EXHIBIT 10.1

 

 

SECURITIES PURCHASE AGREEMENT

 

This Securities Purchase Agreement (this “Agreement”) is dated as of March 29,
2017, between Biotech Products Services and Research, Inc. (and together with
all of its current and future, direct and/or indirect, wholly owned and/or
partially owned Subsidiaries, collectively, the “Company”), and each purchaser
identified on the signature pages hereto (each, including its successors and
assigns, a “Purchaser” and collectively, the “Purchasers”).

 

WHEREAS, subject to the terms and conditions set forth in this Agreement and
pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the
“Securities Act”), the Company desires to issue and sell to each Purchaser, and
each Purchaser, severally and not jointly, desires to purchase from the Company,
securities of the Company as more fully described in this Agreement.

 

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

 

ARTICLE I.

DEFINITIONS

 

1.1 Definitions. In addition to the terms defined elsewhere in this Agreement:
(a) capitalized terms that are not otherwise defined herein have the meanings
given to such terms in the Notes (as defined herein), and (b) the following
terms have the meanings set forth in this Section 1.1:

 

“Acquiring Person” shall have the meaning ascribed to such term in Section 4.7.

 

“Action” shall have the meaning ascribed to such term in Section 3.1(j).

 

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

 

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

 

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

 

“Closing Date” means the Trading Day(s) on which all of the Transaction
Documents have been executed and delivered by the applicable parties thereto in
connection with a Closing, and all conditions precedent to (i) the Purchasers’
obligations to pay the Subscription Amount as to such Closing and (ii) the
Company’s obligations to deliver the Securities as to such Closing, in each
case, have been satisfied or waived.

 

“Closing” means the closing of the purchase and sale of the Securities pursuant
to Section 2.2.

 

“Closing Statement” means the Closing Statement in the form on Annex A attached
hereto.

 

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

 

“Common Stock” means the common stock of the Company, par value $0.001 per
share, and any other class of securities into which such securities may
hereafter be reclassified or changed.

 

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

 

“Contingent Obligation” means as to any Person, any direct or indirect
liability, contingent or otherwise, of that Person with respect to any
indebtedness, lease, dividend or other obligation of another Person if the
primary purpose or intent of the Person incurring such liability, or the primary
effect thereof, is to provide assurance to the obligee of such liability that
such liability will be paid or discharged, or that any agreements relating
thereto will be complied with, or that the holders of such liability will be
protected (in whole or in part) against loss with respect thereto.

 

“Conversion Price” shall have the meaning ascribed to such term in the Notes.

 

“Conversion Shares” shall have the meaning ascribed to such term in the Notes.

 

“Disclosure Schedules” shall have the meaning ascribed to such term in Section
3.1.

 

“Effective Date” means the earliest of the date that (a) all of the Securities
have been sold pursuant to Rule 144 or may be sold pursuant to Rule 144 without
the requirement for the Company to be in compliance with the current public
information required under Rule 144 and without volume or manner-of-sale
restrictions or (c) following the one year anniversary of the Closing Date
provided that a holder of Securities is not an Affiliate of the Company, all of
the Securities may be sold pursuant to an exemption from registration under
Section 4(a)(1) of the Securities Act without volume or manner-of-sale
restrictions and holder has received a standing written unqualified opinion that
resales may then be made by such holders of the Securities pursuant to such
exemption which opinion shall be in form and substance reasonably acceptable to
such holders.

 

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“Equity Conditions” means, during the period in question, (a) no Event of
Default shall have occurred, (b) the Company has timely filed (or obtained
extensions in respect thereof and filed within the applicable grace period) all
reports other than Form 8-K reports required to be filed by the Company after
the date hereof pursuant to the Exchange Act, (c) on any date that the Company
desires to make a payment of interest, the average daily dollar volume of the
Common Stock for the previous twenty (20) Trading Days must be greater than
$20,000, (d) the Common Stock must be DWAC Eligible and not subject to a “DTC
chill”, (e) the Conversion Shares must be delivered via an “Automatic
Conversion” of principal and/or interest, and (f) the Conversion Shares have
been registered and are freely tradeable or are eligible to be sold under Rule
144 of the Securities Act.

 

“Evaluation Date” shall have the meaning ascribed to such term in Section
3.1(r).

 

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

 

“Exempt Issuance” means the issuance of (a) shares of Common Stock or options to
employees, officers or directors of the Company pursuant to any stock or option
plan for 10,000,000 shares of Common Stock duly adopted for such purpose, by a
majority of the members of the Board of Directors and stockholders of the
Company, (b) securities upon the exercise or exchange of or conversion of any
Securities issued hereunder, (c) with Agent’s (as defined below) prior written
consent, securities issued pursuant to acquisitions or strategic transactions
approved by a majority of the disinterested directors of the Company, provided
that any such issuance shall only be to a Person (or to the equityholders of a
Person) which is, itself or through its subsidiaries, an operating company, but
shall not include a transaction in which the Company is issuing securities
primarily for the purpose of raising capital or to an entity whose primary
business is investing in securities, (d) shares of Common Stock or Common Stock
Equivalents issued to the national director of sales, and (e) securities of Mint
Organics, Inc., a Florida corporation.

 

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

 

“GAAP” shall have the meaning ascribed to such term in Section 3.1(h).

 

“Indebtedness” shall have the meaning ascribed to such term in Section 3.1(aa).

 

“Intellectual Property Rights” shall have the meaning ascribed to such term in
Section 3.1(o).

 

“Indebtedness” means, with respect to any Person at any date, without
duplication, (i) all indebtedness of such Person for borrowed money, (ii) all
obligations of such Person for the deferred purchase price of property or
services, (iii) all obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments, (iv) all indebtedness created or
arising under any conditional sale or other title retention agreement with
respect to property acquired by such Person (even though the rights and remedies
of the seller or the Purchasers under such agreement in the event of default are
limited to repossession or sale of such property), (v) all capital lease
obligations of such Person, (vi) all obligations of such Person, contingent or
otherwise, as an account party or applicant under acceptance, letter of credit,
surety bond or similar facilities, (vii) all obligations of such Person,
contingent or otherwise, to purchase, redeem, retire or otherwise acquire for
value any capital stock of such Person, (viii) all obligations for any earn-out
consideration, (ix) the liquidation value of all capital stock of such Person,
(x) all guarantee obligations of such Person in respect of obligations of the
kind referred to in clauses (i) through (ix) above, (xi) all obligations of the
kind referred to in clauses (i) through (ix) above secured by (or for which the
holder of such obligation has an existing right, contingent or otherwise, to be
secured by) any lien on property (including, without limitation, accounts and
contract rights) owned by such Person, whether or not such Person has assumed or
become liable for the payment of such obligation and all obligations of such
Person in respect of hedge agreements; and (xii) all Contingent Obligations in
respect to indebtedness or obligations of any Person of the kind referred to in
clauses (i)-(xi) above. The Indebtedness of any Person shall include, without
duplication, the Indebtedness of any other entity (including any partnership in
which such Person is a general partner) to the extent such Person is liable
therefor as a result of such Person’s ownership interest in or other
relationship with such entity, except to the extent the terms of such
Indebtedness expressly provide that such Person is not liable therefor

 

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“Legend Removal Date” shall have the meaning ascribed to such term in Section
4.1(c).

 

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

 

“Material Adverse Effect” shall have the meaning assigned to such term in
Section 3.1(b).

 

“Material Permits” shall have the meaning ascribed to such term in Section
3.1(m).

 

“Maximum Rate” shall have the meaning ascribed to such term in Section 5.17.

 

“Note” means the 10% Original Issue Discount Convertible Secured Promissory Note
and Guarantee, subject to the terms therein, twelve (12) months from its date of
issuance, issued by the Company to the Purchasers hereunder, in the form of
Exhibit A attached hereto.

 

“Participation Maximum” shall have the meaning ascribed to such term in Section
4.12(a).

 

“Intellectual Property Security Agreement” means the Intellectual Property
Security Agreement date on or about the date hereof, by and among the Purchasers
and the Company and the Company’s subsidiaries and all documents filed to
perfect the Purchaser’s security interest in the Patents and Trademarks, both
terms as defined in such agreement, which is annexed hereto as Exhibit C.

 

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

 

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“Pre-Notice” shall have the meaning ascribed to such term in Section 4.12(b).

 

“Principal Amount” means, as to each Purchaser, the amounts set forth below such
Purchaser’s signature block on the signature pages hereto next to the heading
“Principal Amount,” in United States Dollars.

 

“Pro Rata Portion” shall have the meaning ascribed to such term in Section
4.12(e).

 

“Proceeding” means an action, claim, suit, investigation or proceeding
(including, without limitation, an informal investigation or partial proceeding,
such as a deposition), whether commenced or threatened.

 

“Public Information Failure” shall have the meaning ascribed to such term in
Section 4.3(b).

 

“Public Information Failure Payments” shall have the meaning ascribed to such
term in Section 4.3(b).

 

“Purchaser Party” shall have the meaning ascribed to such term in Section 4.10.

 

“Purchaser UCC Filings” shall mean a UCC-1 Financing Statement of the Purchasers
on all of the assets of the Company and the Subsidiaries (the “Purchasers’
UCC-1”) to be filed with the Secretary of State of the relevant jurisdiction on
or about the Closing Date, and all financing statements (or comparable documents
now or hereafter filed in accordance with the UCC or other comparable or similar
laws, rules or regulations) in favor of the Purchasers as secured parties
perfecting all Liens the Purchasers have on the Collateral (which security
interests and Liens of the Purchasers shall be senior to all Indebtedness of the
Company), the Intellectual Property Security Agreement (annexed hereto as
Exhibit C), and such other documents, instruments, certificates, supplements,
amendments, exhibits and schedules required and/or attached pursuant to this
Agreement and/or any of the above documents, and/or any other document and/or
instrument related to the above agreements, documents and/or instruments, and
the transactions hereunder and/or thereunder and/or any other agreement,
documents or instruments required or contemplated hereunder or thereunder,
whether now existing or at any time hereafter arising.

 

“Registrable Securities” means (i) the Common Stock into which the principal
amount, together with any accrued interest and any other amounts payable under
the Notes may be converted, and (ii) any shares of capital stock issued or
issuable in exchange for or otherwise with respect to the foregoing.

 

“Required Approvals” shall have the meaning ascribed to such term in Section
3.1(e).

 

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“Required Minimum” means, as of any date, the maximum aggregate number of shares
of Common Stock then issued or potentially issuable in the future pursuant to
the Transaction Documents, including any Underlying Shares issuable upon
conversion in full of all Notes (including Underlying Shares issuable as payment
of interest on the Notes), ignoring any conversion or exercise limits set forth
therein, and assuming that the Conversion Price is at all times on and after the
date of determination 100% of the then Conversion Price on the Trading Day
immediately prior to the date of determination.

 

“Reserved Amount” shall have the meaning ascribed to such term in Section
4.11(a).

 

“Robinson Brog” means Robinson Brog Leinwand Greene Genovese & Gluck P.C., with
offices located at 875 Third Avenue, New York, New York 10022.

 

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

 

“Rule 424” means Rule 424 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended or interpreted from time to time, or
any similar rule or regulation hereafter adopted by the Commission having
substantially the same purpose and effect as such Rule.

 

“SEC Reports” shall have the meaning ascribed to such term in Section 3.1(h).

 

“Securities” means the Notes, the Underlying Shares, and the Commitment Shares.

 

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

 

“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). 

 

“Subscription Amount” means, as to each Purchaser, the aggregate amount to be
paid for Notes purchased hereunder as specified below such Purchaser’s name on
the signature page of this Agreement and next to the heading “Subscription
Amount,” in United States dollars and in immediately available funds.

 

“Subsequent Financing” shall have the meaning ascribed to such term in Section
4.12(a).

 

“Subsequent Financing Notice” shall have the meaning ascribed to such term in
Section 4.12(b).

 

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“Subsidiary” means, with respect to any Person, a corporation, partnership,
limited liability company or other entity of which shares of stock or other
ownership interests having ordinary voting power (other than stock or such other
ownership interests having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors or other managers of
such corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through one
or more intermediaries, or both, by such Person. All of the Company’s
Subsidiaries are set forth on Schedule 3.1(a) hereto.

 

“Subsidiary Guarantee” means the Subsidiary Guarantee, dated the date hereof, by
each Subsidiary in favor of the Purchasers, in the form of Exhibit D, attached
hereto.

 

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

 

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

 

“Transaction Documents” means this Agreement, the Note, each Joinder to Note,
the Security Agreement, the Intellectual Property Security Agreement, the
Subsidiary Guarantee, the Transfer Agent Instruction Letter, all exhibits and
schedules thereto and hereto and any other documents or agreements executed in
connection with the transactions contemplated hereunder.

 

“Transfer Agent” means the current transfer agent of the Company and any
successor transfer agent of the Company.

 

“Transfer Agent Instruction Letter” means the letter from the Company to the
Transfer Agent which instructs the Transfer Agent to issue Underlying Shares
pursuant to the Transaction Documents, in the form of Exhibit B attached hereto.

 

“UCC” means the Uniform Commercial Code of as in effect from time to time in the
State of New York; provided, however, that, in the event that, by reason of
mandatory provisions of law, any or all of the attachment, perfection, priority,
or remedies with respect to the Purchasers’ Liens on any Collateral is governed
by the Uniform Commercial Code as enacted and in effect in a jurisdiction other
than the State of New York, the term “UCC” shall mean the Uniform Commercial
code as enacted and in effect in such other jurisdiction solely for purposes of
the provisions thereof relating to such attachment, perfection, priority, or
remedies. Terms used in this Agreement that are defined in the UCC shall, unless
the context indicates otherwise or are otherwise defined in this Agreement, have
the meanings provided for by the UCC.

 

“Underlying Shares” means the shares of Common Stock issued and issuable upon
conversion or redemption of the Notes and issued and issuable in lieu of the
cash payment of interest on the Notes in accordance with the terms of the Notes.

 

“Variable Rate Transaction” shall have the meaning ascribed to such term in
Section 4.18.

 

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

 

ARTICLE II.

PURCHASE AND SALE

 

2.1 Purchase.

 

(a) General. The Purchasers will purchase, severally and not jointly, an
aggregate of up to $1,500,000 in Subscription Amount of Note (subject to the
adjustments described in Section (2)(b)(ii)) corresponding to an aggregate of up
to $1,666,667 in Principal Amount of Note (subject to the adjustments described
in Section (2)(b)(ii)). The purchase will occur in several tranches (each a
“Tranche,” and collectively the “Tranches”). The Closings with respect to
Tranches subsequent to the second Tranche shall occur at such times and on such
financial terms as set forth in the Note and agreed to by and among the Company
and any of the Purchasers. The Company acknowledges that the Purchasers may fund
to the Company different Subscription Amounts at each Closing after the closing
of the second Tranche and that not all Purchasers will participate in each
Tranche. In the event that any Purchaser does not participate in any Tranche
subsequent to the second Tranche, the remaining Purchasers shall have the right
to participate in such Tranche in an amount up to 100% of the entire Tranche. In
the event that such participating Purchasers do not collectively fund 100% of
the desired Tranche amount, then the Company shall be permitted to request from
any Person the remaining amount, so long as such Person(s) agree to execute this
Agreement (and further, the Company and the Purchasers agree to amend this
Agreement and the Note as necessary). Notwithstanding the foregoing, the
participating Purchasers shall have at least forty-eight (48) hours prior to the
closing of such Tranche to notify the Company as to whether the participating
Purchasers, collectively, will fund one hundred percent (100%) of the desired
amount. Additionally, the Purchasers shall not be required to fund any Tranches
subsequent to the initial Tranche if: (i) the Company, its Subsidiaries, or any
of the directors or officers of the Company or its Subsidiaries commit fraud;
(ii) the Company or its Subsidiaries breach any covenant contained herein or in
the other Transaction Documents (subject to the cure periods, if any, set forth
in the applicable Transaction Document); (iii) if there is an Event of Default
(as defined in the Note); or (iv) the remaining third party debt (the “Third
Party Debt”) of the third party debt holders Lender #1 Ltd. and Lender #2 are
not fully satisfied and such debt claims are not released.

 

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(b) Funding of the Initial Tranche through the Second Tranche. The initial
Tranche through the second Tranche will be for an aggregate of up to $600,000
(subject to adjustment as described herein) in Subscription Amount of Note
corresponding to an aggregate of up to $666,666.67 in Principal Amount of Note.
The Subscription Amounts of each Purchaser for each of the initial Tranche
through second Tranche is set forth on the Schedule of Purchasers annexed hereto
as Annex B. The Closing Date of the initial Tranche of $475,000 will be on the
date of execution of this Agreement (the “First Closing”). The second Tranche
will be for $125,000 and will be funded to the Company on July 15, 2017 (subject
to the conditions in Section 2.1(a)). Notwithstanding anything to the contrary
contained in this Section 2.1(b)(i), the Company and the Purchasers acknowledge
and agree that $300,000 of the Subscription Amount of the initial Tranche will
be funded through the rollover of funding by certain Purchasers prior to the
date of this Agreement

 

(c) Issuance of Commitment Shares. Within three (3) Trading Days of the
execution of this Agreement, the Company shall issue to the Purchases an
aggregate of four million (4,000,000) shares of Common Stock as commitment
shares (the “Commitment Shares”), at the closing price of the Common Stock on
the applicable Trading Market on the date hereof. The Commitment Shares shall be
issued to the Purchases in the denominations set forth in Annex B.

 

2.2 Closings. On the First Closing Date, upon the terms and subject to the
conditions set forth herein, substantially concurrent with the execution and
delivery of this Agreement by the parties hereto, the Company agrees to sell,
and each Purchaser, severally and not jointly, agrees to purchase, such
Purchaser’s Closing Subscription Amount as set forth on the signature page
hereto executed by the Purchaser. At each Closing, the Purchasers shall deliver
to the Company, via wire transfer to an account designated by the Company,
immediately available funds equal to such Purchaser’s Subscription Amount as set
forth on the signature page hereto executed by such Purchaser, and the Company
shall deliver to such Purchaser its respective Note, as determined pursuant to
Section 2.3(a), and the Company and such Purchaser shall deliver the other items
set forth in Section 2.3 deliverable at the First Closing. Upon satisfaction of
the covenants and conditions set forth in Sections 2.3 and 2.4 for each Closing,
each Closing shall occur at the offices of Robinson Brog or such other location
as the parties shall mutually agree, and may by agreement be undertaken remotely
by electronic exchange of Closing documentation.

 

2.3 Deliveries.

 

(a) On or prior to each Closing Date (except as noted), the Company shall
deliver or cause to be delivered to each Purchaser (except for (vii) below) the
following:

 

(i) As to the First Closing, this Agreement duly executed by the Company;

 

(ii) As to the First Closing, the Security Agreement, duly executed by the
Company;

 

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(iii) As to the First Closing, the Intellectual Property Security Agreement,
duly executed by the Company and its Subsidiaries;

 

(iv) As to the First Closing, the Subsidiary Guarantee, duly executed by the
Company and its Subsidiaries;

 

(v) The Transfer Agent Instruction Letter duly executed by the Company and the
Transfer Agent;

 

(vi) As to the First Closing, the Purchasers’ UCC-1, with proof of filing
thereof with the Secretary of State of the applicable jurisdiction and each
jurisdiction where the Real Property of the Company is located and secured,
which shall be in form and substantially satisfactory to the Purchasers; and

 

(vii) A Note with a principal amount equal to the Principal Amount, registered
in the name of the Purchasers, and delivered to Agent (as defined below).

 

(b) On or prior to the applicable Closing Date (except as noted), each Purchaser
(except as noted) shall deliver or cause to be delivered to the Company, as
applicable, the following:

 

(i) As to the First Closing, this Agreement duly executed by such Purchaser;

 

(ii) As to the First Closing, the Security Agreement duly executed by the Agent
(as defined in the Note);

 

(iii) As to the First Closing, the Intellectual Property Security Agreement duly
executed by the agent (as defined in the Note); and

 

(iv) Such Purchaser’s Subscription Amount), by wire transfer to the account
specified in writing by the Company (except for the rollover amounts described
in Section 2(b) and Annex B).

 

2.4 Closing Conditions.

 

(a) The obligations of the Company hereunder in connection with each Closing are
subject to the following conditions being met:

 

(i) The accuracy in all material respects on each applicable Closing Date of the
representations and warranties of the Purchasers contained herein (unless as of
a specific date therein in which case they shall be accurate as of such date);

 

(ii) All obligations, covenants and agreements of each Purchaser required to be
performed at or prior to each applicable Closing Date shall have been performed
in all material respects; and

 

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(iii) The delivery by each Purchaser of the items set forth in Section 2.3(b) of
this Agreement (except as noted).

 

(b) The respective obligations of each Purchaser hereunder in connection with
each Closing are subject to the following conditions being met:

 

(i) The accuracy in all material respects when made and on each applicable
Closing Date of the representations and warranties of the Company contained
herein (unless as of a specific date therein);

 

(ii) All obligations, covenants and agreements of the Company required to be
performed at or prior to each applicable Closing Date shall have been performed
in all material respects;

 

(iii) The delivery by the Company of the items set forth in Section 2.3(a) of
this Agreement (except as noted);

 

(iv) There is no existing Event of Default (as defined in the Notes) or any
other existing event which, with the passage of time or the giving of notice,
would constitute an Event of Default;

 

(v) There shall have been no Material Adverse Effect with respect to the Company
since the date hereof;

 

(vi) Trading in the Common Stock shall not have been suspended by the Commission
or the Company’s principal Trading Market and, at any time prior to the Closing
Date, trading in securities generally as reported by Bloomberg L.P. shall not
have been suspended or limited, or minimum prices shall not have been
established on securities whose trades are reported by such service, or on any
Trading Market, nor shall a banking moratorium have been declared either by the
United States or New York State authorities nor shall there have occurred any
material outbreak or escalation of hostilities or other national or
international calamity of such magnitude in its effect on, or any material
adverse change in, any financial market which, in each case, in the reasonable
judgment of such Purchaser, makes it impracticable or inadvisable to purchase
the Securities at the applicable Closing; and

 

(vii) Each Purchaser and its advisors, if any, shall be furnished with all
materials relating to the business, finances and operations of the Company and
materials relating to the offer and sale of the Securities which have been
requested by such Purchaser or its advisors. Each Purchaser and its advisors, if
any, shall be afforded the opportunity to ask questions of the Company regarding
its business and affairs.

 

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ARTICLE III.

REPRESENTATIONS AND WARRANTIES

 

3.1 Representations and Warranties of the Company. Except as set forth in the
Disclosure Schedules, which Disclosure Schedules shall be deemed a part hereof
and shall qualify any representation or otherwise made herein to the extent of
the disclosure contained in the corresponding section of the Disclosure
Schedules, the Company (which for purposes of this Section means the Company and
all of its Subsidiaries) hereby makes the following representations and
warranties to each Purchaser as of the date hereof:

 

(a) Subsidiaries. All of the direct and indirect subsidiaries of the Company are
set forth on Schedule 3.1(a). Except as set forth on Schedule 3.1(a), the
Company owns, directly or indirectly, all of the capital stock or other equity
interests of each Subsidiary free and clear of any Liens, and all of the issued
and outstanding shares of capital stock of each Subsidiary are validly issued
and are fully paid, non-assessable and free of preemptive and similar rights to
subscribe for or purchase securities.

 

(b) Organization and Qualification. Except as set forth on Schedule 3.1(b), the
Company and each of the Subsidiaries is an entity duly incorporated or otherwise
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization, with the requisite power and
authority to own and use its properties and assets and to carry on its business
as currently conducted. Neither the Company nor any Subsidiary is in violation
nor default of any of the provisions of its respective certificate or articles
of incorporation, bylaws or other organizational or charter documents. Each of
the Company and the Subsidiaries is duly qualified to conduct business and is in
good standing as a foreign corporation or other entity in each jurisdiction in
which the nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, could not have or reasonably be expected to result
in: (i) a material adverse effect on the legality, validity or enforceability of
any Transaction Document, (ii) a material adverse effect on the results of
operations, assets, business, prospects or condition (financial or otherwise) of
the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse
effect on the Company’s ability to perform in any material respect on a timely
basis its obligations under any Transaction Document (any of (i), (ii) or (iii),
a “Material Adverse Effect”) and no Proceeding has been instituted in any such
jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or
curtail such power and authority or qualification.

 

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

 

  12

 

 

(d) No Conflicts. The execution, delivery and performance by the Company of this
Agreement and the other Transaction Documents to which it is a party, the
issuance and sale of the Securities and the consummation by it of the
transactions contemplated hereby and thereby do not and will not: (i) conflict
with or violate any provision of the Company’s or any Subsidiary’s certificate
or articles of incorporation, bylaws or other organizational or charter
documents, (ii) conflict with, or constitute a default (or an event that with
notice or lapse of time or both would become a default) under, result in the
creation of any Lien upon any of the properties or assets of the Company or any
Subsidiary, or give to others any rights of termination, amendment, acceleration
or cancellation (with or without notice, lapse of time or both) of, any
agreement, credit facility, debt or other instrument (evidencing a Company or
Subsidiary debt or otherwise) or other understanding to which the Company or any
Subsidiary is a party or by which any property or asset of the Company or any
Subsidiary is bound or affected, or (iii) subject to the Required Approvals,
conflict with or result in a violation of any law, rule, regulation, order,
judgment, injunction, decree or other restriction of any court or governmental
authority to which the Company or a Subsidiary is subject (including federal and
state securities laws and regulations), or by which any property or asset of the
Company or a Subsidiary is bound or affected; except in the case of each of
clauses (ii) and (iii), such as could not have or reasonably be expected to
result in a Material Adverse Effect.

 

(e) Filings, Consents and Approvals. The Company is not required to obtain any
consent, waiver, authorization or order of, give any notice to, or make any
filing or registration with, any court or other federal, state, local or other
governmental authority or other Person in connection with the execution,
delivery and performance by the Company of the Transaction Documents, other
than: (i) the filings required pursuant to Section 4.6 of this Agreement, (ii)
the notice and/or application(s) to each applicable Trading Market for the
issuance and sale of the Securities and the listing of the Conversion Shares for
trading thereon in the time and manner required thereby, and (iii) the filing of
Form D with the Commission and such filings as are required to be made under
applicable state securities laws (collectively, the “Required Approvals”).

 

(f) Issuance of the Securities. The Securities are duly authorized and, when
issued and paid for in accordance with the terms of the applicable Transaction
Documents, will be duly and validly issued, fully paid and nonassessable, free
and clear of all Liens imposed by the Company other than restrictions on
transfer provided for in the Transaction Documents. The Company will reserve
from its duly authorized capital stock a number of shares of Common Stock for
issuance of the Underlying Shares at least equal to the Reserved Amount.

 

  13

 

 

(g) Capitalization. The capitalization of the Company is as set forth on
Schedule 3.1(g), which Schedule 3.1(g) shall also include the number of shares
of Common Stock owned beneficially, and of record, by Affiliates of the Company
as of the date hereof. Except as set forth on Schedule 3.1(g), no Person has any
right of first refusal, preemptive right, right of participation, or any similar
right to participate in the transactions contemplated by the Transaction
Documents. Except as a result of the purchase and sale of the Securities and as
disclosed on Schedule 3.1(g), there are no outstanding options, warrants, scrip
rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities, rights or obligations convertible into or
exercisable or exchangeable for, or giving any Person any right to subscribe for
or acquire any shares of Common Stock, or contracts, commitments, understandings
or arrangements by which the Company or any Subsidiary is or may become bound to
issue additional shares of Common Stock or Common Stock Equivalents. Except as
set forth on Schedule 3.1(g), the issuance and sale of the Securities will not
obligate the Company to issue shares of Common Stock or other securities to any
Person (other than the Purchasers) and will not result in a right of any holder
of Company securities to adjust the exercise, conversion, exchange or reset
price under any of such securities. All of the outstanding shares of capital
stock of the Company are duly authorized, validly issued, fully paid and
nonassessable, have been issued in compliance with all federal and state
securities laws, and none of such outstanding shares was issued in violation of
any preemptive rights or similar rights to subscribe for or purchase securities.
No further approval or authorization of any stockholder, the Board of Directors
or others is required for the issuance and sale of the Securities. Except as set
forth on Schedule 3.1(g), there are no stockholders agreements, voting
agreements or other similar agreements with respect to the Company’s capital
stock to which the Company is a party or, to the knowledge of the Company,
between or among any of the Company’s stockholders.

 

(h) SEC Reports; Financial Statements. Except as set forth on Schedule 3.1(h),
the Company has filed all reports, schedules, forms, statements and other
documents required to be filed by the Company under the Securities Act and the
Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two
years preceding the date hereof (or such shorter period as the Company was
required by law or regulation to file such material) (the foregoing materials,
including the exhibits thereto and documents incorporated by reference therein,
being collectively referred to herein as the “SEC 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 financial statements of the Company
included in the SEC Reports comply in all material respects with applicable
accounting requirements and the rules and regulations of the Commission with
respect thereto as in effect at the time of filing. Such financial statements
have been prepared in accordance with United States generally accepted
accounting principles applied on a consistent basis during the periods involved
(“GAAP”), except as may be otherwise specified in such financial statements or
the notes thereto and except that unaudited financial statements may not contain
all footnotes required by GAAP, and fairly present in all material respects the
financial position of the Company and its consolidated Subsidiaries as of and
for the dates thereof and the results of operations and cash flows for the
periods then ended, subject, in the case of unaudited statements, to normal,
immaterial, year-end audit adjustments.

 

  14

 

 

(i) Material Changes; Undisclosed Events, Liabilities or Developments. Except as
set forth on Schedule 3.1(i), since the date of the latest audited financial
statements included within the SEC Reports, except as specifically disclosed in
a subsequent SEC Report filed prior to the date hereof: (i) there has been no
event, occurrence or development that has had or that could reasonably be
expected to result in a Material Adverse Effect, (ii) the Company has not
altered its method of accounting, (iii) the Company has not incurred any
liabilities (contingent or otherwise) other than (A) trade payables and accrued
expenses incurred in the ordinary course of business consistent with past
practice and (B) liabilities not required to be reflected in the Company’s
financial statements pursuant to GAAP or disclosed in filings made with the
Commission, (iv) the Company has not declared or made any dividend or
distribution of cash or other property to its stockholders or purchased,
redeemed or made any agreements to purchase or redeem any shares of its capital
stock and (v) the Company has not issued any equity securities to any officer,
director or Affiliate, except pursuant to existing Company stock option plans.
The Company does not have pending before the Commission any request for
confidential treatment of information. Except for the issuance of the Securities
contemplated by this Agreement or as set forth on Schedule 3.1(i), to the best
of the Company’s knowledge, no material event, liability, fact, circumstance,
occurrence or development has occurred or exists or is reasonably expected to
occur or exist with respect to the Company or its Subsidiaries or their
respective businesses, properties, operations, assets or financial condition,
that would be required to be disclosed by the Company under applicable
securities laws at the time this representation is made or deemed made that has
not been publicly disclosed at least 1 Trading Day prior to the date that this
representation is made.

 

(j) Litigation. Except as set forth on Schedule 3.1(j), there is no action,
suit, inquiry, notice of violation, proceeding or investigation pending or, to
the knowledge of the Company, threatened against or affecting the Company, any
Subsidiary or any of their respective properties, or against or affecting the
Company’s current or former officers or directors in their capacity as such,
before or by any court, arbitrator, governmental or administrative agency or
regulatory authority (federal, state, county, local or foreign) (collectively,
an “Action”) which (i) adversely affects or challenges the legality, validity or
enforceability of any of the Transaction Documents or the Securities or (ii)
could, if there were an unfavorable decision, have or reasonably be expected to
result in a Material Adverse Effect. Neither the Company nor any Subsidiary, nor
any director or officer thereof, is or has been the subject of any Action
involving a claim of violation of or liability under federal or state securities
laws or a claim of breach of fiduciary duty. There has not been, and to the
knowledge of the Company, there is not pending or contemplated, any
investigation by the Commission involving the Company or any current or former
director or officer of the Company. The Commission has not issued any stop order
or other order suspending the effectiveness of any registration statement filed
by the Company or any Subsidiary under the Exchange Act or the Securities Act.

 

  15

 

 

(k) Labor Relations. No labor dispute exists or, to the knowledge of the
Company, is imminent with respect to any of the employees of the Company, which
could reasonably be expected to result in a Material Adverse Effect. None of the
Company’s or its Subsidiaries’ employees is a member of a union that relates to
such employee’s relationship with the Company or such Subsidiary, and neither
the Company nor any of its Subsidiaries is a party to a collective bargaining
agreement, and the Company and its Subsidiaries believe that their relationships
with their employees are good. To the knowledge of the Company, no executive
officer of the Company or any Subsidiary, is, or is now expected to be, in
violation of any material term of any employment contract, confidentiality,
disclosure or proprietary information agreement or non-competition agreement, or
any other contract or agreement or any restrictive covenant in favor of any
third party, and the continued employment of each such executive officer does
not subject the Company or any of its Subsidiaries to any liability with respect
to any of the foregoing matters. To the best of the Company’s knowledge, the
Company and its Subsidiaries are in compliance with all U.S. federal, state,
local and foreign laws and regulations relating to employment and employment
practices, terms and conditions of employment and wages and hours, except where
the failure to be in compliance could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

 

(l) Compliance. Except as set forth on Schedule 3.1(l), neither the Company nor
any Subsidiary, to the best of the Company’s knowledge: (i) is in default under
or in violation of (and no event has occurred that has not been waived that,
with notice or lapse of time or both, would result in a default by the Company
or any Subsidiary under), nor has the Company or any Subsidiary received notice
of a claim that it is in default under or that it is in violation of, any
indenture, loan or credit agreement or any other agreement or instrument to
which it is a party or by which it or any of its properties is bound (whether or
not such default or violation has been waived), (ii) is in violation of any
judgment, decree or order of any court, arbitrator or other governmental
authority or (iii) is or has been in violation of any statute, rule, ordinance
or regulation of any governmental authority, including without limitation all
foreign, federal, state and local laws relating to taxes, environmental
protection, occupational health and safety, product quality and safety and
employment and labor matters, except in each case as could not have or
reasonably be expected to result in a Material Adverse Effect.

 

(m) Regulatory Permits. To the best of the Company’s knowledge, the Company and
the Subsidiaries possess all certificates, authorizations and permits issued by
the appropriate federal, state, local or foreign regulatory authorities
necessary to conduct their respective businesses as described in the SEC
Reports, except where the failure to possess such permits could not reasonably
be expected to result in a Material Adverse Effect (“Material Permits”), and
neither the Company nor any Subsidiary has received any notice of proceedings
relating to the revocation or modification of any Material Permit.

 

  16

 

 

(n) Title to Assets. The Company and the Subsidiaries have good and marketable
title in fee simple to all real property owned by them and good and marketable
title in all personal property owned by them that is material to the business of
the Company and the Subsidiaries, in each case free and clear of all Liens,
except for (i) 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 the Subsidiaries and (ii) Liens for the payment of
federal, state or other taxes, for which appropriate reserves have been made
therefor in accordance with GAAP and, the payment of which is neither delinquent
nor subject to penalties. Any real property and facilities held under lease by
the Company and the Subsidiaries are held by them under valid, subsisting and
enforceable leases with which the Company and the Subsidiaries are in
compliance.

 

(o) Transactions with Affiliates and Employees. Except as set forth on Schedule
3.1(o), none of the officers or directors of the Company or any Subsidiary and,
to the knowledge of the Company, none of the employees of the Company or any
Subsidiary is presently a party to any transaction with the Company or any
Subsidiary (other than for services as employees, officers and directors),
including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from providing for the borrowing of money from or lending of
money to, or otherwise requiring payments to or from any officer, director or
such employee or, to the knowledge of the Company, any entity in which any
officer, director, or any such employee has a substantial interest or is an
officer, director, trustee, stockholder, member or partner, in each case in
excess of $120,000 other than for: (i) payment of salary or consulting fees for
services rendered, (ii) reimbursement for expenses incurred on behalf of the
Company and (iii) other employee benefits, including stock option agreements
under any stock option plan of the Company.

 

(p) Sarbanes-Oxley; Internal Accounting Controls. Except as set forth on
Schedule 3.1(p), Company and the Subsidiaries are in compliance with any and all
applicable requirements of the Sarbanes-Oxley Act of 2002 that are effective as
of the date hereof, and any and all applicable rules and regulations promulgated
by the Commission thereunder that are effective as of the date hereof and as of
the applicable Closing Date.

 

(q) Certain Fees. Other than as set forth on Schedule 3.1(q), no brokerage or
finder’s fees or commissions are or will be payable by the Company or any
Subsidiaries to any broker, financial advisor or consultant, finder, placement
agent, investment banker, bank or other Person with respect to the transactions
contemplated by the Transaction Documents. The Purchasers shall have no
obligation with respect to any fees or with respect to any claims made by or on
behalf of other Persons for fees of a type contemplated in this Section that may
be due in connection with the transactions contemplated by the Transaction
Documents.

 

  17

 

 

(r) Private Placement. Assuming the accuracy of the Purchasers’ representations
and warranties set forth in Section 3.2, 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.

 

(s) 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 an “investment company” subject to
registration under the Investment Company Act of 1940, as amended.

 

(t) Registration Rights. Except as set forth in this Agreement and on Schedule
3.1(t), no Person has the right to cause the Company to effect the registration
under the Securities Act of any securities of the Company or any Subsidiaries.

 

(u) Listing and Maintenance Requirements. The Common Stock is registered
pursuant to Section 12(b) or 12(g) of the Exchange Act, and the Company has
taken no action designed to, or which to its knowledge is likely to have the
effect of, terminating the registration of the Common Stock under the Exchange
Act nor has the Company received any notification that the Commission is
contemplating terminating such registration. Except with respect to the
documents set forth on Schedule 3.1(h), the Company has not, in the 12 months
preceding the date hereof, 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, and has no reason to believe that it will not in the
foreseeable future continue to be, in compliance with all such listing and
maintenance requirements.

 

(v) Application of 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 certificate of incorporation (or similar charter documents)
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 the
Securities and the Purchasers’ ownership of the Securities.

 

(w) Disclosure. Except with respect to the material terms and conditions of the
transactions contemplated by the Transaction Documents, neither the Company nor
any other Person acting on its behalf has provided any of the Purchasers or
their agents or counsel with any information that it believes constitutes or
might constitute material, non-public information. The Company understands and
confirms that the Purchasers will rely on the foregoing representation in
effecting transactions in securities of the Company. All of the disclosure
furnished by or on behalf of the Company to the Purchasers regarding the Company
and its Subsidiaries, their respective businesses and the transactions
contemplated hereby, including the Disclosure Schedules to this Agreement, is
true and correct and does not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading. The press releases disseminated by the Company during the twelve
months preceding the date of this Agreement 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.
The Company acknowledges and agrees that no Purchaser makes or has made any
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in Section 3.2 hereof.

 

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(x) No Integrated Offering. Assuming the accuracy of the Purchasers’
representations and warranties set forth in Section 3.2, neither the Company,
nor 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 (i) the Securities Act which would require the registration of
any such securities under the Securities Act, or (ii) any applicable shareholder
approval provisions of any Trading Market on which any of the securities of the
Company are listed or designated.

 

(y) Tax Status. Except as set forth on Schedule 3.1(y) and for matters that
would not, individually or in the aggregate, have or reasonably be expected to
result in a Material Adverse Effect, the Company and its Subsidiaries each (i)
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, (ii) 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 (iii) 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.

 

(z) No General Solicitation. Neither the Company nor 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.

 

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

 

  19

 

 

(bb) Accountants. The Company’s accounting firm is set forth on Schedule 3.1(aa)
of the Disclosure Schedules. To the knowledge and belief of the Company, such
accounting firm: (i) is a registered public accounting firm as required by the
Exchange Act and (ii) shall express its opinion with respect to the financial
statements to be included in the Company’s Annual Report for the fiscal year
ending October 31, 2016.

 

(cc) No Disagreements with Accountants and Lawyers. 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 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.

 

(dd) 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 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.

 

(ee) No Bad Actors. Neither the Company nor any of its predecessors,
predecessors in interest, any affiliated issuer, any director, executive
officer, other officer of the Company participating in the offering hereunder,
any beneficial owner of ten percent (10%) or more of the Company’s outstanding
voting equity securities, calculated on the basis of voting power, or any
promoter (as that term is defined in Rule 405 under the Securities Act)
connected with the Company in any capacity at the time of sale is subject to any
of the “Bad Actor” disqualifications described in Rule 506(d)(1)(i) to (viii)
under the Securities Act.

 

(ff) Regulation M Compliance. The Company has not, and to its knowledge no one
acting on its behalf has, (i) taken, directly or indirectly, any action designed
to cause or to result in the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of any of the
Securities, (ii) sold, bid for, purchased, or paid any compensation for
soliciting purchases of, any of the Securities, or (iii) paid or agreed to pay
to any Person any compensation for soliciting another to purchase any other
securities of the Company, other than, in the case of clauses (ii) and (iii),
compensation paid to the Company’s placement agent in connection with the
placement of the Securities.

 

  20

 

 

(gg) Subsidiary Rights. Except as set forth on Schedule 3.1(ff), the Company has
the unrestricted right to vote, and (subject to limitations imposed by
applicable law) to receive dividends and distributions on, all capital
securities of its Subsidiaries as owned by the Company or any Subsidiary.

 

(hh) Office of Foreign Assets Control. Neither the Company nor any Subsidiary
nor, to the Company's knowledge, any director, officer, agent, employee or
affiliate of the Company or any Subsidiary is currently subject to any U.S.
sanctions administered by the Office of Foreign Assets Control of the U.S.
Treasury Department (“OFAC”).

 

(ii) Money Laundering. To the best of the Company’s knowledge, the operations of
the Company and its Subsidiaries 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, suit or
proceeding by or before any court or governmental agency, authority or body or
any arbitrator involving the Company or any Subsidiary with respect to the Money
Laundering Laws is pending or, to the knowledge of the Company or any
Subsidiary, threatened.

 

(jj) Anti-Dilution. Except as set forth on Schedule 3.1 (ii), no current holders
of warrants of the Company have, as at the Closing, warrants containing
anti-dilution or ratchet provisions.

 

Except where such representations conflict, each Purchaser acknowledges and
agrees that the representations contained in Section 3.1 shall not modify, amend
or affect the Company’s right to rely on such Purchaser’s representations and
warranties contained in this Agreement or any representations and warranties
contained in any other Transaction Document or any other document or instrument
executed and/or delivered in connection with this Agreement or the consummation
of the transaction contemplated hereby.

 

3.2 Representations and Warranties of the Purchasers. Each Purchaser, for itself
and for no other Purchaser, hereby represents and warrants as of the date hereof
and as of the applicable Closing Date to the Company as follows (unless as of a
specific date therein):

 

(a) Organization; Authority. Such Purchaser is either an individual or an entity
duly incorporated or formed, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or formation with full right,
corporate, partnership, limited liability company or similar power and authority
to enter into and to consummate the transactions contemplated by the Transaction
Documents and otherwise to carry out its obligations hereunder and thereunder.
The execution and delivery of the Transaction Documents and performance by such
Purchaser of the transactions contemplated by the Transaction Documents have
been duly authorized by all necessary corporate, partnership, limited liability
company or similar action, as applicable, on the part of such Purchaser. Each
Transaction Document to which it is a party has been duly executed by such
Purchaser, and when delivered by such Purchaser in accordance with the terms
hereof, will constitute the valid and legally binding obligation of such
Purchaser, enforceable against it in accordance with its terms, except: (i) as
limited by general equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors’ rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may be
limited by applicable law.

 

  21

 

 

(b) Own Account. Such Purchaser understands that the Securities are “restricted
securities” and have not been registered under the Securities Act or any
applicable state securities law and is acquiring the Securities as principal for
its own account and not with a view to or for distributing or reselling such
Securities or any part thereof in violation of the Securities Act or any
applicable state securities law, has no present intention of distributing any of
such Securities in violation of the Securities Act or any applicable state
securities law and has no direct or indirect arrangement or understandings with
any other persons to distribute or regarding the distribution of such Securities
in violation of the Securities Act or any applicable state securities law (this
representation and warranty not limiting such Purchaser’s right to sell the
Securities in compliance with applicable federal and state securities laws).
Such Purchaser is acquiring the Securities hereunder in the ordinary course of
its business.

 

(c) Purchaser Status. At the time such Purchaser was offered the Securities, it
was, and as of the date hereof it is, and on each date on which it converts any
Notes it will be an “accredited investor” as defined in Rule 501(a)(1), (a)(2),
(a)(3), (a)(7) or (a)(8) under the Securities Act.

 

(d) Experience of Such Purchaser. Such Purchaser, either alone or together with
its representatives, has such knowledge, sophistication and experience in
business and financial matters so as to be capable of evaluating the merits and
risks of the prospective investment in the Securities, and has so evaluated the
merits and risks of such investment. Such Purchaser is able to bear the economic
risk of an investment in the Securities and, at the present time, is able to
afford a complete loss of such investment.

 

(e) General Solicitation. Such Purchaser is not purchasing the Securities as a
result of any advertisement, article, notice or other communication regarding
the Securities published in any newspaper, magazine or similar media or
broadcast over television or radio or presented at any seminar or any other
general solicitation or general advertisement.

 

(f) Certain Transactions and Confidentiality. Other than consummating the
transactions contemplated hereunder, such Purchaser has not directly or
indirectly, nor has any Person acting on behalf of or pursuant to any
understanding with such Purchaser, executed any purchases or sales, including
Short Sales, of the securities of the Company during the period commencing as of
the time that such Purchaser first received a term sheet (written or oral) from
the Company or any other Person representing the Company setting forth the
material terms of the transactions contemplated hereunder and ending immediately
prior to the execution hereof. Notwithstanding the foregoing, in the case of a
Purchaser that is a multi-managed investment vehicle whereby separate portfolio
managers manage separate portions of such Purchaser’s assets and the portfolio
managers have no direct knowledge of the investment decisions made by the
portfolio managers managing other portions of such Purchaser’s assets, the
representation set forth above shall only apply with respect to the portion of
assets managed by the portfolio manager that made the investment decision to
purchase the Securities covered by this Agreement. Other than to other Persons
party to this Agreement, such Purchaser has maintained the confidentiality of
all disclosures made to it in connection with this transaction (including the
existence and terms of this transaction).

 

  22

 

 

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

 

(h) Information. Each Purchaser and its advisors, if any, have been furnished
with all materials relating to the business, finances and operations of the
Company and materials relating to the offer and sale of the Securities which
have been requested by such Purchaser or its advisors. Each Purchaser and its
advisors, if any, have been afforded the opportunity to ask questions of the
Company regarding its business and affairs.

 

(i) Residency. Each Purchaser is a resident of the jurisdiction set forth
immediately below such Purchaser’s name on the signature pages hereto.

 

(j) Transfer or Re-sale. Each Purchaser understands that (i) the sale or resale
of the Securities has not been and is not being registered under the Securities
Act or any applicable state securities laws, and the Securities may not be
transferred unless (a) the Securities are sold pursuant to an effective
registration statement under the Securities Act, (b) the Purchaser shall have
delivered to the Company, at the cost of the Company, an opinion of counsel that
shall be in form, substance and scope customary for opinions of counsel in
comparable transactions to the effect that the Securities to be sold or
transferred may be sold or transferred pursuant to an exemption from such
registration, which opinion shall be reasonably acceptable by the Company, (c)
the Securities are sold or transferred to an “affiliate” (as defined in Rule
144) of the Purchaser who agrees to sell or otherwise transfer the Securities
only in accordance with this Section 2(f) and who is an Accredited Investor, (d)
the Securities are sold pursuant to Rule 144, or (e) the Securities are sold
pursuant to Regulation S under the Securities Act (or a successor rule)
(“Regulation S”), and the Purchaser shall have delivered to the Company, at the
cost of the Company, an opinion of counsel that shall be in form, substance and
scope customary for opinions of counsel in corporate transactions, which opinion
shall be reasonably acceptable by the Company; (ii) any sale of such Securities
made in reliance on Rule 144 may be made only in accordance with the terms of
said Rule and further, if said Rule is not applicable, any re-sale of such
Securities under circumstances in which the seller (or the person through whom
the sale is made) may be deemed to be an underwriter (as that term is defined in
the Securities Act) may require compliance with some other exemption under the
Securities Act or the rules and regulations of the Commission thereunder; and
(iii) neither the Company nor any other person is under any obligation to
register such Securities under the Securities Act or any state securities laws
or to comply with the terms and conditions of any exemption thereunder (in each
case). Notwithstanding the foregoing or anything else contained herein to the
contrary, the Securities may be pledged in connection with a bona fide margin
account or other lending arrangement secured by the Securities, and such pledge
of Securities shall not be deemed to be a transfer, sale or assignment of the
Securities hereunder, and the Purchaser in effecting such pledge of Securities
shall be not required to provide the Company with any notice thereof or
otherwise make any delivery to the Company pursuant to this Agreement or
otherwise.

 

Except where such representations conflict, the Company acknowledges and agrees
that the representations contained in Section 3.2 shall not modify, amend or
affect such Purchaser’s right to rely on the Company’s representations and
warranties contained in this Agreement or any representations and warranties
contained in any other Transaction Document or any other document or instrument
executed and/or delivered in connection with this Agreement or the consummation
of the transaction contemplated hereby.

 

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ARTICLE IV.

OTHER AGREEMENTS OF THE PARTIES

 

4.1 Transfer Restrictions.

 

(a) The Securities may only be disposed of in compliance with state and federal
securities laws. In connection with any transfer of Securities other than
pursuant to an effective registration statement or Rule 144, to the Company or
to an Affiliate of a Purchaser or in connection with a pledge as contemplated in
Section 4.1(b), the Company may require the transferor thereof to provide to the
Company an opinion of counsel selected by the transferor, the form and substance
of which opinion shall be reasonably satisfactory to the Company, to the effect
that such transfer does not require registration of such transferred Securities
under the Securities Act. As a condition of transfer, any such transferee shall
agree in writing to be bound by the terms of this Agreement and shall have the
rights and obligations of a Purchaser under this Agreement.

 

(b) The Purchasers agree to the imprinting, so long as is required by this
Section 4.1, of a legend on any of the Securities in the following form:

 

[NEITHER] THIS SECURITY [NOR THE SECURITIES INTO WHICH THIS SECURITY IS
[EXERCISABLE] [CONVERTIBLE]] HAS [NOT] BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON
AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO
AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO
THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE TO THE COMPANY.

 

  24

 

 

(c) Certificates evidencing the Underlying Shares shall not contain any legend
(including the legend set forth in Section 4.1(b) hereof): (i) following any
sale of such Underlying Shares pursuant to Rule 144; or (ii) if such legend is
not required under applicable requirements of the Securities Act (including
judicial interpretations and pronouncements issued by the staff of the
Commission). The Company shall use commercially reasonable efforts to cause
counsel to issue a legal opinion to the Transfer Agent, at the cost of the
Company, promptly after any of the events described in (i)-(ii) in the preceding
sentence if required by the Transfer Agent to effect the removal of the legend
hereunder (with a copy to the applicable Purchaser and its broker); provided
that the Purchaser may (at the Company’s cost) secure another legal counsel to
issue such legal opinion, and the Company will instruct the Transfer Agent to
accept such opinion. If all or any portion of a Note is converted (as provided
in a Note) at a time when such legend is not otherwise required under applicable
requirements of the Securities Act (including judicial interpretations and
pronouncements issued by the staff of the Commission) then such Underlying
Shares shall be issued free of all legends. The Company agrees that following
the Effective Date or at such time as such legend is no longer required under
this Section 4.1(c), it will, no later than three Trading Days following the
later of (x) the delivery by a Purchaser to the Company or the Transfer Agent of
a certificate representing Underlying Shares, as applicable, issued with a
restrictive legend, and (y) receipt by the Transfer Agent of a legal opinion
covering the Underlying Shares, if required (such third Trading Day, the “Legend
Removal Date”), deliver or cause to be delivered to such Purchaser a certificate
representing such shares that is free from all restrictive and other legends.
The Company may not make any notation on its records or give instructions to the
Transfer Agent that enlarge the restrictions on transfer set forth in this
Section 4. Certificates for Underlying Shares subject to legend removal
hereunder shall be transmitted by the Transfer Agent to the Purchaser by
crediting the account of the Purchaser’s prime broker with the Depository Trust
Company System as directed by such Purchaser.

 

(d) In addition to such Purchaser’s other available remedies, the Company shall
pay to a Purchaser, in cash, as partial liquidated damages and not as a penalty,
for each $1,000 of Underlying Shares (based on the VWAP of the Common Stock on
the date such Securities are submitted to the Transfer Agent) delivered for
removal of the restrictive legend and subject to Section 4.1(c), $10 per Trading
Day (increasing to $20 per Trading Day five (5) Trading Days after such damages
have begun to accrue) for each Trading Day after the Legend Removal Date until
such certificate is delivered without a legend. Nothing herein shall limit such
Purchaser’s right to pursue actual damages for the Company’s failure to deliver
certificates representing any Securities as required by the Transaction
Documents, and such Purchaser shall have the right to pursue all remedies
available to it at law or in equity including, without limitation, a decree of
specific performance and/or injunctive relief.

 

(e) The Company shall not change transfer agents without the prior written
consent of the Holder.

 

(f) The Company shall be up to date with all of its filings with the Commission
by July 15, 2017, including without limitation, all reports, schedules, forms,
statements and other documents required to be filed by the Company under the
Securities Act and the Exchange Act (including pursuant to Section 13(a) or
15(d) thereof).

 

4.2 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 Underlying Shares
pursuant to the Transaction Documents, are 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.

 

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4.3 Furnishing of Information; Public Information.

 

(a) Until the earliest of the 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 date hereof pursuant to the
Exchange Act.

 

(b) At any time during the period commencing from the six (6) month anniversary
of the date hereof and ending at such time that all of the Securities may be
sold without the requirement for the Company to be in compliance with Rule
144(c)(1) and otherwise without restriction or limitation pursuant to Rule 144,
if the Company shall fail for any reason to satisfy the current public
information requirement under Rule 144(c) (a “Public Information Failure”),
Purchaser may provide written notice to the Company of the Public Information
Failure (“PIF Notice”). If the Public Information Failure is not cured within
three (3) Trading Days following the date that PIF Notice is received by the
Company, then, in addition to such Purchaser’s other available remedies, the
Company shall pay to a Purchaser, in cash, as partial liquidated damages and not
as a penalty, by reason of any such delay in or reduction of its ability to sell
the Securities, an amount in cash equal to two percent (2.0%) of the aggregate
Subscription Amount of such Purchaser’s Securities on the 3rd (third) Trading
Day following the date that PIF Notice is received by the Company and on every
thirtieth (30th) day (prorated for periods totaling less than thirty days)
thereafter until the earlier of (a) the date such Public Information Failure is
cured and (b) such time that such public information is no longer required for
the Purchasers to transfer the Underlying Shares pursuant to Rule 144. The
payments to which a Purchaser shall be entitled pursuant to this Section 4.3(b)
are referred to herein as “Public Information Failure Payments.” Public
Information Failure Payments shall be paid on the earlier of (i) the last day of
the calendar month during which such Public Information Failure Payments are
incurred and (ii) the third (3rd) Business Day after the event or failure giving
rise to the Public Information Failure Payments is cured. In the event the
Company fails to make Public Information Failure Payments in a timely manner,
such Public Information Failure Payments shall bear interest at the rate of 1%
per month (prorated for partial months) until paid in full. Nothing herein shall
limit such Purchaser’s right to pursue actual damages for the Public Information
Failure, and such Purchaser shall have the right to pursue all remedies
available to it at law or in equity including, without limitation, a decree of
specific performance and/or injunctive relief. Notwithstanding the foregoing,
this Section 4.3(b) shall not apply to any Purchaser who is an executive officer
or director of the Company.

 

  26

 

 

4.4 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 in a manner that would require the registration under the Securities
Act of the sale of the Securities or that would be integrated with the offer or
sale of the Securities for purposes of the rules and regulations of any Trading
Market such that it would require shareholder approval prior to the closing of
such other transaction unless shareholder approval is obtained before the
closing of such subsequent transaction.

 

4.5 Conversion and Exercise Procedures. The form of Notice of Conversion
included in the Notes sets forth the totality of the procedures required of the
Purchasers in order to convert the Notes. Without limiting the preceding
sentences, no ink-original Notice of Conversion shall be required, nor shall any
medallion guarantee (or other type of guarantee or notarization) of any Notice
of Conversion form be required by the Company in order to convert the Note. No
additional legal opinion, other information or instructions shall be required of
the Purchasers to convert their Notes. The Company shall honor conversions of
the Notes and shall deliver Underlying Shares in accordance with the terms,
conditions and time periods set forth in the Transaction Documents.

 

4.6 Securities Laws Disclosure; Publicity. The Company shall file a Current
Report on Form 8-K (if required by the Exchange Act), 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 8-K, 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). 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: (a) as required by federal
securities law and (b) to the extent such disclosure is required by law or
Trading Market regulations, in which case the Company shall provide the
Purchasers with prior notice of such disclosure permitted under this clause (b).

 

4.7 Shareholder Rights Plan. No claim will be made or enforced by the Company
or, with the consent of the Company, any other Person, that any Purchaser 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 hereafter adopted by the Company,
or that any Purchaser could be deemed to trigger the provisions of any such plan
or arrangement, by virtue of receiving Securities under the Transaction
Documents or under any other agreement between the Company and the Purchasers

 

  27

 

 

4.8 Non-Public Information. Except with respect to the material terms and
conditions of the transactions contemplated by the Transaction Documents, the
Company covenants and agrees that neither it, nor any of its subsidiaries, nor
any other Person acting on its behalf, will provide any Purchaser or its agents
or counsel with any information that the Company believes constitutes material
non-public information, unless prior thereto such information is disclosed to
the public, or such Purchaser shall have entered into a written agreement with
the Company regarding the confidentiality and use of such information. The
Company understands and confirms that each Purchaser shall be relying on the
foregoing covenant in effecting transactions in securities of the Company.
Notwithstanding the foregoing, this Section 4.8 shall not apply to any Purchaser
who is an executive officer or director of the Company.

 

4.9 Use of Proceeds. The Company shall use the net proceeds from the initial
Tranche as set forth on Annex A. The Company shall use the net proceeds from any
Tranches subsequent to the initial Tranche for general working capital purposes.

 

4.10 Indemnification of Purchasers. Subject to the provisions of this Section
4.10, the Company will indemnify and hold each Purchaser and its directors,
officers, shareholders, 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, 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” and collectively the “Purchaser Parties”) 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 or (b) any
third-party 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). 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 the defense thereof with counsel of its own
choosing reasonably acceptable to the Purchaser Party. Any Purchaser Party shall
have the right to employ separate counsel in any such action and participate in
the defense thereof, but the fees and expenses of such counsel shall be at the
expense of such Purchaser Party except to the extent that (i) the employment
thereof has been specifically authorized by the Company in writing, (ii) the
Company has failed after a reasonable period of time to assume such defense and
to employ counsel or (iii) in such action there is, in the reasonable opinion of
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. 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 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 4.10 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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4.11 Reservation and Listing of Securities.

 

(a) The Company shall maintain a reserve from its duly authorized shares of
Common Stock for issuance a sufficient number of shares of Common Stock at least
equal to the following formula: 3 x (P/CP), where P equals the outstanding
principal amount of the Note from time to time and CP equals the then-effective
Conversion Price (the “Reserved Amount”). The Reserved Amount shall be
recalculated each month and the Company shall notify the Transfer Agent by the
first day of the following month of the new Reserved Amount.

 

(b) In the event that the Company is unable to reserve the entirety of the
Reserved Amount in accordance with Section 4.11(a) above, 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 such amount within 75 days after
the date of calculation as required by Section 4.11(a) above.

 

(c) The Company shall, if applicable: (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 or quotation on such Trading Market as soon as reasonably
practicable thereafter, (iii) provide to the Purchasers evidence of such listing
or quotation and (iv) for so long as a Purchaser owns any of the Securities,
maintain the listing or quotation 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.

 

4.12 Participation in Future Financing.

 

(a) From the date hereof until the date that no principal amount under the Notes
remains outstanding, upon any issuance by the Company or any of its Subsidiaries
of Common Stock, Common Stock Equivalents or debt pursuant to Section 3(a)(9) of
the Securities Act (a “Subsequent Financing”), the Purchasers shall,
collectively, have the right to participate in the Subsequent Financing in an
amount up to 100% of the outstanding balance of the Note (subject to the
applicable Prepayment Multiplier) (the “Participation Maximum”) on the same
terms, conditions and price provided for in the Subsequent Financing.

 

(b) At least forty-eight (48) hours prior to the closing of the Subsequent
Financing (the “Subsequent Financing Notice Period”), the Company shall deliver
to each Purchaser a written notice of its intention to effect a Subsequent
Financing (the “Subsequent Financing Notice”), which Subsequent Financing Notice
shall describe in reasonable detail the proposed terms of such Subsequent
Financing, the Persons as parties to the Subsequent Financing, the amount of
proceeds intended to be raised thereunder and the Person or Persons through or
with whom such Subsequent Financing is proposed to be effected, and shall
include a term sheet or similar document relating thereto as an attachment.

 

  29

 

 

(c) Any Purchaser desiring to participate in such Subsequent Financing must
provide, before the expiration of the Subsequent Financing Notice Period,
written notice to the Company that such Purchaser is willing to participate in
the Subsequent Financing, the amount of such Purchaser’s participation, and
represent and warrant that such Purchaser has such funds ready, willing, and
available for investment on the terms set forth in the Subsequent Financing
Notice.

 

(d) If notifications by the Purchasers of their willingness to participate in
the Subsequent Financing (or to cause their designees to participate) is, in the
aggregate, less than the total amount of the Subsequent Financing, then the
Company may effect the remaining portion of such Subsequent Financing on the
terms and with the Persons set forth in the Subsequent Financing Notice.

 

(e) If the Company receives responses to a Subsequent Financing Notice from any
Purchasers seeking to purchase more than the aggregate amount of the
Participation Maximum, each such Purchaser shall have the right to purchase its
Pro Rata Portion (as defined below) of the Participation Maximum. “Pro Rata
Portion” means the ratio of (x) the Subscription Amount of Securities purchased
by a Purchaser participating under this Section 4.12 and (y) the sum of the
aggregate Subscription Amounts of Securities purchased by all Purchasers
participating under this Section 4.12.

 

(f) The Company must provide the Purchasers with a second Subsequent Financing
Notice, and the Purchasers will again have the right of participation set forth
above in this Section 4.12, if the Subsequent Financing subject to the initial
Subsequent Financing Notice is not consummated for any reason on the terms set
forth in such Subsequent Financing Notice within thirty (30) Trading Days after
the date of the initial Subsequent Financing Notice.

 

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

 

(h) Notwithstanding anything to the contrary in this Section 4.12 and unless
otherwise agreed to by such Purchaser, the Company shall either confirm in
writing to such Purchaser that the transaction with respect to the Subsequent
Financing has been abandoned or shall publicly disclose its intention to issue
the securities in the Subsequent Financing, in either case in such a manner such
that such Purchaser will not be in possession of any material, non-public
information, by the tenth (10th) Business Day following delivery of the
Subsequent Financing Notice. If by such tenth (10th) Business Day, no public
disclosure regarding a transaction with respect to the Subsequent Financing has
been made, and no notice regarding the abandonment of such transaction has been
received by such Purchaser, such transaction shall be deemed to have been
abandoned and such Purchaser shall not be deemed to be in possession of any
material, non-public information with respect to the Company or any of its
Subsidiaries.

 

(i) Notwithstanding the foregoing, this Section 4.12 shall not apply in respect
of an Exempt Issuance.

 

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4.13 Form D; Blue Sky Filings. If required under Regulation D of the Securities
Act, the Company agrees to timely file a Form D with respect to the Securities
as required under Regulation D and to 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 the Purchasers at the applicable 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.

 

4.14 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 this Agreement unless
the same consideration is also offered to all of the parties to this Agreement.
Further, the Company shall not make any payment of principal or interest on the
Notes in amounts which are disproportionate to the respective principal amounts
outstanding on the Notes at any applicable time. 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.

 

4.15 Certain Transactions and Confidentiality. Each Purchaser, severally and not
jointly with the other Purchasers, covenants that neither it, nor any Affiliate
acting on its behalf or pursuant to any understanding with it, will execute any
Short Sales of any of the Company’s securities from the date hereof until the
earlier of (x) the six (6) month anniversary of the date hereof and (y) the date
that the Notes are no longer outstanding (provided that this provision shall not
prohibit any sales made where a corresponding Notice of Conversion or Notice of
Exercise is tendered to the Company and the shares received upon such conversion
or exercise are used to close out such sale) (a “Prohibited Short Sale”). Each
Purchaser, severally and not jointly with the other Purchasers, covenants that
until such time as the transactions contemplated by this Agreement are publicly
disclosed by the Company, such Purchaser will maintain the confidentiality of
the existence and terms of this transaction and the information included in the
Transaction Documents and the Disclosure Schedules. For sixty (60) days after
the date of this Agreement, the Company shall not enter into any negotiations
for, or accept or consummate any debt or equity financing transactions, without
Agent’s (as defined below) express written consent, excluding the bridge
financing previously discussed by the parties. The Company agrees that Agent’s
(as defined below) damages for breach of the previous sentence shall be
liquidated damages in an amount equal to $150,000 payable in cash.

 

4.16 Piggy-Back Registrations. If at any time prior to the conversion in full or
repayment of the Note, the Company shall determine to prepare and file with the
Commission a registration statement relating to an offering for the account of
others under the Securities Act of any of its equity securities (a “Registration
Statement”), other than on Form S-4 or Form S-8 (each as promulgated under the
Securities Act) or their then equivalents relating to equity securities to be
issued solely in connection with any merger with or acquisition of any entity or
business or equity securities issuable in connection with the Company’s stock
option or other employee benefit plans, then the Company shall deliver to each
Purchaser a written notice of such determination and, if within fifteen (15)
days after the date of the delivery of such notice, any such Purchaser shall so
request in writing, the Company shall include in such registration statement all
or any part of such Registrable Securities such Purchaser requests to be
registered; provided, however, that the Company shall not be required to
register any Registrable Securities pursuant to this Section 6(e) that are
eligible for resale pursuant to Rule 144 (without volume restrictions or current
public information requirements) promulgated by the Commission pursuant to the
Securities Act or that are the subject of a then effective Registration
Statement.

 

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4.17 Exchange Transactions. During the period commencing on the date hereof and
for so long as an aggregate of at least $100,000 in Principal Amount on the Note
remains outstanding, neither the Company nor any of its affiliates or
Subsidiaries, nor any of its or their respective officers, employees, directors,
agents or other representatives, will, without the prior written consent of the
Purchasers (which consent may be withheld, delayed or conditioned in the
Purchasers’ sole discretion), directly or indirectly: (a) solicit, initiate,
encourage or accept any other inquiries, proposals or offers from any Person
(other than the Purchasers or the officers or directors of the Company) relating
to any exchange (i) of any security of the Company or any of its Subsidiaries
for any other security of the Company or any of its Subsidiaries or (ii) of any
indebtedness or other securities of, or claim against, the Company or any of its
Subsidiaries relying on the exemption provided by Section 3(a)(10) of the
Securities Act (any such transaction described in clauses (i) or (ii), an
“Exchange Transaction”); (b) enter into, effect, alter, amend, announce or
recommend to its stockholders any Exchange Transaction with any Person (other
than the Purchasers or the Company’s executive officers and directors); or (c)
participate in any discussions, conversations, negotiations or other
communications with any Person (other than the Purchasers or the Company’s
executive officers and directors) regarding any Exchange Transaction, or furnish
to any Person (other than the Purchasers or the Company’s executive officers and
directors) any information with respect to any Exchange Transaction, or
otherwise cooperate in any way, assist or participate in, facilitate or
encourage any effort or attempt by any Person (other than the Purchasers or the
Company’s executive officers and directors) to seek an Exchange Transaction
involving the Company or any of its Subsidiaries. In addition, for so long as
any Principal on the Note remains outstanding, neither the Company nor any of
its affiliates or Subsidiaries, nor any of its or their respective officers,
employees, directors, agents or other representatives, will, without the prior
written consent of the Purchasers (which consent may be withheld, delayed or
conditioned in the Purchasers’ sole discretion), directly or indirectly,
cooperate in any way, assist or participate in, facilitate or encourage any
effort or attempt by any Person (other than the Purchaser or the Company’s
executive officers and directors) to effect any acquisition of securities or
indebtedness of, or claim against, the Company by such Person from an existing
holder of such securities, indebtedness or claim in connection with a proposed
exchange of such securities or indebtedness of, or claim against, the Company
(whether pursuant to Section 3(a)(9) or 3(a)(10) of the Securities Act or
otherwise) (a “Third Party Exchange Transfer”). The Company, its affiliates and
Subsidiaries, and each of its and their respective officers, employees,
directors, agents or other representatives shall immediately cease and cause to
be terminated all existing discussions, conversations, negotiations and other
communications with any Persons (other than the Purchasers or the Company’s
executive officers and directors) with respect to any of the foregoing. The
Company shall promptly (and in no event later than 24 hours after receipt)
notify (which notice shall be provided orally and in writing and shall identify
the Person making the inquiry, request, proposal or offer and set forth the
material terms thereof) the Purchasers after receipt of any inquiry, request,
proposal or offer relating to any Exchange Transaction or Third Party Exchange
Transfer, and shall promptly (and in no event later than 24 hours after receipt)
provide copies to the Purchasers of any written inquiries, requests, proposals
or offers relating thereto. The Company agrees that it and its affiliates and
Subsidiaries, and each of its and their respective officers, employees,
directors, agents or other representatives Subsidiaries will not enter into any
agreement with any Person subsequent to the date hereof which prohibits the
Company from providing any information to the Purchasers in accordance with this
provision. For all purposes of this Agreement, violations of the restrictions
set forth in this Section 4.17 by any Subsidiary or affiliate of the Company, or
any officer, employee, director, agent or other representative of the Company or
any of its Subsidiaries or affiliates shall be deemed a direct breach of this
Section 4.17 by the Company.

 

  32

 

 

4.18  No Variable Rate Transactions, Etc. For as long as any Notes remain
outstanding, the Company shall not directly or indirectly (i)(A) consummate any
exchange of any Indebtedness and/or securities of the Company for any other
securities and/or Indebtedness of the Company, (B) cooperate with any person to
effect any exchange of securities and/or Indebtedness of the Company in
connection with a proposed sale of such securities from an existing holder of
such securities to a third party), and/or (C) reduce and/or otherwise change the
exercise price, conversion price and/or exchange price of any Common Stock
Equivalent of the Company and/or amend any non-convertible Indebtedness of the
Company to make it convertible into securities of the Company, (ii) issue or
sell any of its securities either (A) at a conversion, exercise or exchange rate
or price that is based upon and/or varies with the trading prices of, or
quotations for, the shares of Common Stock, and/or (B) with a conversion,
exercise or exchange rate and/or price that is subject to being reset on one or
more occasions either (1) at some future date after the initial issuance of such
securities or (2) upon the occurrence of specified or contingent events directly
or indirectly related to the business of the Company or the market for the
Common Stock, and/or (iii) enter into any agreement (including, without
limitation, an “equity line of credit” or an “at-the-market offering”) whereby
the Company may sell securities at a future determined price. Any transaction
contemplated in this Section 4.18, shall be referred to as a “Variable Rate
Transaction.” The Purchasers shall be entitled to obtain injunctive relief
against the Company to preclude any Variable Rate Transaction (without the need
for the posting of any bond or similar item, which the Company hereby expressly
and irrevocably waives the requirement for), which remedy shall be in addition
to any right of the Purchasers to collect damages.

 

4.19 Satisfaction of Third Party Debt. The Company shall satisfy the Third Party
Debt and obtain the correlating release(s).

 

4.20 Executive Management’s Salaries. C-Level executives, which shall initially
consist of Albert Mitrani, Ian Bothwell Dr. Bruce Werber, Mari Mitrani, Terrell
Suddarth, and any similarly positioned C-Level executives (e.g., Chief
Technology Officer) that are hired after the date hereof (collectively, the
“Executives” and each an “Executive”) with the prior written consent (which such
consent shall not be unreasonably withheld) of Purchaser Agent (“Agent”), shall
be entitled to receive their monthly base contractual salary. Additionally, the
currently hired Executives may only be compensated based on the pro-rata monthly
salary set forth in the each of the Executives’ respective employment agreements
in effect as of the Effective Date. In the event that the any of the Executives
receive any such amounts, then Agent shall receive a simultaneous repayment
equal to one-third (1/3) of the aggregate amounts paid to the Executives at the
prepayment rates set forth in Section 4 of the Note. Such repayment shall reduce
the principal amount due specifically to Agent under the Note, and such
repayments shall continue until Agent is repaid all unpaid principal, fees, and
accrued and unpaid interest due to it under the Note. Notwithstanding anything
to the contrary contained in this Section 4.20, unless waived in writing by
Agent, in no event shall past due salary due to any Executive be paid to such
Executive until all unpaid principal, fees, and accrued and unpaid interest due
under the Note to Agent is paid in full

 

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4.21 Subsequent Company Capital Raises. Subject to the Company’s prohibitions on
future capital raises set forth in this Agreement, in the event that the Company
raises above $500,000 from any other Person(s), all amounts raised above
$500,000 shall be used towards the repayment of the Principal Amount, accrued
and unpaid interest, and any other amounts or fees due to Agent under the Note
(with such payments being applied first to accrued and unpaid interest, then the
other amounts or fees due under the Note, and then the Principal Amount).

 

4.22 Lien Searches. At any time after the date hereof, Agent, at its discretion,
may cause a one-time full lien search (e.g., judgments, taxes, bankruptcy) to be
conducted on the Company and its Subsidiaries, at the Company’s expense.

 

ARTICLE V.

MISCELLANEOUS

 

5.1 Termination. This Agreement may be terminated by any Purchaser, as to such
Purchaser’s obligations hereunder only and without any effect whatsoever on the
obligations between the Company and the other Purchasers, by written notice to
the other parties, if the First Closing has not been consummated on or before
March 31, 2017; provided, however, that such termination will not affect the
right of any party to sue for any breach by any other party (or parties).

 

5.2 Fees and Expenses. At the Closing, the Company has agreed to reimburse Agent
$25,000 for its legal, due diligence and broker review fees, less any fees
related hereto which have been previously paid by the Company. Accordingly, no
additional payments shall be made to any Purchaser at the Closing. The Company
shall deliver to each Purchaser, prior to each Closing, a completed and executed
copy of the Closing Statement, attached hereto as Annex A. Except as expressly
set forth in the Transaction Documents to the contrary, each party shall pay the
fees and expenses of its respective advisers, counsel, accountants and other
experts, if any, and all other expenses incurred by such party incident to the
negotiation, preparation, execution, delivery and performance of this Agreement.
The Company shall pay all Transfer Agent fees (including, without limitation,
any fees required for same-day processing of any instruction letter delivered by
the Company and any conversion or exercise notice delivered by a Purchaser),
stamp taxes and other taxes and duties levied in connection with the delivery of
any Securities to the Purchasers.

 

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

 

5.4 Notices. Any and all notices or other communications or deliveries required
or permitted to be provided hereunder shall be in writing and shall be deemed
given and effective on the earliest of: (a) the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile number set
forth on the signature pages attached hereto at or prior to 5:30 p.m. (New York
City time) on a Trading Day, (b) the next Trading Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number set forth on the signature pages attached hereto on a day that
is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading
Day, (c) the second (2nd) Trading Day following the date of mailing, if sent by
U.S. nationally recognized overnight courier service or (d) upon actual receipt
by the party to whom such notice is required to be given. The address for such
notices and communications shall be as set forth on the signature pages attached
hereto.

 

5.5 Amendments; Waivers. No provision of this Agreement may be waived, modified,
supplemented or amended except in a written instrument signed, in the case of an
amendment, by the Company and Agent, LLC, or, in the case of a waiver, by the
party against whom enforcement of any such waived provision is sought. No waiver
of any default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any subsequent default or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of any party to exercise any
right hereunder in any manner impair the exercise of any such right.

 

5.6 Headings. The headings herein are for convenience only, do not constitute a
part of this Agreement and shall not be deemed to limit or affect any of the
provisions hereof.

 

5.7 Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties and their successors and permitted assigns. The
Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of each Purchaser (other than by merger). Any
Purchaser may assign any or all of its rights under this Agreement to any Person
to whom such Purchaser assigns or transfers any Securities, provided that such
transferee agrees in writing to be bound, with respect to the transferred
Securities, by the provisions of the Transaction Documents that apply to the
“Purchasers.”

 

5.8 No Third-Party Beneficiaries. This Agreement is intended for the benefit of
the parties hereto and their respective successors and permitted assigns and is
not for the benefit of, nor may any provision hereof be enforced by, any other
Person, except as otherwise set forth in Section 4.10.

 

  35

 

 

5.9 Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of the Transaction Documents shall be governed by
and construed and enforced in accordance with the internal laws of the State of
New York, without regard to the principles of conflicts of law thereof. Each
party agrees that all legal proceedings concerning the interpretations,
enforcement and defense of the transactions contemplated by this Agreement and
any other Transaction Documents (whether brought against a party hereto or its
respective affiliates, directors, officers, shareholders, partners, members,
employees or agents) shall be commenced exclusively in the state and federal
courts sitting in the City of New York. Each party hereby irrevocably submits to
the exclusive jurisdiction of the state and 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 (including with respect to the enforcement of any of the
Transaction Documents), 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
improper or is an inconvenient venue for such proceeding. 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 via
registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for 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 other manner permitted by law. If
either party shall commence an action, suit or proceeding to enforce any
provisions of the Transaction Documents, then, in addition to the obligations of
the Company under Section 4.10, the prevailing party in such action, suit or
proceeding shall be reimbursed by the other party for its reasonable attorneys’
fees and other costs and expenses incurred with the investigation, preparation
and prosecution of such action or proceeding. The parties hereto acknowledge
that this Agreement has been negotiated, executed, and delivered in the State of
New York and is to be wholly performed within New York, and each party’s actions
in connection with the negotiation, execution, and delivery of this Agreement
constitutes transacting business in New York.

 

5.10 Survival. The representations and warranties contained herein shall survive
the Closings and the delivery of the Securities.

 

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

 

  36

 

 

5.12 Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and the parties hereto shall use
their commercially reasonable efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.

 

5.13 Rescission and Withdrawal Right. Notwithstanding anything to the contrary
contained in (and without limiting any similar provisions of) any of the other
Transaction Documents, whenever any Purchaser exercises a right, election,
demand or option under a Transaction Document and the Company does not timely
perform its related obligations within the periods therein provided, then such
Purchaser may rescind or withdraw, in its sole discretion from time to time upon
written notice to the Company, any relevant notice, demand or election in whole
or in part without prejudice to its future actions and rights; provided,
however, that in the case of a rescission of a conversion of a Note, the
applicable Purchaser shall be required to return any shares of Common Stock
subject to any such rescinded conversion notice concurrently with the return to
such Purchaser of the aggregate exercise price paid to the Company for such
shares.

 

5.14 Replacement of Securities. If any certificate or instrument evidencing any
Securities is mutilated, lost, stolen or destroyed, the Company shall issue or
cause to be issued in exchange and substitution for and upon cancellation
thereof (in the case of mutilation), or in lieu of and substitution therefor, a
new certificate or instrument, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction. The applicant
for a new certificate or instrument under such circumstances shall also pay any
reasonable third-party costs (including customary indemnity) associated with the
issuance of such replacement Securities.

 

5.15 Remedies. In addition to being entitled to exercise all rights provided
herein or granted by law, including recovery of damages, each of the Purchasers
and the Company will be entitled to specific performance under the Transaction
Documents. The parties agree that monetary damages may not be adequate
compensation for any loss incurred by reason of any breach of obligations
contained in the Transaction Documents and hereby agree to waive and not to
assert in any action for specific performance of any such obligation the defense
that a remedy at law would be adequate.

 

5.16 Payment Set Aside. To the extent that the Company makes a payment or
payments to any Purchaser pursuant to any Transaction Document or a Purchaser
enforces or exercises its rights thereunder, and such payment or payments or the
proceeds of such enforcement or exercise or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside, recovered
from, disgorged by or are required to be refunded, repaid or otherwise restored
to the Company, a trustee, receiver or any other Person under any law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable cause of action), then to the extent of any such restoration
the obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.

 

  37

 

 

5.17 Usury. To the extent it may lawfully do so, the Company hereby agrees not
to insist upon or plead or in any manner whatsoever claim, and will resist any
and all efforts to be compelled to take the benefit or advantage of, usury laws
wherever enacted, now or at any time hereafter in force, in connection with any
claim, action or proceeding that may be brought by any Purchaser in order to
enforce any right or remedy under any Transaction Document. Notwithstanding any
provision to the contrary contained in any Transaction Document, it is expressly
agreed and provided that the total liability of the Company under the
Transaction Documents for payments in the nature of interest shall not exceed
the maximum lawful rate authorized under applicable law (the “Maximum Rate”),
and, without limiting the foregoing, in no event shall any rate of interest or
default interest, or both of them, when aggregated with any other sums in the
nature of interest that the Company may be obligated to pay under the
Transaction Documents exceed such Maximum Rate. It is agreed that if the maximum
contract rate of interest allowed by law and applicable to the Transaction
Documents is increased or decreased by statute or any official governmental
action subsequent to the date hereof, the new maximum contract rate of interest
allowed by law will be the Maximum Rate applicable to the Transaction Documents
from the effective date thereof forward, unless such application is precluded by
applicable law. If under any circumstances whatsoever, interest in excess of the
Maximum Rate is paid by the Company to any Purchaser with respect to
indebtedness evidenced by the Transaction Documents, such excess shall be
applied by such Purchaser to the unpaid principal balance of any such
indebtedness or be refunded to the Company, the manner of handling such excess
to be at such Purchaser’s election.

 

5.18 Independent Nature of Purchasers’ Obligations and Rights. The obligations
of each Purchaser under any Transaction Document are several and not joint with
the obligations of any other Purchaser, and no Purchaser shall be responsible in
any way for the performance or non-performance of the obligations of any other
Purchaser under any Transaction Document. Nothing contained herein or in any
other Transaction Document, and no action taken by any Purchaser pursuant hereto
or thereto, shall be deemed to constitute the Purchasers as a partnership, an
association, a joint venture or any other kind of entity, or create a
presumption that the Purchasers are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated by the
Transaction Documents. Each Purchaser shall be entitled to independently protect
and enforce its rights, including, without limitation, the rights arising out of
this Agreement or out of the other Transaction Documents, and it shall not be
necessary for any other Purchaser to be joined as an additional party in any
proceeding for such purpose. Each Purchaser has been represented or has had the
opportunity to be represented by its own separate legal counsel in its review
and negotiation of the Transaction Documents. For reasons of administrative
convenience only, each Purchaser and its respective counsel have chosen to
communicate with the Company through Robinson Brog. Robinson Brog does not
represent any of the Purchasers other than Agent. The Company has elected to
provide all Purchasers with the same terms and Transaction Documents for the
convenience of the Company and not because it was required or requested to do so
by any of the Purchasers.

 

  38

 

 

5.19 Liquidated Damages. The Company’s obligations to pay any partial liquidated
damages or other amounts owing under the Transaction Documents is a continuing
obligation of the Company and shall not terminate until all unpaid partial
liquidated damages and other amounts have been paid notwithstanding the fact
that the instrument or security pursuant to which such partial liquidated
damages or other amounts are due and payable shall have been canceled.

 

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

 

5.21 Construction. The parties agree that each of them and/or their respective
counsel have reviewed and had an opportunity to revise the Transaction Documents
and, therefore, the normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of the Transaction Documents or any amendments thereto. In
addition, each and every reference to share prices and shares of Common Stock in
any Transaction Document shall be subject to adjustment for reverse and forward
stock splits, stock dividends, stock combinations and other similar transactions
of the Common Stock that occur after the date of this Agreement.

 

5.22 WAIVER OF JURY TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY
JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH
KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW,
HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER
TRIAL BY JURY.

 

(Signature Pages Follow)

 

  39

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.

 

Biotech Products Services and Research, Inc.

Address for Notice:

 

 

 

By:

 

 

Fax:

 

Name:

 

 

 

Title:

 

 

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

 

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGE FOR PURCHASER FOLLOWS]

 

  40

 

 

[PURCHASER SIGNATURE PAGES TO SECURITIES PURCHASE AGREEMENT]

 

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

 

Name of Purchaser:
______________________________________________________________

 

Signature of Authorized Signatory of Purchaser: 
_______________________________________

 

Name of Authorized Signatory:
_____________________________________________________

 

Title of Authorized Signatory:
______________________________________________________

 

Email Address of Authorized
Signatory:_______________________________________________

 

Facsimile Number of Authorized Signatory:
____________________________________________

 

Address for Notice to Purchaser:
____________________________________________________

 

Address for Delivery of Securities to Purchaser (if not same as address for
notice):_______________

 

First Closing Subscription Amount:
__________________________________________________

 

First Closing Principal Amount:
_____________________________________________________

 

EIN Number: ___________________________________________________________________

 

[SIGNATURE PAGES CONTINUE]

 

  41

 

 

Annex A

 

CLOSING STATEMENT

 

Pursuant to the attached Securities Purchase Agreement, dated as of the date
hereto, the purchasers shall purchase Notes from Biotech Products Services and
Research, Inc. (the “Company”). All funds will be wired into an account
maintained by the Company. All funds will be disbursed in accordance with this
Closing Statement.

 

Disbursement Date: March 29, 2017

 

I. PURCHASE PRICE

 

 

 

Gross Proceeds to be Received

$175,000.00

 

 

 

II. DISBURSEMENTS

 

 

 

Purchaser’s legal fees

Repayment of Lender #1

Repayment of Lender #2

Lien Searches

Filing of UCC Financing Statements

$25,000.000

$71,585.21

$45,000.00

$1,500.00

$3,000.00

 

 

 

Total Amount Disbursed:

$28,914.79

 

WIRE INSTRUCTIONS:

 

 

 

Duly executed this 29th day of March, 2017:

 

 

 

 

 

BIOTECH PRODUCTS SERVICES AND RESEARCH, INC.

 

 

 

 

 

By:   __________________________________________

         Name:

         Title:

 

 

 

42

   

 

Annex B

 

SCHEDULE OF PURCHASERS

 

Lender

 

First Tranche Subscription Amount (Upon Execution)

 

 

Second Tranche

Subscription Amount

 

 

Total

First Tranche through Second Tranche Subscription Amounts

 

 

Commitment Shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Agent

 

$ 175,000

 

 

$ 125,000

 

 

$ 300,000

 

 

 

2,000,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dr. Bruce Werber

 

$ 150,000 *

 

$ 0

 

 

$ 150,000 *

 

 

1,000,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ian Bothwell

 

$ 150,000 *

 

$ 0

 

 

$ 150,000 *

 

 

1,000,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL

 

$ 475,000

 

 

$ 125,000

 

 

$ 600,000 *

 

 

4,000,000

 

_____________

* Includes the rollover described in Section 2(b)

 

  43

 

 

EXHIBIT A

 

Form of Note

 

 

 

 

 

  44

 

 

EXHIBIT B

 

Form of Transfer Agent Instruction Letter

 

 

 

 

 

 

 

 

 

  45

 

 

EXHIBIT C

 

Intellectual Property Security Agreement

 

 

 

 

 

 

 

 

 

 

  46

 

 

EXHIBIT D

 

Subsidiary Guarantee

 

 

 

 

 

 

 

 

47