EXHIBIT 10.1

 

WARRANT RESTRUCTURING AND ADDITIONAL ISSUANCE AGREEMENT

 

This Warrant Restructuring and Additional Issuance Agreement (this “Agreement”),
dated as of May 9, 2019, is made pursuant to that certain Securities Purchase
Agreement, dated as of October 5, 2018 (the “Purchase Agreement”), as amended,
by and between Innovation Pharmaceuticals Inc. (the “Company”) and the
purchasers signatory hereto (the “Purchasers”) for the purchase of shares of the
Company’s Series B 5% Convertible Preferred Stock (the “Series B Preferred” and
such shares, the “Additional Shares”) and Series 4 preferred stock purchase
warrants (the “New Warrants”, and together with the Additional Shares, the
“Additional Securities”). Capitalized terms used and not otherwise defined
herein that are defined in the Purchase Agreement shall have the meanings given
such terms in the Purchase Agreement.

 

For good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereby agree as follows:

 

1. Agreement to Exercise Warrants. The Purchasers hold Series 1 Warrants, Series
2 Warrants and/or Series 3 Warrants (collectively, the “Warrants”) to purchase
shares of the Series B Preferred. Each Purchaser, severally and not jointly with
the other Purchasers, hereby agrees to exercise such Warrants for the amount set
forth on such Purchaser’s signature page hereto (for an aggregate of 500 shares
of Series B Preferred among the Purchasers). For purposes of such exercise, this
Agreement shall be deemed to act as a duly delivered Notice of Exercise and all
other provisions of the Warrants and the Certificate of Designation shall apply
to the delivery obligations of the Company in connection with such exercise.

 

2. Amendment to Warrants. The Company and the Purchasers hereby agree to amend
the Warrants by (i) with respect to Series 1 Warrants only, by inserting the
below provision in replacement of the existing Section 2(e) of such Series 1
Warrants and (ii) with respect to the Series 2 and the Series 3 Warrants only,
by inserting the below provision as new Section 2(e) of such Series 2 Warrants
and Series 3 Warrants:

 

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“(e) Forced Exercise. Subject to the provisions of this Section 2(e), if and
only if (i) a registration statement shall be effective as to all of the Warrant
Shares and the prospectus thereunder available for use by the Company for the
sale of all such Warrant Shares to the Holder for the last thirty (30) days,
(ii) the Common Stock shall be listed or quoted for trading on the Trading
Market for the last thirty (30) days, (iii) there is a sufficient number of
authorized shares of Common Stock for issuance of all of the Conversion Shares
under the Preferred Stock then outstanding and issuable upon exercise in full of
this Warrant and there is no existing Authorized Share Failure for the last
thirty (30) days, (iv) there is no Triggering Event or any event that has
occurred and, with passage of time or delivery of notice, would result in a
Triggering Event for the last thirty (30) days, (v) there has been no public
announcement of a pending or proposed Fundamental Transaction or Change of
Control Transaction that has not been consummated, (vi) the Holder is not in
possession of any information that constitutes, or might constitute, material
non-public information which was provided by the Company, any of its
Subsidiaries, or any of their officers, directors, employees, agents or
Affiliates, (vii) the Holder has not been subject to any restriction or
limitation on conversions of shares of Preferred Stock or trading in general
from Holder’s prime broker which restricts at all the Holder’s conversions of
shares of Preferred Stock then held by the Holder or conversions of any Warrant
Shares for the last thirty (30) days, (viii) the average daily trading volume of
the Common Stock on the principal Trading Market for the 30 Trading Days
immediately prior to a Forced Exercise is not less than $40,000 and (ix) each
VWAP for the Common Stock for the 30 Trading Days immediately prior to a Forced
Exercise has not, at any time during such period, been less than $0.05, subject
to adjustment for reverse and forward stock splits and the like, then the
Company shall have the right to require the Holder to exercise a portion of this
Warrant equal to up to $400,000 of aggregate Exercise Price into Warrant Shares
(a “Forced Exercise”) per calendar month commencing on June 3, 2019 and on the
first Trading Day of each month thereafter until the earlier of such time that
the aggregate amount of Forced Exercises is $2,000,000 and November 1, 2019
(each such date, the “Forced Exercise Date”), which $400,000 and $2,000,000
respectively, of aggregate Exercise Price shall be allocated pro-rata among the
Holders of the Warrants based on such Holder’s original Subscription Amount,
provided that, in connection with any Forced Exercise, the Holder shall have the
right to exercise Series 1 Warrants, Series 2 Warrants, and/or Series 3 Warrants
held by such Holder in such Holder’s sole discretion in the amount of the Forced
Exercise; provided, however, that in no event shall a Forced Exercise occur on
any date on which there is not an effective registration statement for the
issuance of all of the Warrant Shares and the prospectus thereunder available
for use by the Company for the sale of all such Warrant Shares to the Holder or
on any date on which there is an Authorized Share Failure; provided, further
however, that, if the Holder exercises any portion of this Warrant at any time
on or prior to a Forced Exercise Date, the Company’s right to require the Holder
to exercise a portion of this Warrant shall be reduced, on a $1 for $1 basis
(based on aggregate Exercise Price of any exercises on or prior to the Forced
Exercise Date), which shall reduce the aggregate Exercise Price subject to the
next Forced Exercise hereunder. The Company may exercise its right to require a
Forced Exercise under this Section 2(e) by delivering a written notice thereof
to all, but not less than all, of the holders of Warrants issued under the
Purchase Agreement (such notice, a “Forced Exercise Notice” and the date
thereof, a “Forced Exercise Notice Date”) at least ten (10) Trading Days prior
to the Forced Exercise Date. For purposes of this Section 2(e), “Forced Exercise
Date” shall be deemed to replace the date of delivery of the Notice of Exercise
for all purposes hereunder as if the Holder delivered an Exercise Notice to the
Company on the Forced Exercise Date. For the avoidance of doubt, if (i) any
Authorized Share Failure or any Triggering Event has occurred and is continuing,
unless such Triggering Event has been waived in writing by the Holder, the
Company shall have no right to effect a Forced Exercise, provided that such
Triggering Event shall have no effect upon the Holder’s right to exercise this
Warrant in its discretion, and (ii) the Company may deliver a Forced Exercise
Notice on the Forced Exercise Notice Date even though certain conditions to the
Forced Exercise may only be satisfied on the Forced Exercise Date, provided that
the Forced Exercise shall remain contingent upon the satisfaction of such
conditions on the Forced Exercise Date. If the Company elects to cause a Forced
Exercise of this Warrant pursuant to this Section 2(e), then the Company must
simultaneously take the same action in the same proportion with respect to up to
$400,000 of aggregate Exercise Price of the Warrants issued under the Purchase
Agreement.”

 

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3. Issuance of Additional Securities. In consideration for the covenants and
amendments set forth in Section 1 and 2 of this Agreement, the Company hereby
agrees to issue to the Purchasers, for no additional consideration, (a) on the
date hereof, New Warrants, in the form of Exhibit A attached hereto, to purchase
up to 2,500 shares of Series B Preferred, issued pro rata to the Purchasers
based on initial Subscription Amounts under the Purchase Agreement, and (b) on
the date hereof, 100 shares of Series B Preferred with the rights and
preferences set forth in the Amended Certificate of Designation of the Series B
Preferred that has been filed with the Secretary of State of Nevada in the form
of Exhibit B attached hereto (the “Amended Certificate of Designation”), issued
pro rata to the Purchasers based on the aggregate Exercise Price of the Warrants
exercised pursuant to Section 1. The Company shall promptly deliver to the
Purchasers the Additional Securities under clauses (a) and (b) herein within 2
Trading Days of the date hereof. In addition, during the period commencing on
the date hereof and ending on November 9, 2019, upon each exercise of the New
Warrants and/or the Warrants (in any combination thereof) by the Purchasers, the
Company shall issue to the exercising Purchaser a number of shares of Series B
Preferred equal to one (1) share of Series B Preferred for each five (5) shares
of Series B Preferred issued upon such exercise of the New Warrants or the
Warrants, as applicable, up to an aggregate of 400 shares of Series B Preferred
for the exercise of the New Warrants issued pursuant to clause (a) herein and/or
the exercise of the Warrants (in any combination thereof), which shares of
Series B Preferred shall be delivered to the respective Purchaser on the Warrant
Share Delivery Date (as defined in the New Warrants or the Warrants, as
applicable) related to such exercise of the New Warrants and/or the Warrants.

 

4. Extension of Warrant Termination Dates. The Termination Dates of the Series 1
Warrants shall be extended by six (6) months. Each Purchaser may require the
Company to provide such Purchaser with new Series 1 Warrant certificates
reflecting the amended terms under this Agreement, in form satisfactory to such
Purchaser.

 

5. Amendment to Purchase Agreement. The Company and the Purchasers hereby agree
to amend the definition of “Required Minimum” in Section 1.1 of the Purchase
Agreement by inserting at the end of the definition of “Required Minimum” as
follows:

 

“; provided, however, that, for the period of one hundred eighty (180) days
following May 9, 2019 only, the Required Minimum shall be fixed at 70 million
shares of Common Stock (subject to adjustment for forward and reverse stock
splits, recapitalizations and similar transactions), provided further, however,
that, following the expiration of such period, the Required Minimum shall equal
the number of shares of Common Stock required hereunder.”

 

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6. Documents. The rights and obligations of the Purchaser and of the Company
with respect to the Additional Securities, the shares of Series B Preferred
issuable under the New Warrants (“Additional Warrant Shares”) and the Common
Stock issuable under the Additional Shares and the Additional Warrant Shares
(the “Additional Underlying Shares”) shall be identical in all respects to the
rights and obligations of such Purchaser and of the Company with respect to the
Series B Preferred, the Warrants and the Underlying Shares issued and issuable
pursuant to the Purchase Agreement. Any rights of a Purchaser or covenants of
the Company which are dependent on such Purchaser holding securities of the
Company or which are determined in magnitude by such Purchaser’s purchase of
securities pursuant to the Purchase Agreement shall be deemed to include any
Additional Securities purchased or issuable hereunder. The Purchase Agreement is
hereby amended so that the term “Preferred Stock” includes the Additional
Shares, “Warrants” includes the New Warrants issued hereunder, “Conversion
Shares” includes the Additional Underlying Shares and “Warrant Shares” means the
Additional Warrant Shares issuable under the New Warrants.

 

7. Representations and Warranties of the Company. The Company hereby makes to
the Purchaser the following representations and warranties:

 

(a) Authorization; Enforcement. The Company has the requisite corporate power
and authority to enter into and to consummate the transactions contemplated by
this Agreement and otherwise to carry out its obligations hereunder and
thereunder. The execution and delivery of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby have been
duly authorized by all necessary action on the part of the Company and no
further action is required by the Company, its board of directors or its
stockholders in connection therewith. This Agreement has been duly executed by
the Company and, when delivered in accordance with the terms hereof, 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.

 

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

 

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(c) Issuance of the Additional Securities. The Additional Securities are duly
authorized and, upon the execution of this Agreement by a Purchaser, will be
duly and validly issued, fully paid and nonassessable, free and clear of all
Liens imposed by the Company other than restrictions on transfer provided for in
the Transaction Documents. The Additional Underlying Shares and Additional
Warrant Shares, when issued in accordance with the terms of the Additional
Securities, will be validly issued, fully paid and nonassessable, free and clear
of all Liens imposed by the Company. The Company has reserved from its duly
authorized capital stock a number of shares of Common Stock for issuance of the
Additional Underlying Shares at least equal to the Required Minimum (in addition
to share underlying the New Warrants) on the date hereof.

 

(d) Affirmation of Prior Representations and Warranties. Except as set forth on
Schedule 3(d) hereto, the Company hereby represents and warrants to each
Purchaser that the Company’s representations and warranties listed in Section
3.1 of the Purchase Agreement are true and correct as of the date hereof.

 

(e) Availability of Registration Statement for Issuance of Additional
Securities. The Registration Statement is currently effective and available for
the issuance of the Additional Securities, the Additional Warrant Shares and the
Additional Underlying Shares to the Purchasers. The Company is eligible to use
Form S-3 under the Securities Act and it meets the transaction requirements as
set forth in General Instruction I.B.1 of Form S-3.

 

8. Representations and Warranties of the Purchaser. The Purchaser hereby
represents and warrants as of the date hereof to the Company as follows:

 

(a) Authority. The execution, delivery and performance by such Purchaser of the
transactions contemplated by this Agreement have been duly authorized by all
necessary corporate or similar action on the part of such Purchaser. This
Agreement 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.

 

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9. Company Deliverables. On the date hereof, the Company shall deliver or cause
to be delivered to each Purchaser the following:

 

(a) evidence of the filing and acceptance of the Amended Certificate of
Designation from the Secretary of State of Nevada that is reasonably
satisfactory to the Purchasers;

 

(b) a prospectus supplement to the Prospectus for the issuance of the Additional
Securities complying with Rule 424(b) of the Securities Act that is filed with
the Commission and delivered by the Company (which may be delivered in
accordance with Rule 172 under the Securities Act); and

 

(c) the legal opinion of Company Counsel, in the form delivered in connection
with the closing of the Purchase Agreement, on the issuance of the Additional
Securities hereunder; provided, however, that the delivery by the Company of the
legal opinion of Company Counsel may occur within two (2) Trading Days following
the date hereof.

 

10. Public Disclosure. On the date hereof, the Company shall disclose the
material terms of the transactions contemplated hereby on a Form 8-K, including
this Agreement as an exhibit thereto. The Company shall consult with the
Purchaser in issuing any other press releases with respect to the transactions
contemplated hereby.

 

11. Expense Reimbursement. The Company shall reimburse the legal fees and
expenses of the Purchasers in connection with this Agreement and the
transactions contemplated herein in the amount of $10,000, which shall be
payable on the date hereof.

 

12. Effect on Transaction Documents. Except as expressly set forth above, all of
the terms and conditions of the Transaction Documents shall continue in full
force and effect after the execution of this Agreement and shall not be in any
way changed, modified or superseded by the terms set forth herein, including,
but not limited to, any other obligations the Company may have to the Purchaser
under the Transaction Documents. Notwithstanding the foregoing, this Agreement
shall be deemed for all purposes as an amendment to any Transaction Document as
required to serve the purposes hereof, and in the event of any conflict between
the terms and provisions of the Additional Securities or any other Transaction
Document, on the one hand, and the terms and provisions of this Agreement, on
the other hand, the terms and provisions of this Agreement shall prevail.

 

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13. Amendments and Waivers. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given,
unless the same shall be in writing and signed by the Company and each
Purchaser.

 

14. Notices. Any and all notices or other communications or deliveries required
or permitted to be provided hereunder shall be delivered as set forth in the
Purchase Agreement.

 

15. Successors and Assigns. This Agreement shall inure to the benefit of and be
binding upon the successors and permitted assigns of each of the parties and
shall inure to the benefit of each Purchaser. The Company may not assign (except
by merger) its rights or obligations hereunder without the prior written consent
of the Purchaser of the then-outstanding Securities. The Purchaser may assign
their rights hereunder in the manner and to the Persons as permitted under the
Purchase Agreement.

 

16. Execution and Counterparts. 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 the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission or by e-mail delivery of a “.pdf” format
data file, such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed) with the same
force and effect as if such facsimile or “.pdf” signature page were an original
thereof.

 

17. Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be determined in
accordance with the provisions of the Purchase Agreement.

 

18. 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.

 

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

 

[SIGNATURE PAGE FOLLOWS]

 

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Executed as of the first date written above by the undersigned duly authorized
representatives of the Company and the Purchaser:

 

INNOVATION PHARMACEUTICALS INC.    By:/s/ Leo Ehrlich

Name:

Leo Ehrlich

 Title:

Chief Executive Officer

 

 

Name of Purchaser: _______________________

 

Signature of Authorized Signatory: ___________________________

 

Name of Authorized Signatory:

 

Title of Authorized Signatory:

 

Warrant Exercise: Series 1 Warrants: $__________; Series 2 Warrants: $_________;
and Series 3 Warrants: $___________

 

Additional Shares: _________________

 

New Warrant Shares: ________________

 

[signature page to Warrant Restructuring and Additional Issuance Agreement]

 

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Form of New Warrant

 

 

 

 

 

 

 

 

 

 

 

 

 

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Form of Amended Certificate of Designation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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