Exhibit 10.1

AMENDMENT TO SECURITIES PURCHASE AGREEMENT

This Amendment (this “Amendment”), dated April 25, 2019, amends the Securities
Purchase Agreement (the “Agreement”), dated as of March 17, 2019, by and among
Innovate Biopharmaceuticals, Inc., a Delaware corporation (the “Company”), and
each purchaser identified on the signature pages thereto (each, including its
successors and assigns, a “Purchaser” and collectively the “Purchasers”).
Capitalized terms used but not otherwise defined herein shall have the meanings
ascribed to such terms in the Agreement.

WHEREAS, Section 4.12 of the Agreement provides that, without prior written
consent of the Purchasers which purchased at least 50.1% of the initial
aggregate Subscription Amounts thereunder, except with respect to Exempt
Issuances, from the date thereof until forty-five (45) days after the Closing
Date, the Company may not (i) issue, enter into any agreement to issue or
announce the issuance or proposed issuance of any shares of Common Stock or
Common Stock Equivalents, or (ii) sell or grant any option to purchase, or
otherwise issue Common Stock or Common Stock Equivalents at an effective price
below the Per Share Purchase Price of the securities in the Agreement;

WHEREAS, the Company desires to amend the Agreement to remove Section 4.12 in
its entirety and in connection therewith has agreed to offer to each Purchaser
the opportunity to purchase additional warrants to purchase shares of Common
Stock.

WHEREAS, the undersigned Purchasers, constituting at least 50.1% of the initial
aggregate Subscription Amounts under the Agreement, are willing to amend the
Agreement to remove Section 4.12 of the Agreement in consideration for the
opportunity to purchase additional warrants to purchase shares of Common Stock;
and

WHEREAS, Section 4.13 of the Agreement provides that no consideration shall be
offered to any Purchaser to amend any provision of the Agreement unless the same
consideration is also offered to all of the Purchasers.

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Amendment, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and the undersigned
Purchasers, constituting at least 50.1% of the initial aggregate Subscription
Amounts under the Agreement, hereby agree as follows:

1.
Section 4.12 of the Agreement and the defined term “Exempt Issuance” set forth
in Section 1.1 of the Agreement are each hereby deleted in their entirety.

2.
In connection with Paragraph 1 hereof, each Purchaser shall have the right to
purchase, for $0.125 per underlying share, an additional warrant to purchase
shares of the Common Stock having an exercise price per share of $2.13 and
otherwise having the terms of the Long-Term Warrants purchased by the Purchaser
under the Agreement (collectively, the “New Warrants”). Such purchases shall be
pursuant to a Securities Purchase Agreement in substantially the form attached
hereto as Exhibit A (the “Securities Purchase Agreement”) to be entered into
among the Company and each Purchaser that desires to purchase New Warrants. Each
Purchaser executing the Securities Purchase Agreement will receive a New Warrant
for up to that number of shares of Common Stock (indicated on its signature page
to the Securities Purchase Agreement (which cannot exceed its pro rata portion
(based on the number of shares of Common Stock it purchased pursuant to the
Agreement, and rounded down to the nearest whole share) of the maximum number of
shares

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of Common Stock underlying the New Warrants that may be issued (approximately
3,900,000), as provided in the Securities Purchase Agreement).

3.
Except as provided herein, all other terms of the Agreement remain in full force
and effect.

4.
Sections 5.4, 5.6, 5.7, 5.8, 5.9, 5.11, 5.12, 5.15, 5.17, 5.19, 5.20, 5.21 and
5.22 of the Agreement shall apply mutatis mutandi to this Amendment.

[SIGNATURE PAGES FOLLOW]

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

INNOVATE BIOPHARMAECUTICALS, INC.

/s/ Sandeep Laumas, M.D.

By:     Sandeep Laumas, M.D.               
Title: Chief Executive Officer

[SIGNATURE PAGE FOR PURCHASERS FOLLOWS]

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ALPHA CAPITAL ANSALT
 
By:
Nicola Feuerstein
Its:
Director
 
Name:
_________________________________
Date:
_________________________________

    
BPY LIMITED
 
By:
Peter Poole
Its:
Director
 
Name:
_________________________________
Date:
_________________________________

ANTHONY BARRETT
 
Name:
_________________________________
Date:
_________________________________

    

JONATHAN BARRETT
 
Name:
_________________________________
Date:
_________________________________

GRANITE POINT CAPITAL PANACEA GLOBAL HEALTHCARE FUND
 
By:
R. Scott Bushley
Its:
Partner
 
Name:
/s/ R. Scott Bushley
Date:
4/25/2019

|

--------------------------------------------------------------------------------

GRAVITAS CAPITAL LP
 
By:
Vincent LoPriore
Its:
Managing Member
 
Name:
/s/ Vincent LoPriore
Date:
4/25/2019

RS IRREVOCABLE TRUST
 
By:
Chitra Shrotriya
Its:
Trustee
 
Name:
_________________________________
Date:
_________________________________

LEONARD M. SCHILLER REVOCABLE TRUST DTD. 10/3/1997
 
By:
Leonard Schiller
Its:
Trustee
 
Name:
/s/ Leonard Schiller
Date:
4/25/2019

SDS CAPITAL PARTNERS II, LLC
 
By:
Steve Derby
Its:
Managing Member
 
Name:
/s/ Steve Derby
Date:
4/25/2019

PAUL W. AND BRIDGET A. SMITH
 
Name:
_________________________________
Date:
_________________________________

--------------------------------------------------------------------------------

NORMAN SPIVOCK TRUST
 
By:
Norman Spivock
Its:
Trustee
 
Name:
/s/ Normal Spivock
Date:
4/25/2019

GSB HOLDINGS, INC.
 
By:
David H. Clarke
Its:
Vice President
 
Name:
_________________________________
Date:
_________________________________

MARILYN HEMANI
 
Name:
_________________________________
Date:
_________________________________

LANE VENTURES INC.
 
By:
Joseph Hammer
Its:
President
 
Name:
_________________________________
Date:
_________________________________

LION GATE CAPITAL
 
By:
Ken Rickel
Its:
President
 
Name:
_________________________________
Date:
_________________________________

--------------------------------------------------------------------------------

PORTER PARTNERS, LP
 
By:
Jeff Porter
Its:
General Partner
 
Name:
_________________________________
Date:
_________________________________

PRENTICE LENDING LLC
 
By:
Mark Hossein
Its:
CFO
 
Name:
_________________________________
Date:
_________________________________

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Appendix A

Form of Securities Purchase Agreement

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FORM OF
SECURITIES PURCHASE AGREEMENT

This Securities Purchase Agreement (this “Agreement”) is dated as of April _ ,
2019 (the “Effective Date”), between Innovate Biopharmaceuticals, Inc., a
Delaware corporation (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 an exemption from the registration requirements of Section 5 of the
Securities Act of 1933, as amended (the “Securities Act”) contained in Section
4(a)(2) thereof and/or Regulation D thereunder, the Company desires to issue and
sell to each Purchaser, and each Purchaser, severally and not jointly, desires
to purchase from the Company, Warrants (as defined herein) to purchase up to
3,900,000 shares of Common Stock (as defined herein) in the aggregate 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, for all purposes of this Agreement, the following terms have the
meanings set forth in this Section 1.1:
“Acquiring Person” has the meaning ascribed to such term in Section 4.5.
“Action” has 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; and the term control (including the terms controlling,
controlled by and under common control with) means the possession, direct or
indirect, of the power to direct or cause the direction of the management and
policies of a person, whether through the ownership of voting securities, by
contract, or otherwise.
“Applicable Laws” has the meaning ascribed to such term in Section 3.1(hh).
“Authorizations” has the meaning ascribed to such term in Section 3.1(hh).
“Bad Actor” has the meaning ascribed to such term in Section 3.1(pp).
“BHCA” has the meaning ascribed to such term in Section 3.1(ll).
“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.
“Buy-In Price” has the meaning ascribed to such term in Section 4.1(d).

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“Closing” means the closing of the purchase and sale of the Warrants pursuant to
Section 2.1.
“Closing Date” means the Trading Day on which this Agreement has been executed
and delivered by the applicable parties thereto, and all conditions precedent to
(i) the Purchasers’ obligations to pay the Subscription Amount and (ii) the
Company’s obligations to deliver the Warrants, in each case, have been satisfied
or waived, but in no event later than the third (3rd) Trading Day following the
date hereof.
“Code” has the meaning ascribed to such term in Section 3.1(zz).
“Commission” means the United States Securities and Exchange Commission.
“Common Stock” means the common stock of the Company, par value $0.0001 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.
“Common Stock Sales Agreement” means that certain Common Stock Sales Agreement
dated October 26, 2018, by and among the Company, H.C. Wainwright & Co., LLC and
Ladenburg Thalmann & Co. Inc.
“Company Counsel” means Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan,
L.L.P. with offices located at Wells Fargo Capitol Center, 150 Fayetteville
Street, Suite 2300, Raleigh, North Carolina 27601.
“Company Deliverables” shall have the meaning ascribed to such term in Section
2.2(a).
“Current Report” has the meaning ascribed to such term in Section 2.4.
“Disqualification Event” has the meaning ascribed to such term in Section
3.1(pp).
“Effective Date” has the meaning set forth in the preamble.
“EMA” has the meaning ascribed to such term in Section 3.1(hh).
“Environmental Claims” has the meaning ascribed to such term in Section 3.1(m).
“Environmental Laws” has the meaning ascribed to such term in Section 3.1(m).
“ERISA” has the meaning ascribed to such term in Section 3.1(zz).
“ERISA Affiliates” has the meaning ascribed to such term in Section 3.1(zz).
“Evaluation Date” has the meaning ascribed to such term in Section 3.1(s).
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.
“FCPA” means the Foreign Corrupt Practices Act of 1977, as amended.
“FDA” has the meaning ascribed to such term in Section 3.1(hh).
“Federal Reserve” has the meaning ascribed to such term in Section 3.1(ll).
“Form 10-K” means the Company’s Annual Report on Form 10-K for the year ended
December 31, 2018, filed with the Commission.

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“GAAP” has the meaning ascribed to such term in Section 3.1(h).
“Intellectual Property Assets” has the meaning ascribed to such term in Section
3.1(p).
“Intellectual Property Licensed Agreements” has the meaning ascribed to such
term in Section 3.1(p).
“Intellectual Property Rights” has the meaning ascribed to such term in Section
3.1(p).
“Investor Questionnaire” means the accredited investor questionnaire in the form
attached
“Issuer Covered Person” has the meaning ascribed to such term in Section
3.1(pp).
“Legend Removal Date” has 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.
“March SPA” means the Securities Purchase Agreement dated March 17, 2019 among
the Company and the Purchasers.
“Material Adverse Effect” has the meaning assigned to such term in Section
3.1(b).
“Materials of Environmental Concern” shall have the meaning ascribed to such
term in Section 3.1(m).
“Material Permits” has the meaning ascribed to such term in Section 3.1(n).
“Money Laundering Laws” has the meaning ascribed to such term in Section
3.1(mm).
“OFAC” has the meaning ascribed to such term in Section 3.1(jj).
“Per Share Purchase Price” has the meaning set forth in the March SPA.
“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.
“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” has the meaning ascribed to such term in Section
4.2(b).
“Public Information Failure Payment” has the meaning ascribed to such term in
Section 4.2(b).
“Purchase Price” has the meaning set forth in Section 2.1(a).
“Purchaser” has the meaning set forth in the preamble to this Agreement; it
being understood that each Purchaser hereunder was a purchaser under the March
SPA.
“Purchaser Deliverables” has the meaning ascribed to such term in Section
2.2(b).
“Purchaser Party” has the meaning ascribed to such term in Section 4.8.
“Registrable Securities” has the meaning ascribed to such term in Section
4.16(a).
“Resale Prospectus” has the meaning ascribed to such term in Section 4.16(a).
“Resale Registration Statement” has the meaning ascribed to such term in Section
4.16(a).
“Required Approvals” has the meaning ascribed to such term in Section 3.1(e).

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“Rule 144” means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended or interpreted from time to time, or
any similar rule or regulation hereafter adopted by the Commission having
substantially the same purpose and effect as such Rule.
“SEC Reports” has the meaning ascribed to such term in Section 3.1(h).
“Securities” means the Warrants and the Warrant 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 locating, reserving
and/or borrowing shares of Common Stock).
“Standard Settlement Period” shall have the meaning ascribed to such term in
Section 4.1(c).
“Subscription” means the proposed purchase by each Purchaser of Warrants
pursuant to the terms of this Agreement.
“Subscription Amount” means, as to each Purchaser, the aggregate amount to be
paid for Warrants 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.
“Subsidiary” means any subsidiary of the Company, and shall, where applicable,
also include any direct or indirect subsidiary of the Company formed or acquired
after the date hereof.
“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
American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global
Select Market, the New York Stock Exchange, OTCQB or OTCQX (or any successors to
any of the foregoing).
“Transaction Documents” means, collectively, this Agreement, the Warrants, all
exhibits and schedules thereto and hereto and any other documents or agreements
executed in connection with the transactions contemplated hereunder. Each of the
forgoing documents may be individually referred to as a “Transaction Document”.
“Transfer Agent” means Corporate Stock Transfer, Inc., the current transfer
agent of the Company, and any successor transfer agent of the Company.
“VWAP” means, for any date, the price determined by the first of the following
clauses that applies: (a) if the Common Stock 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 OTCQB or OTCQX is not a Trading Market, the volume weighted
average price of the Common Stock for such date (or the nearest preceding date)
on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed or
quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then
reported in the “Pink Sheets” published by OTC Markets Group, Inc. (or a similar
organization or agency succeeding to its functions of reporting prices), the
most recent bid price per share of 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.

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“Warrant Delivery Date” has the meaning set forth in Section 2.1(b).
“Warrant Shares” means the shares of Common Stock issuable upon exercise of the
Warrants.
“Warrants” means the Common Stock purchase warrants in the form of Exhibit A
hereto delivered to the Purchasers in accordance with Section 2.2(a) hereof,
which Warrants (i) shall be exercisable commencing on the six-month anniversary
of the Closing Date, (ii) have a term ending on the 5th anniversary of the
Closing Date and (iii) have an exercise price of $2.13 per Warrant Share.
“WMD” means Wollmuth Maher & Deutsch LLP, with offices at 500 Fifth Avenue, New
York, NY 10110.

ARTICLE II.
PURCHASE AND SALE; CLOSING

2.1 Purchase, Sale and Closing.
(a)Purchase and Sale. Subject to the terms and conditions set forth in this
Agreement, the Company agrees to sell, and the Purchasers agree to purchase,
Warrants to purchase up to 3,900,000 shares of Common Stock in the aggregate at
the purchase price of $0.125 per Warrant Share (the “Purchase Price”).
(b)Closing. On the Closing Date, upon the terms and subject to the conditions
set forth herein, the Company agrees to sell to each Purchaser, and each
Purchaser, severally and not jointly, agrees to purchase from the Company, at
the Purchase Price, a Warrant to purchase up to that number of Warrant Shares
set forth below such Purchaser’s name on the signature page hereto executed by
such Purchaser; provided that the maximum number of Warrant Shares that may be
issued upon exercise of a Purchaser’s Warrant shall not exceed 93.2776% (rounded
down to the nearest whole share) of the number of shares of Common Stock
purchased by such Purchaser pursuant to the March SPA. Each Purchaser’s
Subscription Amount as set forth on the signature page hereto executed by such
Purchaser shall be wired following Purchaser’s receipt of the Company
Deliverables subject to the terms set forth in Section 2.2(a) to the account
specified in writing by the Company. The Company reserves the right to accept or
reject all or any portion of a Purchaser’s Subscription in its sole discretion.
If a Purchaser’s Subscription is rejected in whole or in part, that Purchaser’s
Subscription Amount with respect to the rejected portion will be promptly
returned to such Purchaser. With respect to each accepted Subscription,
effective as of the Closing, the Company shall deliver to each Purchaser its
respective Warrants as determined pursuant to Section 2.1(a), such delivery to
be made within three (3) Business Days following the Closing (the “Warrant
Delivery Date”) by express mail service or other overnight courier and the
Company and each such Purchaser shall deliver the other items set forth in
Section 2.2 deliverable at the Closing. Upon satisfaction of the covenants and
conditions set forth in Sections 2.2 and 2.3, the Closing shall occur at the
offices of WMD or such other location as the parties shall mutually agree.
2.2     Deliveries.
    (a) On or prior to the Closing Date (or Warrant Delivery Date with respect
to item (iii) below, the Company shall deliver or cause to be delivered to each
Purchaser whose subscription is accepted the following (the “Company
Deliverables”):
(i)     this Agreement duly executed by the Company;

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(ii)     a legal opinion of Company Counsel, opining with respect to
substantially the matters set forth in Exhibit B attached hereto;
(iii)     a Warrant registered in the name of such Purchaser to purchase the
number of Warrants Shares set forth under the name of such Purchaser on the
signature pages hereto;
(iv)     a certificate executed by an executive officer of the Company to the
effect set forth in Section 2.3(b)(i), (ii) and (iv); and
(vi)     a certificate of the Secretary of the Company certifying as to, among
other things, the certificate of incorporation and by-laws of the Company and
the resolutions of the Board relating to the transactions contemplated by this
Agreement and the Transactions Documents; and
    (b) On or prior to the Closing Date, each Purchaser shall deliver or cause
to be delivered to the Company, the following (the “Purchaser Deliverables”):
        (i)     this Agreement duly executed by such Purchaser;
(ii)    a completed and executed Investor Questionnaire; and
(iii)    such Purchaser’s Subscription Amount, which shall be by wire transfer
pursuant to wire instructions to be provided by the Company to Purchaser prior
to Closing.
    2.3    Closing Conditions.
    (a) The obligations of the Company hereunder in connection with the Closing
are subject to the following conditions being met:
(i) the accuracy in all material respects (or, to the extent representations or
warranties are qualified by materiality or Material Adverse Effect, in all
respects) on the 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 the Closing Date shall have been performed; and
(iii)     the delivery by each Purchaser of the items set forth in Section
2.2(b) of this Agreement.
    (b) The respective obligations of the Purchasers hereunder in connection
with the Closing are subject to the following conditions being met:
(i)    the accuracy in all material respects (or, to the extent representations
or warranties are qualified by materiality or Material Adverse Effect, in all
respects) when made and on the Closing Date of the representations and
warranties of the Company 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 the Company required to be
performed at or prior to the Closing Date shall have been performed;
(iii)     the delivery by the Company of the items set forth in Section 2.2(a)
of this Agreement;
(iv)     there shall have been no Material Adverse Effect with respect to the
Company since December 31, 2018; and
(v)     from the date hereof to the Closing Date, trading in the Common Stock
shall not have been suspended by the Commission or the Company’s principal
Trading Market, and, at any time

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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 Closing.
(c)    Provided that the Company and Purchaser have satisfied all conditions set
forth in this Section 2.3, the Purchaser’s Subscription Amount shall be
delivered to the Company by each Purchaser as provided in Section 2.2(b)(iii).
In the event that a Closing does not occur with respect to any Purchaser, such
Purchaser’s funds will be returned by the Company to such Purchaser.
2.4 Current Report. As soon as practicable, but in any event not later than 5:30
p.m. (New York City time) on the first Trading Day immediately following the
Closing Date, the Company shall file with the Commission (i) a report on Form
8-K relating to the transactions contemplated by, and describing the material
terms and conditions of, this Agreement (the “Current Report”). The Current
Report shall include a copy of this Agreement as an exhibit.
2.5 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 of the obligations of any other Purchaser under any
Transaction Document. Nothing contained herein or in any Transaction Document,
and no action taken by any Purchaser pursuant 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
acknowledges that no other Purchaser has acted as agent for such Purchaser in
connection with making its investment hereunder and that no Purchaser will be
acting as agent of such Purchaser in connection with monitoring its investment
in the Securities or enforcing its rights under 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.
2.6 Acceptance or Rejection of Subscription. Each Purchaser understands and
agrees that the Company reserves the right, in its sole discretion, to reject
any Purchaser’s Subscription, in whole until there has been notice of acceptance
of the Purchaser’s subscription, if (a) the Purchaser is not an “accredited
investor” as determined by the Company in its reasonable discretion, (b) the
Purchaser fails to deliver payment of the Subscription Amount, or (c) the
Purchaser fails to deliver the completed Purchaser Deliverables. In the event of
a rejection, in whole or in part, of a Subscription, the Purchaser’s
Subscription Amount (without interest) will be promptly, but in no event later
than three (3) Business Days, returned to the Purchaser in immediately available
funds.

ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1     Representations and Warranties of the Company. The Company hereby makes
the following representations and warranties to each Purchaser:

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(a)Subsidiaries. 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. If the Company has
no subsidiaries, all other references to the Subsidiaries or any of them in the
Transaction Documents shall be disregarded.
(b)Organization and Qualification. 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, would 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, or financial condition 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.
(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, anti-
dilution or similar adjustments, 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

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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 would 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 4.4 of this Agreement, (ii)
application(s) to each applicable Trading Market for the listing of the Warrant
Shares for trading thereon, (iii) the notices, forms, and authorizations as may
be required by the Transfer Agent and The Depository Trust & Clearing
Corporation in connection with the transactions contemplated by the Transaction
Documents, and (iv) 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 Warrant Shares. The Warrant Shares, when issued in accordance
with the terms of the Warrants upon payment of the exercise price thereof, will
be validly issued, fully paid and nonassessable, free and clear of all Liens
imposed by the Company and the issuance of such Warrant Shares is not subject to
any preemptive or other similar rights. The Company has reserved from its duly
authorized capital stock the maximum number of shares of Common Stock issuable
pursuant to the Warrants.
(g)Capitalization. The authorized and outstanding Capital Stock of the Company
as of the date hereof is (i) an aggregate of ____ shares of Common Stock, of
which ____ shares are issued and outstanding, ____ shares are reserved for
issuance upon exercise or conversion of issued and outstanding options,
warrants, restricted stock, convertible securities and other derivative
securities (excluding the Warrants), ____ shares are reserved for issuance to
employees, officers and directors under the Company’s 2012 Omnibus Incentive
Plan, as amended, and ____ shares are reserved for issuance upon exercise of the
Warrants, and (ii) an aggregate of _____ shares of Preferred Stock, none of
which is issued and outstanding. The Company has not issued any capital stock
since December 31, 2018, other than (i) shares of Common Stock and warrants sold
pursuant to the March SPA; (ii) pursuant to the exercise of employee stock
options under the Company’s stock option plans, the issuance of shares of Common
Stock to employees pursuant to the Company’s employee stock purchase plans,
pursuant to the conversion and/or exercise of Common Stock Equivalents
outstanding as of the date of the most recently filed periodic report under the
Exchange Act; and (iii) pursuant to the Common Stock Sales Agreement. 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 (i) as disclosed in the Form 10-K and in the Company’s Current
Report on Form 8-K filed with the Commission on March 19, 2019, (ii) pursuant to
stock options outstanding on the date hereof granted pursuant to the Company’s
equity incentive plan, or (iii) as a result of the purchase and sale of the
Warrants, 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 the capital stock of any Subsidiary, 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 or capital stock of any Subsidiary. The issuance and sale of the
Securities will not obligate the Company or any Subsidiary to issue shares of
Common Stock or other securities to any Person (other than the Purchasers).
Except as disclosed in the Form 10-K and in the Company’s Current Report on Form
8-K filed with the Commission on March 19, 2019, there are no outstanding
securities or instruments of the Company or any Subsidiary with any provision
that adjusts the exercise, conversion,

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exchange or reset price of such security or instrument upon an issuance of
securities by the Company or any Subsidiary. Except as disclosed in the Form
10-K, there are no outstanding securities or instruments of the Company or any
Subsidiary that contain any redemption or similar provisions, and there are no
contracts, commitments, understandings or arrangements by which the Company or
any Subsidiary is or may become bound to redeem a security of the Company or
such Subsidiary. The Company does not have any stock appreciation rights or
“phantom stock” plans or agreements or any similar plan or agreement. 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. 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. The Company has filed all periodic and
other 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 one year 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
or waiver of such time of filing and has filed any such SEC Reports prior to the
expiration of any such extension. As of their respective dates, the SEC Reports
complied in all material respects with the requirements of the Securities Act
and the Exchange Act, as applicable, and none of the SEC Reports, when filed,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. The Company has never been an issuer subject to Rule 144(i) under
the Securities Act. The financial statements, together with the related notes
and schedules of the Company filed with the Commission as a part of 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. The supporting schedules included or incorporated by reference in
the SEC Reports present fairly the information required to be stated therein.
(i)Material Changes; Undisclosed Events, Liabilities or Developments. Since
December 31, 2018, (i) there has been no event, occurrence or development that
has had or that would reasonably be expected to result in a Material Adverse
Effect, (ii) 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, (iii) the Company has not
altered its method of accounting, (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, no event, liability, fact,
circumstance, occurrence or development

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has occurred or exists or is reasonably expected to occur or exist with respect
to the Company or its Subsidiaries or their respective businesses, prospects,
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 otherwise disclosed in the Form 10-K, 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 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, (ii) has as the subject thereof
any officer or director of, or property owned or leased by, the Company or any
of its Subsidiaries, (iii) relates to environmental or discriminatory matters,
(iv) relates to any labor dispute with the employees of the Company or any of
its Subsidiaries, or (v) could, if there were an unfavorable decision, have or
reasonably be expected to result in a Material Adverse Effect. Except as
otherwise disclosed in the Form 10-K, 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. To the knowledge of the Company,
there has not been and 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.
(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, to the knowledge of the Company, 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. 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. Neither the Company nor any Subsidiary: (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 would not have or
reasonably be expected to result in a Material Adverse Effect.

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(m)Compliance with Environmental Laws. Except as otherwise described in the Form
10-K, and except as would not, individually or in the aggregate, result in a
Material Adverse Effect (i) neither the Company nor any of its Subsidiaries is
in violation of any federal, state, local or foreign law or regulation relating
to pollution or protection of human health or the environment (including,
without limitation, ambient air, surface water, groundwater, land surface or
subsurface strata) or wildlife, including without limitation, laws and
regulations relating to emissions, discharges, releases or threatened releases
of chemicals, pollutants, contaminants, wastes, toxic substances, hazardous
substances, petroleum and petroleum products (collectively, “Materials of
Environmental Concern”), or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Materials of Environmental Concern (collectively, “Environmental Laws”), which
violation includes, but is not limited to, noncompliance with any permits or
other governmental authorizations required for the operation of the business of
the Company or its Subsidiaries under applicable Environmental Laws, or
noncompliance with the terms and conditions thereof, nor has the Company or any
of its Subsidiaries received any written communication, whether from a
governmental authority, citizens group, employee or otherwise, that alleges that
the Company or any of its Subsidiaries is in violation of any Environmental Law;
(ii) there is no claim, action or cause of action filed with a court or
governmental authority, no investigation with respect to which the Company has
received written notice, and no written notice received by the Company from any
person or entity alleging potential liability for investigatory costs, cleanup
costs, governmental responses costs, natural resources damages, property
damages, personal injuries, attorneys’ fees or penalties arising out of, based
on or resulting from the presence, or release into the environment, of any
Material of Environmental Concern at any location owned, leased or operated by
the Company or any of its subsidiaries, now or in the past (collectively,
“Environmental Claims”), pending or, to the Company’s knowledge, threatened
against the Company or any of its Subsidiaries or any person or entity whose
liability for any Environmental Claim the Company or any of its Subsidiaries has
retained or assumed either contractually or by operation of law; and (iii) to
the Company’s knowledge, there are no past or present actions, activities,
circumstances, conditions, events or incidents, including, without limitation,
the release, emission, discharge, presence or disposal of any Material of
Environmental Concern, that reasonably could result in a violation of any
Environmental Law or form the basis of a potential Environmental Claim against
the Company or any of its Subsidiaries or against any person or entity whose
liability for any Environmental Claim the Company or any of its Subsidiaries has
retained or assumed either contractually or by operation of law.
(n)Regulatory Permits. 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 would 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.
(o)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
in all material respects.
(p)Intellectual Property. Except as disclosed in the Form 10-K, the Company and
its Subsidiaries own

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or possess the valid right to use all (i) valid and enforceable patents, patent
applications, trademarks, trademark registrations, service marks, service mark
registrations, Internet domain name registrations, copyrights, copyright
registrations, licenses and trade secret rights (“Intellectual Property Rights”)
and (ii) inventions, software, works of authorships, trademarks, service marks,
trade names, databases, formulae, know how, Internet domain names and other
intellectual property (including trade secrets and other unpatented and/or
unpatentable proprietary confidential information, systems, or procedures)
(collectively, “Intellectual Property Assets”) necessary to conduct their
respective businesses as currently conducted, except to the extent that the
failure to own, possess, license or have other rights to use such Intellectual
Property Rights or Intellectual Property Assets would not, individually or in
the aggregate, reasonably be expected to result in a Material Adverse Effect.
The Company and its Subsidiaries have not received any opinion from their legal
counsel concluding that any activities of their respective businesses infringe,
misappropriate, or otherwise violate, valid and enforceable Intellectual
Property Rights of any other person, and have not received written notice of any
challenge, which is to their knowledge still pending, by any other person to the
rights of the Company and its Subsidiaries with respect to any Intellectual
Property Rights or Intellectual Property Assets owned or used by the Company or
its Subsidiaries. To the knowledge of the Company, the Company and its
Subsidiaries’ respective businesses as now conducted do not constitute
infringement of, misappropriation of, or other violation of, any valid and
enforceable Intellectual Property Rights of any other person. All licenses for
the use of the Intellectual Property Rights described in the Form 10-K to which
the Company is a party are, to the Company’s knowledge, valid, binding upon, and
enforceable by or against the parties thereto in accordance with their terms.
The Company has complied in all material respects with, and is not in material
breach nor has received any written notice of any asserted or threatened claim
of breach of, any license agreement pursuant to which Intellectual Property
Rights have been licensed to or by the Company (the “Intellectual Property
Licensed Agreements”), and the Company has no knowledge of any material breach
by any other person to any Intellectual Property License Agreement. Except as
described in the Form 10-K, no claim has been made in writing against the
Company alleging the infringement by the Company of any patent, trademark,
service mark, trade name, copyright, trade secret, license in or other
intellectual property right or franchise right of any person. The Company has
taken all reasonable steps to protect, maintain and safeguard its Intellectual
Property Rights and Intellectual Property Assets, including the execution of
appropriate nondisclosure and confidentiality agreements. The consummation of
the transactions contemplated by this Agreement will not result in the loss or
impairment of or payment of any additional amounts with respect to, nor require
the consent of any other person in respect of, the Company’s right to own, use,
or hold for use any of the Intellectual Property Rights as owned, used or held
by the Company for use in the conduct of the business as currently conducted.
(q)Insurance. The Company and the Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which the Company and
the Subsidiaries are engaged, including, but not limited to, directors and
officers insurance coverage at least equal to the aggregate Subscription Amount.
Neither the Company nor any Subsidiary has any reason to believe that it will
not be able to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be necessary
to continue its business without a significant increase in cost.
(r)Transactions With Affiliates and Employees. 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,

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in each case in excess of $100,000 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. There are no
business relationships or related-party transactions, as defined in Item 404 of
Regulation S-K under the Exchange Act, involving the Company or any subsidiary
or any other person required to be described in the Form 10-K which have not
been described as required.
(s)Sarbanes-Oxley; Internal Accounting Controls; Disclosure Controls. Except as
disclosed in the Form 10-K, the Company and the Subsidiaries are in material
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 Closing Date. The Company and the Subsidiaries
maintain system of “internal control over financial reporting” (as such term is
defined in Rule 13a-15(f) of the General Rules and Regulations under the
Exchange Act that complies with the requirements of the Exchange Act and has
been designed by its principal executive and principal financial officers, or
under their supervision, to provide reasonable assurance that: (i) transactions
are executed in accordance with management’s general or specific authorizations,
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain asset accountability, (iii)
access to assets is permitted only in accordance with management’s general or
specific authorization, and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences. Except as described in the Form 10-K,
since the end of the Company’s most recent audited fiscal year, there has been
(A) no material weakness in the Company’s internal control over financial
reporting (whether or not remediated) and (B) no change in the Company’s
internal control over financial reporting that has materially affected, or is
reasonably likely to materially affect, the Company’s internal control over
financial reporting. The Company and the Subsidiaries have established
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) for the Company and the Subsidiaries and designed such disclosure
controls and procedures to ensure that information required to be disclosed by
the Company in the reports it files or submits under the Exchange Act is
recorded, processed, summarized and reported, within the time periods specified
in the Commission’s rules and forms. The Company’s certifying officers have
evaluated the effectiveness of the disclosure controls and procedures of the
Company and the Subsidiaries as of the end of the period covered by the most
recently filed periodic report under the Exchange Act (such date, the
“Evaluation Date”). The Company presented in its most recently filed periodic
report under the Exchange Act the conclusions of the certifying officers about
the effectiveness of the disclosure controls and procedures based on their
evaluations as of the Evaluation Date.
(t)Certain Fees. No brokerage or finder’s fees or commissions are or will be
payable by the Company or any Subsidiary 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 3.1(t) that may be due in connection with the transactions
contemplated by the Transaction Documents.
(u)Investment Company. The Company is not, and is not an Affiliate of, and
immediately after receipt of payment for the Warrants, 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.
(v)Registration Rights. Except as provided in Section 4.16 herein, in Section
4.16 of the March SPA, no Person has any right to cause the Company or any
Subsidiary to effect the registration under the Securities

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Act of any securities of the Company or any Subsidiary.
(w)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 as disclosed in the Form 10-K, 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. The Common Stock is
currently eligible for electronic transfer through the Depository Trust Company
or another established clearing corporation and the Company is current in
payment of the fees to the Depository Trust Company (or such other established
clearing corporation) in connection with such electronic transfer.
(x)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.
(y)Disclosure. Except with respect to the material terms and conditions of the
transactions contemplated by the Transaction Documents, the Company confirms
that neither it 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 would reasonably be expected to constitute material, non-public
information which is not otherwise disclosed in the Form 10-K. 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, 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 the 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 the 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.
(z)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
(i) for purposes of the Securities Act which would require the registration of
the Warrants or Warrant Shares under the Securities Act, or (ii) that would
require any shareholder approval for purposes of the rules and regulations of
any Trading Market on which any of the securities of the Company are listed or
designated.
(aa) Solvency. Based on the consolidated financial condition of the Company as
of the Closing Date,

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after giving effect to the receipt by the Company of the proceeds from the sale
of the hereunder, (i) the fair saleable value of the Company’s assets exceeds
the amount that will be required to be paid on or in respect of the Company’s
existing debts and other liabilities (including known contingent liabilities) as
they mature, (ii) the Company’s assets do not constitute unreasonably small
capital to carry on its business as now conducted and as proposed to be
conducted including its capital needs taking into account the particular capital
requirements of the business conducted by the Company, consolidated and
projected capital requirements and capital availability thereof, and (iii) the
current cash flow of the Company, together with the proceeds the Company would
receive, were it to liquidate all of its assets, after taking into account all
anticipated uses of the cash, would be sufficient to pay all amounts on or in
respect of its liabilities when such amounts are required to be paid. The
Company does not intend to incur debts beyond its ability to pay such debts as
they mature (taking into account the timing and amounts of cash to be payable on
or in respect of its debt). The Company has no knowledge of any facts or
circumstances which lead it to believe that it will file for reorganization or
liquidation under the bankruptcy or reorganization laws of any jurisdiction
within one year from the Closing Date.
(bb) Tax Status. Except for matters that would not, individually or in the
aggregate, have or reasonably be expected to result in a Material Adverse
Effect, the Company 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. The Company has made adequate charges, accruals
and reserves in the applicable financial statements referred to in Section
3.1(h) above in respect of all federal, state and foreign income, property and
franchise taxes for all periods as to which the tax liability of the Company or
any of its consolidated Subsidiaries has not been finally determined.
(cc) 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.
(dd) Accountants. CBIZ MHM, LLC, who has expressed its opinion with respect to
the financial statements (which term as used in this Agreement includes the
related notes thereto) and supporting schedules included in the Form 10-K is a
registered public accounting firm as required by the Securities Act and the
Exchange Act.
(ee) Acknowledgment Regarding Purchasers’ Purchase of Securities. The Company
acknowledges and agrees that each of the Purchasers is acting solely in the
capacity of an arm’s length purchaser with respect to the Transaction Documents
and the transactions contemplated thereby. The Company further acknowledges that
no Purchaser is acting as a financial advisor or fiduciary of the Company (or in
any similar capacity) with respect to the Transaction Documents and the
transactions contemplated thereby and any advice given by any Purchaser or any
of their respective representatives or agents in connection with the Transaction
Documents and the transactions contemplated thereby is merely incidental to the
Purchasers’ purchase of

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the Securities. The Company further represents to each Purchaser that the
Company’s decision to enter into this Agreement and the other Transaction
Documents has been based solely on the independent evaluation of the
transactions contemplated hereby by the Company and its representatives.
(ff) Acknowledgment Regarding Purchaser’s Trading Activity. Anything in this
Agreement or elsewhere herein to the contrary notwithstanding (except for
Sections 3.2(f) and 4.14 hereof), it is understood and acknowledged by the
Company that, (i) none of the Purchasers has been asked by the Company to agree,
nor has any Purchaser agreed, to desist from purchasing or selling, long and/or
short, securities of the Company, or “derivative” securities based on securities
issued by the Company or to hold the Securities for any specified term, (ii)
past or future open market or other transactions by any Purchaser, specifically
including, without limitation, Short Sales or “derivative” transactions, before
or after the closing of this or future private placement transactions, may
negatively impact the market price of the Company’s publicly-traded securities,
(iii) any Purchaser, and counter-parties in “derivative” transactions to which
any such Purchaser is a party, directly or indirectly, presently may have a
“short” position in the Common Stock, and (iv) each Purchaser shall not be
deemed to have any affiliation with or control over any arm’s length
counter-party in any “derivative” transaction. The Company further understands
and acknowledges that (y) one or more Purchasers may engage in hedging
activities at various times during the period that the Securities are
outstanding, and (z) such hedging activities (if any) could reduce the value of
the existing stockholders’ equity interests in the Company at and after the time
that the hedging activities are being conducted. Subject to compliance with
Sections 3.2(f) and 4.14 hereof, the Company acknowledges that such
aforementioned hedging activities do not constitute a breach of any of the
Transaction Documents.
(gg) 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.
(hh) Compliance with Applicable Laws. The Company and the Subsidiaries: (A) are
and at all times have been in material compliance with all statutes, rules and
regulations applicable to the ownership, testing, development, manufacture,
packaging, processing, use, distribution, marketing, labeling, promotion, sale,
offer for sale, storage, import, export or disposal of any product under
development, manufactured or distributed by the Company or the Subsidiaries
(“Applicable Laws”), (B) have not received any Form 483 from the United States
Food and Drug Administration (“FDA”), notice of adverse finding, warning letter,
or other written correspondence or notice from the FDA, European Medicines
Agency “EMA”), or any other federal, state, local or foreign governmental or
regulatory authority alleging or asserting material noncompliance with any
Applicable Laws or with any licenses, certificates, approvals, clearances,
authorizations, permits and supplements or amendments thereto required by any
such Applicable Laws (“Authorizations”), which would, individually or in the
aggregate, result in a Material Adverse Effect; (C) possess all material
Authorizations and such Authorizations are valid and in full force and effect
and neither the Company nor the Subsidiaries is in material violation of any
term of any such Authorizations; (D) have not received written notice of any
claim, action, suit, proceeding, hearing, enforcement, investigation,
arbitration or other action from the FDA, the EMA, or any other federal, state,
local or foreign governmental or regulatory authority or third party alleging
that any Company product, operation or activity is in material violation of any
Applicable Laws or Authorizations and have no knowledge that the FDA, the EMA,
or any other any federal, state, local or foreign governmental or regulatory
authority or third party is considering any such claim, litigation, arbitration,
action, suit, investigation or proceeding against the Company; (E) have not
received notice that the FDA, the EMA, or any other federal, state, local or
foreign governmental or regulatory authority has taken, is taking or intends to
take action to limit, suspend, modify or revoke any

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material Authorizations and have no knowledge that the FDA, the EMA, or any
other federal, state, local or foreign governmental or regulatory authority is
considering such action; and (F) have filed, obtained, maintained or submitted
all reports, documents, forms, notices, applications, records, claims,
submissions and supplements or amendments as required by any Applicable Laws or
Authorizations except where the failure to file such reports, documents, forms,
notices, applications, records, claims, submissions and supplements or
amendments would not result in a Material Adverse Effect, and that all such
reports, documents, forms, notices, applications, records, claims, submissions
and supplements or amendments were materially complete and correct on the date
filed (or were corrected or supplemented by a subsequent submission).
(ii) Stock Option Plans. Each stock option granted by the Company under the
Company’s stock option plan was granted (i) in accordance with the terms of the
Company’s stock option plan and (ii) with an exercise price at least equal to
the fair market value of the Common Stock on the date such stock option would be
considered granted under GAAP and applicable law. No stock option granted under
the Company’s stock option plan has been backdated. The Company has not
knowingly granted, and there is no and has been no Company policy or practice to
knowingly grant, stock options prior to, or otherwise knowingly coordinate the
grant of stock options with, the release or other public announcement of
material information regarding the Company or its Subsidiaries or their
financial results or prospects.
(jj) 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”).
(kk) U.S. Real Property Holding Corporation. The Company is not and has never
been a U.S. real property holding corporation within the meaning of Section 897
of the Internal Revenue Code of 1986, as amended, and the Company shall so
certify upon Purchaser’s request.
(ll) Bank Holding Company Act. Neither the Company nor any of its Subsidiaries
or Affiliates is subject to the Bank Holding Company Act of 1956, as amended
(the “BHCA”) and to regulation by the Board of Governors of the Federal Reserve
System (the “Federal Reserve”). Neither the Company nor any of its Subsidiaries
or Affiliates owns or controls, directly or indirectly, five percent (5%) or
more of the outstanding shares of any class of voting securities or twenty-five
percent or more of the total equity of a bank or any entity that is subject to
the BHCA and to regulation by the Federal Reserve. Neither the Company nor any
of its Subsidiaries or Affiliates exercises a controlling influence over the
management or policies of a bank or any entity that is subject to the BHCA and
to regulation by the Federal Reserve.
(mm) Money Laundering. 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 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.
(nn) Private Placement of Warrants. Assuming the accuracy of the Purchasers’
representations and warranties made by the Purchasers pursuant to this
Agreement, no registration under the Securities Act is required for the offer
and sale of the Warrants or the Warrant Shares by the Company to the Purchasers
as contemplated hereby.
(oo) No General Solicitation. Neither the Company nor any Person acting on
behalf of the Company or

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any of its Affiliates has offered or sold any of the Warrants or Warrant Shares
by any form of “general solicitation” or “general advertising” as such terms are
defined in Regulation D promulgated under the Securities Act. The Company has
offered the Warrants and Warrant Shares for sale only to the Purchasers and
certain other “accredited investors” within the meaning of Rule 501 of
Regulation D under the Securities Act.
(pp) No Disqualification Events. With respect to the Warrant and Warrant Shares
to be offered and sold hereunder in reliance on Rule 506 under the Securities
Act, none of the Company, any of its predecessors, any affiliated issuer, any
director, executive officer, other officer of the Company participating in the
offering hereunder, any beneficial owner of 20% or more of the Company’s
outstanding voting equity securities, calculated on the basis of voting power,
nor 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 (each, an “Issuer
Covered Person”) is subject to any of the “Bad Actor” disqualifications
described in Rule 506(d)(1)(i) to (viii) under the Securities Act (a
“Disqualification Event”), except for a Disqualification Event covered by Rule
506(d)(2) or (d)(3). The Company has exercised reasonable care to determine
whether any Issuer Covered Person is subject to a Disqualification Event. The
Company has complied, to the extent applicable, with its disclosure obligations
under Rule 506(e), and has furnished to the Purchasers a copy of any disclosures
provided thereunder.
(qq) Other Covered Persons. The Company is not aware of any person (other than
any Issuer Covered Person) that has been or will be paid (directly or
indirectly) remuneration for solicitation of purchasers in connection with the
sale of any Securities.
(rr) Notice of Disqualification Events. The Company will notify the Purchasers
in writing, prior to the Closing Date of (i) any Disqualification Event relating
to any Issuer Covered Person and (ii) any event that would, with the passage of
time, reasonably be expected to become a Disqualification Event relating to any
Issuer Covered Person, in each case of which it is aware.
(ss) Not an Ineligible Issuer. The Company currently is not an “ineligible
issuer,” as defined in Rule 405 of the rules and regulation of the Commission.
(tt) Distribution of Offering Material by the Company. The Company has not
distributed and will not distribute, prior to the Closing, any offering material
in connection with the offering and sale of the Securities.
(uu) XBRL. The interactive data in eXtensible Business Reporting Language
included in the SEC Reports fairly presents the information called for in all
material respects and has been prepared in accordance with the Commission’s
rules and guidelines applicable thereto.
(vv) Statistical and Market-Related Data. The statistical, demographic and
market- related data included or incorporated by reference in the Form 10-K, as
of the date or dates to which they speak, are based on or derived from sources
that the Company believes to be reliable and accurate or represent the Company’s
good faith estimates that are made on the basis of data derived from such
sources.
(ww) No Outstanding Loans or Other Indebtedness. Except as described in the Form
10-K, there are no outstanding loans, advances (except normal advances for
business expenses in the ordinary course of business) or guarantees or
indebtedness by the Company to or for the benefit of any of the officers or
directors of the Company or any of the immediate family members of any of them.
(xx) Clinical Studies. All animal and other preclinical studies and clinical
trials conducted by the Company or on behalf of the Company were, and, if still
pending are, to the Company’s knowledge, being conducted in compliance with all
Applicable Laws and in accordance with experimental protocols, procedures and
controls generally used by qualified experts in the preclinical study and
clinical trials of new drugs,

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biologics, medical devices and drug-device combination products as applied to
comparable products to those being developed by the Company, except for such
noncompliance that would not reasonably be expected to result in a Material
Adverse Effect; the descriptions of the results of such preclinical studies and
clinical trials contained in the SEC Reports are accurate in all material
respects, and, except as set forth in the SEC Reports, the Company has no
knowledge of any other clinical trials or preclinical studies, the results of
which reasonably call into question the clinical trial or preclinical study
results described or referred to in the SEC Reports when viewed in the context
in which such results are described; and the Company has not received any
written notices or correspondence from any domestic or foreign governmental
agency requiring the termination or suspension of any preclinical studies or
clinical trials conducted by or on behalf of the Company that are described in
the SEC Reports or the results of which are referred to in the SEC Reports.
(yy) Compliance Program. The Company has established and administers a
compliance program applicable to the Company, to assist the Company and the
officers and employees of the Company in complying with applicable regulatory
guidelines (including, without limitation, those administered by the FDA, the
EMA, and any other foreign, federal, state or local governmental or regulatory
authority performing functions similar to those performed by the FDA or EMA);
except where such noncompliance would not reasonably be expected to result in a
Material Adverse Effect.
(zz) ERISA Compliance. The Company and its Subsidiaries and any “employee
benefit plan” (as defined under the Employee Retirement Income Security Act of
1974, as amended, and the regulations and published interpretations thereunder
(collectively, “ERISA”)) established or maintained by the Company, its
Subsidiaries or their “ERISA Affiliates” (as defined below) are, to their
knowledge, in compliance in all material respects with ERISA. “ERISA Affiliate”
means, with respect to the Company or a Subsidiary, any member of any group of
organizations described in Sections 414(b), (c),(m) or (o) of the Internal
Revenue Code of 1986, as amended, and the regulations and published
interpretations thereunder (the “Code”) of which the Company or such Subsidiary
is a member. Except as described in the Form 10-K, no “reportable event” (as
defined under ERISA) has occurred or is reasonably expected to occur with
respect to any “employee benefit plan” established or maintained by the Company,
its Subsidiaries or any of their ERISA Affiliates. Except as described in the
Form 10-K, no “employee benefit plan” established or maintained by the Company,
its Subsidiaries or any of their ERISA Affiliates, if such “employee benefit
plan” were terminated, would have any “amount of unfunded benefit liabilities”
(as defined under ERISA). Except as described in the Form 10-K, neither the
Company, its Subsidiaries nor any of their ERISA Affiliates has incurred or
reasonably expects to incur any liability under (i) Title IV of ERISA with
respect to termination of, or withdrawal from, any “employee benefit plan” or
(ii) Sections 412, 4971, 4975 or 4980B of the Code. Each “employee benefit plan”
established or maintained by the Company, its Subsidiaries or any of their ERISA
Affiliates that is intended to be qualified under Section 401(a) of the Code is
so qualified and, except as described in the Form 10-K, nothing has occurred,
whether by action or failure to act, which would reasonably be expected to
result in the loss of such qualification.
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 Closing Date to the Company as follows (unless as of a
specific date therein, in which case they shall be accurate as of such date):
(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

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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.
(b)Understandings or Arrangements. Such Purchaser is acquiring the Securities as
principal for its own account and has no direct or indirect arrangement or
understandings with any other persons to distribute or regarding the
distribution of such Securities (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. Such Purchaser understands
that the Warrants and the Warrant Shares are “restricted securities” and have
not been registered under the Securities Act or any applicable state securities
law and is acquiring such Securities as principal for his, her or 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 such Securities
pursuant to a registration statement or otherwise in compliance with applicable
federal and state securities laws).
(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 exercises any
Warrants, it will be either: (i) an “accredited investor” as defined in Rule
501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act or (ii) a
“qualified institutional buyer” as defined in Rule 144A(a) 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)Access to Information. Such Purchaser acknowledges that it has had the
opportunity to review the Transaction Documents (including all exhibits and
schedules thereto) and the SEC Reports and has been afforded, (i) the
opportunity to ask such questions as it has deemed necessary of, and to receive
answers from, representatives of the Company concerning the terms and conditions
of the offering of the Securities and the merits and risks of investing in the
Securities, (ii) access to information about the Company and its financial
condition, results of operations, business, properties, management and prospects
sufficient to enable it to evaluate its investment, and (iii) the opportunity to
obtain such additional information that the Company possesses or can acquire
without unreasonable effort or expense that is necessary to make an informed
investment decision with respect to the investment.
(f)Certain Transactions and Confidentiality. Other than consummating the
transactions contemplated hereunder, such Purchaser has not, nor has any Person
acting on behalf of or pursuant to any understanding with such Purchaser,
directly or indirectly 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

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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
or to such Purchaser’s representatives, including, without limitation, its
officers, directors, partners, legal and other advisors, employees, agents and
Affiliates who have needed to know such information in connection with this
transaction, 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). Notwithstanding the foregoing, for the
avoidance of doubt, nothing contained herein shall constitute a representation
or warranty, or preclude any actions, with respect to locating, reserving or
borrowing shares in order to effect Short Sales or similar transactions in the
future.
(g)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, to the
knowledge of such Purchaser, any other “general solicitation” or “general
advertisings” as such terms are defined in Regulation D.
The Company acknowledges and agrees that the representations contained in this
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 transactions contemplated hereby.
Notwithstanding the foregoing, for the avoidance of doubt, nothing contained
herein shall constitute a representation or warranty, or preclude any actions,
with respect to locating, reserving or borrowing shares in order to effect Short
Sales or similar transactions in the future.
ARTICLE IV.
OTHER AGREEMENTS OF THE PARTIES
4.1 Removal of Legends.
(a)The Warrants and Warrant Shares may only be disposed of in compliance with
state and federal securities laws. In connection with any transfer of Warrants
or Warrant Shares 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 and reasonably acceptable to the Company, 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 Warrant or
Warrant Shares under the Securities Act. As a condition to such transfer, any
such transferee shall agree, in writing, to be bound by the terms of 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 Warrants or Warrant Shares in the
following form:
NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE
HAS 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

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“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. THIS SECURITY AND THE SECURITIES ISSUABLE UPON
EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL
INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE
SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.
The Company acknowledges and agrees that a Purchaser may from time to time
pledge pursuant to a bona fide margin agreement with a registered broker-dealer
or grant a security interest in some or all of the Warrants or Warrant Shares to
a financial institution that is an “accredited investor” as defined in Rule
501(a) under the Securities Act and, if required under the terms of such
arrangement, such Purchaser may transfer pledged or secured Warrants or Warrant
Shares to the pledgees or secured parties. Such a pledge or transfer would not
be subject to approval of the Company and no legal opinion of legal counsel of
the pledgee, secured party or pledgor shall be required in connection therewith.
Further, no notice shall be required of such pledge. At the appropriate
Purchaser’s expense, the Company will execute and deliver such reasonable
documentation as a pledgee or secured party of Warrants and Warrant Shares may
reasonably request in connection with a pledge or transfer of the Warrants or
Warrant Shares.
(c)Certificates evidencing the Warrant Shares shall not contain any legend
(including the legend set forth in Section 4.1(b) hereof): (i) while a
registration statement covering the resale of such security is effective under
the Securities Act, or (ii) following any sale of such Warrant Shares pursuant
to Rule 144 (assuming cashless exercise of the Warrants), or (iii) if such
Warrant Shares are eligible for sale under Rule 144 (assuming cashless exercise
of the Warrants), or (iv) 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 cause
its counsel to issue a legal opinion to the Transfer Agent or the Purchaser
promptly if required by the Transfer Agent to effect the removal of the legend
hereunder, or if requested by a Purchaser, respectively. Upon request by the
Company or its counsel with a form of letter, the Purchaser shall deliver a
customary representation letter to counsel of the Company in connection with an
opinion related to Rule 144 hereunder. If all or any portion of a Warrant is
exercised at a time when there is an effective registration statement to cover
the issuance or resale of the Warrant Shares, or if such Warrant Shares may be
sold under Rule 144 (assuming cashless exercise of the Warrants) or if 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 Warrant Shares shall be issued free of all legends.
The Company agrees that following such time as such legend is no longer required
under this Section 4.1(c), the Company will, no later than the earlier of (i)
two (2) Trading Days and (ii) the number of Trading Days comprising the Standard
Settlement Period (as defined below) following the delivery by a Purchaser to
the Company or the Transfer Agent of a certificate representing Warrant Shares,
as applicable, issued with a restrictive legend (such date, 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. Warrant 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. As used herein, “Standard Settlement Period” means
the standard settlement period, expressed in a number of Trading Days, on the
Company’s primary Trading Market with respect to the Common Stock as in effect
on the date of delivery of a certificate representing Warrant Shares issued with
a restrictive legend.

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(d)In addition to such Purchaser’s other available remedies, the Company shall
pay to a Purchaser, in cash, (i) as partial liquidated damages and not as a
penalty, for each $1,000 of Warrant 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 and (ii) if the Company
fails to (a) issue and deliver (or cause to be delivered) to a Purchaser by the
Legend Removal Date a certificate representing the Securities so delivered to
the Company by such Purchaser that is free from all restrictive and other
legends and (b) if after the Legend Removal Date such Purchaser purchases (in an
open market transaction or otherwise) shares of Common Stock to deliver in
satisfaction of a sale by such Purchaser of all or any portion of the number of
shares of Common Stock, or a sale of a number of shares of Common Stock equal to
all or any portion of the number of shares of Common Stock, that such Purchaser
anticipated receiving from the Company without any restrictive legend, then an
amount equal to the excess of such Purchaser’s total purchase price (including
brokerage commissions and other out-of-pocket expenses, if any) for the shares
of Common Stock so purchased (including brokerage commissions and other
out-of-pocket expenses, if any) (the “Buy-In Price”) over the product of (A)
such number of Warrant Shares that the Company was required to deliver to such
Purchaser by the Legend Removal Date multiplied by (B) the lowest closing sale
price of the Common Stock on any Trading Day during the period commencing on the
date of the delivery by such Purchaser to the Company of the applicable Warrant
Shares (as the case may be) and ending on the date of such delivery and payment
under this Section 4.1(d).
4.2 Furnishing of Information.
(a)Until the earliest of the time that (i) no Purchaser owns Securities or (ii)
the Warrants have expired, the Company covenants 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 even if the Company is not then subject to the reporting
requirements of 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 Warrant Shares
(assuming cashless exercise) 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 (i) shall fail for any reason to
satisfy the current public information requirement under Rule 144(c) or (ii) has
ever been an issuer described in Rule 144(i)(1)(i) or becomes an issuer in the
future, and the Company shall fail to satisfy any condition set forth in Rule
144(i)(2) (a “Public Information Failure”) 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 Warrant Shares, an amount in cash equal
to two percent (2.0%) of the aggregate exercise price of such Purchaser’s
Warrants on the day of a Public Information Failure and on every thirtieth
(30th) day (pro-rated 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 Warrant Shares pursuant to Rule 144. The payments to
which a Purchaser shall be entitled pursuant to this Section 4.2(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 1.5% 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

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relief.
4.3 Integration. The Company shall not sell, offer for sale or solicit offers to
buy or otherwise negotiate in respect of any security (as defined in Section 2
of the Securities Act) that would be integrated with the offer or sale of the
Securities in a manner that would require the registration under the Securities
Act of the sale of the Warrants or Warrant Shares 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.
4.4 Securities Laws Disclosure; Publicity. The Company shall file a Current
Report on Form 8- K, including the Transaction Documents as exhibits thereto,
with the Commission within the time required by the Exchange Act. The Company
represents to the Purchasers that it shall have publicly disclosed all material,
non-public information delivered to any of the Purchasers by the Company or any
of its Subsidiaries, or any of their respective officers, directors, employees
or agents in connection with the transactions contemplated by the Transaction
Documents. In addition, the Company acknowledges and agrees that any and all
confidentiality or similar obligations under any agreement, whether written or
oral, between the Company, any of its Subsidiaries or any of their respective
officers, directors, agents, employees or Affiliates on the one hand, and any of
the Purchasers or any of their Affiliates on the other hand, shall terminate.
The Company and each Purchaser shall consult with each other in issuing any
other press releases with respect to the transactions contemplated hereby, and
neither the Company nor any Purchaser shall issue any such press release nor
otherwise make any such public statement without the prior consent of the
Company, with respect to any press release of any Purchaser, or without the
prior consent of each Purchaser, with respect to any press release of the
Company, which consent shall not unreasonably be withheld or delayed, except if
such disclosure is required by law, in which case the disclosing party shall
promptly provide the other party with prior notice of such public statement or
communication. Notwithstanding the foregoing, the Company shall not publicly
disclose the name of any Purchaser, or include the name of any Purchaser in any
filing with the Commission or any regulatory agency or Trading Market, without
the prior written consent of such Purchaser, except (a) as required by federal
securities law in connection with the filing of final Transaction Documents with
the Commission 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).
4.5 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.
4.6 Non-Public Information. Except with respect to the material terms and
conditions of the transactions contemplated by the Transaction Documents, which
shall be disclosed pursuant to Sections 2.4 and 4.4, the Company covenants and
agrees that neither it, nor any other Person acting on its behalf will provide
any Purchaser or its agents or counsel with any information that constitutes, or
the Company reasonably believes constitutes, material non-public information,
unless prior thereto such Purchaser shall have consented to the receipt of such
information and agreed with the Company to keep such information confidential.
The Company understands and confirms that each Purchaser shall be relying on the
foregoing covenant in effecting transactions in securities of the Company. To
the extent that the Company delivers any material, non-public information to a
Purchaser without such Purchaser’s consent, the Company hereby covenants and
agrees that such Purchaser shall not have any duty of confidentiality to the
Company, any of its Subsidiaries, or any of

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their respective officers, directors, agents, employees or Affiliates, or a duty
to the Company, any of its Subsidiaries or any of their respective officers,
directors, agents, employees or Affiliates not to trade on the basis of, such
material, non-public information, provided that the Purchaser shall remain
subject to applicable law. To the extent that any notice provided pursuant to
any Transaction Document constitutes, or contains, material, non-public
information regarding the Company or any Subsidiaries, the Company shall
simultaneously file such notice with the Commission pursuant to a Current Report
on Form 8-K. The Company understands and confirms that each Purchaser shall be
relying on the foregoing covenant in effecting transactions in securities of the
Company.
4.7 Exercise Procedures. The form of Notice of Exercise included in the Warrants
set forth the totality of the procedures required of the Purchasers in order to
exercise the Warrants. Other than as provided in Section 4.1(c), no additional
legal opinion, other information or instructions shall be required of the
Purchasers to exercise their Warrants. Without limiting the preceding sentences,
no ink-original Notice of Exercise shall be required, nor shall any medallion
guarantee (or other type of guarantee or notarization) of any Notice of Exercise
form be required in order to exercise the Warrants. The Company shall honor
exercises of the Warrants and shall deliver Warrant Shares in accordance with
the terms, conditions and time periods set forth in the Transaction Documents.
4.8 Indemnification of Purchasers. Subject to the provisions of this Section
4.8, 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”) 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 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 solely based upon a material 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 is
finally judicially determined to constitute fraud, gross negligence or willful
misconduct) or (c) in connection with any registration statement of the Company
providing for the resale by the Purchasers of the Warrant Shares issued and
issuable upon exercise of the Warrants, the Company will indemnify each
Purchaser Party, to the fullest extent permitted by applicable law, from and
against any and all losses, claims, damages, liabilities, costs (including,
without limitation, reasonable attorneys’ fees) and expenses, as incurred,
arising out of or relating to (i) any untrue or alleged untrue statement of a
material fact contained in such registration statement, any prospectus or any
form of prospectus or in any amendment or supplement thereto or in any
preliminary prospectus, or arising out of or relating to any omission or alleged
omission of a material fact required to be stated therein or necessary to make
the statements therein (in the case of any prospectus or supplement thereto, in
the light of the circumstances under which they were made) not misleading,
except to the extent, but only to the extent, that such untrue statements or
omissions are based solely upon information regarding such Purchaser Party
furnished in writing to the Company by such Purchaser Party expressly for use
therein, or (ii) any violation or alleged violation by the Company of the
Securities Act, the Exchange Act or any state securities law, or any rule or
regulation thereunder in connection therewith. If any action shall

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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 (x) the employment thereof has been specifically
authorized by the Company in writing, (y) the Company has failed after a
reasonable period of time to assume such defense and to employ counsel or (z) in
such action there is, in the reasonable opinion of counsel, a 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 (in
addition to any local counsel). The Company will not be liable to any Purchaser
Party under this Agreement (1) for any settlement by a Purchaser Party effected
without the Company’s prior written consent, which shall not be unreasonably
withheld or delayed; or (2) 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 4.8 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.
4.9 Reservation of Common Stock. As of the date hereof, the Company has reserved
and the Company shall continue to reserve and keep available at all times, free
of preemptive rights, a sufficient number of shares of Common Stock for the
purpose of enabling the Company to issue Warrant Shares pursuant to any exercise
of the Warrants.
4.10 Listing of Common Stock. The Company hereby agrees to use reasonable best
efforts to maintain the listing or quotation of the Common Stock on the Trading
Market on which it is currently listed, and, promptly following the execution
and delivery of this Agreement, the Company shall apply to list or quote all of
the Warrant Shares on such Trading Market and promptly secure the listing of all
of the Warrant Shares on such Trading Market. The Company further agrees, if the
Company applies to have the Common Stock traded on any other Trading Market, it
will then include in such application all of the Warrant Shares, and will take
such other action as is reasonably necessary to cause all of the Warrant Shares
to be listed or quoted on such other Trading Market as promptly as possible. The
Company will then take all action reasonably necessary to continue the listing
and trading of its Common Stock on a Trading Market and will comply in all
material respects with the Company’s reporting, filing and other obligations
under the bylaws or rules of the Trading Market. The Company agrees to use its
reasonable best efforts to maintain the eligibility of the Common Stock for
electronic transfer through the Depository Trust Company or another established
clearing corporation, including, without limitation, by timely payment of fees
to the Depository Trust Company or such other established clearing corporation
in connection with such electronic transfer.
4.11 Form D; Blue Sky Filings. The Company agrees to timely file a Form D with
respect to the Warrant and Warrant Shares 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 Warrant and Warrant Shares
for, sale to the Purchasers at the 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.
4.12 [Reserved.]
4.13 Equal Treatment of Purchasers. No consideration (including any modification
of any Transaction

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Document) shall be offered or paid to any Person to amend or consent to a waiver
or modification of any provision of the Transaction Documents unless the same
consideration is also offered to all of the parties to the Transaction
Documents. For clarification purposes, this provision constitutes a separate
right granted to each Purchaser by the Company and negotiated separately by each
Purchaser, and is intended for the Company to treat the Purchasers as a class
and shall not in any way be construed as the Purchasers acting in concert or as
a group with respect to the purchase, disposition or voting of Securities or
otherwise.
4.14 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
purchases or sales, including Short Sales of any of the Company’s securities
during the period commencing with the execution of this Agreement and ending at
such time that the transactions contemplated by this Agreement are first
publicly disclosed by the company. 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. Notwithstanding the foregoing and notwithstanding anything
contained in this Agreement to the contrary, the Company expressly acknowledges
and agrees that (i) no Purchaser makes any representation, warranty or covenant
hereby that it will not engage in effecting transactions in any securities of
the Company after the time that the transactions contemplated by this Agreement
are first publicly disclosed by the Company, (ii) no Purchaser shall be
restricted or prohibited from effecting any transactions in any securities of
the Company in accordance with applicable securities laws from and after the
time that the transactions contemplated by this Agreement are first publicly
disclosed by the Company, and (iii) no Purchaser shall have any duty of
confidentiality or duty not to trade in the securities of the Company to the
Company or its Subsidiaries after the time that the transactions contemplated by
this Agreement are first publicly disclosed by the Company. 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 covenant 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.
4.15 Capital Changes. Until the one year anniversary of the Closing Date, the
Company shall not undertake a reverse or forward stock split or reclassification
of the Common Stock without the prior written consent of the Purchasers which
purchased at least 50.1% of the initial aggregate Subscription Amounts
hereunder.
4.16 Registration Rights Relating to the Warrant Shares.
(a)On or prior to June 17, 2019, the Company shall prepare and file with the SEC
a registration statement pursuant to Rule 415 under the Securities Act on such
form as the Company may then utilize under the rules of the SEC (the “Resale
Registration Statement” and the prospectus contained therein, the “Resale
Prospectus”) covering the resale of all of the Warrant Shares and any Common
Stock issued as (or issuable upon the conversion or exercise of any warrant,
right, or other security that is issued as) a stock split or dividend or other
distribution with respect to, or in exchange for or in replacement of, the
Warrant Shares (collectively, the “Registrable Securities”).
(b)Upon filing the Resale Registration Statement, the Company shall use its
commercially reasonable efforts to cause such Resale Registration Statement to
be declared effective by the Commission as soon as practicable thereafter, but
in no event more than 60 days following the initial filing of the Resale
Registration Statement, including the filing of amendments and post-effective
amendments and supplements to such Resale Registration Statement and the Resale
Prospectus. In the event the Company is notified by the SEC that the Resale
Registration Statement will not be reviewed or is no longer subject to further
review and

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comments, the Company shall use its commercially reasonable efforts to have the
Registration Statement promptly declared effective and in any event by the 3rd
Trading Day following the date on which the Company is so notified if such date
precedes the dates otherwise required above). The Company shall furnish to the
Purchasers such numbers of copies of a Resale Prospectus and such other
documents as the Purchasers may reasonably request
(c)The Company shall cause (i) the Resale Registration Statement (as of the
effective date of the Resale Registration Statement), any amendment thereof (as
of the effective date thereof) or supplement thereto (as of its date), (A) to
comply in all material respects with the applicable requirements of the
Securities Act, the Exchange Act and the rules and regulations of the SEC, and
(B) not to 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 not misleading, and (ii) any related prospectus, preliminary
prospectus and any amendment thereof or supplement thereto, as of its date, (A)
to comply in all material respects with the applicable requirements of the
Securities Act, the Exchange and the rules and regulations of the SEC, and (B)
not to 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 the light of the circumstances under which they were
made, not misleading; provided, however, the Company shall have no such
obligations or liabilities with respect to any written information pertaining to
a Purchaser and furnished to the Company by or on behalf of such Purchaser
specifically for inclusion therein.
(d)The Company shall notify the Purchasers: (i) when the Resale Registration
Statement or any amendment thereto has been filed with the SEC and when the
Resale Registration Statement or any post-effective amendment thereto has become
effective (or a supplement to any prospectus forming a part of the Resale
Registration Statement has been filed), (ii) of any request by the SEC for
amendments or supplements to the Resale Registration Statement or the prospectus
included therein or for additional information, (iii) of the issuance by the SEC
of any stop order suspending the effectiveness of the Resale Registration
Statement or the initiation of any proceedings for that purpose and of any other
action, event or failure to act that would cause the Resale Registration
Statement not to remain effective (or for the prospectus contained therein to no
longer be usable for offers and sales of the Registrable Securities), and (iv)
of the receipt by the Company of any notification with respect to the suspension
of the qualification or exemption from qualification of any Registrable
Securities for sale in any jurisdiction or the initiation of any proceeding for
such purpose.
(e)The Company shall use commercially reasonable efforts to maintain the
effectiveness of the Resale Registration Statement, including by filing any
necessary post- effective amendments and prospectus supplements, or,
alternatively, by filing new registration statements relating to the Registrable
Securities continuously until the earliest to occur of (i) five (5) years
following the date of the effectiveness of the Resale Registration Statement,
(ii) such time as no Purchaser holds or has the right to acquire upon exercise
of the Warrants any Registrable Securities, and (iii) such time as the
Registrable Securities may be resold by the Purchasers pursuant to Rule 144 of
the Securities Act without volume or manner-of-sale restrictions as set forth in
a written opinion letter to such effect, addressed, delivered and acceptable to
the transfer agent for the Common Stock and the affected Purchasers (assuming
for purposes of such opinion that such securities and any securities issuable
upon exercise, conversion or exchange of which, or as a dividend upon which,
such securities were issued or are issuable, were at no time held by any
Affiliate of the Company), as reasonably determined by the Company, upon the
advice of counsel to the Company.
(f)The Company shall notify the Purchasers of the occurrence or existence of any
pending corporate development with respect to the Company that it believes is
material and that, in the determination of the Company and its counsel, causes
the Resale Registration Statement and the Resale Prospectus to contain an untrue
statement of material fact or to omit to state a material fact necessary to make
the statements contained therein not misleading, or otherwise makes the Resale
Registration Statement and the Resale Prospectus not

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in the best interest of the Company to allow continued availability thereof. The
Company shall use its reasonable best efforts to cause the filing of amendments
and post-effective amendments and supplements to such Resale Registration
Statement and Resale Prospectus as the Company determines are necessary to again
allow resales under the Resale Registration Statement as soon as practicable.
(g)If required under applicable law, the Company shall use its commercially
reasonable efforts to register and qualify the securities covered by the Resale
Registration Statement under such other securities or “blue sky” laws of such
jurisdictions as shall be reasonably requested by the Purchasers; provided that
the Company shall not be required to qualify to do business or to file a general
consent to service of process in any such states or jurisdictions, unless the
Company is already subject to service in such jurisdiction and except as may be
required by the Securities Act
(h)All expenses incident to the Company’s compliance with this Section 4.16,
including, without limitation, all registration and filing fees, fees and
expenses of compliance with securities laws, printing expenses, filing expenses,
transfer agent fees, fees and expenses of compliance with securities or “blue
sky” laws, and fees and disbursements of the Company’s counsel and independent
registered public accountants will be borne by the Company.
(i)If the Company fails to comply with its obligations in this Section 4.16, the
Purchasers shall be entitled to a payment from the Company, as liquidated
damages and not as a penalty, in the amount per month equal to a half of a
percent (0.5%) of the Per Share Purchase Price from (i) the date the Company was
required to file the Resale Registration Statement until it is actually filed
and pro-rated for any partial month, (ii) from the date the Resale Registration
Statement was required to be declared effective until it is actually declared
effective and pro-rated for any partial month, or (iii) from the date the
Registration Statement ceases to be effective for any reason (or the prospectus
contained therein may no longer be used in connection with offers and sales of
the Registrable Securities) or is subject to a stop order issued by the SEC
until either a post-effective amendment to the Resale Registration Statement has
been declared effective by the SEC or a new registration statement covering the
Registrable Securities is filed and declared effective by the SEC (or the
prospectus included in the Resale Registration Statement is amended or
supplemented so that it may thereafter be used in connection with offers and
sales of the Registrable Securities) or such stop order is no longer in effect
and pro-rated for any partial month. The maximum penalty payable by the Company
for all such failures shall not exceed five percent (5%) of the Per Share
Purchase Price in the aggregate. If the Company fails to pay any partial
liquidated damages pursuant to this Section 4.16 in full within seven (7) days
after the date payable, the Company will pay interest thereon at a rate of 12%
per annum (or such lesser maximum amount that is permitted to be paid by
applicable law) to the Purchaser, accruing daily from the date such partial
liquidated damages are due until such amounts, plus all such interest thereon,
are paid in full.
(j)Notwithstanding anything to the contrary contained herein, the Company shall
not be required to include in the Resale Registration Statement any Warrant
Shares held, or which could be held upon exercise of Warrants held, by any
Purchaser unless such Purchaser has furnished to the Company, at least ten (10)
Trading Days prior to the scheduled filing date of such Resale Registration
Statement, a customary executed stockholder questionnaire in a form provided to
it by the Company.
4.17 Liquidated Damage for Failure to Timely Deliver Warrants. In addition to
such Purchaser’s other available remedies, if the Company fails to deliver the
Warrants to a Purchaser whose Subscription was accepted by the Warrant Delivery
Date, then the Company shall pay to a Purchaser, in cash, (i) as partial
liquidated damages and not as a penalty, for each $1,000 of Warrant Shares
(based on the VWAP of the Common Stock on the Warrant Delivery Date), $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 until such Warrants are
delivered.

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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 Closing has not been consummated on or before the
fifth (5th) Trading Day following the date hereof; provided however that no such
termination will affect the right of any party to sue for any breach by any
other party (or parties).
5.2.Fees and Expenses. Except as expressly set forth in the Transaction
Documents to the contrary, each party shall pay the fees and expenses of its
advisers, counsel, accountants and other experts, if any, and all other expenses
incurred by such party incident to the negotiation, preparation, execution,
delivery and performance of this Agreement. 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 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.
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 or
email attachment at the email address as set forth on the signature pages
attached hereto at or prior to 8:00 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 or email
attachment at the email address as set forth on the signature pages attached
hereto on a day that is not a Trading Day or later than 8:00 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. To the extent that any notice provided pursuant
to any Transaction Document constitutes, or contains, material, non- public
information regarding the Company or any Subsidiaries, the Company shall
simultaneously file such notice with the Commission pursuant to a Current Report
on Form 8-K.
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 Purchasers which purchased at least 50.1% of the
aggregate Subscription Amounts hereunder or, in the case of a waiver, by the
party against whom enforcement of any such waived provision is sought, provided
that if any amendment, modification or waiver disproportionately and adversely
impacts a Purchaser (or group of Purchasers), the consent of such
disproportionately impacted Purchaser (or group of Purchasers) shall also be
required. 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. Any proposed amendment or waiver that disproportionately, materially and
adversely affects the rights and obligations of

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any Purchaser relative to the comparable rights and obligations of the other
Purchasers shall require the prior written consent of such adversely affected
Purchaser. Any amendment effected in accordance with this Section 5.5 shall be
binding upon each Purchaser and holder of Securities and the Company.
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 or
operation of law). 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 Purchaser provides prompt written notice of the
assignment or transfer to the Company and such assignee or 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 4.8 and this Section 5.8.
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 Action or Proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such 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
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 any party shall commence an
Action or Proceeding to enforce any provisions of the Transaction Documents,
then, in addition to the obligations of the Company under Section 4.8, the
prevailing party in such Action or Proceeding shall be reimbursed by the
non-prevailing party for its reasonable attorneys’ fees and other costs and
expenses incurred with the investigation, preparation and prosecution of such
Action or Proceeding.
5.10.Survival. The representations and warranties contained herein shall survive
the Closing 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

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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.
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 an exercise of a Warrant, the
applicable Purchaser shall be required to return any shares of Common Stock
subject to any such rescinded exercise notice concurrently with the return to
such Purchaser of the aggregate exercise price paid to the Company for such
shares and the restoration of such Purchaser’s right to acquire such shares
pursuant to such Purchaser’s Warrant (including, issuance of a replacement
warrant certificate evidencing such restored right).
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.
5.17.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

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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 by its own separate legal counsel in its review
and negotiation of the Transaction Documents. For the avoidance of doubt, WMD
only represents SDS Capital Partners II, LLC and none of the other Purchasers.
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. It is expressly
understood and agreed that each provision contained in this Agreement and in
each other Transaction Document is between the Company and a Purchaser, solely,
and not between the Company and the Purchasers collectively and not between and
among the Purchasers.
5.18.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.
5.19.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.
5.20.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.
5.21.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.
5.22.SEEKING ADVICE OF COUNSEL. FOR PURPOSES OF THIS AGREEMENT, EACH PURCHASER
HERETO ACKNOWLEDGES THAT, IN EXECUTING THIS AGREEMENT, HE/SHE/IT HAD THE
OPPORTUNITY TO SEEK THE ADVICE OF INDEPENDENT LEGAL COUNSEL, AND HAS READ AND
UNDERSTANDS ALL OF THE TERMS AND PROVISIONS OF THIS AGREEMENT AND THE OTHER
TRANSACTION DOCUMENTS.

(Signature Pages Follow)

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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.

INNOVATE BIOPHARMAECUTICALS, INC.

By: ____________________________________    
Name:
Title:
Email:
Fax:
With a copy to (which shall not constitute notice):

[SIGNATURE PAGE FOR PURCHASER FOLLOWS]

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:
Number of Warrants Shares to be represented by Warrant purchased:
Subscription Amount: $
EIN Number:
Email Address of Authorized Signatory:
Facsimile Number of Authorized Signatory:

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Address for Notice to Purchaser:

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

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Exhibit A

NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE
HAVE 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. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS
SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES.

LONG-TERM COMMON STOCK PURCHASE WARRANT INNOVATE BIOPHARMACEUTICALS, INC.
No. of Warrant Shares:     
Initial Exercise Date: October     , 2019
Issue Date: April , 2019

THIS LONG-TERM COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for
value received, [name of Holder] or its assigns (the “Holder”) is entitled, upon
the terms and subject to the limitations on exercise and the conditions
hereinafter set forth, at any time on or after October , 2019 (the “Initial
Exercise Date”) and on or prior to the close of business on the five (5) year
anniversary of the Issue Date (the “Termination Date”), provided that, if such
date is not a Trading Day, the Termination Date should be the immediately
following Trading Day, but not thereafter, to subscribe for and purchase from
Innovate Biopharmaceuticals, Inc., a Delaware corporation (the “Company”), up to
shares (as subject to adjustment hereunder, the “Warrant Shares”) of Common
Stock. The purchase price of one share of Common Stock under this Warrant shall
be equal to the Exercise Price, as defined in Section 2(b).

Section 1.    Definitions. Capitalized terms used and not otherwise defined
herein shall have the meanings set forth in that certain Securities Purchase
Agreement (the “Purchase Agreement”), dated April__ , 2019, between the Company
and purchasers signatory thereto.

Section 2.    Exercise.

a)Exercise of Warrant. Exercise of the purchase rights represented by this
Warrant may be made, in whole or in part, at any time or times on or after the
Initial Exercise Date and on or before the Termination Date by delivery to the
Company of a duly executed facsimile copy or PDF copy submitted by e-mail (or
e-mail attachment) of the Notice of Exercise in the form annexed hereto (the
“Notice of Exercise”). Within the earlier of (i) two (2) Trading Days and (ii)
the number of Trading Days comprising the Standard Settlement Period (as defined
in Section 2(d)(i) herein) following the date of exercise as aforesaid, the
Holder shall deliver the aggregate Exercise Price for the Warrant Shares
specified in the applicable Notice of Exercise by wire transfer or cashier’s
check drawn on a United States bank unless the cashless exercise procedure
specified in Section 2(c) below is specified in the applicable Notice of
Exercise. No ink-original Notice of Exercise shall be required, nor shall any
medallion guarantee (or other type of guarantee or notarization) of any Notice
of Exercise be required. Notwithstanding anything herein to the contrary, the
Holder shall not be required to physically surrender this Warrant to the Company
until the Holder has purchased all of the Warrant Shares available hereunder and
the Warrant has been exercised in full, in which case, the Holder shall
surrender this Warrant to the Company for cancellation within three
(3) Trading Days of the date on which the final Notice of Exercise is delivered
to the Company. Partial exercises of this Warrant resulting in purchases of a
portion of the total number of Warrant Shares available hereunder shall have the
effect of lowering the outstanding number of Warrant Shares purchasable
hereunder in an amount equal to the applicable number of Warrant Shares
purchased. The Holder and the Company shall maintain records showing the number
of Warrant Shares purchased and the date of such purchases. The Company shall
deliver any objection

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to any Notice of Exercise within one
(1) Business Day of receipt of such notice. The Holder and any assignee, by
acceptance of this Warrant, acknowledge and agree that, by reason of the
provisions of this paragraph, following the purchase of a portion of the Warrant
Shares hereunder, the number of Warrant Shares available for purchase hereunder
at any given time may be less than the amount stated on the face hereof.

Without limiting the rights of a Holder to receive Warrant Shares on a “cashless
exercise” solely in respect of the circumstance set forth in Section 2(c), and
without limiting the liquidated damages provision in Section 2(d)(i) and the
buy-in provision in Section 2(d)(iv), in no event will the Company be required
to net cash settle a Warrant exercise.

b)Exercise Price. The exercise price per share of the Common Stock under this
Warrant shall be $2.13 subject to adjustment hereunder (the “Exercise Price”).

c)Cashless Exercise. Notwithstanding anything herein to the contrary and except
as provided in the last paragraph of this Section 2(c), the only circumstance
under which the Holder may exercise the Warrant pursuant to a “cashless
exercise” is when, at the time of exercise, there is no effective registration
statement registering under the Securities Act, or the prospectus contained
therein is not available for the issuance or resale of, the Warrant Shares to be
received by the Holder in connection with such exercise. For the avoidance of
doubt, in the event there is no effective registration statement, this Warrant
may be exercised by way of “cashless exercise.” A “cashless exercise” entitles
the Holder to receive a number of Warrant Shares equal to the quotient obtained
by dividing [(A-B) (X)] by (A), where:

(A) = as applicable: (i) the VWAP on the Trading Day immediately preceding the
date of the applicable Notice of Exercise if such Notice of Exercise is (1) both
executed and delivered pursuant to Section 2(a) hereof on a day that is not a
Trading Day or (2) both executed and delivered pursuant to Section 2(a) hereof
on a Trading Day prior to the opening of “regular trading hours” (as defined in
Rule 600(b)(64) of Regulation NMS promulgated under the federal securities laws)
on such Trading Day, (ii) at the option of the Holder, either (y) the VWAP on
the Trading Day immediately preceding the date of the applicable Notice of
Exercise or (z) the Bid Price of the Common Stock on the principal Trading
Market as reported by Bloomberg L.P. as of the time of the Holder’s execution of
the applicable Notice of Exercise if such Notice of Exercise is executed during
“regular trading hours” on a Trading Day and is delivered within two (2) hours
thereafter (including until two (2) hours after the close of “regular trading
hours” on a Trading Day) pursuant to Section 2(a) hereof or (iii) the VWAP on
the date of the applicable Notice of Exercise if the date of such Notice of
Exercise is a Trading Day and such Notice of Exercise is both executed and
delivered pursuant to Section 2(a) hereof after the close of “regular trading
hours” on such Trading Day;

(B) = the Exercise Price of this Warrant, as adjusted hereunder; and

(X) = the number of Warrant Shares that would be issuable upon exercise of this
Warrant in accordance with the terms of this Warrant if such exercise were by
means of a cash exercise rather than a cashless exercise.

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

“Bid Price” 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 bid price of the Common Stock for the time in question
(or the nearest preceding date) on the Trading Market on which the Common Stock
is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day
from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if
OTCQB or OTCQX is not a Trading Market, the volume weighted average price of the
Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as
applicable, (c) if the Common Stock is not then listed or quoted for trading on
OTCQB or OTCQX and if prices for the Common Stock are then reported in the “Pink
Sheets” published by OTC Markets Group, Inc. (or a similar organization or
agency succeeding to its functions of reporting prices), the most recent bid
price per share of 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

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and reasonably acceptable to the Company, the fees and expenses of which shall
be paid by the Company.

“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 OTCQB or OTCQX is not a Trading Market, the volume weighted
average price of the Common Stock for such date (or the nearest preceding date)
on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed or
quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then
reported in the “Pink Sheets” published by OTC Markets Group, Inc. (or a similar
organization or agency succeeding to its functions of reporting prices), the
most recent bid price per share of 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.

Notwithstanding anything herein to the contrary, if not previously exercised in
full, on the Termination Date, this Warrant shall be automatically exercised via
cashless exercise pursuant to this Section 2(c).

d)
Mechanics of Exercise.

i.Delivery of Warrant Shares Upon Exercise. The Company shall cause the Warrant
Shares purchased hereunder to be transmitted by the Transfer Agent to the Holder
by crediting the account of the Holder’s or its designee’s balance account with
The Depository Trust Company through its Deposit or Withdrawal at Custodian
system (“DWAC”) if the Company is then a participant in such system and either
(A) there is an effective registration statement permitting the issuance of the
Warrant Shares to or resale of the Warrant Shares by the Holder or (B) the
Warrant Shares are eligible for resale by the Holder without volume or
manner-of-sale limitations pursuant to Rule 144 (assuming cashless exercise of
the Warrants), and otherwise by physical delivery of a certificate, registered
in the Company’s share register in the name of the Holder or its designee, for
the number of Warrant Shares to which the Holder is entitled pursuant to such
exercise to the address specified by the Holder in the Notice of Exercise by the
date that is the earlier of (i) the earlier of (A) two (2) Trading Days after
the delivery to the Company of the Notice of Exercise and (B) one (1) Trading
Day after delivery of the aggregate Exercise Price to the Company and (ii) the
number of Trading Days comprising the Standard Settlement Period after the
delivery to the Company of the Notice of Exercise (such date, the “Warrant Share
Delivery Date”). Upon delivery of the Notice of Exercise, the Holder shall be
deemed for all corporate purposes to have become the holder of record of the
Warrant Shares with respect to which this Warrant has been exercised,
irrespective of the date of delivery of the Warrant Shares, provided that
payment of the aggregate Exercise Price (other than in the case of a cashless
exercise) is received within the earlier of (i) two (2) Trading Days and (ii)
the number of Trading Days comprising the Standard Settlement Period following
delivery of the Notice of Exercise. If the Company fails for any reason to
deliver to the Holder the Warrant Shares subject to a Notice of Exercise by the
Warrant Share Delivery Date, the Company shall pay to the Holder, in cash, as
liquidated damages and not as a penalty, for each $1,000 of Warrant Shares
subject to such exercise (based on the VWAP of the Common Stock on the date of
the applicable Notice of Exercise), $10 per Trading Day (increasing to $20 per
Trading Day on the fifth Trading Day after such liquidated damages begin to
accrue) for each Trading Day after such Warrant Share Delivery Date until such
Warrant Shares are delivered or Holder rescinds such exercise. The Company
agrees to maintain a transfer agent that is a participant in the FAST program so
long as this Warrant remains outstanding and exercisable. As used herein,
“Standard Settlement Period” means the standard settlement period, expressed in
a number of Trading Days, on the Company’s primary Trading Market with respect
to the Common Stock as in effect on the date of delivery of the Notice of
Exercise.

ii.Delivery of New Warrants Upon Exercise. If this Warrant shall have been
exercised in part, the Company shall, at the request of a Holder and upon
surrender of this Warrant certificate, at the time of delivery of the Warrant
Shares, deliver to the Holder a new Warrant

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evidencing the rights of the Holder to purchase the unpurchased Warrant Shares
called for by this Warrant, which new Warrant shall in all other respects be
identical with this Warrant.

iii.Rescission Rights. If the Company fails to cause the Transfer Agent to
transmit to the Holder the Warrant Shares pursuant to Section 2(d)(i) by the
Warrant Share Delivery Date, then the Holder will have the right to rescind such
exercise.

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

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

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

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

e)Holder’s Exercise Limitations. The Company shall not effect any exercise of
this Warrant, and a

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Holder shall not have the right to exercise any portion of this Warrant,
pursuant to Section 2 or otherwise, to the extent that after giving effect to
such issuance after exercise as set forth on the applicable Notice of Exercise,
the Holder (together with the Holder’s Affiliates, and any other Persons acting
as a group together with the Holder or any of the Holder’s Affiliates (such
Persons, “Attribution Parties”)), would beneficially own in excess of the
Beneficial Ownership Limitation (as defined below). For purposes of the
foregoing sentence, the number of shares of Common Stock beneficially owned by
the Holder and its Affiliates and Attribution Parties shall include the number
of shares of Common Stock issuable upon exercise of this Warrant with respect to
which such determination is being made, but shall exclude the number of shares
of Common Stock which would be issuable upon (i) exercise of the remaining,
nonexercised portion of this Warrant beneficially owned by the Holder or any of
its Affiliates or Attribution Parties and (ii) exercise or conversion of the
unexercised or nonconverted portion of any other securities of the Company
(including, without limitation, any other Common Stock Equivalents) subject to a
limitation on conversion or exercise analogous to the limitation contained
herein beneficially owned by the Holder or any of its Affiliates or Attribution
Parties. Except as set forth in the preceding sentence, for purposes of this
Section 2(e), beneficial ownership shall be calculated in accordance with
Section 13(d) of the Exchange Act and the rules and regulations promulgated
thereunder, it being acknowledged by the Holder that the Company is not
representing to the Holder that such calculation is in compliance with Section
13(d) of the Exchange Act and the Holder is solely responsible for any schedules
required to be filed in accordance therewith. To the extent that the limitation
contained in this Section 2(e) applies, the determination of whether this
Warrant is exercisable (in relation to other securities owned by the Holder
together with any Affiliates and Attribution Parties) and of which portion of
this Warrant is exercisable shall be in the sole discretion of the Holder, and
the submission of a Notice of Exercise shall be deemed to be the Holder’s
determination of whether this Warrant is exercisable (in relation to other
securities owned by the Holder together with any Affiliates and Attribution
Parties) and of which portion of this Warrant is exercisable, in each case
subject to the Beneficial Ownership Limitation, and the Company shall have no
obligation to verify or confirm the accuracy of such determination. In addition,
a determination as to any group status as contemplated above shall be determined
in accordance with Section 13(d) of the Exchange Act and the rules and
regulations promulgated thereunder. For purposes of this Section 2(e), in
determining the number of outstanding shares of Common Stock, a Holder may rely
on the number of outstanding shares of Common Stock as reflected in (A) the
Company’s most recent periodic or annual report filed with the Commission, as
the case may be, (B) a more recent public announcement by the Company or (C) a
more recent written notice by the Company or the Transfer Agent setting forth
the number of shares of Common Stock outstanding. Upon the written or oral
request of a Holder, the Company shall within one (1) Trading Day confirm orally
and in writing to the Holder the number of shares of Common Stock then
outstanding. In any case, the number of outstanding shares of Common Stock shall
be determined after giving effect to the conversion or exercise of securities of
the Company, including this Warrant, by the Holder or its Affiliates or
Attribution Parties since the date as of which such number of outstanding shares
of Common Stock was reported. The “Beneficial Ownership Limitation” shall be
4.99% of the number of shares of the Common Stock outstanding immediately after
giving effect to the issuance of shares of Common Stock issuable upon exercise
of this Warrant. The Holder, upon notice to the Company, may increase or
decrease the Beneficial Ownership Limitation provisions of this Section 2(e),
provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of
the number of shares of the Common Stock outstanding immediately after giving
effect to the issuance of shares of Common Stock upon exercise of this Warrant
held by the Holder and the provisions of this Section 2(e) shall continue to
apply. Any increase in the Beneficial Ownership Limitation will not be effective
until the 61st day after such notice is delivered to the Company. The provisions
of this paragraph shall be construed and implemented in a manner otherwise than
in strict conformity with the terms of this Section 2(e) to correct this
paragraph (or any portion hereof) which may be defective or inconsistent with
the intended Beneficial Ownership Limitation herein contained or to make changes
or supplements necessary or desirable to properly give effect to such
limitation. The limitations contained in this paragraph shall apply to a
successor holder of this Warrant.

Section 3. Certain Adjustments.

a)Stock Dividends and Splits. If the Company, at any time while this Warrant is
outstanding: (i) pays a stock dividend or otherwise makes a distribution or
distributions on shares of its Common Stock or any other equity or equity
equivalent securities payable in shares of Common Stock (which, for avoidance of
doubt, shall not include any shares of Common Stock issued by the Company upon
exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock
into a larger number of shares, (iii) combines (including by way of reverse
stock split) outstanding shares of Common Stock into a smaller number of shares,
or (iv) issues by reclassification of shares of the Common Stock any shares of
capital stock of the Company, then in each case the Exercise Price shall be
multiplied by a fraction of which the numerator shall be the number of shares of
Common Stock (excluding treasury shares, if any) outstanding immediately before
such event and of which the denominator shall be the

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number of shares of Common Stock outstanding immediately after such event, and
the number of shares issuable upon exercise of this Warrant shall be
proportionately adjusted such that the aggregate Exercise Price of this Warrant
shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall
become effective immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution and shall become
effective immediately after the effective date in the case of a subdivision,
combination or re-classification.

b)
Issuance of Rights, Options, Warrants, Etc.

i.If the Company, at any time while this Warrant is outstanding, shall issue
rights, options or warrants to all holders of Common Stock (and not to the
Holder) entitling them to subscribe for or purchase shares of Common Stock at a
price per share less than the VWAP on the record date mentioned below, then the
Exercise Price shall be multiplied by a fraction, of which the denominator shall
be the number of shares of Common Stock outstanding on the date of issuance of
such rights, options or warrants plus the number of additional shares of Common
Stock offered for subscription or purchase, and of which the numerator shall be
the number of shares of Common Stock outstanding on the date of issuance of such
rights, options or warrants plus the number of shares which the aggregate
offering price of the total number of shares so offered (assuming receipt by the
Company in full of all consideration payable upon exercise of such rights,
options or warrants) would purchase at such VWAP. Such adjustment shall be made
whenever such rights, options or warrants are issued, and shall become effective
immediately after the record date for the determination of stockholders entitled
to receive such rights, options or warrants.

ii.If the Company, at any time while this Warrant is outstanding, shall
distribute to all holders of Common Stock (and not to the Holder) evidences of
its indebtedness or assets (including cash and cash dividends) or rights or
warrants to subscribe for or purchase any security other than Common Stock, then
in each such case the Exercise Price shall be adjusted by multiplying the
Exercise Price in effect immediately prior to the record date fixed for
determination of stockholders entitled to receive such distribution by a
fraction of which the denominator shall be the VWAP determined as of the record
date mentioned above, and of which the numerator shall be such VWAP on such
record date less the then per share fair market value at such record date of the
portion of such assets or evidence of indebtedness so distributed applicable to
one outstanding share of Common Stock as determined by the Board of Directors of
the Company in good faith. In either case, the adjustments shall be described in
a statement provided to the Holder of the portion of assets or evidences of
indebtedness so distributed or such subscription rights applicable to one share
of Common Stock. Such adjustment shall be made whenever any such distribution is
made and shall become effective immediately after the record date mentioned
above.

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

d)Pro Rata Distributions. During such time as this Warrant is outstanding, if
the Company shall declare or make any dividend or other distribution of its
assets (or rights to acquire its assets) to holders of shares of

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

e)Fundamental Transaction. If, at any time while this Warrant is outstanding,
(i) the Company, directly or indirectly, in one or more related transactions
effects any merger or consolidation of the Company with or into another Person,
(ii) the Company, directly or indirectly, effects any sale, lease, license,
assignment, transfer, conveyance or other disposition of all or substantially
all of its assets in one or a series of related transactions, (iii) any, direct
or indirect, purchase offer, tender offer or exchange offer (whether by the
Company or another Person) is completed pursuant to which holders of Common
Stock are permitted to sell, tender or exchange their shares for other
securities, cash or property and has been accepted by the holders of 50% or more
of the outstanding Common Stock, (iv) the Company, directly or indirectly, in
one or more related transactions effects any reclassification, reorganization or
recapitalization of the Common Stock or any compulsory share exchange pursuant
to which the Common Stock is effectively converted into or exchanged for other
securities, cash or property, or (v) the Company, directly or indirectly, in one
or more related transactions consummates a stock or share purchase agreement or
other business combination (including, without limitation, a reorganization,
recapitalization, spin-off or scheme of arrangement) with another Person or
group of Persons whereby such other Person or group acquires more than 50% of
the outstanding shares of Common Stock (not including any shares of Common Stock
held by the other Person or other Persons making or party to, or associated or
affiliated with the other Persons making or party to, such stock or share
purchase agreement or other business combination) (each a “Fundamental
Transaction”), then, upon any subsequent exercise of this Warrant, the Holder
shall have the right to receive, for each Warrant Share that would have been
issuable upon such exercise immediately prior to the occurrence of such
Fundamental Transaction, at the option of the Holder (without regard to any
limitation in Section 2(e) on the exercise of this Warrant), the number of
shares of Common Stock of the successor or acquiring corporation or of the
Company, if it is the surviving corporation, and any additional consideration
(the “Alternate Consideration”) receivable as a result of such Fundamental
Transaction by a holder of the number of shares of Common Stock for which this
Warrant is exercisable immediately prior to such Fundamental Transaction
(without regard to any limitation in Section 2(e) on the exercise of this
Warrant). For purposes of any such exercise, the determination of the Exercise
Price shall be appropriately adjusted to apply to such Alternate Consideration
based on the amount of Alternate Consideration issuable in respect of one share
of Common Stock in such Fundamental Transaction, and the Company shall apportion
the Exercise Price among the Alternate Consideration in a reasonable manner
reflecting the relative value of any different components of the Alternate
Consideration. If holders of Common Stock are given any choice as to the
securities, cash or property to be received in a Fundamental Transaction, then
the Holder shall be given the same choice as to the Alternate Consideration it
receives upon any exercise of this Warrant following such Fundamental
Transaction. Notwithstanding anything to the contrary, in the event of a
Fundamental Transaction, the Company or any Successor Entity (as defined below)
shall, at the Holder’s option, exercisable at any time concurrently with, or
within 30 days after, the consummation of the Fundamental Transaction (or, if
later, the date of the public announcement of the applicable Fundamental
Transaction), purchase this Warrant from the Holder by paying to the Holder an
amount of cash equal to the Black Scholes Value of the remaining unexercised
portion of this Warrant on the date of the consummation of such Fundamental
Transaction; provided, however, that, if the Fundamental Transaction is not
within the Company’s control, including not approved by the Company’s Board of
Directors or the consideration is not in all stock of the Successor Entity,
Holder shall only be entitled to receive from the Company or any Successor
Entity, as of the date of consummation of such Fundamental Transaction, the same
type or form of consideration (and in the same proportion), at the Black Scholes
Value (as defined below) of the unexercised portion of this Warrant, that is
being offered and paid to the holders of Common Stock of the Company in
connection with the Fundamental Transaction,

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whether that consideration be in the form of cash, stock or any combination
thereof, or whether the holders of Common Stock are given the choice to receive
from among alternative forms of consideration in connection with the Fundamental
Transaction. “Black Scholes Value” means the value of this Warrant based on the
Black and Scholes Option Pricing Model obtained from the “OV” function on
Bloomberg, L.P. (“Bloomberg”) determined as of the day of consummation of the
applicable Fundamental Transaction for pricing purposes and reflecting (A) a
risk-free interest rate corresponding to the U.S. Treasury rate for a period
equal to the time between the date of the public announcement of the applicable
Fundamental Transaction and the Termination Date, (B) an expected volatility
equal to the greater of 100% and the 100 day volatility obtained from the HVT
function on Bloomberg as of the Trading Day immediately following the public
announcement of the applicable Fundamental Transaction, (C) the underlying price
per share used in such calculation shall be the sum of the price per share being
offered in cash, if any, plus the value of any non-cash consideration, if any,
being offered in such Fundamental Transaction, and (D) a remaining option time
equal to the time between the date of the public announcement of the applicable
Fundamental Transaction and the Termination Date. The payment of the Black
Scholes Value will be made by wire transfer of immediately available funds (or
by delivery of such other consideration, as applicable) within five Business
Days of the Holder’s election (or, if later, on the effective date of the
Fundamental Transaction). The Company shall cause any successor entity in a
Fundamental Transaction in which the Company is not the survivor (the “Successor
Entity”) to assume in writing all of the obligations of the Company under this
Warrant and the other Transaction Documents in accordance with the provisions of
this Section 3(e) pursuant to written agreements in form and substance
reasonably satisfactory to the Holder and approved by the Holder (without
unreasonable delay) prior to such Fundamental Transaction and shall, at the
option of the Holder, deliver to the Holder in exchange for this Warrant a
security of the Successor Entity evidenced by a written instrument substantially
similar in form and substance to this Warrant which is exercisable for a
corresponding number of shares of capital stock of such Successor Entity (or its
parent entity) equivalent to the shares of Common Stock acquirable and
receivable upon exercise of this Warrant (without regard to any limitations on
the exercise of this Warrant) prior to such Fundamental Transaction, and with an
exercise price which applies the exercise price hereunder to such shares of
capital stock (but taking into account the relative value of the shares of
Common Stock pursuant to such Fundamental Transaction and the value of such
shares of capital stock, such number of shares of capital stock and such
exercise price being for the purpose of protecting the economic value of this
Warrant immediately prior to the consummation of such Fundamental Transaction),
and which is reasonably satisfactory in form and substance to the Holder. Upon
the occurrence of any such Fundamental Transaction, the Successor Entity shall
succeed to, and be substituted for (so that from and after the date of such
Fundamental Transaction, the provisions of this Warrant and the other
Transaction Documents referring to the “Company” shall refer instead to the
Successor Entity), and may exercise every right and power of the Company and
shall assume all of the obligations of the Company under this Warrant and the
other Transaction Documents with the same effect as if such Successor Entity had
been named as the Company herein.

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

g)
Notice to Holder.

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

ii.Notice to Allow Exercise by Holder. If (A) the Company shall declare a
dividend (or any other distribution in whatever form) on the Common Stock, (B)
the Company shall declare a special nonrecurring cash dividend on or a
redemption of the Common Stock, (C) the Company shall authorize the granting to
all holders of the Common Stock rights or warrants to subscribe for or purchase
any shares of capital stock of any class or of any rights, (D) the approval of
any stockholders of the Company shall be required in connection with any
reclassification of the Common Stock, any consolidation or merger to which the
Company is a party, any sale or transfer of all or substantially all of the
assets of the Company, or any compulsory share exchange whereby the Common Stock
is converted into other securities, cash or property, or (E) the Company shall
authorize the voluntary or involuntary dissolution, liquidation or winding up of

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the affairs of the Company, then, in each case, the Company shall cause to be
delivered by facsimile or email to the Holder at its last facsimile number or
email address as it shall appear upon the Warrant Register of the Company, at
least 20 calendar days prior to the applicable record or effective date
hereinafter specified, a notice stating (x) the date on which a record is to be
taken for the purpose of such dividend, distribution, redemption, rights or
warrants, or if a record is not to be taken, the date as of which the holders of
the Common Stock of record to be entitled to such dividend, distributions,
redemption, rights or warrants are to be determined or (y) the date on which
such reclassification, consolidation, merger, sale, transfer or share exchange
is expected to become effective or close, and the date as of which it is
expected that holders of the Common Stock of record shall be entitled to
exchange their shares of the Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, sale, transfer or
share exchange; provided that the failure to deliver such notice or any defect
therein or in the delivery thereof shall not affect the validity of the
corporate action required to be specified in such notice. To the extent that any
notice provided in this Warrant constitutes, or contains, material, non-public
information regarding the Company or any of the Subsidiaries, the Company shall
simultaneously file such notice with the Commission pursuant to a Current Report
on Form 8-K. The Holder shall remain entitled to exercise this Warrant during
the period commencing on the date of such notice to the effective date of the
event triggering such notice except as may otherwise be expressly set forth
herein.

Section 4.    Transfer of Warrant.

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

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

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

d)Transfer Restrictions. If, at the time of the surrender of this Warrant in
connection with any transfer of this Warrant, the transfer of this Warrant shall
not be either (i) registered pursuant to an effective registration statement
under the Securities Act and under applicable state securities or blue sky laws
or (ii) eligible for resale without volume or manner- of- sale restrictions or
current public information

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requirements pursuant to Rule 144, the Company may require, as a condition of
allowing such transfer, that the Holder or transferee of this Warrant, as the
case may be, make the representations and warranties set forth in Section 3.2 of
the Purchase Agreement.

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

Section 5.    Miscellaneous.

a)No Rights as Stockholder Until Exercise. This Warrant does not entitle the
Holder to any voting rights, dividends or other rights as a stockholder of the
Company prior to the exercise hereof as set forth in Section 2(d)(i), except as
expressly set forth in Section 3.

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

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

d)
Authorized Shares.

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

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

Before taking any action which would result in an adjustment in the number of
Warrant Shares for which

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this Warrant is exercisable or in the Exercise Price, the Company shall obtain
all such authorizations or exemptions thereof, or consents thereto, as may be
necessary from any public regulatory body or bodies having jurisdiction thereof.

e)
Jurisdiction.

i.All questions concerning the construction, validity, enforcement and
interpretation of this Warrant 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. All legal Proceedings concerning the
interpretations, enforcement and defense of the transactions contemplated by
this Warrant (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. The Holder and the Company each 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, and hereby irrevocably waives, and agrees not to assert in
any action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such action or proceeding is improper or is
an inconvenient venue for such proceeding. The Holder and the Company
irrevocably each irrevocably each waives personal service of process and
consents to process being served in any such action or proceeding by mailing a
copy thereof via registered or certified mail or overnight delivery (with
evidence of delivery) to it at the address in effect for notices to it under the
Purchase 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 the Holder or the Company shall commence an action or
proceeding to enforce any provisions of this Warrant, then the prevailing party
in such action or proceeding shall be reimbursed by the non-prevailing party for
its reasonable attorneys’ fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such action or proceeding.

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

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

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

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

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

--------------------------------------------------------------------------------

j)Remedies. The Holder, in addition to being entitled to exercise all rights
granted by law, including recovery of damages, will be entitled to specific
performance of its rights under this Warrant. The Company agrees that monetary
damages would not be adequate compensation for any loss incurred by reason of a
breach by it of the provisions of this Warrant and hereby agrees to waive and
not to assert the defense in any action for specific performance that a remedy
at law would be adequate.

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

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

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

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

********************

(Signature Page Follows)

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

INNOVATE BIOPHARMACEUTICALS, INC.

By: ____________________________     Name:
        Title:

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NOTICE OF EXERCISE

TO:    INNOVATE BIOPHARMACEUTICALS, INC.

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

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

¨ in lawful money of the United States; or

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

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

_______________________________

The Warrant Shares shall be delivered to the following DWAC Account Number:

_______________________________

_______________________________

_______________________________

(4)Accredited Investor. The undersigned is an “accredited investor” as defined
in Regulation D promulgated under the Securities Act of 1933, as amended.

[SIGNATURE OF HOLDER]

Name of Investing Entity:     

Signature of Authorized Signatory of Investing Entity:     
 
Name of Authorized Signatory:     

Title of Authorized Signatory:

Date:____________________

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ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this form and supply required
information. Do not use this form to purchase shares.)

FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are
hereby assigned to

Name:                            ___________________________________________
(Please Print)

Address:                            ___________________________________________
(Please Print)

Phone Number: _____

Email Address:

Dated:___________, _____

Holder’s Signature:_________________________

Holder’s Address:_______________________________

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Exhibit B

1.The Company is a corporation validly existing and in good standing under the
laws of the State of Delaware. The Company has the corporate power to own, lease
and operate its properties and to conduct its business in all material respects
as described in the Company’s Annual Report on Form 10-K for its fiscal year
ended December 31, 2018, (the “Form 10-K”), and any subsequent periodic reports
(the “Exchange Act Reports”) filed by the Company pursuant to Sections 13(a) and
15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
2.
The Company is authorized to transact business in the State of North Carolina.

3.The Company has the corporate power to execute, deliver and perform its
obligations under the Transaction Documents.
4.The Company has duly authorized the execution, delivery and performance of the
Agreement by all necessary corporate action. The Company has duly executed and
delivered the Agreement and the Agreement constitutes the legal, valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms.
5.After giving effect to the transactions contemplated by the Agreement, and
immediately after the closing thereof, the authorized capital stock of the
Company will consist of (i) an aggregate of [•] shares of Common Stock, of which
[•] shares will be issued and outstanding, [•] shares will be reserved for
issuance upon conversion or exercise of currently issued and outstanding
options, warrants, restricted stock and other derivative securities (excluding
any Warrants), [•] shares will be reserved for issuance to employees, officers
and directors under the Innovate Biopharmaceuticals, Inc. 2012 Omnibus Incentive
Plan, as amended, and [•] shares will be reserved for issuance upon exercise of
the Warrants (the “Warrant Shares”), and (ii) an aggregate of [•] shares of
preferred stock, none of which will be issued and outstanding.
6.The Warrants have been duly authorized and, when executed and delivered
against payment therefor as provided in the Agreement, will valid and binding
obligations of the Company, enforceable in accordance with their terms. The
Warrant Shares have been duly authorized and reserved for issuance, and when
issued upon the exercise of the Warrants in accordance with the terms thereof
against payment of the exercise price therefore, will be validly issued, fully
paid and nonassessable, and free of any preemptive or similar rights.
7.To our knowledge, since the date of the filing of the Form 10-K, the Company
has filed all periodic reports required to be filed by it pursuant to Sections
13(a) and 15(d) of the Exchange Act. To our knowledge, as of their respective
filing dates and, with respect to reports that were amended following their
respective filing dates, also as of the date of such amendment, the Exchange Act
Reports complied in all material respects as to form with the requirements of
the Exchange Act and the rules and regulations of the Commission promulgated
thereunder.
8.The execution and delivery by the Company of the Transaction Documents, and
the performance by the Company of its obligations thereunder, do not (a) violate
the Organizational Documents, (b) constitute a default (or an event which, with
the giving of notice or lapse of time or both, constitutes or would constitute a
default) under, or result

--------------------------------------------------------------------------------

in a breach of, any agreement or other instrument to which the Company is a
party or by which the Company is bound, that in each case is filed as an exhibit
to the Form 10-K or to any Exchange Act Report and pursuant to which the Company
has material continuing performance obligations, or (c) violate any decree,
judgment or order that is directed to the Company or its properties, that in
each case is disclosed in the Form 10-K or in any Exchange Act Report.
9.The execution and delivery by the Company of the Transaction Documents, and
the performance by the Company of its obligations thereunder, do not violate
applicable provisions of statutory laws or regulations.
10.No consent, approval, authorization or other action by, or filing with, any
governmental or regulatory authority or agency of the United States, the State
of Delaware or the State of North Carolina is required for the performance by
the Company of its obligations under the Transaction Documents or the issuance
and the Warrants, except for (i) the filing of a Form D with the Commission in
respect of the private placement of the Warrants, and (ii) the filing with
Nasdaq of an additional listing application to list the Warrant Shares.
11.Based solely on a certificate of an officer or officers of the Company, and
without any independent investigation or verification, the Company is not, and
after consummation of the transactions contemplated by the Transaction Documents
will not be, required to register as an “investment company” under the
Investment Company Act of 1940, as amended.
12.Based on the representations and warranties of the Company and each of the
Purchasers in the Agreement, (i) no registration of the Warrants or the Warrant
Shares under the Securities Act is required in connection with the offer and the
sale of the Warrants in the manner contemplated by the Agreement and (ii)
assuming the accuracy of the representations and warranties of the Purchasers in
the Agreement as of and at the time of exercise of the Warrants, no registration
of the Warrant Shares under the Securities Act is required in connection with
such exercise.

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Exhibit C

ACCREDITED INVESTOR QUESTIONNAIRE

Innovate Biopharmaceuticals, Inc.

To:    Innovate Biopharmaceuticals, Inc.

This Accredited Investor Questionnaire is being completed by the undersigned
Purchaser (the “Subscriber”) in connection with the transactions contemplated by
the Securities Purchase Agreement (the “SPA”) dated as of March 14, 2019,
between Innovate Biopharmaceuticals, Inc., a Delaware corporation (the
“Company”), and each purchaser identified on the signature pages to the SPA.
Capitalized terms used but not defined herein shall have the meanings ascribed
to such terms in the SPA.

I.The Subscriber represents and warrants that he, she or it comes within one
category marked below, and that for any category marked, the Subscriber has
truthfully set forth, where applicable, the factual basis or reason the
Subscriber comes within that category. ALL INFORMATION IN RESPONSE TO THIS
SECTION WILL BE KEPT STRICTLY CONFIDENTIAL EXCEPT AS NECESSARY FOR THE COMPANY
TO COMPLY WITH LAW AND/OR ANY RULES PROMULGATED BY ANY REGULATORY AGENCY. The
undersigned shall furnish any additional information which Innovate
Biopharmaceuticals, Inc. (the “Company”) deems necessary in order to verify the
answers set forth below.

Category A The undersigned is an individual (not a partnership, corporation,
etc.) whose individual net worth, or joint net worth with his or her spouse,
presently exceeds $1,000,000.

Explanation. In calculating net worth you may include equity in personal
property and real estate (other than the value, after deducting mortgage
obligations, of Subscriber’s principal residence which may not be included in
such net worth calculation), cash, short-term investments, stock and securities.
Equity in personal property and real estate should be based on the fair market
value of such property less debt secured by such property.

Category B The undersigned is an individual (not a partnership, corporation,
etc.) who had an individual income in excess of $200,000 in each of the two most
recent years, or joint income with his or her spouse

--------------------------------------------------------------------------------

in excess of $300,000

in each of those years (in each case including foreign income, tax exempt income
and full amount of capital gains and losses but excluding any income of other
family members and any unrealized capital appreciation) and has a reasonable
expectation of reaching the same income level in the current year.

Category C
The undersigned is a director or executive officer of the Company which is
issuing and selling the Securities.

Category D The undersigned is a bank; a savings and loan association; insurance
company; registered investment company; registered business development company;
licensed small business investment company (“SBIC”); or employee benefit plan
within the meaning of Title 1 of ERISA and (a) the investment decision is made
by a plan fiduciary which is either a bank, savings and loan association,
insurance company or registered investment advisor, or (b) the plan has total
assets in excess of $5,000,000 or is a self-directed plan with investment
decisions made solely by persons that are accredited investors.

_________________________________________________

_________________________________________________

(describe entity)

Category E
The undersigned is a private business development company as defined in section
202(a)(22) of the Investment Advisors Act of 1940.

_______________________________________________

_______________________________________________

(describe entity)

Category F The undersigned is either a corporation, partnership, Massachusetts
business trust, or non-profit organization within the meaning of Section
501(c)(3) of the Internal Revenue Code, in each

--------------------------------------------------------------------------------

case not formed for the specific purpose of acquiring the Securities and with
total assets in excess of $5,000,000.

________________________________________________

________________________________________________

(describe entity)

Category G The undersigned is a trust with total assets in excess of $5,000,000,
not formed for the specific purpose of acquiring the Securities, where the
purchase is directed by a “sophisticated person” as defined in Regulation
506(b)(2)(ii) under the Securities Act.

Category H The undersigned is an entity (other than a trust) all the equity
owners of which are “accredited investors” within one or more of the above
categories. If relying upon this Category alone, each equity owner must complete
a separate copy of this Questionnaire.

________________________________________________

________________________________________________

(describe entity)

Category I
The undersigned is not within any of the categories above and is therefore not
an accredited investor.

For purposes hereof, “individual income” means adjusted gross income less any
income attributable to a spouse or to property owned by a spouse, increased by
the following amounts (but not including any amounts attributable to a spouse or
to property owned by a spouse): (i) the amount of any interest income received
which is tax-exempt under Section 103 of the Internal Revenue Code of 1986, as
amended (the “Code”), (ii) the amount of losses claimed as a limited partner in
a limited partnership (as reported on Schedule E of Form 1040), (iii) any
deduction claimed for depletion under Section 611 et seq. of the Code, and (iv)
any amount by which income from long-term capital gains has been reduced in
arriving at adjusted gross income pursuant to the provisions of Section 12.02 of
the Code.

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To facilitate the DWAC delivery of shares, please provide the following
information:

Name:
Broker:
Brokerage account number:
Broker DTC number if available:
SS# or EIN:

The undersigned understands and agrees that the Company may request further
information of the undersigned in verification or amplification of the
undersigned’s responses.

The undersigned represents to the Company that (a) the information contained
herein is complete and accurate on the date hereof and may be relied upon by the
Company and (b) the undersigned will notify the Company immediately of any
change in any such information occurring prior to the acceptance of the
subscription and will promptly send the Company written confirmation of such
change. The undersigned hereby certifies that he, she or it has read and
understands the Subscription Agreement related hereto.

THE UNDERSIGNED HEREBY REPRESENTS AND WARRANTS THAT (A) THE UNDERSIGNED IS
RELYING SOLELY ON ITS OWN CONCLUSIONS OR THE ADVICE OF ITS OWN COUNSEL OR
INVESTMENT REPRESENTATIVE WITH RESPECT TO ITS DECISION TO INVEST IN THE COMPANY,
AND (B) THE UNDERSIGNED UNDERSTANDS THAT SDS CAPITAL PARTNERS II, LLC AND ITS
PRINCIPALS (“SDS”) ARE NOT ACTING AS AN AGENT, ADVISOR, OR IN ANY OTHER CAPACITY
TO THE UNDERSIGNED IN CONNECTION WITH THE UNDERSIGNED’S INVESTMENT IN THE
SECURITIES AND THAT ANY ACTIONS TAKEN BY SDS IN CONNECTION WITH THE OFFERING OF
SECURITIES HAVE BEEN SOLELY ADMINISTRATIVE AND FOR CONVENIENCE PURPOSES ONLY.

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INVESTOR QUESTIONNAIRE EXECUTION PAGE

______________________________        _______________________________________
Signature                    Signature (if purchasing jointly)

______________________________        _______________________________________
Name Typed or Printed            Name Typed or Printed

______________________________        _______________________________________
Entity Name                    Entity Name

______________________________        _______________________________________
Address                    Address

______________________________        _______________________________________
City, State and Zip Code            City, State and Zip Code