Exhibit
10.1


 


SECURITIES
EXCHANGE AGREEMENT


 


This Securities Exchange
Agreement (this “Agreement”) is dated as of May 31, 2017, between Northwest Biotherapeutics, Inc., a Delaware
corporation (the “Company”), and each holder identified on the signature pages hereto (each, including its successors
and assigns, a “Holder” and collectively the “Holders”).


 


WHEREAS, subject to the
terms and conditions set forth in this Agreement and pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the
“Securities Act”), the Company desires to exchange with each Holder, and each Holder, severally and not jointly,
desires to exchange with the Company, securities of the Company for other securities of the Company as more fully described in
this Agreement.


 


NOW, THEREFORE, IN CONSIDERATION
of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and adequacy of
which are hereby acknowledged, the Company and each Holder 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”
shall have the meaning ascribed to such term in Section 4.5.


 


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


 


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


 


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


 


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


 


“Closing”
means the closing of the exchange of the Securities pursuant to Section 2.1.


 


“Closing
Date” means the Trading Day on which (A) all of the Transaction
Documents have been executed and delivered by the applicable parties thereto, and all conditions precedent to (i) the Holders’
obligations to deliver the Exchanged Debentures and (ii) the Company’s obligations to issue and deliver the Securities, in
each case, have been satisfied or waived, but in all cases, in no
event later than the third Trading Day following the date hereof.


 




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


 


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


 


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


 


“Company
Counsel” means Gibson, Dunn & Crutcher LLP, with offices located at 200 Park Avenue, New York, New York 10166.


 


“Disclosure
Schedules” means the Disclosure Schedules of the Company delivered concurrently herewith.


 


“EGS”
means Ellenoff Grossman & Schole LLP, with offices located at 1345 Avenue of the Americas, New York, New York 10105-0302.


 


“Evaluation
Date” shall have 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.


 


“Exchange
Amount” shall mean the principal amount of Exchanged Debenture exchanged hereunder.


 


“Exchanged
Debenture” shall means the Company’s 5.00% Convertible Senior Notes due 2017.


 


“Exempt
Issuance” means the issuance of (a) shares of Common Stock or options to employees, officers, directors, Scientific Advisory
Board members and collaborators of the Company pursuant to any stock or option plan duly adopted for such purpose by a
majority of the disinterested members of the Board of Directors for services rendered to the Company, provided that any
issuances to collaborators of the Company shall be unregistered and have no registration rights, (b) securities upon the exercise
or exchange of or conversion of any Securities issued hereunder and/or other securities exercisable or exchangeable for or convertible
into shares of Common Stock issued and outstanding on the date of this Agreement, provided that such securities have not been amended
since the date of this Agreement to increase the number of such securities or to decrease the exercise price, exchange price or
conversion price of such securities or to extend the term of such securities,
(c) securities issued pursuant to acquisitions or strategic transactions approved by a majority of the disinterested directors
of the Company, provided that any such issuance shall only be to a Person (or to the equityholders of a Person) which is, itself
or through its subsidiaries, an operating company or an owner of an asset in a business synergistic with the business of the Company
and shall provide to the Company additional benefits in addition to the investment of funds, but shall not include a transaction
in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary business
is investing in securities, and (d) securities issued to fulfill existing obligations provided they are not materially modified
after the date hereof and were entered into and publicly disclosed prior to the date of this Agreement, specifically including
but not limited to shares of Common Stock issuable to Adar Bays, LLC (“Adar Bays”) as a result of the Company’s
assumption of obligations from Cognate BioServices, Inc., to Adar Bays as disclosed in the Company’s SEC Reports, provided
that such issuances under this clause (d) shall not exceed an aggregate of 2,500,000 shares of Common Stock (as adjusted for stock
splits, recapitalizations, and other similar events following the date hereof).


 




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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


“Per
Share Exchange Price” equals $0.14, 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.


 


“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.


 


“Pharmaceutical
Product” shall have the meaning ascribed to such term in Section 3.1(hh).


 




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“Prior
Holders” means the Sellers, as such term is defined in the Securities Purchase Agreement.


 


“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.


 


“Holder
Party” shall have the meaning ascribed to such term in Section 4.8.


 


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


 


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


 


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


 


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


 


“Securities
Purchase Agreement” means the Securities Agreement made on the date hereof by and among the Sellers and the Holders.


 


“Shares”
means the shares of Common Stock issued or issuable to each Holder pursuant to this Agreement.


 


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


 


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


 


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


 


“Subsidiary”
means any subsidiary of the Company as set forth in the SEC Reports, 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.


 




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“Trading
Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on
the date in question: the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New
York Stock Exchange, OTCBB, OTCQB or OTCQX or the “Pink Sheets” published by OTC Markets, Inc. (or any successors to
any of the foregoing).


 


“Transaction
Documents” means this Agreement, the Warrants and any other documents or agreements executed in connection with the transactions
contemplated hereunder.


 


“Transfer
Agent” means Computershare, the current transfer agent of the Company, with a mailing address of 520 Pike Street, Suite
1220, Seattle, WA 98101, 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
Holders 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.


 


“Warrants”
means the Common Stock purchase warrants delivered to the Holders at the Closing in accordance with Section 2.2(a) hereof, which
Warrants shall be immediately exercisable and have a term of exercise equal to two (2) years following the Closing Date, in the
form of Exhibit A attached hereto.


 


“Warrant
Shares” means the shares of Common Stock issuable upon exercise of the Warrants.


 




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ARTICLE II.

EXCHANGE


 


2.1           Closing.
On the Closing Date, upon the terms and subject to the conditions set forth herein, substantially concurrent with the execution
and delivery of this Agreement by the parties hereto, the Company agrees to exchange, and the Holders, severally and not jointly,
agree to exchange, up to an aggregate of $3,000,000 of Exchanged Debentures for a combination of Shares and Warrants. Notwithstanding
anything herein to the contrary, in the event that a Holder’s Subscription Amount would cause such Holder’s beneficial
ownership of the Common Stock to exceed 9.99% of the issued and outstanding shares of Common Stock, in lieu of Shares in excess
of such amount, such Purchaser shall be issued a pre-funded Warrant pursuant to Section 2.2. The Company shall deliver to each
Holder its respective Shares and Warrants as determined pursuant to Section 2.2(a), and the Company and each Holder 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 EGS or such other location as the parties shall mutually agree.


 


2.2           Deliveries.


 


(a)           On
or prior to the Closing Date, the Company shall deliver or cause to be delivered to each Holder the following:


 


(i)          this
Agreement duly executed by the Company;


 


(ii)         a
legal opinion of Company Counsel, substantially in the form of Exhibit B attached hereto, addressed to the Holders;


 


(iii)        a
copy of the irrevocable instructions to the Transfer Agent instructing the Transfer Agent to deliver on an expedited basis via
The Depository Trust Company Deposit or Withdrawal at Custodian system (“DWAC”) a number of Shares equal to
such Holder’s Exchange Amount divided by the Per Share Exchange Price, registered in the name of such Holder;


 


(iv)        a
Warrant registered in the name of such Holder to purchase up to a number of shares of Common Stock equal to seventy-five percent
(75%) of such Holder’s Shares, with an exercise price equal to $____, subject to adjustment therein; and


 


(v)         if
applicable, a pre-funded Warrant in the name of such Holder to purchase up to a number of shares of Common Stock equal to the
difference the difference between (A) such Purchaser’s Subscription Amount divided by the Per Share Purchase Price and (B)
the number of Shares otherwise issuable to such Purchaser that would cause such Purchaser’s Beneficial Ownership to be more
than 4.99% of the issued and outstanding shares of Common Stock, which Warrants shall have the exercise price fully paid at the
Closing.





 


(b)          On
or prior to the Closing Date, each Holder shall deliver or cause to be delivered to the Company the following:


 


(i)          this
Agreement duly executed by such Holder; and


 


(ii)         the
Exchanged Debenture with a principal amount equal to such Holder’s Exchange Amount.


 






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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) when made and on the Closing Date of the representations and warranties of the Holders 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 Holder required to be performed at or prior to the Closing Date shall have been performed
or waived; and


 


(iii)        the
delivery by each Holder of the items set forth in Section 2.2(b) of this Agreement.


 


(b)          The
respective obligations of the Holders 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 or waived 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 the date hereof; 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 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 Holder, makes it impracticable or inadvisable to exchange the Securities at the Closing.


 




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ARTICLE III.

REPRESENTATIONS AND WARRANTIES


 


3.1           Representations
and Warranties of the Company. Except as set forth in the SEC Reports and the Disclosure Schedules, which SEC Reports and Disclosure
Schedules shall be deemed a part hereof and shall qualify any representation or otherwise made herein to the extent of the disclosure
contained in the corresponding section of the SEC Reports and the Disclosure Schedules, the Company hereby makes the following
representations and warranties to each Holder:


 


(a)          Subsidiaries.
All of the direct and indirect subsidiaries of the Company are set forth in the SEC Reports. 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, could not have or reasonably be expected to result in: (i) a material adverse effect on the legality, validity
or enforceability of any Transaction Document, (ii) a material adverse effect on the results of operations, assets, business, prospects
or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse effect
on the Company’s ability to perform in any material respect on a timely basis its obligations under any Transaction Document
(any of (i), (ii) or (iii), a “Material Adverse Effect”) and no Proceeding has been instituted in any such jurisdiction
revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.


 




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(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, or (ii) conflict with, or constitute a default
(or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any
of the properties or assets of the Company or any Subsidiary, or give to others any rights of termination, amendment, acceleration
or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing
a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary is a party or by which
any property or asset of the Company or any Subsidiary is bound or affected, or (iii) subject to the Required Approvals, conflict
with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court
or governmental authority to which the Company or a Subsidiary is subject (including federal and state securities laws and regulations),
or by which any property or asset of the Company or a Subsidiary is bound or affected; except in the case of each of clauses (ii)
and (iii), such as could not have or reasonably be expected to result in a Material Adverse Effect.


 


(e)          Filings,
Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of, give any notice
to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other
Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than: (i)
the filings required pursuant to Section 4.4 of this Agreement, (ii) application(s) to each applicable Trading Market for the listing
of the Shares and Warrant Shares for trading thereon in the time and manner required thereby, (iii) the filing of Form D with the
Commission and (iv) such filings as are required to be made under applicable state securities laws (collectively, the “Required
Approvals”).


 




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(f)          Issuance
of the Securities; Registration. The Securities are duly authorized and, when issued and paid for in accordance with the applicable
Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the
Company. The Warrant Shares, when issued in accordance with the terms of the Warrants, 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 the maximum
number of shares of Common Stock issuable pursuant to this Agreement and the Warrants.


 


(g)          Capitalization.
The capitalization of the Company is as set forth on Schedule 3.1(g). The Company has not issued any capital stock since
its most recently filed SEC Report under the Exchange Act, other than 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 and 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, except as disclosed in the most recently filed SEC Report under the
Exchange Act. 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 for any such rights as have been complied with or waived.
Except as a result of the exchange of the Securities or payment of the contractor invoices in whole or in part in shares of Common
Stock in the ordinary course of business, which contractor arrangements are disclosed on Schedule 3.1(g), there are no outstanding
options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights
or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire,
any shares of Common Stock, or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is
or may become bound to issue additional shares of Common Stock or Common Stock Equivalents. The issuance and sale of the Securities
will not obligate the Company to issue shares of Common Stock or other securities to any Person (other than the Holders) and will
not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under any
of such securities. 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.


 




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(h)          SEC
Reports; Financial Statements. The Company has filed all reports, schedules, forms, statements and other documents required
to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof,
for the two years preceding the date hereof (or such shorter period as the Company was required by law or regulation to file such
material) (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectively
referred to herein as the “SEC Reports”) on a timely basis or has received a valid extension of such time of
filing and has filed any such SEC Reports prior to the expiration of any such extension. As of their respective dates, the SEC
Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable, and
none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were
made, not misleading. The Company has never been an issuer subject to Rule 144(i) under the Securities Act. The financial statements
of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules
and regulations of the Commission with respect thereto as in effect at the time of filing. Such financial statements have been
prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the periods
involved (“GAAP”), except as may be otherwise specified in such financial statements or the notes thereto and
except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects
the financial position of the Company and its consolidated Subsidiaries as of and for the dates thereof and the results of operations
and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit
adjustments.


 


(i)          Material
Changes; Undisclosed Events, Liabilities or Developments. Since the date of the latest audited financial statements included
within the SEC Reports, except as specifically disclosed in a subsequent SEC Report filed prior to the date hereof, (i) there has
been no event, occurrence or development that has had or that could reasonably be expected to result in a Material Adverse Effect,
(ii) the Company has not 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 (B) liabilities not required to be reflected in the Company’s
financial statements pursuant to GAAP or disclosed in filings made with the Commission and (C) non-cash accounting measures that
have effect of reducing shareholder equity as described on Schedule 3.1(i) hereto, (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 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 one (1) Trading
Day prior to the date that this representation is made.


 




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(j)          Litigation.
Except as set forth in the SEC Reports, 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 or (ii) could, if there were an unfavorable decision, have
or reasonably be expected to result in a Material Adverse Effect. Neither the Company nor any Subsidiary, nor any director or officer
thereof, is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities
laws or a claim of breach of fiduciary duty. There has not been, and to the knowledge of the Company, there is not pending or contemplated,
any investigation by the Commission involving the Company or any current or former director or officer of the Company. The Commission
has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company or
any Subsidiary under the Exchange Act or the Securities Act.


 


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


 




    	 	12	 



     


    

 


(m)          Environmental
Laws. The Company and its Subsidiaries (i) are in compliance with all
federal, state, local and foreign laws relating to pollution or protection of human health or the environment (including ambient
air, surface water, groundwater, land surface or subsurface strata), including laws relating to emissions, discharges, releases
or threatened releases of chemicals, pollutants, contaminants, or toxic or hazardous substances or wastes (collectively, “Hazardous
Materials”) into the environment, or otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Materials, as well as all authorizations, codes, decrees, demands, or demand
letters, injunctions, judgments, licenses, notices or notice letters, orders, permits, plans or regulations, issued, entered,
promulgated or approved thereunder (“Environmental Laws”); (ii) have received all permits licenses or other
approvals required of them under applicable Environmental Laws to conduct their respective businesses; and (iii) are in compliance
with all terms and conditions of any such permit, license or approval where in each clause (i), (ii) and (iii), the failure to
so comply could be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect.


 


(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 could not reasonably be expected to result in a Material Adverse Effect (“Material
Permits”), and neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation
or modification of any Material Permit.


 


(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.


 




    	 	13	 



     


    

 


(p)          Intellectual
Property. The Company and its Subsidiaries own or possess adequate rights to use all patents, patent applications, patent rights,
licenses, inventions, copyrights, know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures), trademarks, trademark registrations, service marks, service mark registrations, trade names,
mask work rights and other intellectual property necessary to carry on the business now operated by it or proposed to be operated
by it as described in the SEC Reports (collectively, “Intellectual Property”), except where the lack of such
ownership or rights to use would not have a Material Adverse Effect. Except as disclosed in the SEC Reports, there is no litigation
or other proceeding pending or, to the Company’s knowledge, threatened and no claims are presently being asserted by any
third party challenging or questioning the ownership, validity, or enforceability of the Company's right to use or own any Intellectual
Property or asserting that the use of the Company’s Intellectual Property by the Company or the operation of the Company’s
business infringes upon or misappropriates the Intellectual Property of any third party, and the Company is unaware of any facts
which would form a reasonable basis for any such claim. None of, and neither the Company nor any Subsidiary has received a notice
(written or otherwise) that any of, the Intellectual Property has expired, terminated or been abandoned, or is essential for the
Company’s business and is expected to expire or terminate or be abandoned within two (2) years from the date of this Agreement.
Except as disclosed in the SEC Reports, the Company is not otherwise aware of any infringement of or conflict with asserted rights
of others with respect to any of the Company's Intellectual Property or the operation of the Company’s business. Except as
disclosed in the SEC Reports, the Company is not otherwise aware of any facts or circumstances which would render any of the Company's
Intellectual Property invalid or inadequate to protect the interests of the Company therein, or with respect to the patent applications
contained in the Intellectual Property, unpatentable. Except as disclosed in the SEC Reports, or as would not, individually or
in the aggregate have a Material Adverse Effect, to the best of the Company’s knowledge, (i) there is no infringement by
third parties engaged in commercial activity of any Intellectual Property of the Company relating to the Company’s business
and (ii) there are no non-commercial activities being performed by any third parties which, upon commercialization thereof, could
reasonably be expected to infringe on the Intellectual Property of the Company. The Company and its subsidiaries have taken all
steps necessary to perfect its ownership of and interest in the Intellectual Property.


 


(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 $5,000,000. 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.


 




    	 	14	 



     


    

 


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


 


(s)          Sarbanes-Oxley;
Internal Accounting Controls. The Company and the Subsidiaries are in compliance with any and all applicable requirements of
the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and any and all applicable rules and regulations promulgated
by the Commission thereunder that are effective as of the date hereof and as of the Closing Date. The Company and the Subsidiaries
maintain a system of internal accounting controls sufficient 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. 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. Since the
Evaluation Date, there have been no changes in the internal control over financial reporting (as such term is defined in the Exchange
Act) of the Company and its Subsidiaries that have materially affected, or is reasonably likely to materially affect, the internal
control over financial reporting of the Company and its Subsidiaries.


 


(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 Holders shall have no obligation with respect to any fees or with respect to any
claims made by or on behalf of other Persons for fees of a type contemplated in this Section that may be due in connection with
the transactions contemplated by the Transaction Documents.


 




    	 	15	 



     


    

 


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


 


(v)         Registration
Rights. Except as set forth on Schedule 3.1(v), no Person has any right to cause the Company or any Subsidiary to effect the
registration under the Securities 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 set forth in the SEC Reports, 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. Except as set forth in the SEC Reports, 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 Holders as a result of the Holders 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 Holders’ ownership of the Securities.


 




    	 	16	 



     


    

 


(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 Holders or their agents or counsel with
any information that it believes constitutes or might constitute material, non-public information which is not otherwise disclosed
in the SEC Reports. The Company understands and confirms that the Holders 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 Holders regarding
the Company and its Subsidiaries, their respective businesses and the transactions contemplated hereby, including the Disclosure
Schedules to this Agreement, is true and correct in all material respects and does not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under
which they were made, not misleading. The press releases disseminated by the Company during the twelve months preceding the date
of this Agreement taken as a whole do not contain any untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were
made and when made, not misleading. The Company acknowledges and agrees that no Holder 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 Holders’ representations and warranties set forth in Section 3.2, neither
the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers
or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering of the
Securities to be integrated with prior offerings by the Company for purposes of any applicable shareholder approval provisions
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, after giving effect to the receipt by the
Company of the proceeds from the sale of the Securities 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. The SEC Reports set forth
as of the date hereof all outstanding secured and unsecured Indebtedness of the Company or any Subsidiary, or for which the Company
or any Subsidiary has commitments. For the purposes of this Agreement, “Indebtedness” means (x) any liabilities
for borrowed money or amounts owed in excess of $50,000 (other than trade accounts payable incurred in the ordinary course of business),
(y) all guaranties, endorsements and other contingent obligations in respect of indebtedness of others, whether or not the same
are or should be reflected in the Company’s consolidated balance sheet (or the notes thereto), except guaranties by endorsement
of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business; and (z) the present
value of any lease payments in excess of $50,000 due under leases required to be capitalized in accordance with GAAP. Neither the
Company nor any Subsidiary is in default with respect to any Indebtedness.


 




    	 	17	 



     


    

 


(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.


 


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


 


(ee)         
Acknowledgment Regarding Holders’ Exchange of Securities. The Company acknowledges and agrees that each of the Holders
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 Holder 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 Holder or any of their respective representatives or agents in connection with the Transaction Documents and the transactions
contemplated thereby is merely incidental to the Holders’ exchange of the Securities. The Company further represents to each
Holder 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.


 




    	 	18	 



     


    

 


(ff)         Acknowledgement
Regarding Holder’s Trading Activity. Anything in this Agreement or elsewhere herein to the contrary notwithstanding (except
for Sections 3.2(f) and 4.15 hereof), it is understood and acknowledged by the Company that: (i) none of the Holders has been asked
by the Company to agree, nor has any Holder 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 Holder, 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 Holder, and counter-parties in “derivative”
transactions to which any such Holder is a party, directly or indirectly, presently may have a “short” position in
the Common Stock, and (iv) each Holder 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 Holders may engage in hedging activities at various times during the period that the Securities are outstanding, including,
without limitation, during the periods that the value of the Warrant Shares deliverable with respect to Securities are being determined,
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. 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, other than, in the case of clauses (ii).


 




    	 	19	 



     


    

 


(hh)         FDA.
As to each product subject to the jurisdiction of the U.S. Food and Drug Administration (“FDA”) under the Federal
Food, Drug and Cosmetic Act, as amended, and the regulations thereunder (“FDCA”) that is manufactured, packaged,
labeled, tested, distributed, sold, and/or marketed by the Company or any of its Subsidiaries (each such product, a “Pharmaceutical
Product”), such Pharmaceutical Product is being manufactured, packaged, labeled, tested, distributed, sold and/or marketed
by the Company in compliance with all applicable requirements under FDCA and similar laws, rules and regulations relating to registration,
investigational use, premarket clearance, licensure, or application approval, good manufacturing practices, good laboratory practices,
good clinical practices, product listing, quotas, labeling, advertising, record keeping and filing of reports, except where the
failure to be in compliance would not have a Material Adverse Effect. There is no pending, completed or, to the Company's knowledge,
threatened, action (including any lawsuit, arbitration, or legal or administrative or regulatory proceeding, charge, complaint,
or investigation) against the Company or any of its Subsidiaries, and none of the Company or any of its Subsidiaries has received
any notice, warning letter or other communication from the FDA or any other governmental entity, which (i) contests the premarket
clearance, licensure, registration, or approval of, the uses of, the distribution of, the manufacturing or packaging of, the testing
of, the sale of, or the labeling and promotion of any Pharmaceutical Product, (ii) withdraws its approval of, requests the recall,
suspension, or seizure of, or withdraws or orders the withdrawal of advertising or sales promotional materials relating to, any
Pharmaceutical Product, (iii) imposes a clinical hold on any clinical investigation by the Company or any of its Subsidiaries,
(iv) enjoins production at any facility of the Company or any of its Subsidiaries, (v) enters or proposes to enter into a consent
decree of permanent injunction with the Company or any of its Subsidiaries, or (vi) otherwise alleges any violation of any laws,
rules or regulations by the Company or any of its Subsidiaries, and which, either individually or in the aggregate, would have
a Material Adverse Effect. The properties, business and operations of the Company have been and are being conducted in all material
respects in accordance with all applicable laws, rules and regulations of the FDA. The Company has not been informed by the FDA
that the FDA will prohibit the marketing, sale, license or use in the United States of any product proposed to be developed, produced
or marketed by the Company nor has the FDA expressed any concern as to approving or clearing for marketing any product being developed
or proposed to be developed by the Company. 


 


(ii)         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”).


 


(jj)         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 Holder’s request.


 


(kk)         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.


 




    	 	20	 



     


    

 


(ll)         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.


 


(mm)         PFS
Data. The Company represents that, to the current knowledge of the Company, the Company has no reason to believe that the Company
(or any Person acting on its behalf) will release or publicly disclose any PFS data of the Company or any Subsidiary prior to the
thirty-first day after the Closing Date; provided, however, nothing herein shall prohibit the Company from making any disclosure
otherwise required by applicable law.


 


(nn)         Tacking.
Subject to the truth and accuracy of the Holder’s representations set forth in Section 3.2 of this Agreement, and of the
representations of the Sellers set forth in the Securities Purchase Agreement, the parties acknowledge and agree that in accordance
with Sections 3(a)(9) and 4(a)(2) and Rule 144 of the Securities Act, the Shares and Warrants issued in exchange for the Exchanged
Debentures will tack back to ____________, 2014, the original issue date of such Debentures, pursuant to Rule 144 and the Company
agrees not to take a position to the contrary. The Company is not an issuer subject to Rule 144(i).


 


3.2           Representations
and Warranties of the Holders. Each Holder, for itself and for no other Holder, 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 Holder 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 Holder of the transactions contemplated by the Transaction Documents have been duly authorized by all necessary
corporate, partnership, limited liability company or similar action, as applicable, on the part of such Holder. Each Transaction
Document to which it is a party has been duly executed by such Holder, and when delivered by such Holder in accordance with the
terms hereof, will constitute the valid and legally binding obligation of such Holder, 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 Holder 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. Such Holder is acquiring
the Securities hereunder in the ordinary course of its business.




    	 	21	 



     


    

 


(c)          Holder
Status. At the time such Holder 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 an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7)
or (a)(8) under the Securities Act. The Holder is not, and within the ninety (90) days preceding the date of this Agreement has
not been, an Affiliate of the Company.


 


(d)          Experience
of Such Holder. Such Holder, 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 Holder 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 Holder 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 Holder has not, nor
has any Person acting on behalf of or pursuant to any understanding with such Holder, 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 Holder
first received a term sheet or other communication (written or oral) from the Company or any other Person representing the Company
setting forth the material terms of the transactions contemplated hereunder and ending immediately prior to the execution hereof.
Notwithstanding the foregoing, in the case of a Holder that is a multi-managed investment vehicle whereby separate portfolio managers
manage separate portions of such Holder’s assets and the portfolio managers have no direct knowledge of the investment decisions
made by the portfolio managers managing other portions of such Holder’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 exchange
the Securities covered by this Agreement. Other than to other Persons party to this Agreement or to such Holder’s representatives,
including, without limitation, its officers, directors, partners, legal and other advisors, employees, agents and Affiliates, such
Holder 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 or borrowing shares in order to effect Short Sales
or similar transactions in the future.


 




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The Company acknowledges
and agrees that the representations contained in this Section 3.2 shall not modify, amend or affect such Holder’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 or borrowing
shares in order to effect Short Sales or similar transactions in the future.


 


ARTICLE IV.

OTHER AGREEMENTS OF THE PARTIES


 


4.1           Restrictions
on Resale. Subject to the accuracy of the Holders’ representations contained in this Agreement, the Shares and Warrants
shall have no restrictions on resale by the Holder and be issued free of all legends. 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 the Warrant
is exercised via cashless exercise, the Warrant Shares issued pursuant to any such exercise shall be issued free of all legends.
If at any time following the date hereof a registration statement is not effective or is not otherwise available for the sale or
resale of the Warrant Shares, the Company shall immediately notify the holders of the Warrants in writing that a registration statement
is not then effective and, if a registration statement shall subsequently become effective and available thereafter shall promptly
notify such holders when the registration statement is effective again and available for the sale or resale of the Warrant Shares
(it being understood and agreed that the foregoing shall not limit the ability of the Company to issue, or any Holder to sell,
any of the Warrant Shares in compliance with applicable federal and state securities laws).


 


4.2           Furnishing
of Information. Until the earliest of the time that (i) no Holder 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.


 


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 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.


 




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4.4           Securities
Laws Disclosure; Publicity. The Company shall by 9:00 a.m. (New York City time) on the Trading Day immediately following the
date hereof file a Current Report on Form 8-K, including the Transaction Documents as exhibits thereto. From and after the issuance
of such Form 8-K, the Company represents to the Holders that it shall have publicly disclosed all material, non-public information
delivered to any of the Holders by the Company or any of its Subsidiaries, or any of their respective officers, directors, employees
or agents in connection with the transactions contemplated by the Transaction Documents. In addition, effective upon the issuance
of such Form 8-K, 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 Holders or any of their Affiliates on the other hand, shall terminate. The Company
and each Holder shall consult with each other in issuing any other press releases with respect to the transactions contemplated
hereby, and neither the Company nor any Holder 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 Holder, or without the prior consent of each
Holder, 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
Holder, or include the name of any Holder in any filing with the Commission or any regulatory agency or Trading Market, without
the prior written consent of such Holder, 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, governmental order or decision,
or Trading Market regulations, in which case the Company shall provide the Holders 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
Holder 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 Holder 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 Holders.


 


4.6           Non-Public
Information. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents,
which shall be disclosed pursuant to Section 4.4, the Company covenants and agrees that neither it, nor any other Person acting
on its behalf will provide any Holder or its agents or counsel with any information that constitutes, or the Company reasonably
believes constitutes, material non-public information, unless prior thereto such Holder 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
Holder 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 Holder without such Holder’s consent, the Company hereby covenants
and agrees that such Holder shall not have any duty of confidentiality to the Company, any of its Subsidiaries, or any of their
respective officers, directors, agents, employees or Affiliates, or a duty to the Company, any of its Subsidiaries or any of their
respective officers, directors, agents, employees or Affiliates not to trade on the basis of, such material, non-public information,
provided that the Holder 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 Holder shall be relying on the foregoing covenant in effecting transactions in securities of the Company.


 




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4.7           Use
of Proceeds. The Company shall use the net proceeds from the sale of the Securities hereunder for working capital purposes
and shall not use such proceeds: (a) [reserved], (b) [reserved], (c) for the settlement of any outstanding litigation or (d) in
violation of FCPA or OFAC regulations.


 


4.8           Indemnification
of Holders. Subject to the provisions of this Section 4.8, the Company will indemnify and hold each Holder 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 Holder (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 “Holder 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 Holder 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 Holder 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
Holder Party, with respect to any of the transactions contemplated by the Transaction Documents (unless such action is based upon
a breach of such Holder Party’s representations, warranties or covenants under the Transaction Documents or any agreements
or understandings such Holder Party may have with any such stockholder or any violations by such Holder Party of state or federal
securities laws or any conduct by such Holder Party which constitutes fraud, gross negligence, willful misconduct or malfeasance).
If any action shall be brought against any Holder Party in respect of which indemnity may be sought pursuant to this Agreement,
such Holder 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 Holder Party. Any Holder 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 Holder Party except to the extent that (i) the employment thereof has been specifically authorized by the Company in writing,
(ii) the Company has failed after a reasonable period of time to assume such defense and to employ counsel or (iii) in such action
there is, in the reasonable opinion of counsel, a material conflict on any material issue between the position of the Company and
the position of such Holder Party, in which case the Company shall be responsible for the reasonable fees and expenses of no more
than one such separate counsel. The Company will not be liable to any Holder Party under this Agreement (y) for any settlement
by a Holder Party effected without the Company’s prior written consent, which shall not be unreasonably withheld or delayed;
or (z) to the extent, but only to the extent that a loss, claim, damage or liability is attributable to any Holder Party’s
breach of any of the representations, warranties, covenants or agreements made by such Holder 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 Holder Party against the Company or others
and any liabilities the Company may be subject to pursuant to law.


 




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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 Shares pursuant to this Agreement and Warrant Shares pursuant to any exercise of the Warrants.


 


4.10         Listing
of Common Stock. The Company hereby agrees to use best efforts to maintain the listing or quotation of the Common Stock on
the Trading Market on which it is currently listed, and concurrently with the Closing, the Company shall apply to list or quote
all of the Shares and Warrant Shares on such Trading Market and promptly secure the listing of all of the Shares and 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 Shares and Warrant Shares, and will take such other action as is necessary
to cause all of the Shares and 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 respects with the Company’s reporting, filing and other obligations under the bylaws or rules of the
Trading Market. The Company agrees 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         Blue
Sky Filings. The Company shall take such action as the Company shall reasonably determine is necessary in order to obtain an
exemption for, or to qualify the Securities for, sale to the Holders at the Closing under applicable securities or “Blue
Sky” laws of the states of the United States, and shall provide evidence of any such actions taken promptly upon the written
request of any Holder.


 


4.12         Participation
in Future Financing.


 


(a)            From
the date hereof until the date that is the four (4) month anniversary of the Closing Date, upon any issuance by the Company or
any of its Subsidiaries of Common Stock or Common Stock Equivalents for cash consideration, Indebtedness or a combination of units
thereof (including but not limited to an exchange similar to the transactions contemplated hereunder) (a “Subsequent Financing”),
each Holder with an Exchange Amount of at least $1,000,000 at Closing (a “Participation Right Holder”) shall
have the right to participate in up to an amount of the Subsequent Financing equal to 50% of the Subsequent Financing (the “Participation
Maximum”) on the same terms, conditions and price provided for in the Subsequent Financing. As an example and for the
avoidance of doubt, if a Subsequent Financing of $1 million occurs, the Participation Maximum in such case shall be $500,000.


 




    	 	26	 



     


    

 


(b)          Between
4 pm ET and 6 pm ET on the Trading Day immediately prior to the Trading Day of the expected announcement of the Subsequent Financing,
the Company shall deliver a notice to such Participation Right Holder (a “Subsequent Financing Notice”), which
shall describe in reasonable detail the proposed terms of such Subsequent Financing, the amount of proceeds intended to be raised
thereunder and the Person or Persons through or with whom such Subsequent Financing is proposed to be effected and shall include
a term sheet or similar document relating thereto as an attachment.


 


(c)          Any
Participation Right Holder desiring to participate in such Subsequent Financing must provide written notice to the Company by the
later of (i) 10 pm ET on the Trading Day that the Subsequent Financing Notice is delivered and (ii) two hours after the time that
the Subsequent Financing Notice is received by such Participation Right Holder (the “Notice Termination Time”)
that such Participation Right Holder is willing to participate in the Subsequent Financing, the amount of such Participation Right
Holder’s participation, and representing and warranting that such Participation Right Holder has such funds ready, willing,
and available for investment on the terms set forth in the Subsequent Financing Notice. If the Company receives no such notice
from a Participation Right Holder as of such time, such Participation Right Holder shall be deemed to have notified the Company
that it does not elect to participate.


 


(d)          The
Company must provide the Participation Right Holders with a second Subsequent Financing Notice, and the Participation Right Holders
will again have the right of participation set forth above in this Section 4.12, if the definitive agreement subject to the initial
Subsequent Financing Notice is not entered into for any reason on the terms set forth in such Subsequent Financing Notice within
five Trading Days after the date of the initial Subsequent Financing Notice.


 


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


 


(f)          Notwithstanding
anything to the contrary in this Section 4.12 and unless otherwise agreed to by such Participation Right Holder, the Company shall
either confirm in writing to such Participation Right Holder that the transaction with respect to the Subsequent Financing has
been abandoned or shall publicly disclose its intention to issue the securities in the Subsequent Financing, in either case in
such a manner such that such Participation Right Holder will not be in possession of any material, non-public information, by the
fifth (5th) Business Day following delivery of the Subsequent Financing Notice. If by such fifth (5th) Business
Day, no public disclosure regarding a transaction with respect to the Subsequent Financing has been made, and no notice regarding
the abandonment of such transaction has been received by such Participation Right Holder, such transaction shall be deemed to have
been abandoned and such Participation Right Holder shall not be deemed to be in possession of any material, non-public information
with respect to the Company or any of its Subsidiaries.


 




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


 


4.13         Subsequent
Equity Sales.


 


(a)          From
the date hereof until 30 days after the Closing Date, neither the Company nor any Subsidiary shall issue, enter into any agreement
to issue or announce the issuance or proposed issuance (or exchange, or proposed exchange, of securities of the Company, including
but not limited to an exchange similar to the transactions contemplated hereunder except as permitted below) of any shares of Common
Stock or Common Stock Equivalents, other than Exempt Issuances.


 


(b)          Notwithstanding
the foregoing, this Section 4.13 shall not apply with respect to:


 


(i)          a
non-institutional investor (e.g., an individual who is an existing investor which invests after the closing date) that purchases
securities from the Company on the same terms as the Securities under this Agreement (or terms more favorable to the Company) (but
not an exchange of Exchanged Debentures which shall be covered under clause (ii) below); provided, however, that
any such non-institutional investor purchasing any such securities will agree to enter into a Lock-Up Agreement which shall include,
but not be limited to, such non-institutional investor not selling, pledging, transferring, or assigning any such purchased securities
during the 30 day period set forth at the beginning of this Section 4.13.


 


(ii)         an
exchange of other Exchanged Debentures not purchased hereunder on the same terms as the exchange of Securities under this Agreement
(or terms more favorable to the Company); provided, however, that such exchange shall not occur prior to June 19,
2017 and shall not be publicly announce prior to June 20, 2017 and any such investor exchanging such Exchanged Debentures will
agree to enter into a Lock-Up Agreement which shall include, but not be limited to, such investor not selling, pledging, transferring,
or assigning any such exchanged securities during the 30 day period set forth at the beginning of this Section 4.13.


 


4.14         Equal
Treatment of Holders. No consideration (including any modification of any Transaction Document) shall be offered or paid to
any Person to amend or consent to a waiver or modification of any provision of 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 Holder by the Company and negotiated separately by each Holder, and is intended for the Company to treat
the Holders as a class and shall not in any way be construed as the Holders acting in concert or as a group with respect to the
purchase, disposition or voting of Securities or otherwise.


 




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4.15         Certain
Transactions and Confidentiality. Each Holder, severally and not jointly with the other Holders, 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 announced pursuant to the initial press release
as described in Section 4.4. Each Holder, severally and not jointly with the other Holders,
covenants that until such time as the transactions contemplated by this Agreement are publicly disclosed by the Company pursuant
to the initial press release as described in Section 4.4, such Holder will maintain the confidentiality of the existence and terms
of this transaction and the information included in the Disclosure Schedules. Notwithstanding the
foregoing and notwithstanding anything contained in this Agreement to the contrary, the Company expressly acknowledges and agrees
that (i) no Holder 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 announced pursuant
to the initial press release as described in Section 4.4, (ii) no Holder 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 announced pursuant to the initial press release as described in Section 4.4 and (iii) no Holder
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 issuance of the initial press release as described in Section 4.4. Notwithstanding the foregoing, in the case
of a Holder that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such Holder’s
assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers managing
other portions of such Holder’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 exchange the Securities covered by this Agreement.


 


4.16         Exercise
Procedures. The form of Notice of Exercise included in the Warrants set forth the totality of the procedures required of the
Holders in order to exercise the Warrants. No additional legal opinion, other information or instructions shall be required of
the Holders 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.


 


4.17         Registration
of Warrant Shares. The Company shall use reasonable best efforts to file a resale registration statement for the resale of
the Warrant Shares within 45 days of the date hereof and to cause such registration statement to go effective as soon as possible,
and in any event within 120 days of the date hereof.


 




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ARTICLE V.

MISCELLANEOUS


 


5.1           Termination.
This Agreement may be terminated by the Company or any Holder, as to such Holder’s obligations hereunder only and without
any effect whatsoever on the obligations between the Company and the other Holders, by written notice to the other parties, if
the Closing has not been consummated on or before June __, 2017; 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. At the Closing, the Company has agreed to reimburse the lead Holder the non-accountable sum of $20,000 for its
legal and diligence 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 Holder), stamp taxes and other taxes and duties levied in connection with
the delivery of any Securities to the Holders.


 


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


 




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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 the Holders who exchanged at least 50.1% in interest of the Shares based on the
initial Exchange 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 Holder (or
group of Holders), the consent of such disproportionately impacted Holder (or group of Holders) 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 any Holder relative
to the comparable rights and obligations of the other Holders shall require the prior written consent of such adversely affected
Holder, Any amendment effected in accordance with accordance with this Section 5.5 shall be binding upon each Holder 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 Holder (other than by merger). Any Holder may assign any or all of its rights under this Agreement to any Person to whom such
Holder assigns or transfers any Securities, provided that such transferee agrees in writing to be bound, with respect to the transferred
Securities, by the provisions of the Transaction Documents that apply to the “Holders.”


 


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 suit, action
or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding
is improper or is an inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail
or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement
and agrees that such service shall constitute good and sufficient service of process and notice thereof, effective upon receipt.
Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. If
either party shall commence an action, suit or proceeding to enforce any provisions of the Transaction Documents, then, in addition
to the obligations of the Company under Section 4.8, the prevailing party in such action, suit or proceeding shall be reimbursed
by the other party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation
and prosecution of such action or proceeding.


 




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


 




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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 Holders 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 Holder pursuant to any Transaction Document or
a Holder 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 Holders’ Obligations and Rights. The obligations of each Holder under any Transaction Document are several
and not joint with the obligations of any other Holder, and no Holder shall be responsible in any way for the performance or non-performance
of the obligations of any other Holder under any Transaction Document. Nothing contained herein or in any other Transaction Document,
and no action taken by any Holder pursuant hereto or thereto, shall be deemed to constitute the Holders as a partnership, an association,
a joint venture or any other kind of entity, or create a presumption that the Holders 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 Holder 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 Holder to be joined as an additional party in any
Proceeding for such purpose. Each Holder has been represented by its own separate legal counsel in its review and negotiation of
the Transaction Documents. 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 Holder, solely, and not between the Company and the Holders collectively and
not between and among the Holders.


 


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.


 




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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. The term “including” is deemed to mean “including, without limitation.”


 


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. 


 


(Signature Pages Follow)


 




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


 


	NORTHWEST BIOTHERAPEUTICS, INC.	 	Address for Notice:
	 	 	 	 
	By:	/s/ Linda F. Powers	 	4800 Montgomery Lane, Suite 800
	 	Name: Linda F. Powers	 	Bethesda, MD 20814
	 	Title: Chief Executive Officer	 	Fax:
	 	 	 	E-mail:
	With a copy to (which shall not constitute notice):	 	 


 


[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK


SIGNATURE PAGE FOR HOLDER FOLLOWS]


 




    	 	35	 



     


    

 


[HOLDER SIGNATURE PAGES TO NWBO SECURITIES EXCHANGE
AGREEMENT]


 


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


 


Name of Holder: Sabby
Healthcare Master Fund, Ltd.


 


Signature of Authorized Signatory of Holder:
/s/ Robert Grundstein 


 


Name of Authorized Signatory:  Robert Grundstein


 


Title of Authorized Signatory: COO
of Purchaser’s Investment Manager


 


Email Address of Authorized Signatory:_________________________________________


 


Facsimile Number of Authorized Signatory: __________________________________________


 


Address for Notice to Holder:


 


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


 


Exchange Amount: $2,000,000


 


Shares: 13,485,714 at $0.14


 


Pre-Funded Warrants: 800,000


 


Warrant Shares: 10,714,285 at $0.175


 


[SIGNATURE PAGES CONTINUE]


 




    	 	36	 



     


    

 


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


 


Name of Holder: Sabby
Volatility Warrant Master Fund, Ltd.


 


Signature of Authorized Signatory of Holder:
/s/ Robert Grundstein 


 


Name of Authorized Signatory:  Robert Grundstein 


 


Title of Authorized Signatory: COO
of Purchaser’s Investment Manager


 


Email Address of Authorized Signatory:_________________________________________


 


Facsimile Number of Authorized Signatory: __________________________________________


 


Address for Notice to Holder:


 


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


 


Exchange Amount: $1,000,000


 


Shares: 7,142,857 at $0.14


 


Pre-Funded Warrants: 0


 


Warrant Shares: 5,357,143 at $0.175


 


[SIGNATURE PAGES CONTINUE]


 




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