Exhibit 10.1

 

EXCHANGE AGREEMENT

 

EXCHANGE AGREEMENT (the “Agreement”) is made as of the 2nd day of October 2016,
by and between, Great Basin Scientific, Inc., a Delaware corporation (the
“Company”), and the investor signatory hereto (the “Investor”).

 

WHEREAS, reference is hereby made to (a) that certain Securities Purchase
Agreement, dated December 28, 2015, by and among the Company, the Investor and
certain other buyers signatory thereto (the “2015 SPA”), pursuant to which the
Investor and such other buyers acquired (i) senior secured convertible notes
(the “2015 Notes”) and (ii) warrants to acquire shares of the Company's common
stock, par value $0.0001 per share (the ”Common Stock”) (the “2015 Warrants”),
(b) that certain Securities Purchase Agreement, dated June 29, 2016, by and
among the Company, the Investor and certain other buyers signatory thereto (the
“2016 SPA” and together with the 2015 SPA, each, an “SPA” and collectively, the
“SPAs”), pursuant to which the Investor and such other buyers acquired (i)
senior secured convertible notes (the “2016 Notes”) and (ii) warrants to acquire
shares of Common Stock (the “2016 Warrants”). Capitalized terms not defined
herein shall have the meaning as set forth in the 2015 SPA and/or 2015 Notes, as
applicable, and (c) that certain leak-out agreement, dated September 19, 2016,
by and between the Company and the Investor (the “Leak-Out Agreement”).

 

WHEREAS, in exchange for the aggregate principal amount of the 2015 Notes
outstanding as of the Closing Date (as defined below) (together with any accrued
and unpaid interest thereon, the “Exchange Note”), the Company desires to issue
to the Investor (a) such aggregate number of shares of Common Stock (the
“Exchange Shares”) equal to the lesser of (i) the quotient of (x) the aggregate
principal amount of the Exchange Note as of the Closing Date divided by (y) the
Exchange Price (as defined below) (the “Maximum Share Amount”) and (ii) such
aggregate number of shares of Common Stock equal to Maximum Percentage of Common
Stock outstanding as of the Exchange Date (the “Blocker Share Amount”) and (b)
solely if the Blocker Share Amount is less than the Maximum Share Amount, a
right to receive, subject to the terms and conditions set forth herein, from
time to time (such right of the Investor, the “Right”), such aggregate number of
shares of Common Stock obtained by subtracting (x) the Blocker Shares Amount,
from (y) the Maximum Share Amount (the “Right Share Amount”, and such shares of
Common Stock, the “Right Shares”).

 

WHEREAS, the exchange of the Exchange Note for the Exchange Shares and, if
applicable, the Right is being made in reliance upon the exemption from
registration provided by Section 4(a)(2) and Rule 144(d)(3)(ii) of the
Securities Act of 1933, as amended (the “1933 Act”).

 

WHEREAS, concurrently herewith, the Company is entering into agreements with
holders of 2015 Notes representing at least the Required Holders (as defined in
the 2015 Notes) (each, an “Other Investor”, and such agreements, each an “Other
Agreement”) substantially in the form of this Agreement (other than with respect
to the identity of the Investor, any provision regarding the reimbursement of
legal fees and proportional changes reflecting the different aggregate principal
amount of the 2015 Notes and Right Shares of such Other Investor then
outstanding).

 

 

 

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, and in consideration of the promises and the
mutual agreements, representations and warranties, provisions and covenants
contained herein, the parties hereto, intending to be legally bound hereby,
agree as follows:

 

1.          Exchange. On the Closing Date (as defined below), subject to the
terms and conditions of this Agreement, the Investor shall, and the Company
shall, pursuant to Section 4(a)(2) and Rule 144(d)(3)(ii) of the 1933 Act,
exchange the Exchange Note for the Exchange Shares and, if applicable, the
Right. At the Closing (as defined below), the following transactions shall occur
(such transactions in this Section 1, the “Exchange”):

 

1.1           As of the Closing Date, the Exchange Note shall be free and clear
of all Liens. Upon receipt of the Exchange Shares in accordance with Section 1.2
and, if applicable, the creation of the Right hereunder as of the Closing Date,
all of the Investor’s rights under the Exchange Note shall be extinguished
(including, without limitation, the rights to receive any accrued and unpaid
interest thereon or any other shares of Common Stock with respect thereto).

 

1.2           On or prior to the third (3rd) Trading Day after the Closing Date,
the Company shall credit the Exchange Shares to the Investor or its designee’s
balance account with the Depository Trust Company (“DTC”) in accordance with the
DTC instructions delivered by the Investor in writing to the Company on or prior
to the Closing Date. On the Closing Date, the Investor shall be deemed for all
corporate purposes to have become the holder of record of the Exchange Shares
and, if applicable, the Right, irrespective of the date such Exchange Shares are
credited to the Investor’s or its designee’s balance account with DTC in
accordance herewith.

 

1.3           The Company and the Investor shall execute and/or deliver such
other documents and agreements as are customary and reasonably necessary to
effectuate the Exchange.

 

1.4           For purposes of this Agreement, “Exchange Price” means 85% of the
lowest daily Weighted Average Price of the Common Stock during the five (5)
consecutive Trading Days ending and including the Trading Day immediately prior
to the Closing Date (with all such determinations to be appropriately adjusted
for any stock split, stock dividend, stock combination, reclassification or
other similar transaction during such applicable period and as such Exchange
Price may be further adjusted for any stock split, stock dividend, stock
combination, reclassification or other similar transaction occurring on or after
the Closing Date).

 

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2.           Voluntary Reduction Notice; Waivers; Release; Leak-Out Amendment.

 

2.1           Voluntary Reduction Notice. Effective as of the date the holders
of 2015 Notes representing at least the Required Holders (as defined in the 2015
Notes) shall have executed either this Agreement or an Other Agreement (the
“Effective Date”), pursuant to Section 7(d) of the 2015 Notes, the Company
hereby elects to lower (but in no event increase) the Conversion Price of each
of the 2015 Notes of the Investor and each Other Investor with respect to any
given Trading Day during the period (the “Voluntary Reduction Period”, and any
such reduction, each a “Voluntary Reduction”) commencing on the Effective Date,
through and including November 17, 2016, to the Alternate Conversion Price (as
defined below) for such Trading Day. For the purpose of this Section 2.1, the
“Alternate Conversion Price” for any given Trading Day during the Voluntary
Reduction Period shall equal 85% of the lowest daily Weighted Average Price of
the Common Stock during the five (5) consecutive Trading Days ending and
including such given Trading Day (with all such determinations to be
appropriately adjusted for any stock split, stock dividend, stock combination,
reclassification or other similar transaction during such applicable period and
as such Alternate Conversion Price may be further adjusted for any stock split,
stock dividend, stock combination, reclassification or other similar transaction
occurring on or after such Trading Day).

 

2.2         Waivers

 

(a)          Effective as of the Effective Date, the Investor hereby waives any
reduction in: (i) the exercise price of its 2015 Warrants pursuant to Section
2(a) thereof, (ii) the exercise price of its 2016 Warrants pursuant to Section
2(a) thereof and (iii) the conversion price of its 2016 Notes pursuant to
Section 7(a) thereof, in each case, solely as a result of any Voluntary
Reduction pursuant to Section 2.1 hereof.

 

(b)          Effective as of the Effective Date, the Investor hereby elects
pursuant to Section 8(d) of the 2015 Notes to defer the Installment Amount with
respect to the Investor's 2015 Notes with respect to the Installment Date
occurring thereunder on November 30, 2016 until the Installment Date of December
30, 2016 (including, without limitation, any rights to receive pre-delivery of
shares of Common Stock with respect to such Installment Amount on or prior to
December 1, 2016).

 

(c)          Effective as of the Effective Date, the 2015 Notes are hereby
amended to add a new Section 8(g) at the end of Section 8 of the 2015 Notes that
provides as follows:

 

"(g)        October 31, 2016 Installment Date. Notwithstanding Section 8(d) to
the contrary, the portion of the Installment Amount due on the October 31, 2016
Installment Date equal to the product obtained by multiplying (x) the number of
Pre-Installment Conversion Shares delivered by the Company to the Holder with
respect to such Installment Date and (y) the Company Conversion Price as in
effect on such Installment Date, shall not be allowed to be deferred by the
Holder to a later Installment Date."

 

(d)          Effective as of the Effective Date, the Investor waives any right
pursuant to Section 8(e) of the 2015 Notes to deliver any Acceleration Notice
during the period commencing on the Effective Date and ending on December 1,
2016, inclusive, with respect to the Installment Amount due on the November 30,
2016 Installment Date.

 

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(e)          Effective as of the Effective Date, the Investor hereby waives the
notice provisions Section 4(n) of each SPA, solely with respect to the
transactions contemplated by this Agreement and each Other Agreement (the “Right
of Participation Waiver”).

 

2.3          Release. The Investor shall cause: (i) $[●]1 to be transferred, on
or prior to the Effective Date, from the Investor’s Holder Master Restricted
Account with respect to the 2015 Notes to the operating account of the Company
and (ii) any remaining amounts in such Investor’s Holder Master Restricted
Account with respect to the 2015 Notes shall be transferred, on or prior to the
later of (x) November 1, 2016 and (y) the Effective Date, to the operating
account of the Company, in each case, pursuant to written instructions provided
by the Company at least one (1) Business Day prior to the applicable deadline;
provided, however, that the obligation of the Investor to release such cash to
the Company pursuant to this Section 2.3 is subject to the fulfillment, to the
Investor's reasonable satisfaction, prior to the applicable Release Date, of
each of the following conditions:

 

(a)         No Event of Default. On each Trading Day during the twenty (20)
Trading Days immediately preceding the applicable Release Date, no Event of
Default or event that with the passage of time or giving of notice would
constitute an Event of Default shall have occurred (unless waived in writing by
the Required Holders (as defined in the 2015 Notes)).

 

(b)         Minimum Volume. Unless waived in writing by the Required Holders (as
defined in the 2015 Notes), the daily dollar trading volume of the Common Stock
as reported by Bloomberg for each Trading Day during the twenty (20) consecutive
Trading Days immediately preceding the applicable Release Date shall be at least
$100,000.

 

(c)          Listing. On each Trading Day during the twenty (20) Trading Days
immediately preceding the applicable Release Date, the Common Stock (I) shall be
designated for quotation or listed on an Eligible Market and (II) shall not have
been suspended.

 

(d)          No Material Non-Public Information. As of the applicable Release
Date, the Investor shall not be in possession of any material, nonpublic
information received from the Company, any Subsidiary or its respective agents
or Affiliates.

 

(e)          No Public Information Failure. As of the applicable Release Date,
the Company shall have no knowledge of any fact that would cause any Exchange
Shares or, upon exercise of any Right, any Right Shares (without regard to any
restriction or limitation on exercise of the Right), not to be eligible for sale
pursuant to (i) Rule 144 without any volume limitation by the Investor
(including, without limitation, by virtue of an existing or expected Public
Information Failure) or (ii) any applicable state securities laws.

 

 

1 Insert the lower of (A) product of (i) $3,500,000 and (ii) a fraction, (x) the
numerator of which equals the Investor's remaining amount in its Holder Master
Restricted Account and (y) the denominator of which equals the sum of the
remaining amounts in all Holder Master Restricted Accounts of the Investor and
the Other Investors and (B) the remaining balance in the Investor's Holder
Master Restricted Account.

 

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As used herein, "Release Date" means the Effective Date and November 1, 2016, as
applicable, on which the Investor is required, subject to the satisfaction (or
waiver in writing by the investor) of the foregoing conditions, to release cash
from the Investor's Holder Master Restricted Account to the Company pursuant to
this Section 2.3.

 

2.4         Leak-Out Amendment. As of the Effective Date the Leak-Out Agreement
is hereby amended as follows:

 

(a)          The percentage set forth in paragraph 3 of the Leak-Out Agreement,
representing the Investor’s (together with its Buyer Trading Affiliates) pro
rata share of 35% (measured based upon the aggregate principal amount of 2015
Notes initially purchased by the Investor and its Buyer Trading Affiliates),
shall be amended and restated as such percentage as set forth on the signature
page of the Investor attached hereto, representing 40% of the Investor’s
(together with its Buyer Trading Affiliates) pro rata share of aggregate
principal amount of the 2015 Notes as of the date hereof.

 

(b)          Notwithstanding anything in the Leak-Out Agreement to the contrary,
the Restricted Period (as defined in the Leak-Out Agreement) shall not include
the period commencing on and including October 17, 2016 and ending and including
October 21, 2016.

 

3.          The Closing(s). Subject to the conditions set forth below, the
Exchange shall take place at the offices of Kelley Drye & Warren LLP, 101 Park
Avenue, New York, NY 10178, on the later to occur of (x) November 18, 2016 and
(y) the Effective Date, or at such other time and place as the Company and the
Investor mutually agree (the “Closing” and the “Closing Date”).

 

4.          Closing Conditions.

 

4.1         Condition’s to Investor’s Obligations. The obligation of the
Investor to consummate the Exchange is subject to the fulfillment, to the
Investor’s reasonable satisfaction, prior to or at the Closing, of each of the
following conditions:

 

(a)          Representations and Warranties. The representations and warranties
of the Company contained in this Agreement shall be true and correct in all
material respects (except for those representations and warranties that are
qualified by materiality or Material Adverse Effect, which are accurate in all
respects) on the date hereof and on and as of the Closing Date as if made on and
as of such date (except for representations and warranties that speak as of a
specific date, which are accurate in all material respects (except for those
representations and warranties that are qualified by materiality or Material
Adverse Effect, which are accurate in all respects) as of such specified date).

 

(b)          Issuance of Securities. At the Closing, the Company shall issue the
Exchange Shares and the Right on the books and records of the Company.

 

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(c)        No Actions. No action, proceeding, investigation, regulation or
legislation shall have been instituted, threatened or proposed before any court,
governmental agency or authority or legislative body to enjoin, restrain,
prohibit or obtain substantial damages in respect of, this Agreement or the
consummation of the transactions contemplated by this Agreement.

 

(d)        Proceedings and Documents. All proceedings in connection with the
transactions contemplated hereby and all documents and instruments incident to
such transactions shall be satisfactory in substance and form to the Investor,
and the Investor shall have received all such counterpart originals or certified
or other copies of such documents as they may reasonably request.

 

(e)         No Event of Default. On each Trading Day during the twenty (20)
Trading Days immediately preceding the Closing Date, no Event of Default or
event that with the passage of time or giving of notice would constitute an
Event of Default shall have occurred (unless waived in writing by the Required
Holders (as defined in the 2015 Notes)).

 

(f)         Minimum Volume. Unless waived in writing by the Required Holders (as
defined in the 2015 Notes), the quotient of (x) the sum of each daily dollar
trading volume of the Common Stock as reported by Bloomberg for each Trading Day
during the twenty (20) consecutive Trading Days immediately preceding the
Closing Date, divided by (y) twenty (20) shall be at least $300,000.

 

(g)        Listing. On each Trading Day during the twenty (20) Trading Days
immediately preceding the Closing Date, the Common Stock (I) shall be designated
for quotation or listed on an Eligible Market and (II) shall not have been
suspended.

 

(h)          No Material Non-Public Information. As of the Closing Date, the
Investor shall not be in possession of any material, nonpublic information
received from the Company, any Subsidiary or its respective agents or
Affiliates.

 

(i)        No Public Information Failure. As of the Closing Date, the Company
shall have no knowledge of any fact that would cause any Exchange Shares or,
upon exercise of any Right, any Right Shares (without regard to any restriction
or limitation on exercise of the Right), not to be eligible for sale pursuant to
(i) Rule 144 without any volume limitation by the Investor (including, without
limitation, by virtue of an existing or expected Public Information Failure) or
(ii) any applicable state securities laws.

 

4.2         Condition’s to the Company’s Obligations. The obligation of the
Company to consummate the Exchange is subject to the fulfillment, to the
Company’s reasonable satisfaction, prior to or at the Closing in question, of
each of the following conditions:

 

(a)          Representations and Warranties. The representations and warranties
of the Investor contained in this Agreement shall be true and correct in all
material respects (except for those representations and warranties that are
qualified by materiality or material adverse effect, which are accurate in all
respects) on the date hereof and on and as of the Closing Date as if made on and
as of such date (except for representations and warranties that speak as of a
specific date, which are accurate in all material respects (except for those
representations and warranties that are qualified by materiality or material
adverse effect, which are accurate in all respects) as of such specified date).

 

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(b)          Waiver. The Company shall have obtained the waiver of the Right of
Participation Waiver of the Investor and all Other Investors.

 

(c)          No Actions. No action, proceeding, investigation, regulation or
legislation shall have been instituted, threatened or proposed before any court,
governmental agency or authority or legislative body to enjoin, restrain,
prohibit, or obtain substantial damages in respect of, this Agreement or the
consummation of the transactions contemplated by this Agreement.

 

(d)          Proceedings and Documents. All proceedings in connection with the
transactions contemplated hereby and all documents and instruments incident to
such transactions shall be satisfactory in substance and form to the Company and
the Company shall have received all such counterpart originals or certified or
other copies of such documents as the Company may reasonably request.

 

5.            Representations and Warranties of the Company. The Company hereby
represents and warrants to Investor that:

 

5.1           Organization, Good Standing and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. 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 (as defined below) on its business or
properties. As used in this Agreement, “Material Adverse Effect” means any
material adverse effect on the business, properties, assets, liabilities,
operations, results of operations, condition (financial or otherwise) or
prospects of the Company and its Subsidiaries, if any, individually or taken as
a whole, or on the transactions contemplated hereby or on the Transaction
Documents (as defined below) or by the agreements and instruments to be entered
into (or entered into) in connection herewith or therewith, or on the authority
or ability of the Company to perform its obligations under this Agreement or the
Transaction Documents.

 

5.2           Authorization. All corporate action on the part of the Company,
its officers, directors and stockholders necessary for the authorization,
execution and delivery of this Agreement and the performance of all obligations
of the Company hereunder and thereunder, and the authorization (or reservation
for issuance), the Exchange, and the issuance of the Exchange Shares, the Right
and, upon exercise of the Right, the Right Shares (collectively, the
“Securities”) have been taken on or prior to the date hereof.

 

5.3           Valid Issuance of the Securities. The Exchange Shares and Right
Shares when issued and delivered in accordance with the terms of this Agreement,
for the consideration expressed herein, will be duly and validly issued, fully
paid and non-assessable. The Right when issued in accordance with the terms of
this Agreement, for the consideration expressed herein, will be duly and validly
issued. The Exchange Shares and, upon exercise of the Right, the Right Shares
are freely tradeable and shall not be required to bear any 1933 Act or other
restrictive legend. The Company agrees to take all actions, including, without
limitation, the issuance by its legal counsel of any necessary legal opinions,
necessary to issue unrestricted Exchange Shares and Right Shares, if any, that
are freely tradable on the principal Eligible Market on which the Common Stock
then trades without restriction and not containing any restrictive legend
without the need for any action by the Investor.

 

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5.4           Offering. The offer and issuance of the Securities as contemplated
by this Agreement are exempt from the registration requirements of the 1933 Act
and the qualification or registration requirements of state securities laws or
other applicable blue sky laws. The Company represents and warrants that neither
it nor any Person acting on its behalf, has directly or indirectly paid or given
any commission or other remuneration for soliciting the transactions
contemplated by this Agreement. Neither the Company nor any authorized agent
acting on its behalf will take any action hereafter that would cause the loss of
such exemptions.

 

5.5           Compliance With Laws. The Company has not violated any law or any
governmental regulation or requirement which violation has had or would
reasonably be expected to have a Material Adverse Effect, and the Company has
not received written notice of any such violation.

 

5.6           Consents; Waivers. No consent, waiver, approval or authority of
any nature, or other formal action, by any Person, not already obtained, is
required in connection with the execution and delivery of this Agreement by the
Company or the consummation by the Company of the transactions provided for
herein and therein.

 

5.7           Acknowledgment Regarding Investor’s Purchase of Securities. The
Company acknowledges and agrees that the Investor is acting solely in the
capacity of arm’s length purchaser with respect to this Agreement and the other
documents entered into in connection herewith (collectively, the “Transaction
Documents”) and the transactions contemplated hereby and thereby and that the
Investor is not (i) an officer or director of the Company, (ii) an “affiliate”
of the Company (as defined in Rule 144 promulgated under the 1933 Act), or (iii)
to the knowledge of the Company, a “beneficial owner” of more than 10% of the
shares of Common Stock (as defined for purposes of Rule 13d-3 of the 1934 Act).
The Company further acknowledges that the Investor is not acting as a financial
advisor or fiduciary of the Company (or in any similar capacity) with respect to
the Transaction Documents and the transactions contemplated hereby and thereby,
and any advice given by the Investor or any of its representatives or agents in
connection with the Transaction Documents and the transactions contemplated
hereby and thereby is merely incidental to the Investor’s acceptance of the
Exchange Shares and the Right, if any. The Company further represents to the
Investor that the Company’s decision to enter into the Transaction Documents has
been based solely on the independent evaluation by the Company and its
representatives.

 

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5.8          Absence of Litigation. Except as set forth in the SEC Documents,
there is no action, suit, proceeding, inquiry or investigation before or by any
court, public board, government agency, self-regulatory organization or body
pending or, to the knowledge of the Company, threatened against or affecting the
Company, the Common Stock, the Exchange Note or any of the Company’s officers or
directors in their capacities as such.

 

5.9           No Group. The Company acknowledges that, to the Company’s
knowledge, the Investor is acting independently in connection with this
Agreement and the transactions contemplated hereby, and is not acting as part of
a “group” as such term is defined under Section 13(d) of the 1933 Act and the
rules and regulations promulgated thereunder.

 

5.10         Validity; Enforcement; No Conflicts. This Agreement and each
Transaction Document to which the Company is a party have been duly and validly
authorized, executed and delivered on behalf of the Company and shall constitute
the legal, valid and binding obligations of the Company enforceable against the
Company in accordance with their respective terms, except as such enforceability
may be limited by general principles of equity or to applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation and other similar laws
relating to, or affecting generally, the enforcement of applicable creditors’
rights and remedies. The execution, delivery and performance by the Company of
this Agreement and each Transaction Document to which the Company is a party and
the consummation by the Company of the transactions contemplated hereby and
thereby will not (i) result in a violation of the organizational documents of
the Company or (ii) conflict with, or constitute a default (or an event which
with notice or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation of,
any agreement, indenture or instrument to which the Company is a party or by
which it is bound, or (iii) result in a violation of any law, rule, regulation,
order, judgment or decree (including federal and state securities or “blue sky”
laws) applicable to the Company, except in the case of clause (ii) above, for
such conflicts, defaults or rights which would not, individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect.

 

5.11         Disclosure. Other than as set forth in the 8-K Filing (as defined
below), the Company confirms that neither it nor any other Person acting on its
behalf has provided the Investor or its agents or counsel with any information
that constitutes or could reasonably be expected to constitute material,
nonpublic information. The Company understands and confirms that the Investor
will rely on the foregoing representations in effecting transactions in the
Exchange Securities.

 

5.12         Capitalization. As of September 30, 2016, the Company has 2,520,215
shares of Common Stock issued and outstanding.

 

6.            Representations and Warranties of the Investor. The Investor
hereby represents, warrants and covenants that:

 

6.1           Authorization. The Investor has full power and authority to enter
into this Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby and has taken all action necessary to authorize
the execution and delivery of this Agreement, the performance of its obligations
hereunder and the consummation of the transactions contemplated hereby.

 

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6.2           Accredited Investor Status; Investment Experience. The Investor is
an “accredited investor” as that term is defined in Rule 501(a) of Regulation D.
The Investor can bear the economic risk of its investment in the Securities, and
has such knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of an investment in the Securities.

 

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

 

6.4           Validity; Enforcement; No Conflicts. This Agreement and each
Transaction Document to which the Investor is a party have been duly and validly
authorized, executed and delivered on behalf of the Investor and shall
constitute the legal, valid and binding obligations of the Investor enforceable
against the Investor in accordance with their respective terms, except as such
enforceability may be limited by general principles of equity or to applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation and other
similar laws relating to, or affecting generally, the enforcement of applicable
creditors’ rights and remedies. The execution, delivery and performance by the
Investor of this Agreement and each Transaction Document to which the Investor
is a party and the consummation by the Investor of the transactions contemplated
hereby and thereby will not (i) result in a violation of the organizational
documents of the Investor or (ii) conflict with, or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Investor is
a party, or (iii) result in a violation of any law, rule, regulation, order,
judgment or decree (including federal and state securities or “blue sky” laws)
applicable to the Investor, except in the case of clause (ii) above, for such
conflicts, defaults or rights which would not, individually or in the aggregate,
reasonably be expected to have a material adverse effect on the ability of the
Investor to perform its obligations hereunder.

 

6.5           Ownership of Original Note. The Investor owns and holds,
beneficially and of record, the entire right, title, and interest in and to the
Exchange Note free and clear of all rights and Liens (other than pledges or
security interests (x) arising by operation of applicable securities laws and
(y) that the Investor may have created in favor of a prime broker under and in
accordance with its prime brokerage agreement with such broker). The Investor
has full power and authority to transfer and dispose of the Exchange Note to the
Company free and clear of any right or Lien. Other than the transactions
contemplated by this Agreement, there is no outstanding vote, plan, pending
proposal, or other right of any Person to acquire all or any part of the
Exchange Note or any shares of Common Stock issuable upon conversion of the
Exchange Note.

 

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7.            Additional Covenants

 

7.1           Disclosure. The Company shall, on or before 8:30 a.m., New York
City time, on the first business day after the date of this Agreement, issue a
press release and/or Current Report on Form 8-K (collectively, the “8-K Filing”)
disclosing all material terms of the transactions contemplated hereby. From and
after the issuance of the 8-K Filing, the Investor shall not be in possession of
any material, nonpublic information received from the Company or any of its
Subsidiaries or any of their respective officers, directors, employees,
affiliates or agents, that is not disclosed in the 8-K Filing. The Company shall
not, and shall cause its officers, directors, employees, affiliates and agents,
not to, provide the Investor with any material, nonpublic information regarding
the Company from and after the filing of the 8-K Filing without the express
written consent of the Investor. To the extent that the Company delivers any
material, non-public information to the Investor without the Investor's express
prior written consent, the Company hereby covenants and agrees that the Investor
shall not have any duty of confidentiality to the Company, any of its
Subsidiaries or any of their respective officers, directors, employees,
affiliates or agent with respect to, or a duty to the to the Company, any of its
Subsidiaries or any of their respective officers, directors, employees,
affiliates or agent or not to trade on the basis of, such material, non-public
information. The Company shall not disclose the name of the Investor in any
filing, announcement, release or otherwise, unless such disclosure is required
by law or regulation. In addition, effective upon the filing of the 8-K Filing,
the Company acknowledges and agrees that any and all confidentiality or similar
obligations under any agreement, whether written or oral, between the Company,
any of its subsidiaries or any of their respective officers, directors,
affiliates, employees or agents, on the one hand, and the Investor or any of its
affiliates, on the other hand, shall terminate and be of no further force or
effect. The Company understands and confirms that the Investor will rely on the
foregoing representations in effecting transactions in securities of the
Company.

 

7.2           Intentionally omitted.

 

7.3           Listing. The Company shall promptly secure the listing or
designation for quotation (as applicable) of all of the Exchange Shares and, if
applicable, Right Shares upon each Eligible Market upon which the Common Stock
is then listed or designated for quotation (as applicable) (subject to official
notice of issuance) and shall maintain such listing of all the Exchange Shares
and, if applicable, Right Shares from time to time issuable under the terms of
the Transaction Documents. The Company shall pay all fees and expenses in
connection with satisfying its obligations under this Section 7.3.

 

7.4           Holding Period. For the purposes of Rule 144 of the 1933 Act, the
Company acknowledges that the holding period of the Exchange Note may be tacked
onto the holding period of the Exchange Shares and the Right (and upon exercise
of the Right, the Right Shares) and that the holding period of the Right may be
tacked onto the holding period of the Right Shares, and the Company agrees not
to take a position contrary to this Section 5.4.

 

 11 

 

 

7.5           Blue Sky. The Company shall make all filings and reports relating
to the Exchange required under applicable securities or “Blue Sky” laws of the
states of the United States following the date hereof, if any.

 

7.6           Fees and Expenses. Each party shall pay the fees and expenses of
its advisers, counsel, accountants and other experts, if any, and all other
expenses incurred by such party incident to the negotiation, preparation,
execution, delivery and performance of this Agreement.

 

8.            Right

 

8.1           Right of Issuance of Shares. Subject to the terms hereof,
including, without limitation, Section 8.7 hereof, the exercise of the Right may
be made by the Investor (or any transferee of such Right by the Investor) (the
“Holder”), in whole or in part, at any time or times on or after the date hereof
by delivery to the Company (or such other office or agency of the Company as it
may designate by notice in writing to the registered Holder at the address of
the Holder appearing on the books of the Company) of a duly executed facsimile
or PDF copy (delivered via e-mail) of the Notice of Issuance Form annexed hereto
as Exhibit A. Partial exercises of the Right resulting in issuances of a portion
of the total number of Right Shares available hereunder shall have the effect of
lowering the outstanding number of Right Shares purchasable hereunder in an
amount equal to the applicable number of Right Shares issued. The Holder and the
Company shall maintain records showing the number of Right Shares issued and the
date of such issuances. The Company shall deliver any objection to any Notice of
Issuance Form within two (2) Business Days of receipt of such notice. The Holder
acknowledges and agrees that, by reason of the provisions of this paragraph,
following each exercise of the Rights issued hereunder and the issuance of a
portion of the Right Shares pursuant thereto, the number of Right Shares
available for issuance pursuant to the Rights issued hereunder at any given time
may be less than the initial Right Share Amount.

 

8.2           Delivery of Right Shares. Right Shares issued hereunder shall be
transmitted by the Transfer Agent to the Holder by crediting the account of the
Holder’s prime broker with The Depository Trust Company through its Deposit or
Withdrawal at Custodian system (“DWAC”), on or prior to the date that is three
(3) Trading Days after the delivery to the Company of the Notice of Issuance
(such date, the “Share Delivery Date”). The Right Shares shall be deemed to have
been issued, and Holder or any other person so designated to be named therein
shall be deemed to have become a holder of record of such shares for all
purposes, as of the date the Right has been exercised.

 

8.3           Charges, Taxes and Expenses. Issuance of the Right Shares shall be
made without charge to the Holder for any issue or transfer tax or other
incidental expense in respect of the issuance of such Right Shares, all of which
taxes and expenses shall be paid by the Company. The Company shall pay all
Transfer Agent fees required for same-day processing of any Notice of Issuance.

 

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8.4           Authorized Shares. The Company covenants that, during the period
the Right is outstanding, it will reserve from its authorized and unissued
Common Stock a sufficient number of shares to provide for the issuance of the
Right Shares upon the exercise of the Right. The Company further covenants that
its issuance of the Right shall constitute full authority to its officers who
are charged with the duty of executing stock certificates to execute and issue
the necessary certificates for the Right Shares upon the due exercise of the
Right. The Company will take all such reasonable action as may be necessary to
assure that such Right Shares may be issued as provided herein without violation
of any applicable law or regulation, or of any requirements of the Eligible
Market upon which the Common Stock may be listed. The Company covenants that all
Right Shares which may be issued upon the exercise of the Right represented by
this Agreement will, upon exercise of the Right, be duly authorized, validly
issued, fully paid and nonassessable and free from all preemptive or similar
rights, taxes, liens, charges and other encumbrances in respect of the issue
thereof (other than taxes in respect of any transfer occurring contemporaneously
with such issue, which shall be borne by the Company pursuant to Section 8.3).

 

8.5           Impairment. Except and to the extent as waived or consented to by
the Holder, the Company shall not by any action, including, without limitation,
amending its certificate of incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms of this Agreement, but will at all times in
good faith assist in the carrying out of all such terms and in the taking of all
such actions as may be necessary or appropriate to protect the rights of the
Holder as set forth in this Agreement against impairment. Without limiting the
generality of the foregoing, the Company will (i) not increase the par value of
any Right Shares above the amount payable therefor upon such exercise
immediately prior to such increase in par value, (ii) take all such action as
may be necessary or appropriate in order that the Company may validly and
legally issue fully paid and nonassessable Right Shares upon the exercise of the
Right and (iii) use reasonable best efforts to obtain all such authorizations,
exemptions or consents from any public regulatory body having jurisdiction
thereof, as may be, necessary to enable the Company to perform its obligations
under this Agreement.

 

8.6           Authorizations. Before taking any action which would result in an
adjustment in the number of Right Shares for which the Right provides for, the
Company shall obtain all such authorizations or exemptions thereof, or consents
thereto, as may be necessary from any public regulatory body or bodies having
jurisdiction thereof, including, without, limitation any consent required by the
applicable Eligible Market.

 

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8.7           Beneficial Ownership Limitation. Notwithstanding anything to the
contrary contained herein, the Company shall not effect the exercise of any
portion of the Right, and the Holder shall not have the right to exercise any
portion of the Right, pursuant to the terms and conditions of the Right and any
such exercise shall be null and void and treated as if never made, to the extent
that after giving effect to such exercise, the Holder together with the other
Attribution Parties collectively would beneficially own in excess of [    ]2%
(the “Maximum Percentage”) of the number of shares of Common Stock outstanding
immediately after giving effect to such exercise. For purposes of the foregoing
sentence, the aggregate number of shares of Common Stock beneficially owned by
the Holder and the other Attribution Parties shall include the shares of Common
Stock held by the Holder and all other Attribution Parties plus the number of
shares of Common Stock issuable upon exercise of the Right with respect to which
the determination of such sentence is being made, but shall exclude the shares
of Common Stock which would be issuable upon (A) exercise of the remaining,
unexercised portion of the Right beneficially owned by the Holder or any of the
other Attribution Parties and (B) exercise or conversion of the unexercised or
unconverted portion of any other securities of the Company (including, without
limitation, any convertible notes or convertible preferred stock or Rights)
beneficially owned by the Holder or any other Attribution Party subject to a
limitation on conversion or exercise analogous to the limitation contained in
this Section 8.7. For purposes of this Section 8.7, beneficial ownership shall
be calculated in accordance with Section 13(d) of the 1934 Act. For purposes of
the Right, in determining the number of outstanding shares of Common Stock the
Holder may acquire upon the exercise of the Right without exceeding the Maximum
Percentage, the Holder may rely on the number of outstanding shares of Common
Stock as reflected in (x) the Company's most recent Annual Report on Form 10-K,
Quarterly Report on Form 10-Q, Current Report on Form 8-K or other public filing
with the SEC, as the case may be, (y) a more recent public announcement by the
Company or (z) any other written notice by the Company or the Transfer Agent
setting forth the number of shares of Common Stock outstanding (the “Reported
Outstanding Share Number”). If the Company receives an Notice of Issuance from
the Holder at a time when the actual number of outstanding shares of Common
Stock is less than the Reported Outstanding Share Number, the Company shall (i)
notify the Holder in writing of the number of shares of Common Stock then
outstanding and, to the extent that such Notice of Issuance would otherwise
cause the Holder's beneficial ownership, as determined pursuant to this Section
8.7, to exceed the Maximum Percentage, the Holder must notify the Company of a
reduced number of Right Shares to be purchased pursuant to such Notice of
Issuance (the number of shares by which such purchase is reduced, the “Reduction
Shares”) and (ii) as soon as reasonably practicable, the Company shall return to
the Holder any exercise price paid by the Holder for the Reduction Shares. For
any reason at any time, upon the written or oral request of the Holder, the
Company shall within one (1) Business Day confirm orally and in writing or by
electronic mail to the Holder the number of shares of Common Stock then
outstanding. In any case, the number of outstanding shares of Common Stock shall
be determined after giving effect to the conversion or exercise of securities of
the Company, including the Right, by the Holder and any other Attribution Party
since the date as of which the Reported Outstanding Share Number was reported.
In the event that the issuance of shares of Common Stock to the Holder upon
exercise of the Right results in the Holder and the other Attribution Parties
being deemed to beneficially own, in the aggregate, more than the Maximum
Percentage of the number of outstanding shares of Common Stock (as determined
under Section 13(d) of the 1934 Act), the number of shares so issued by which
the Holder's and the other Attribution Parties' aggregate beneficial ownership
exceeds the Maximum Percentage (the “Excess Shares”) shall be deemed null and
void and shall be cancelled ab initio, and the Holder shall not have the power
to vote or to transfer the Excess Shares. As soon as reasonably practicable
after the issuance of the Excess Shares has been deemed null and void, the
Company shall return to the Holder the exercise price paid by the Holder for the
Excess Shares. Upon delivery of a written notice to the Company, the Holder may
from time to time increase or decrease the Maximum Percentage to any other
percentage not in excess of 9.99% as specified in such notice; provided that (i)
any such increase in the Maximum Percentage will not be effective until the
sixty-first (61st) day after such notice is delivered to the Company and (ii)
any such increase or decrease will apply only to the Holder and the other
Attribution Parties and not to any other holder of any right that is not an
Attribution Party of the Holder. For purposes of clarity, the shares of Common
Stock issuable pursuant to the terms of the Right in excess of the Maximum
Percentage shall not be deemed to be beneficially owned by the Holder for any
purpose including for purposes of Section 13(d) or Rule 16a-1(a)(1) of the 1934
Act. The provisions of this paragraph shall be construed and implemented in a
manner otherwise than in strict conformity with the terms of this Section 8.7 to
the extent necessary to correct this paragraph or any portion of this paragraph
which may be defective or inconsistent with the intended beneficial ownership
limitation contained in this Section 8.7 or to make changes or supplements
necessary or desirable to properly give effect to such limitation. The
limitation contained in this paragraph may not be waived and shall apply to a
successor holder of the Right.

 

 

2 Insert 4.99% or 9.99% as elected by the Investor upon signing of this
Agreement.

 

 14 

 

 

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

 

8.9           Stock Dividends and Splits. If the Company, at any time while the
Right exists: (i) pays a stock dividend or otherwise makes a distribution or
distributions on shares of its Common Stock or any other equity or equity
equivalent securities payable in shares of Common Stock, (ii) subdivides
outstanding shares of Common Stock into a larger number of shares, (iii)
combines (including by way of reverse stock split) outstanding shares of Common
Stock into a smaller number of shares, or (iv) issues by reclassification of
shares of the Common Stock any shares of capital stock of the Company, then in
each case the number of Right Shares issuable upon exercise of the Right shall
be proportionately adjusted. Any adjustment made pursuant to this Section 8.9
shall become effective immediately upon the record date for the determination of
stockholders entitled to receive such dividend or distribution (provided that if
the declaration of such dividend or distribution is rescinded or otherwise
cancelled, then such adjustment shall be reversed upon notice to the Holder of
the termination of such proposed declaration or distribution as to any
unexercised portion of the Right at the time of such rescission or cancellation)
and shall become effective immediately after the effective date in the case of a
subdivision, combination or re-classification.

 

 15 

 

 

8.10         Compensation for Buy-In on Failure to Timely Deliver Certificates.
In addition to any other rights available to the Holder, if the Company fails or
fails to cause the Transfer Agent to credit the Holder's balance account with
DTC for the Right Shares pursuant to an exercise on or before the applicable
Share Delivery Date (an “Exercise Failure”), and if after such date the Holder
purchases (in an open market transaction or otherwise) Common Stock relating to
the applicable Exercise Failure (a “Buy-In”), then the Company shall, within
three (3) Trading Days after the Holder's request and in the Holder's
discretion, either (x) pay cash to the Holder in an amount equal to the Holder's
total purchase price (including brokerage commissions and other out-of-pocket
expenses, if any) for the shares of Common Stock so purchased (the “Buy-In
Price”), at which point the Company's obligation to credit the Holder's balance
account with DTC for the shares of Common Stock to which the Holder is entitled
upon the Holder's exercise of the applicable Conversion Amount shall terminate,
(y) promptly honor its obligation to credit the Holder's balance account with
DTC, as required pursuant to the terms of Section 8.2, for such shares of Common
Stock and pay cash to the Holder in an amount equal to the excess (if any) of
the Buy-In Price over the product of (A) such number of shares of Common Stock,
times (B) the Buy-In Price (including brokerage commissions and other
out-of-pocket expenses, if any) or (z) reinstate the portion of the Right and
equivalent number of Right Shares for which such exercise was not honored (in
which case such exercise shall be deemed rescinded, and the Holder shall
promptly return to the Company the Right Shares issued to such Holder pursuant
to the rescinded Notice of Issuance). The Holder shall provide the Company
written notice indicating the amounts payable to the Holder in respect of the
Buy-In and, upon request of the Company, evidence of the amount of such loss.
Nothing herein shall limit a Holder’s right to pursue any other remedies
available to it hereunder, at law or in equity including, without limitation, a
decree of specific performance and/or injunctive relief with respect to the
Company’s failure to timely deliver certificates representing shares of Common
Stock upon exercise of the Right as required pursuant to the terms hereof.

 

8.11         Subsequent Rights Offerings. If at any time the Company grants,
issues or sells any Common Stock Equivalents or rights to purchase stock,
warrants, securities or other property pro rata to the record holders of any
class of shares of Common Stock (the “Purchase Rights”), then the Holder will be
entitled to acquire, upon the terms applicable to such Purchase Rights, the
aggregate Purchase Rights which the Holder could have acquired if the Holder had
held the number of shares of Common Stock acquirable upon complete exercise of
the Right (without regard to any limitations on exercise hereof, including
without limitation, the Maximum Percentage) immediately before the date on which
a record is taken for the grant, issuance or sale of such Purchase Rights, or,
if no such record is taken, the date as of which the record holders of shares of
Common Stock are to be determined for the grant, issue or sale of such Purchase
Rights (provided, however, to the extent that the Holder’s right to participate
in any such Purchase Right would result in the Holder exceeding the Maximum
Percentage, then the Holder shall not be entitled to participate in such
Purchase Right to such extent (or beneficial ownership of such shares of Common
Stock as a result of such Purchase Right to such extent) and such Purchase Right
to such extent shall be held in abeyance for the Holder until such time, if
ever, as its right thereto would not result in the Holder exceeding the Maximum
Percentage, at which time or times the Holder shall be granted such right (and
any Purchase Right granted, issued or sold on such initial Purchase Right or on
any subsequent Purchase Right to be held similarly in abeyance) to the same
extent as if there had been no such limitation).

 

 16 

 

 

8.12         Distribution of Assets. If the Company shall declare or make any
dividend or other distributions of its assets (or rights to acquire its assets)
to any or all holders of shares of Common Stock, by way of return of capital or
otherwise (including without limitation, any distribution of cash, stock or
other securities, property, options, evidence of indebtedness or any other by
way of a dividend, spin off, reclassification, corporate rearrangement, scheme
of arrangement or other similar transaction) (the “Distributions”), at any time
after the issuance of the Right , then, in each such case, the Holder shall be
entitled to such Distributions as if the Holder had held the number of shares of
Common Stock acquirable upon complete exercise in full of this Right (without
taking into account any limitations or restrictions on the exercisability of
this Right) immediately prior to the date on which a record is taken for such
Distribution or, if no such record is taken, the date as of which the record
holders of Common Stock are to be determined for such Distributions (provided,
however, that to the extent that the Holder's right to participate in any such
Distribution would result in the Holder and the other Attribution Parties
exceeding the Maximum Percentage, then the Holder shall not be entitled to
participate in such Distribution to such extent (and shall not be entitled to
beneficial ownership of such shares of Common Stock as a result of such
Distribution (and beneficial ownership) to such extent) and the portion of such
Distribution shall be held in abeyance for the benefit of the Holder until such
time or times as its right thereto would not result in the Holder and the other
Attribution Parties exceeding the Maximum Percentage, at which time or times the
Holder shall be granted such Distribution (and any Distributions declared or
made on such initial Distribution or on any subsequent Distribution to be held
similarly in abeyance) to the same extent as if there had been no such
limitation).

 

 17 

 

 

8.13         Fundamental Transaction. The Company shall not enter into or be
party to a Fundamental Transaction unless the Successor Entity assumes in
writing all of the obligations of the Company under this Agreement and the other
Transaction Documents in accordance with the provisions of this Section 8.13
pursuant to written agreements in form and substance satisfactory to the
Required Holders (as defined in the 2015 Notes) and approved by the Required
Holders (as defined in the 2015 Notes) prior to such Fundamental Transaction,
including agreements, if so requested by the Holder, to deliver to each Holder a
security of the Successor Entity evidenced by a written instrument substantially
similar in form and substance to this Right, and exercisable for a corresponding
number of shares of capital stock equivalent to the shares of Common Stock
acquirable and receivable upon exercise of this Right (without regard to any
limitations on the exercise of this Right) prior to such Fundamental
Transaction, and satisfactory to the Required Holders (as defined in the 2015
Notes). Upon the occurrence or consummation of any Fundamental Transaction in
which the Company is not the Successor Entity (or in which the Common Stock
ceases to be registered under the 1934 Act), and it shall be a required
condition to the occurrence or consummation of any Fundamental Transaction that,
the Company and the Successor Entity or Successor Entities, jointly and
severally, shall succeed to, and the Company shall cause any Successor Entity or
Successor Entities to jointly and severally succeed to, and be added to the term
“Company” under this Right (so that from and after the date of such Fundamental
Transaction, each and every provision of this Right referring to the “Company”
shall refer instead to each of the Company and the Successor Entity or Successor
Entities, jointly and severally), and the Company and the Successor Entity or
Successor Entities, jointly and severally, may exercise every right and power of
the Company prior thereto and shall assume all of the obligations of the Company
prior thereto under this Right with the same effect as if the Company and such
Successor Entity or Successor Entities, jointly and severally, had been named as
the Company in this Right, and, solely at the request of the Holder, if the
Successor Entity and/or Successor Entities is a publicly traded corporation
whose common capital stock is quoted on or listed for trading on an Eligible
Market, shall deliver (in addition to and without limiting any right under this
Right) to the Holder in exchange for this Right a security of the Successor
Entity and/or Successor Entities evidenced by a written instrument substantially
similar in form and substance to the Right set forth in this Agreement and
exercisable for a corresponding number of shares of capital stock of the
Successor Entity and/or Successor Entities (the “Successor Capital Stock”)
equivalent to the shares of Common Stock acquirable and receivable upon exercise
of this Right (without regard to any limitations on the exercise of this Right)
prior to such Fundamental Transaction (such corresponding number of shares of
Successor Capital Stock to be delivered to the Holder shall be equal to the
greater of (A) the quotient of (i) the aggregate dollar value of all
consideration (including cash consideration and any consideration other than
cash (“Non-Cash Consideration”), in such Fundamental Transaction, as such values
are set forth in any definitive agreement for the Fundamental Transaction that
has been executed at the time of the first public announcement of the
Fundamental Transaction or, if no such value is determinable from such
definitive agreement, as determined in accordance with Section 26 of the 2015
Notes with the term “Non-Cash Consideration” being substituted for the term
“Conversion Price”) that the Holder would have been entitled to receive upon the
happening of such Fundamental Transaction or the record, eligibility or other
determination date for the event resulting in such Fundamental Transaction, had
this Right been exercised immediately prior to such Fundamental Transaction or
the record, eligibility or other determination date for the event resulting in
such Fundamental Transaction (without regard to any limitations on the exercise
of this Right) (the “Aggregate Consideration”) divided by (ii) the per share
Closing Sale Price of such Successor Capital Stock on the Trading Day
immediately prior to the consummation or occurrence of the Fundamental
Transaction and (B) the product of (i) the Aggregate Consideration and (ii) the
highest exchange ratio pursuant to which any stockholder of the Company may
exchange Common Stock for Successor Capital Stock) (provided, however, to the
extent that the Holder's right to receive any such shares of publicly traded
common stock (or their equivalent) of the Successor Entity would result in the
Holder and its other Attribution Parties exceeding the Maximum Percentage, if
applicable, then the Holder shall not be entitled to receive such shares to such
extent (and shall not be entitled to beneficial ownership of such shares of
publicly traded common stock (or their equivalent) of the Successor Entity as a
result of such consideration to such extent) and the portion of such shares
shall be held in abeyance for the Holder until such time or times, as its right
thereto would not result in the Holder and its other Attribution Parties
exceeding the Maximum Percentage, at which time or times the Holder shall be
delivered such shares to the extent as if there had been no such limitation),
and such security shall be satisfactory to the Holder, and with an identical
exercise price to the Exercise Price hereunder (such adjustments to the number
of shares of capital stock and such exercise price being for the purpose of
protecting after the consummation or occurrence of such Fundamental Transaction
the economic value of this Right that was in effect immediately prior to the
consummation or occurrence of such Fundamental Transaction, as elected by the
Holder solely at its option). Upon occurrence or consummation of the Fundamental
Transaction, and it shall be a required condition to the occurrence or
consummation of such Fundamental Transaction that, the Company and the Successor
Entity or Successor Entities shall deliver to the Holder confirmation that there
shall be issued upon exercise of this Right at any time after the occurrence or
consummation of the Fundamental Transaction, as elected by the Holder solely at
its option, shares of Common Stock, Successor Capital Stock or, in lieu of the
shares of Common Stock or Successor Capital Stock (or other securities, cash,
assets or other property purchasable upon the exercise of this Right prior to
such Fundamental Transaction), such shares of stock, securities, cash, assets or
any other property whatsoever (including warrants or other purchase or
subscription rights), which for purposes of clarification may continue to be
shares of Common Stock, if any, that the Holder would have been entitled to
receive upon the happening of such Fundamental Transaction or the record,
eligibility or other determination date for the event resulting in such
Fundamental Transaction, had this Right been exercised immediately prior to such
Fundamental Transaction or the record, eligibility or other determination date
for the event resulting in such Fundamental Transaction (without regard to any
limitations on the exercise of this Right), as adjusted in accordance with the
provisions of this Right. In addition to and not in substitution for any other
rights hereunder, prior to the occurrence or consummation of any Fundamental
Transaction pursuant to which holders of shares of Common Stock are entitled to
receive securities, cash, assets or other property with respect to or in
exchange for shares of Common Stock (a “Corporate Event”), the Company shall
make appropriate provision to ensure that, and any applicable Successor Entity
or Successor Entities shall ensure that, and it shall be a required condition to
the occurrence or consummation of such Corporate Event that, the Holder will
thereafter have the right to receive upon exercise of this Right at any time
after the occurrence or consummation of the Corporate Event, shares of Common
Stock or Successor Capital Stock or, if so elected by the Holder, in lieu of the
shares of Common Stock (or other securities, cash, assets or other property)
purchasable upon the exercise of this Right prior to such Corporate Event (but
not in lieu of such items still issuable under Sections 8.11 and 8.12, which
shall continue to be receivable on the Common Stock or on the such shares of
stock, securities, cash, assets or any other property otherwise receivable with
respect to or in exchange for shares of Common Stock prior to the date of
consummation of such Corporate Event), such shares of stock, securities, cash,
assets or any other property whatsoever (including warrants or other purchase or
subscription rights and any shares of Common Stock) which the Holder would have
been entitled to receive upon the occurrence or consummation of such Corporate
Event or the record, eligibility or other determination date for the event
resulting in such Corporate Event, had this Right been exercised immediately
prior to such Corporate Event or the record, eligibility or other determination
date for the event resulting in such Corporate Event (without regard to any
limitations on exercise of this Right). Provision made pursuant to the preceding
sentence shall be in a form and substance reasonably satisfactory to the Holder.
The provisions of this Section 8.13 shall apply similarly and equally to
successive Fundamental Transactions and Corporate Events.

 

 18 

 

 

8.14         Notice to Allow Exercise of Right. If (A) the Company shall declare
a Distribution (or any other distribution in whatever form) on the Common Stock,
(B) the Company shall declare a special nonrecurring cash dividend on or a
redemption of the Common Stock, (C) the Company shall authorize the granting to
all holders of the Common Stock rights or warrants to subscribe for or purchase
any shares of capital stock of any class or of any rights, (D) the approval of
any stockholders of the Company shall be required in connection with any
reclassification of the Common Stock, any consolidation or merger to which the
Company is a party, any sale or transfer of all or substantially all of the
assets of the Company, or any compulsory share exchange whereby the Common Stock
is converted into other securities, cash or property, or (E) the Company shall
authorize the voluntary or involuntary dissolution, liquidation or winding up of
the affairs of the Company, then, in each case, the Company shall cause to be
mailed to the Holder at least 10 calendar days prior to the applicable record or
effective date hereinafter specified, a notice stating (x) the date on which a
record is to be taken for the purpose of such dividend, distribution,
redemption, rights or warrants, or if a record is not to be taken, the date as
of which the holders of the Common Stock of record to be entitled to such
dividend, distributions, redemption, rights or warrants are to be determined or
(y) the date on which such reclassification, consolidation, merger, sale,
transfer or share exchange is expected to become effective or close, and the
date as of which it is expected that holders of the Common Stock of record shall
be entitled to exchange their shares of the Common Stock for securities, cash or
other property deliverable upon such reclassification, consolidation, merger,
sale, transfer or share exchange; provided that the failure to mail such notice
or any defect therein or in the mailing thereof shall not affect the validity of
the corporate action required to be specified in such notice. To the extent that
any notice provided hereunder constitutes, or contains, material, non-public
information regarding the Company or any of the Subsidiaries, the Company shall
simultaneously file such notice with the Commission pursuant to a Current Report
on Form 8-K. The Holder shall remain entitled to exercise the Right during the
period commencing on the date of such notice to the effective date of the event
triggering such notice except as may otherwise be expressly set forth herein.

 

8.15         No Rights as Stockholder Until Exercise. Except as otherwise set
forth herein, this Agreement does not entitle the Holder to any voting rights,
dividends or other rights as a stockholder of the Company with respect to the
Right prior to the exercise thereof.

 

9.           Miscellaneous

 

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

 

 19 

 

 

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

 

9.3           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.

 

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

 

If to the Company:

 

Great Basin Scientific, Inc.
2441 South 3850 West
Salt Lake City, UT 84120
Telephone: (801) 990-1055 ext. 112
Facsimile: (801) 990-1051
Attention: Jeff Rona

 

With a copy to:

 

Dorsey & Whitney LLP
1400 Wewatta Street, Suite 400
Denver, CO 80202
Telephone: (303) 352-1133
Facsimile: (303) 629-3450
Attention: Jason K. Brenkert, Esq.
Email: brenkert.jason@dorsey.com

 

 20 

 

 

and

 

Kelley Drye & Warren LLP
101 Park Avenue
New York, NY 10178
Telephone: 212-808-7540
Facsimile: (212) 808-7897
Attention: Michael Adelstein, Esq.
Email: madelstein@kelleydrye.com

 

If to the Investor, to its address, facsimile number and e-mail address set
forth on its signature page hereto,

 

or to such other address, facsimile number and/or e-mail address and/or to the
attention of such other Person as the recipient party has specified by written
notice given to each other party five (5) days prior to the effectiveness of
such change. Written confirmation of receipt (A) given by the recipient of such
notice, consent, waiver or other communication, (B) mechanically or
electronically generated by the sender’s facsimile machine or e-mail containing
the time, date, recipient facsimile number and an image of the first page of
such transmission or (C) provided by an overnight courier service shall be
rebuttable evidence of personal service, receipt by facsimile or receipt from an
overnight courier service in accordance with clause (i), (ii) or (iii) above,
respectively.

 

9.5           Finder’s Fees. Each party represents that it neither is nor will
be obligated for any finders’ fee or commission in connection with this
transaction (excluding any fees required to be paid by the Company to Roth
Capital Partners, LLC in connection with the original Transaction Documents).
The Company shall indemnify and hold harmless the Investor from any liability
for any commission or compensation in the nature of a finders’ fee (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.

 

9.6           Amendments and Waivers. Any term of this Agreement may be amended
and the observance of any term of this Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively), only
with the written consent of the Company and the Investor.

 

 21 

 

 

9.7           Severability. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, such provision shall be excluded from
this Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its terms
so long as this Agreement as so modified continues to express, without material
change, the original intentions of the parties as to the subject matter hereof
and the prohibited nature, invalidity or unenforceability of the provision(s) in
question does not substantially impair the respective expectations or reciprocal
obligations of the parties or the practical realization of the benefits that
would otherwise be conferred upon the parties. The parties will endeavor in good
faith negotiations to replace the prohibited, invalid or unenforceable
provision(s) with a valid provision(s), the effect of which comes as close as
possible to that of the prohibited, invalid or unenforceable provision(s).

 

9.8           Entire Agreement. This Agreement together with that certain
leak-out agreement, by and between the Company and the Investor, dated September
19, 2016 (the “Leak-Out Agreement”), represents the entire agreement and
understandings between the parties concerning the Exchange and the other matters
described herein and therein and supersedes and replaces any and all prior
agreements and understandings solely with respect to the subject matter hereof
and thereof. Notwithstanding anything herein to the contrary, nothing herein
shall amend, modify or waive any term or condition of the Leak-Out Agreement or
of any of the other Transaction Documents (as defined in each of the SPAs)
(other than the 2015 Notes, which shall be cancelled following the Exchange
pursuant to Section 1.1).

 

9.9           Counterparts. 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.

 

9.10         Interpretation. Unless the context of this Agreement clearly
requires otherwise, (a) references to the plural include the singular, the
singular the plural, the part the whole, (b) references to any gender include
all genders, (c) “including” has the inclusive meaning frequently identified
with the phrase “but not limited to” and (d) references to “hereunder” or
“herein” relate to this Agreement.

 

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

 

9.12         Survival. The representations, warranties and covenants of the
Company and the Investor contained herein shall survive the Closing and delivery
of the Securities.

 

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

 

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

 

 22 

 

 

9.15         Independent Nature of Investor's Obligations and Rights. The
obligations of the Investor under this Agreement are several and not joint with
the obligations of any Other Investor, and the Investor shall not be responsible
in any way for the performance of the obligations of any Other Investor under
any Other Agreement. Nothing contained herein or in any Other Agreement, and no
action taken by the Investor pursuant hereto, shall be deemed to constitute the
Investor and Other Investors as a partnership, an association, a joint venture
or any other kind of entity, or create a presumption that the Investor and Other
Investors are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by this Agreement or any Other
Agreement and the Company acknowledges that, to the best of its knowledge, the
Investor and the Other Investors are not acting in concert or as a group with
respect to such obligations or the transactions contemplated by this Agreement
or any Other Agreement. The Company and the Investor confirm that the Investor
has independently participated in the negotiation of the transactions
contemplated hereby with the advice of its own counsel and advisors. The
Investor shall be entitled to independently protect and enforce its rights,
including, without limitation, the rights arising out of this Agreement, and it
shall not be necessary for any Other Investor to be joined as an additional
party in any proceeding for such purpose.

 

9.16         Equal Treatment Acknowledgement; Most Favored Nations. The parties
hereto herby acknowledge and agree that, in accordance with Section 9(e) of each
SPA, the Company is obligated to present the terms of this offering to each
Other Investor; provided that each Other Agreement shall be negotiated
separately with each Other Investor and shall not in any way be construed as the
Investor or any Other Investor acting in concert or as a group with respect to
the purchase, disposition or voting of securities of the Company or otherwise.
The Company hereby represents and warrants as of the date hereof and covenants
and agrees that none of the terms offered to any Person with respect to the
Exchange, including, without limitation with respect to any consent, release,
amendment, settlement, or waiver relating to the Exchange (each an “Exchange
Document”), is or will be more favorable to such Person than those of the
Investor and this Agreement. If, and whenever on or after the date hereof, the
Company enters into an Exchange Document, then (i) the Company shall provide
notice thereof to the Investor immediately following the occurrence thereof and
(ii) the terms and conditions of this Agreement shall be, without any further
action by the Investor or the Company, automatically amended and modified in an
economically and legally equivalent manner such that the Investor shall receive
the benefit of the more favorable terms and/or conditions (as the case may be)
set forth in such Exchange Document, provided that upon written notice to the
Company at any time the Investor may elect not to accept the benefit of any such
amended or modified term or condition, in which event the term or condition
contained in this Agreement shall apply to the Investor as it was in effect
immediately prior to such amendment or modification as if such amendment or
modification never occurred with respect to the Investor. The provisions of this
Section 9.16 shall apply similarly and equally to each Exchange Document.

 

[SIGNATURES ON THE FOLLOWING PAGE]

 

 23 

 

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
and delivered as of the date provided above.

 

  THE COMPANY       GREAT BASIN SCIENTIFIC, INC.       By:       Name:    
Title:

 

 

 

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
and delivered as of the date provided above.

 

  INVESTOR:               By:       Name:     Title:       Address for Notices:
                              Fax#: ________________       SSN#:
________________       Amended and Restated   Leak-Out Percentage:____%

 

 

 

 

EXHIBIT A

 

NOTICE OF ISSUANCE

 

TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS

RIGHT TO RECEIVE COMMON STOCK

 

GREAT BASIN SCIENTIFIC, inc.

 

The undersigned holder hereby exercises the right (“right”), in whole or in
part, established by that certain Exchange Agreement, dated as of ____, 2016, by
and between the Company and __________________ (the “Exchange Agreement”) and
elects to receive _________________ shares of Common Stock (“Right Shares”) of
Great Basin Scientific, Inc., a Delaware corporation (the “Company”) in
accordance herewith. Capitalized terms used herein and not otherwise defined
shall have the respective meanings set forth in the Right.

 

1. Delivery of Right Shares. The Company shall deliver to the holder __________
Right Shares in accordance with the terms of the Right.

 

2. Accredited Investor. The undersigned represents it is an “accredited
investor” as defined in Regulation D promulgated under the Securities Act of
1933, as amended and the representations made by the Investor in the Exchange
Agreement in respect of the purchase of the Right are true and correct as of the
date hereof in respect to the undersigned (whether or not the Investor) and the
exercise of the Right.

 

3. Maximum Percentage Representation. Notwithstanding anything to the contrary
contained herein, this Notice of Issuance shall constitute a representation by
the Holder of the Right submitting this Notice of Issuance that after giving
effect to the exercise provided for in this Notice of Issuance, such Holder
(together with its Affiliates) will not have beneficial ownership (together with
the beneficial ownership of such Person's Affiliates) of a number of shares of
Common Stock which exceeds the Maximum Percentage of the total outstanding
shares of Common Stock of the Company as determined based on the Reported
Outstanding Share Number and otherwise pursuant to the provisions of Section 8.6
of the Exchange Agreement.

 

Please issue the Common Stock into which the Right is being exercised to Holder,
or for its benefit, as follows:

 

¨Check here if requesting delivery as a certificate to the following name and to
the following address

 

Issue to:                  

 

¨Check here if requesting delivery by Deposit/Withdrawal at Custodian as
follows:

 

DTC Participant:       DTC Number:       Account Number:  

 

 

 

 

Date: _______________ __, ______           Name of Registered Holder       By:  
    Name:     Title:  

 

 

 

 

ACKNOWLEDGMENT

 

The Company hereby acknowledges this Notice of Issuance and hereby directs
American Stock Transfer & Trust Company to issue the above indicated number of
shares of Common Stock in accordance with the Transfer Agent Instructions dated
______ [__], 2016 from the Company and acknowledged and agreed to by American
Stock Transfer & Trust Company.

 

  GREAT BASIN SCIENTIFIC, INC.       By:       Name:   Title: