments.
There are no disagreements of any kind presently existing, or reasonably
anticipated by the Company to arise, between the Company and the accountants and
lawyers formerly or presently employed by the Company and the Company is or,
immediately after the Initial Closing, will be current with respect to any fees
owed to its accountants which could affect the Company’s ability to perform any
of its obligations under any of the Transaction Documents. There are no
unresolved comments or inquiries received by the Company or its Affiliates from
the Commission which remain unresolved as of the Effective Date.

 

2.20. Acknowledgment Regarding Purchasers’ Purchase of Securities. The Company
acknowledges and agrees that each of the Purchasers is acting solely in the
capacity of an arm’s length purchaser with respect to the Transaction Documents
and the transactions contemplated thereby. The Company further acknowledges that
no Purchaser is 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 thereby and any advice given by any Purchaser or any
of their respective representatives or agents in connection with the Transaction
Documents and the transactions contemplated thereby is merely incidental to the
Purchasers’ purchase of the Securities. The Company further represents to each
Purchaser that the Company’s decision to enter into this Agreement and the other
Transaction Documents has been based solely on the independent evaluation of the
transactions contemplated hereby by the Company and its representatives.

 

2.21. Disqualification. No executive officer, member of the Board of Directors
of the Company or, to the knowledge of the Company, any shareholder of the
Company beneficially owning more than 10% of the Company’s securities is
currently subject to a Disqualifying Event. For purposes of this Agreement,
“Disqualifying Event” means any conviction, order, judgment, decree, suspension,
expulsion, event or other matter set out in Rule 506(d)(1)(i) through
506(d)(1)(viii) of Regulation D that is currently in effect or which occurred
within the periods set out in Rule 506(d)(1)(i) through (viii).

 

2.22. Acknowledgment Regarding Each Purchaser’s Trading Activity. Anything in
this Agreement or elsewhere herein to the contrary notwithstanding, it is
understood and acknowledged by the Company that: (a) none of the Purchasers has
been asked by the Company to agree, nor has any such Purchaser agreed, to desist
from purchasing or selling, long and/or short, securities of the Company, or
“derivative” securities based on securities issued by the Company or to hold the
Securities for any specified term, (b) past or future open market or other
transactions by any Purchaser, specifically including, without limitation, Short
Sales or “derivative” transactions, before or after the closing of this or
future private placement transactions, may negatively impact the market price of
the Company’s publicly-traded securities, (c) any Purchaser, and counter-parties
in “derivative” transactions to which any such Purchaser is a party, directly or
indirectly, presently may have a “short” position in the Common Stock and (d)
each Purchaser shall not be deemed to have any affiliation with or control over
any arm’s length counter-party in any “derivative” transaction. The Company
further understands and acknowledges that (i) one or more Purchasers may engage
in hedging activities at various times during the period that the Securities are
outstanding, including, without limitation, during the periods that the value of
the Securities are being determined, and (ii) such hedging activities (if any)
could reduce the value of the existing stockholders’ equity interests in the
Company at and after the time that the hedging activities are being conducted.
The Company acknowledges that such aforementioned hedging activities do not
constitute a breach of any of the Transaction Documents.

 

 13 

 

 

2.23. Regulation M Compliance. The Company has not, and to its knowledge no one
acting on its behalf has, (a) 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, (b) sold, bid for, purchased, or paid any compensation for
soliciting purchases of, any of the Securities, or (c) paid or agreed to pay to
any Person any compensation for soliciting another to purchase any other
securities of the Company, other than, in the case of clauses (b) and (c),
compensation paid to the Company’s placement agent, if any, in connection with
the placement of the Securities.

 

2.24. Insurance. The Company is insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are prudent
and customary in the businesses in which the Company is engaged, including, but
not limited to, directors and officers insurance coverage in amounts customary
in the businesses in which the Company and the Subsidiaries are engaged. The
Company does not have 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 without a significant increase in cost.

 

2.25. Office of Foreign Assets Control. None of the Company or, to the Company’s
knowledge, any director, officer, agent, employee or affiliate of the Company is
currently subject to any U.S. sanctions administered by the Office of Foreign
Assets Control of the U.S. Treasury Department (“OFAC”).

 

2.26. Money Laundering. The operations of the Company are and have been
conducted at all times in compliance with applicable financial record-keeping
and reporting requirements of the Currency and Foreign Transactions Reporting
Act of 1970, as amended, applicable money laundering statutes and applicable
rules and regulations thereunder (collectively, the “Money Laundering Laws”),
and no Action by or before any court or governmental agency, authority or body
or any arbitrator involving the Company with respect to the Money Laundering
Laws is pending or, to the knowledge of the Company, threatened.

 

2.27. Takeover Protections. The Company and the Board of Directors have taken
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 Company’s
articles of incorporation (or similar charter documents), any certificates of
designation adopted by the Company pursuant to its articles of incorporation or
the laws of its state of incorporation that is or could become applicable to the
Purchasers as a result of the Purchasers and the Company fulfilling their
obligations or exercising their rights under the Transaction Documents,
including without limitation as a result of the Company’s issuance of Securities
and the Purchasers’ ownership of the Securities.

 

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2.28. Promotional Stock Activities. Neither the Company, nor any of its
officers, directors, affiliates or agents, have engaged in any stock promotional
activity that could give rise to a complaint or inquiry by the Commission
alleging (a) a violation of the anti-fraud provisions of the U.S. federal
securities laws, (b) violations of the anti-touting provisions of the U.S.
federal securities laws, (c) improper “gun-jumping” under applicable law, or (d)
improper promotion of the Company or its securities without adequate disclosure
of compensation information.

 

2.29. Disclosure. No representation or warranty of the Company contained in this
Agreement, as qualified by the Schedules attached hereto, and no certificate
furnished or to be furnished to Purchasers at the Closing contains any untrue
statement of a material fact or, omits to state a material fact necessary in
order to make the statements contained herein or therein not misleading in light
of the circumstances under which they were made. All disclosures furnished in
writing by or on behalf of the Company to the Purchasers regarding the Company,
its business and the transactions contemplated hereby, are true and correct and
do 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 months preceding the
Effective Date taken as a whole do not 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.

 

3. Representations and Warranties of the Purchasers. Each Purchaser, severally
and not jointly, represents and warrants to the Company (with respect to itself
only and not any other Purchaser), as of the Closing, that:

 

3.1. Authorization. The Purchaser has full power and authority to enter into the
Transaction Documents. The Transaction Documents to which such Purchaser is a
party, when executed and delivered by the Purchaser, will constitute valid and
legally binding obligations of the Purchaser, enforceable in accordance with
their terms, except (a) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance, and any other laws of general
application affecting enforcement of creditors’ rights generally, and as limited
by laws relating to the availability of specific performance, injunctive relief,
or other equitable remedies, or (b) to the extent the indemnification provisions
contained in the Existing Investment Documents may be limited by applicable
federal or state securities laws.

 

3.2. Purchase Entirely for Own Account. This Agreement is made with the
Purchaser in reliance upon the Purchaser’s representation to the Company, which
by the Purchaser’s execution of this Agreement, the Purchaser confirms, that the
Securities to be acquired by the Purchaser will be acquired for investment for
the Purchaser’s own account and not with a view to the resale or distribution of
any part thereof, and that the Purchaser has no present intention of selling,
granting any participation in, or otherwise distributing the same. By executing
this Agreement, the Purchaser further represents that the Purchaser does not
presently have any contract, undertaking, agreement or arrangement with any
Person to sell, transfer or grant participations to such Person or to any third
Person, with respect to any of the Securities. The Purchaser has not been formed
for the specific purpose of acquiring the Securities.

 

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3.3. Restricted Securities. The Purchaser understands that the Securities have
not been, and will not be, registered under the Securities Act, by reason of a
specific exemption from the registration provisions of the Securities Act which
depends upon, among other things, the bona fide nature of the investment intent
and the accuracy of the Purchaser’s representations as expressed in this
Agreement. The Purchaser understands that the Securities are “restricted
securities” under applicable U.S. federal and state securities laws and that,
pursuant to these laws, the Purchaser must hold the Securities indefinitely
unless they are registered with the Securities and Exchange Commission and
qualified by state authorities, or an exemption from such registration and
qualification requirements is available. The Purchaser acknowledges that the
Company has no obligation to register or qualify the Securities for resale
except as set forth in the Investors’ Rights Agreement. The Purchaser further
acknowledges that if an exemption from registration or qualification is
available, it may be conditioned on various requirements including, but not
limited to, the time and manner of sale, the holding period for the Securities,
and on requirements relating to the Company which are outside of the Purchaser’s
Control, and which the Company is under no obligation and may not be able to
satisfy.

 

3.4. No Public Market. The Purchaser understands that no public market now
exists for the Securities, and that the Company has made no assurances that a
public market will ever exist for the Securities.

 

3.5. Legends. The Purchaser understands that the Conversion Shares issued in
respect of or exchange for the Notes, may bear one or all of the following
legends (or a substantially similar legend):

 

(a) “THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT
WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH
TRANSFER MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED
THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.”

 

(b) Any legend set forth in, or required by, the other Transaction Documents and
the Existing Investment Documents.

 

(c) Any legend required by the securities laws of any state to the extent such
laws are applicable to the securities represented by the certificate so
legended.

 

3.6. Accredited Investor. The Purchaser is an accredited investor as defined in
Rule 501(a) of Regulation D promulgated under the Securities Act.

 

3.7. U.S. Investors. The Purchaser is a United States person (as defined by
Section 7701(a)(30) of the Code).

 

3.8. No General Solicitation. Neither the Purchaser nor any of its officers,
managers, directors, employees, agents, members, stockholders or partners has
either, directly or indirectly, including through a broker or finder (a) engaged
in any general solicitation, or (b) published any advertisement, in connection
with the offer and sale of the Securities.

 

3.9. Residence. The office of the Purchaser in which its principal place of
business is located is set forth on Schedule I.

 

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3.10. Exculpation Among Purchasers. Each Purchaser acknowledges that it is not
relying upon any Person, other than the Company and its officers and directors,
in making its investment or decision to invest in the Company. Each Purchaser
agrees that no Purchaser or the respective Controlling Persons, officers,
directors, managers, partners, agents, or employees of any Purchaser shall be
liable to any other Purchaser for any action heretofore or hereafter taken or
omitted to be taken by any of them in connection with the purchase of the
Securities. Each Purchaser, on its own behalf and on behalf of its Controlling
Persons, officers, directors, managers, partners, agents, or employees, hereby
irrevocably covenants and agrees not to directly or indirectly assert any
claims, actions or causes of action whatsoever, in law or in equity and agrees
not to commence, institute or cause to be commenced or instituted, any
proceeding of any kind against any other Purchaser or such Purchaser’s
Controlling Persons, officers, directors, managers, partners, agents, or
employees, in connection with the purchase of the Securities hereunder.

 

4. Other Agreements of the Parties.

 

4.1. Acknowledgment of Dilution. The Company acknowledges that the issuance of
the Securities may result in dilution of the outstanding shares of Common Stock,
which dilution may be substantial under certain market conditions. The Company
further acknowledges that its obligations under the Transaction Documents,
including, without limitation, its obligation to issue the Conversion Shares and
Warrant Shares pursuant to the Transaction Documents, are, except as otherwise
set forth in the Transaction Documents, unconditional and absolute and not
subject to any right of set off, counterclaim, delay or reduction, regardless of
the effect of any such dilution or any claim the Company may have against any
Purchaser and regardless of the dilutive effect that such issuance may have on
the ownership of the other stockholders of the Company.

 

4.2. Furnishing of Information. The Company represents and warrants to the
Purchasers that the Company files reports with the Commission pursuant to
Section 13 or 15(d) of the Exchange Act. Until such time that no Purchaser owns
Securities, the Company covenants to maintain the registration of the Common
Stock under Section 12(b) or 12(g) of the Exchange Act and to timely file (or
obtain extensions in respect thereof and file within the applicable grace
period) all reports required to be filed by the Company after the Effective Date
pursuant to the Exchange Act even if the Company is not then subject to the
reporting requirements of the Exchange Act.

 

4.3. Integration. The Company shall not sell, offer for sale or solicit offers
to buy or otherwise negotiate in respect of any security (as defined in Section
2 of the Securities Act) that would be integrated with the offer or sale of the
Securities to the Purchasers in a manner that would require the registration
under the Securities Act of the sale of the Securities to the Purchasers.

 

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4.4. Securities Laws Disclosure; Publicity. The Company shall (a) by 9:00 a.m.
(New York City time) on the Trading Day immediately following the Effective
Date, issue a press release disclosing the material terms of the transactions
contemplated hereby, and (b) file a Current Report on Form 8-K, including the
Transaction Documents as exhibits thereto, with the Commission within the time
required by the Exchange Act. From and after the issuance of such press release,
the Company represents to the Purchasers that it shall have publicly disclosed
all material, non-public information delivered to any of the Purchasers by the
Company or any of its Subsidiaries, or any of their respective officers,
directors, employees or agents in connection with the transactions contemplated
by the Transaction Documents. In addition, effective upon the issuance of such
press release, the Company acknowledges and agrees that any and all
confidentiality or similar obligations under any agreement, whether written or
oral, between the Company, any of its Subsidiaries or any of their respective
officers, directors, agents, employees or Affiliates on the one hand, and any of
the Purchasers or any of their Affiliates on the other hand, shall terminate.
The Company and the Lead Purchaser shall consult with each other in issuing any
other press releases with respect to the transactions contemplated hereby, and
neither the Company nor any Purchaser shall issue any such press release nor
otherwise make any such public statement without the prior consent of the
Company, with respect to any press release of any Purchaser, or without the
prior consent of the Lead Purchaser, with respect to any press release of the
Company, which consent shall not unreasonably be withheld or delayed, except if
such disclosure is required by law, in which case the disclosing party shall
promptly provide the other party with prior notice of such public statement or
communication. Notwithstanding the foregoing, the Company shall not publicly
disclose the name of any Purchaser, or include the name of any Purchaser in any
filing with the Commission or any regulatory agency or Trading Market, without
the prior written consent of such Purchaser, except: (i) as required by federal
securities law in connection with the filing of final Transaction Documents with
the Commission and (ii) to the extent such disclosure is required by law or
Trading Market regulations, provided, however, that in each such case the,
Company shall provide the Purchasers with prior notice of such disclosure.

 

4.5. Shareholder Rights Plan. The Company will not make or enforce any claim or,
provide its consent to, any claim by any other Person, that any Purchaser or
group of Purchasers is an “Acquiring Person” under any control share
acquisition, business combination, poison pill (including any distribution under
a rights agreement) or similar anti-takeover plan or arrangement in effect, or
that any Purchaser or group of Purchasers could be deemed to trigger the
provisions of any such plan or arrangement, by virtue of receiving Securities
under the Transaction Documents or any other agreement between the Company and
the Purchasers.

 

4.6. Non-Public Information. Except with respect to the material terms and
conditions of the transactions contemplated by the Transaction Documents, which
shall be disclosed pursuant to Section 4.4, the Company covenants and agrees
that neither it, nor any other Person acting on its behalf has provided or will
provide any Purchaser or its agents or counsel with any information that
constitutes, or the Company reasonably believes constitutes, material non-public
information, unless prior thereto such Purchaser shall have consented to the
receipt of such information and agreed with the Company to keep such information
confidential. The Company understands and confirms that each Purchaser shall be
relying on the foregoing covenant in effecting transactions in securities of the
Company. To the extent that the Company delivers any material, non-public
information to a Purchaser without such Purchaser’s consent, the Company hereby
covenants and agrees that such Purchaser shall not have any duty of
confidentiality to the Company, any of its Subsidiaries, or any of their
respective officers, directors, agents, employees or Affiliates, or a duty to
the Company, any of its Subsidiaries or any of their respective officers,
directors, agents, employees or Affiliates not to trade on the basis of, such
material, non-public information, provided that the Purchaser shall remain
subject to applicable law. To the extent that any notice provided pursuant to
any Transaction Document constitutes, or contains, material, non-public
information regarding the Company or any Subsidiaries, the Company shall
simultaneously file such notice with the Commission pursuant to a Current Report
on Form 8-K. The Company understands and confirms that each Purchaser shall be
relying on the foregoing covenant in effecting transactions in securities of the
Company.

 

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4.7. Indemnification of Purchasers. Subject to the provisions of this Section
4.7, the Company will indemnify and hold each Purchaser and such Purchaser’s
directors, officers, shareholders, members, managers, managing members,
partners, employees and agents (and any other Persons with a functionally
equivalent role of a Person holding such titles notwithstanding a lack of such
title or any other title), each Person who controls such Purchaser (within the
meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act),
and the directors, officers, shareholders, agents, members, managers, managing
members, partners or employees (and any other Persons with a functionally
equivalent role of a Person holding such titles notwithstanding a lack of such
title or any other title) of such controlling persons (each, a “Purchaser
Party”) harmless from any and all losses, liabilities, obligations, claims,
contingencies, damages, costs and expenses, including all judgments, amounts
paid in settlements, court costs and reasonable attorneys’ fees and costs of
investigation that any such Purchaser Party may suffer or incur as a result of
or relating to (a) any breach of any of the representations, warranties,
covenants or agreements made by the Company in this Agreement or in the other
Transaction Documents, (b) any action instituted against the Purchaser Parties
in any capacity, or any of them or their respective Affiliates, by any
stockholder of the Company who is not an Affiliate of such Purchaser Party, with
respect to any of the transactions contemplated by the Transaction Documents
(unless such action is based upon a breach of such Purchaser Party’s
representations, warranties or covenants under the Transaction Documents or any
agreements or understandings such Purchaser Party may have with any such
stockholder or any violations by such Purchaser Party of state or federal
securities laws or any conduct by such Purchaser Party which constitutes fraud,
gross negligence, willful misconduct or malfeasance) or (c) any untrue statement
or alleged untrue statement of a material fact contained in any registration
statement registering the sale or resale of the Securities, or related
prospectus or prospectus supplement, or any information incorporated by
reference therein, or arising out of or based upon any omission or alleged
omission to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. If any action shall be brought against any Purchaser Party in
respect of which indemnity may be sought pursuant to this Agreement, such
Purchaser Party shall promptly notify the Company in writing, and the Company
shall have the right to assume, pursue and maintain the defense thereof with
counsel of its own choosing reasonably acceptable to the Purchaser Party. Any
Purchaser Party shall have the right to engage separate counsel in any such
action and participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such Purchaser Party except to the extent
that (i) the engagement of such separate counsel thereof has been specifically
authorized by the Company in writing, (ii) the Company has failed after a
reasonable period of time to assume, pursue and maintain such defense and to
engage counsel or (iii) in such action there is, in the reasonable opinion of
counsel, a material conflict on any material issue between the position of the
Company and the position of such Purchaser Party, in which case the Company
shall be responsible for the reasonable fees and expenses of no more than one
such separate counsel for such Purchaser Party. The Company will not be liable
to any Purchaser Party under this Agreement (y) for any settlement by a
Purchaser Party effected without the Company’s prior written consent, which
shall not be unreasonably withheld, conditioned or delayed; or (z) to the
extent, but only to the extent that a loss, claim, damage or liability is
attributable to any Purchaser Party’s breach of any of the representations,
warranties, covenants or agreements made by such Purchaser Party in this
Agreement or in the other Transaction Documents. The indemnification required by
this Section 4.7 shall be made by periodic payments of the amount thereof during
the course of the investigation or defense, as and when bills are received or
are incurred. The indemnity agreements contained herein shall be in addition to
any cause of action or similar right of any Purchaser Party against the Company
or others and any liabilities the Company may be subject to pursuant to law.

 

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4.8. Reservation and Listing of Securities.

 

(a) From and after the Initial Closing, the Company shall maintain a reserve
from its duly authorized shares of Common Stock for issuance pursuant to the
Transaction Documents in such amount as may then be required to fulfill its
obligations in full under the Transaction Documents (including Common Stock
issuable upon conversion of Conversion Shares).

 

(b) If, on any date after the Initial Closing, the number of authorized but
unissued (and otherwise unreserved) shares of Common Stock is less than the
Required Minimum on such date, then the Board of Directors shall use
commercially reasonable efforts to amend the Company’s certificate or articles
of incorporation to increase the number of authorized but unissued shares of
Common Stock to at least the Required Minimum at such time, as soon as possible
and in any event not later than the 90th calendar day after such date.

 

(c) The Company shall, if applicable but only after the Initial Closing: (i) in
the time and manner required by the principal Trading Market, prepare and file
with such Trading Market an additional shares listing application covering a
number of shares of Common Stock at least equal to the Required Minimum on the
date of such application, (ii) take all steps necessary to cause such shares of
Common Stock to be approved for listing on such Trading Market as soon as
possible thereafter, (iii) provide to each Purchaser evidence of such listing,
and (iv) maintain the listing of such Common Stock on any date at least equal to
the Required Minimum on such date on such Trading Market or another Trading
Market.

 

4.9. Form D; Blue Sky Filings. The Company shall timely file a Form D with
respect to the Securities and shall provide a copy thereof, promptly upon
request of any Purchaser. The Company shall take such action as the Company
shall reasonably determine is necessary in order to obtain an exemption for, or
to qualify the Securities for, sale to each applicable Purchaser at each Closing
under applicable securities or “Blue Sky” laws of the states of the United
States, and shall provide evidence of such actions promptly upon request of any
Purchaser.

 

4.10. Transfer Agent. The Company covenants and agrees that it will at all times
while the Securities remain outstanding maintain a duly qualified independent
transfer agent.

 

4.11. Corporate Existence. So long as the Securities remain outstanding, the
Company shall not directly or indirectly consummate any merger, reorganization,
restructuring, consolidation, sale of all or substantially all of the Company’s
assets or any similar transaction or related transactions, (each such
transaction, an “Organizational Change”) unless the Company provides the
Purchasers with three (3) Trading Days written notice of such Organizational
Change.

 

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4.12. Equal Treatment of Purchasers. No consideration (including any
modification of any Transaction Document) shall be offered or paid to any Person
to amend or consent to a waiver or modification of any provision of any of the
Transaction Documents unless the same consideration is also offered to all of
the parties to the Transaction Documents. For clarification purposes, this
provision constitutes a separate right granted to each Purchaser by the Company
and negotiated separately by each Purchaser, and is intended for the Company to
treat the Purchasers as a class and shall not in any way be construed as the
Purchasers acting in concert or as a group with respect to the purchase,
disposition or voting of Securities or otherwise.

 

4.13. Conversion and Exercise Procedures. The form of Notice of Exercise in the
Warrants sets forth the totality of the procedures required of the Purchasers in
order to exercise the Warrants. Without limiting the preceding sentences, no
ink-original Notice of Exercise shall be required, nor shall any medallion
guarantee (or other type of guarantee or notarization) of any Notice of Exercise
form be required in order to exercise the Warrants. No additional legal opinion,
other information or instructions shall be required of the Purchasers to
exercise their Warrants. The Company shall honor exercises of the Warrants and
shall deliver underlying shares of Common Stock in accordance with the terms,
conditions and time periods set forth in the Transaction Documents.

 

4.14. Certain Tax Matters. After consideration of all relevant factors, the
Company and the Purchaser acknowledge and agree that the fair market value on
the Effective Date of each Warrant is equal to five percent (5%) of the
principal amount of the corresponding Note issued to the respective Purchaser.
The parties will not take any position inconsistent with the forgoing, and the
Company will file tax and information returns with the Internal Revenue Service
and all other relevant tax authorities based on such determination.

 

4.15. Purchaser Commitment to Qualified Financing.

 

(a) Each Purchaser acknowledges, covenants, affirms and agrees that in
purchasing their Note(s) and Warrant(s), such Purchaser is committing to
participating as an investor in the Company’s next Qualified Financing (as such
term is defined in the Notes) by committing to purchase shares of preferred
stock in the Company at the Qualified Financing Closing via the Backstop
Commitment in cash at an aggregate purchase price no less than such Purchaser’s
Bridge Funding Commitment (subject to pro rata reduction if the Backstop
Commitment is not exercised in full), as more particularly set forth on
“Qualified Financing Commitment” amount set forth opposite such Purchaser’s name
on Schedule I to this Agreement. For the sake of example, if a Purchaser were to
purchase a Note under this Agreement in the original principal amount of
$100,000, such Purchaser’s Qualified Financing Commitment would also be equal to
$100,000 and at the Qualified Financing Closing, such Purchaser will invest an
additional $100,000 towards the purchase of shares of preferred stock in the
Company upon the exercise of the Backstop Commitment for a total aggregate
investment of $200,000 (subject to pro rata reduction if the Backstop Commitment
is not exercised in full). Each Purchaser (other than the Lead Purchaser)
further acknowledges and agrees that such Purchaser may only participate in the
Qualified Financing through the Backstop Commitment and may not separately
acquire shares of preferred stock in the Company through subscriptions in the
Rights Offering or through any other means without the prior consent of the Lead
Purchaser.

 

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(b) Each Purchaser further, on its own behalf and on behalf of its Controlling
Persons, officers, directors, managers, partners, agents, or employees, hereby
irrevocably covenants and agrees not to directly or indirectly assert any
claims, actions or causes of action whatsoever, in law or in equity and agrees
not to commence, institute or cause to be commenced or instituted, any
proceeding of any kind against the Company, any other Purchaser, or any of their
respective Controlling Persons, officers, directors, managers, partners, agents,
or employees, in such Purchaser’s capacity as a holder of capital stock in the
Company with respect to the terms and conditions of the Qualified Financing,
including any limitations that are placed on such Purchaser’s ability to
participate in any Rights Offering conducted by the Company in connection with a
Qualified Financing.

 

(c) Each Purchaser acknowledges that such Purchaser’s breach or failure to
comply with the covenants set forth in this Section 4.15 (a “Purchaser
Subscription Default”) will result in the automatic termination and forfeiture
of the Warrants issued to such Purchaser under this Agreement and in the
conversion of such Purchaser’s Note into shares of Common Stock of the Company
in lieu of Conversion Shares at the Qualified Financing Closing (as more
particularly set forth in Section 8(a) of such Note). For the avoidance of
doubt, the Advance will not be taken into account for purposes of calculating
the Lead Purchaser’s Qualified Financing Commitment hereunder and a Purchaser
Subscription Default on the part of the Lead Purchaser will not result in the
termination or forfeiture of the Converted Advance Warrant.

 

4.16. Hawes Note. The Company is the borrower under that certain 12% Senior
Secured Convertible Note due September 30, 2020 in the original principal amount
of $424,615 and originally payable to George Hawes (the “Hawes Note”). The
Company and the Purchasers acknowledge that on March 27, 2020, the Lead
Purchaser purchased the Hawes Note from George Hawes, along with all other
right, title and interest of George Hawes in and to any other documents or
instruments delivered pursuant to the Hawes Note (including without limitation,
the Security Agreement referenced therein) and the Lead Purchaser is the current
holder of the Hawes Note. Each Purchaser (other than the Lead Purchaser) further
acknowledges and confirms that (a) such Purchaser has no right, title or
interest in, or any participation rights with respect to, the Hawes Note, or its
acquisition by the Lead Purchaser and (b) the Lead Purchaser shall be permitted
to enforce its rights with respect to the Hawes Note (and any collateral secured
the Hawes Note) in such manner as it deems appropriate in its sole and absolute
discretion and without regard to its status as a Purchaser hereunder or as the
Agent for the Purchasers.

 

4.17. Rights Offering Restrictions. The Company agrees that neither it, nor any
other Person acting on its behalf, shall consummate a Rights Offering in which
shares of the Company’s preferred stock are offered for sale at a price per
share less than $0.01279 (subject to adjustment for stock dividends, splits,
combinations and similar events) without first seeking the prior written consent
of the Lead Purchaser, which may be withheld in its sole and absolute
discretion.

 

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5. Conditions to the Purchasers’ Obligations at each Closing. The obligations of
each Purchaser to purchase the Notes at their applicable Closing are subject to
the fulfillment, on or before such Closing, of each of the following conditions,
unless otherwise waived by such Purchaser:

 

5.1. Representations and Warranties True and Correct. The representations and
warranties of the Company set forth in Section 2 shall be true and correct on
and as of the date of such Closing.

 

5.2. Qualifications. All authorizations, approvals or permits, if any, of any
governmental authority or regulatory body of the United States or of any state
that are required in connection with the lawful issuance and sale of the Notes
at the Closing shall be obtained and effective as of such Closing.

 

5.3. Exemption from Registration Requirements. The Notes to be issued at the
applicable Closing shall be exempt from registration requirements under the
Securities Act and any applicable state securities laws.

 

5.4. Consents. The Company shall have obtained and furnished to each Purchaser a
copy of all consents and waivers required in connection with the consummation of
the transactions related to the purchase of the Notes at the applicable Closing.

 

5.5. No Material Adverse Effect. The Company has not experienced a Material
Adverse Effect as of the date of such Closing.

 

6. Conditions to the Company’s Obligations at Each Closing. The obligations of
the Company to sell Notes to the Purchasers at the applicable Closing are
subject to the fulfillment, on or before such Closing, of each of the following
conditions, unless otherwise waived by the Company:

 

6.1. Representations and Warranties. The representations and warranties of each
Purchaser contained in Section 3 that is purchasing a Note at such Closing shall
be true and correct in all respects as of such Closing.

 

6.2. Qualifications. All authorizations, approvals or permits, if any, of any
governmental authority or regulatory body of the United States or of any state
that are required in connection with the lawful issuance and sale of the Notes
pursuant to this Agreement shall be obtained and effective as of the applicable
Closing.

 

7. Agent.

 

7.1. Appointment of Agent. Each Purchaser hereby constitutes and appoints the
Lead Purchaser as their representative (the “Agent”) and their true and lawful
agents and attorney-in-fact, with full power and authority in each of their
names and to act on behalf of each of them in the absolute discretion of the
Agent (i) with respect to the provisions of this Agreement and the other
Transaction Documents, and (ii) exercising all of the rights and remedies of the
Purchasers under this Agreement and the other Transaction Documents following an
“Event of Default” under the Notes, an “Event of Default” under the Security
Agreement or any other default under any of the Transaction Documents. This
appointment and grant of power and authority is coupled with an interest and is
in consideration of the mutual covenants made in this Agreement and is
irrevocable and shall not be terminated by any act of the Purchasers (other than
the resignation of the Agent) or by operation of law. Each Purchaser consents to
the taking of any and all actions and the making of any decisions required or
permitted to be taken or made by the Agent pursuant to this Section 7.1. The
Lead Purchaser may resign as Agent at any time by written notice to the Company
and the other Purchasers. Upon any such resignation, the Lead Purchaser shall
use reasonable efforts to identify and appoint another Person to replace it as
Agent hereunder. If it is unable or otherwise does not appoint another Person to
act as Agent, then the holders of a majority in principal amount outstanding
under the Notes shall fulfill the role of the Agent.

 

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7.2. Delegation of Duties. The Agent may execute its rights or authority under
this Agreement by or through agents or attorneys-in-fact and shall be entitled
to advice of counsel concerning all matters pertaining to such rights and
authority. The Agent shall not be responsible for the negligence or misconduct
of any agents or attorneys-in-fact selected by the Agent with reasonable care.

 

7.3. Exculpatory Provisions. Neither the Agent nor any of its officers,
directors, managers, employees, agents, partners, limited partners, members,
managers, officers, attorneys-in-fact, representatives, subsidiaries or
affiliates shall be (a) liable for any action lawfully taken or omitted to be
taken by it or such Person in good faith under or in connection with this
Agreement or the other Transaction Documents, or (b) responsible in any manner
to any of the Purchasers for any recitals, statements, representations or
warranties made by the Company or for any failure of the Company to perform its
obligations under this Agreement or the other Transaction Documents. The Agent
shall not be under any obligation to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement or the other Transaction Documents, or to inspect the books,
records or properties of the Company.

 

7.4. Reliance by the Agent. The Agent shall be entitled to rely, and shall be
fully protected in relying, upon any note, writing, resolution, notice, consent,
certificate, affidavit, letter, cablegram, telegram, facsimile, electronic mail,
statement, order or other document, communication or correspondence believed by
it to be genuine and correct and to have been signed, sent or made by officers
of the Company, public officials, other appropriate persons and upon advice and
statements of legal counsel (including, without limitation, counsel to the
Company), independent accountants and other experts selected by the Agent. The
Agent shall be fully justified in failing or refusing to take any action under
this Agreement and the other Transaction Documents unless they shall first
receive (but they are not required to obtain unless expressly stated elsewhere
in this agreement) such advice or concurrence of the Purchasers as they deem
appropriate.

 

7.5. Non-Reliance on Agent. Each Purchaser expressly acknowledges and agrees
that neither Agent nor any of its respective officers, directors, managers,
employees, agents, partners, limited partners, members, managers,
attorneys-in-fact, representatives, subsidiaries or affiliates has made any
representations or warranties to it and that no act by either Agent hereunder
taken, including any review of the affairs of the Company, shall be deemed to
constitute any representation or warranty by Agent to any other Purchaser. Each
Purchaser further waives the fiduciary duty, if any, of the Agent with respect
to its duties hereunder.

 

7.6. Indemnification. Each of the Purchasers shall, on a proportionate basis in
accordance with its or his ownership interest in the Notes, indemnify and hold
the Agent harmless from and against any and all losses, damages, expenses,
liabilities, obligations, penalties, actions, judgments, suits or disbursements
(including reasonable counsel fees and expenses) which may be imposed on,
incurred or sustained by, or asserted against the Agent at any time in any way
relating to or arising out of any action or omission by the Agent in such
capacity, except for those resulting from the Agent’s bad faith.

 

 24 

 

 

7.7. Agent in its Individual Capacity. The Agent and its affiliates may make
loans to and investments in and generally engage in any kind of business with
the Company as though they were not the Agent hereunder. With respect to its
investments and any indebtedness issued to it, the Agent shall have the same
rights and powers under this Agreement and the other Transaction Documents as
any other Purchaser and may exercise the same to its own benefit, regardless of
the impact on or to other Purchasers, as though it were not Agent. The term
“Purchaser” includes the Agent in its own capacity.

 

7.8. No Action by Other Purchasers. No Purchaser other than the Agent shall
pursue any remedies in respect of an “Event of Default” under the Notes, an
“Event of Default” under the Security Agreement or any other default under any
of the Transaction Documents, it being the intent of the Purchasers that any an
action to enforce rights of the Purchasers under any of the Transaction
Documents be brought by the Agent as the representative of all Purchasers in a
single action.

 

8. Miscellaneous.

 

8.1. Survival of Warranties. Unless otherwise set forth in this Agreement, the
representations and warranties of the Company and the Purchasers contained in or
made pursuant to this Agreement shall survive the execution and delivery of this
Agreement and the Closings, and shall in no way be affected by any investigation
or knowledge of the subject matter thereof made by or on behalf of the parties
hereto.

 

8.2. Communications. Any public announcement or other disclosure to a third
party regarding this Agreement or the investment by any party hereto shall be
subject to the prior written approval of each of the other parties to this
Agreement, except as required by Applicable Law, and except for disclosure by
Lead Purchaser to its accountants, attorneys, and other advisors, or customary
disclosures by Lead Purchaser to its investors. Without limiting the foregoing,
the Company shall not, without the prior written approval of any Purchaser, (a)
use in a press release, advertising, publicity, or otherwise, the name of such
Purchaser or any of its Affiliates or any trade name, trademark, trade device or
simulation thereof owned by such Purchaser or its Affiliates, (b) disclose the
fact or nature of this investment by such Purchaser, or (c) represent, directly
or indirectly, that any product of service provided by the Company has been
endorsed by such Purchaser or its Affiliates.

 

8.3. Transfer; Successors and Assigns. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
successors and permitted assigns of the parties. Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties
to this Agreement or their respective successors and permitted assigns any
rights, remedies, obligations, or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement.

 

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8.4. Governing Law. This Agreement and any controversy arising out of or
relating to this Agreement shall be governed by and construed in accordance with
the laws of the State of Florida, without regard to its principles of conflicts
of laws.

 

8.5. Dispute Resolution. The parties (a) hereby irrevocably and unconditionally
submit to the jurisdiction of the state courts of the State of Florida located
in the County of Hillsborough and to the jurisdiction of the United States
District Courts for such county for the purpose of any suit, action or other
proceeding arising out of or based upon this Agreement, (b) agree not to
commence any suit, action or other proceeding arising out of or based upon this
Agreement except in such courts, and (c) hereby waive, and agree not to assert,
by way of motion, as a defense, or otherwise, in any such suit, action or
proceeding, any claim that it is not subject personally to the jurisdiction of
the above-named courts, that its property is exempt or immune from attachment or
execution, that the suit, action or proceeding is brought in an inconvenient
forum, that the venue of the suit, action or proceeding is improper or that this
Agreement or the subject matter hereof may not be enforced in or by such court.

 

8.6. Counterparts; Electronic Signatures. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. The exchange of
copies of this Agreement and of signature pages by electronic mail in “portable
document format” (“.pdf”) form, or by any other electronic means intended to
preserve the original graphic and pictorial appearance of a document, will have
the same effect as physical delivery of the paper document bearing an original
signature

 

8.7. Titles and Subtitles. The titles and subtitles used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement.

 

8.8. Notices. All notices and other communications given or made pursuant to
this Agreement shall be in writing and shall be deemed effectively given: (a)
upon personal delivery to the party to be notified, (b) when sent by facsimile
if sent during normal business hours of the recipient, and if not, then on the
recipient’s next Business Day, (c) seven (7) days after having been sent by
registered or certified mail, return receipt requested, postage prepaid, or (d)
one (1) Business Day after deposit (with full payment) with a nationally
recognized overnight courier prior to such courier’s deadline for next Business
Day delivery, specifying next Business Day delivery, with written verification
of receipt. All communications shall be sent to the respective parties at their
address(es) as set forth (x) for the Company, on the signature page, and (y) for
the Purchasers, on Schedule I, or to such facsimile number or address as
subsequently modified by written notice given in accordance with this Section
8.8.

 

8.9. No Finder’s Fees. Each party represents that it neither is nor will be
obligated for any finder’s fee or commission in connection with this
transaction. The Company agrees to indemnify and hold harmless each Purchaser
from any liability for any commission or compensation in the nature of a
finder’s or broker’s fee arising out of this transaction (and the costs and
expenses of defending against such liability or asserted liability) for which
the Company or any of its officers, employees or representatives is responsible.

 

 26 

 

 

8.10. Fees and Expenses. Except as expressly set forth in the Transaction
Documents to the contrary, each party shall pay the fees and expenses of its
advisers, counsel, accountants and other experts, if any, and all other expenses
incurred by such party incident to the negotiation, preparation, execution,
delivery and performance of this Agreement, provided that the Company shall pay
all reasonable out-of-pocket legal, due diligence and administrative fees and
expenses of counsel to the Lead Purchaser, with respect to the Transaction
Documents and the transactions contemplated thereby, regardless of whether such
transactions are consummated. The Purchasers will not be liable for any legal,
due diligence, and administrative costs incurred by the Company regardless of
the amount of those costs.

 

8.11. Attorneys’ Fees. If any action at law or in equity (including arbitration)
is necessary to enforce or interpret the terms of any of the Transaction
Documents, the prevailing party shall be entitled to reasonable attorneys’ fees,
costs and necessary disbursements in addition to any other relief to which such
party may be entitled.

 

8.12. Amendments and Waivers. Any term of this Agreement or the other
Transaction Documents may be amended, terminated or waived only with the written
consent of the Company and the Lead Purchaser; provided that Schedule I may be
updated by the Company in accordance with Section 1 without any consent of the
Purchasers. Any amendment or waiver effected in accordance with this Section
8.12 shall be binding upon all of the Purchasers and each transferee of the
Notes (or the Conversion Shares issuable upon conversion or exercise thereof),
each future holder of all such securities, and the Company. Any time any
provision of this Agreement allows for, contemplates or requires the consent of
the Purchasers, such consent shall be deemed given if Purchasers (or their
assigns) holding at least a majority of the then aggregate principal amount of
the Notes provide their consent.

 

8.13. Severability. In case any one or more of the provisions contained in this
Agreement is for any reason held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality, or unenforceability shall not affect any
other provision of this Agreement, and such invalid, illegal, or unenforceable
provision shall be reformed and construed so that it will be valid, legal, and
enforceable to the maximum extent permitted by law.

 

8.14. No Waiver; Remedies Cumulative. No delay or omission on the part of any
party in exercising any right, power or privilege under this Agreement will
operate as a waiver thereof, nor will any single or partial exercise of any
right, power or privilege hereunder or thereunder preclude other or further
exercise thereof, or the exercise of any other right, power or privilege. The
rights and remedies provided in this Agreement are cumulative and are in
addition to all rights or remedies that the Purchasers or the Company otherwise
may have in law or in equity or by statute or otherwise. Without limiting the
generality of the foregoing, nothing in this Agreement will be deemed to
preclude or be in lieu of any right or remedy that the Purchaser or the Company
may have in law or in equity or by statute or otherwise against, in the case of
the Purchaser, the Company, or any other person based upon any fraud, and, in
the case of the Company, the Purchaser or any other person based on fraud.

 

8.15. Entire Agreement. This Agreement (including the Exhibits) and the other
Transaction Documents constitute the full and entire understanding and agreement
between the parties with respect to the subject matter of this Agreement, and
any other written or oral agreements relating to the subject matter of this
Agreement existing between the parties.

 

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8.16. Legal Counsel. Each party to this Agreement acknowledges that Hill, Ward &
Henderson, P.A. (the “Firm”) (a) has previously served as counsel to an
Affiliate of the Lead Purchaser in connection with a prior investment in the
Company, and (b) has in the past performed and may continue to perform legal
services for the Lead Purchaser and its Affiliates in other matters unrelated to
the transactions described in this Agreement, including the representation of
the Lead Purchaser and one or more of its Affiliates in venture capital
financings and other matters. Accordingly, each party to this Agreement hereby
(i) acknowledges that they have had an opportunity to ask for information
relevant to this disclosure; and (ii) gives its informed consent to the Firm’s
representation of the Lead Purchaser in connection with this Agreement and the
transactions contemplated hereby as well as such other unrelated matters. Each
Purchaser acknowledges that it has reviewed this Agreement and the related
Transaction Documents and has had the opportunity to engage separate counsel to
review this Agreement the related Transaction Documents on such Purchaser’s
behalf.

 

8.17. Acknowledgement. For avoidance of doubt, it is acknowledged that each
Purchaser will be entitled to the benefit of all adjustments in the number of
shares of the Company’s capital stock as a result of any splits,
reorganizations, combinations, or other similar transactions affecting the
Company’s capital stock underlying the Conversion Shares that occur prior to the
conversion of the Notes.

 

(Signature Pages Follow)

 

 28 

 

 

H-CYTE, INC.

SECURED CONVERTIBLE NOTE AND WARRANT PURCHASE AGREEMENT

COMPANY’S SIGNATURE PAGE

 

The undersigned has executed this Secured Convertible Note and Warrant Purchase
Agreement as of the date first written above.

 

  H-CYTE, INC.,   a Nevada corporation         By: /s/ William E. Horne    Name:
William E. Horne   Title: Chief Executive Officer         Address:       201 E.
Kennedy Blvd, Suite 700   Tampa, FL 33602

 

   

 

 

H-CYTE, INC.

SECURED CONVERTIBLE NOTE AND WARRANT PURCHASE AGREEMENT

LEAD PURCHASER SIGNATURE PAGE

 

The undersigned has executed this Secured Convertible Note and Warrant Purchase
Agreement as of the date first written above.

 

  LEAD purchaser:       FWHC BRIDGE, LLC         By:  /s/ Todd Wagner   Name:
Todd R. Wagner   Title: Manager

 

   

 

 

H-CYTE, INC.

SECURED CONVERTIBLE NOTE AND WARRANT PURCHASE AGREEMENT

PURCHASER SIGNATURE PAGE

 

The undersigned has executed this Secured Convertible Note and Warrant Purchase
Agreement as of the date first written above.

 

  purchaser:       FWHC BRIDGE FRIENDS, LLC         By: HOA Capital LLC, its
manager         By:  /s/ J. Rex Farrior   Name: J. Rex Farrior, III   Title:
Manager

 

   

 

 

H-CYTE, INC.

SECURED CONVERTIBLE NOTE AND WARRANT PURCHASE AGREEMENT

ADDITIONAL PURCHASER SIGNATURE PAGE

 

The undersigned has executed this Secured Convertible Note and Warrant Purchase
Agreement as of __________________________.

 

  PURCHASER:           (Entity name, if applicable)           (Print name)      
    (Signature)           (Print name of signatory, if signing for an entity)  
        (Print title of signatory, if signing for an entity)

 

   

 

 

EXHIBIT A

 

FORM OF NOTE

 

(Attached)

 

   

 

 

EXHIBIT B

 

FORM OF WARRANT

 

(Attached)

 

   

 

 

EXHIBIT C

 

FORM OF SECURITY AGREEMENT

 

(Attached)

 

   

 

 

EXHIBIT D

 

FORM OF SUBSIDIARY GUARANTY

 

(Attached)

 

   

 

 

EXHIBIT E

 

FORM OF IP SECURITY AGREEMENT

 

(Attached)

 

   

 

 

EXHIBIT F

 

FORM OF SUBORDINATION AGREEMENT

 

(Attached)