gtbp_ex103





 







Exhibit 10.3

 



[FORM OF SETTLEMENT WARRANT]

 



GT BIOPHARMA, INC.

 



Pre-Funded Warrant To Purchase Common Stock

 



Warrant
No.:                                                                                                                                           






Number
of Shares of Common Stock:_____________


Date of
Issuance: June 19, 2020 ("Issuance
Date")

 


GT
Biopharma, Inc., a Delaware corporation (the "Company"), hereby certifies that, for
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, [EMPERY FUND], the registered holder
hereof or its permitted assigns (the "Holder"), is entitled, subject to the
terms set forth below, to purchase from the Company, at the
Exercise Price (as defined below) then in effect, at any time or
times on or after the Issuance Date, but not after 11:59 p.m., New
York time, on the Expiration Date, (as defined below),
______________ (_____________)1 fully paid non-assessable shares of
Common Stock, subject to adjustment as provided herein (the "Warrant Shares"). Except as otherwise
defined herein, capitalized terms in this Pre-Funded Warrant to
Purchase Common Stock (including any Pre-Funded Warrants to
Purchase Common Stock issued in exchange, transfer or replacement
hereof, this "Warrant"),
shall have the meanings set forth in Section 17. This Warrant is
one of the Pre-Funded Warrants to purchase Common Stock (the
"Settlement Warrants")
issued pursuant to Section 1(b) of that certain Settlement
Agreement, dated as of June 19, 2020 (the "Settlement Date"), by and among the
Company and the investors and other parties referred to therein
(the "Settlement
Agreement"). Capitalized terms used herein and not otherwise
defined shall have the definitions ascribed to such terms in the
Settlement Agreement.

 

1. EXERCISE
OF WARRANT.

 

(a) Mechanics of Exercise. Subject
to the terms and conditions hereof (including, without limitation,
the limitations set forth in Section 1(f)), this Warrant may be
exercised by the Holder at any time or times on or after the
Issuance Date, in whole or in
part, by delivery of a written notice, in the form attached hereto
as Exhibit A (the
"Exercise Notice"), of the
Holder's election to exercise this Warrant. No ink-original Exercise Notice
shall be required, nor shall any medallion guarantee (or other type
of guarantee or notarization) of any Exercise Notice be required.
The Holder shall not be required to deliver the original Warrant in
order to effect an exercise hereunder. Execution and delivery of
the Exercise Notice with respect to less than all of the Warrant
Shares shall have the same effect as cancellation of the original
Warrant and issuance of a new Warrant evidencing the right to
purchase the remaining number of Warrant Shares. On or before the
first (1st) Trading Day
following the date on which the Holder has delivered an Exercise
Notice, the Company shall transmit by electronic mail or facsimile
an acknowledgment of confirmation of receipt of the Exercise Notice
to the Holder and the Company's transfer agent (the "Transfer Agent"). On or before the
earlier of (i) second (2nd) Trading Day and
(ii) the number of Trading Days comprising the Standard Settlement
Period, in each case, following the date on which the Holder has
delivered the Exercise Notice (a "Share Delivery Date"), the Company shall
(X) provided that the Transfer Agent is participating in The
Depository Trust Company ("DTC") Fast Automated Securities Transfer
Program, credit such aggregate number of Warrant Shares to which
the Holder is entitled pursuant to such exercise to the Holder's or
its designee's balance account with DTC through its Deposit /
Withdrawal At Custodian system, or (Y) if the Transfer Agent is not
participating in the DTC Fast Automated Securities Transfer
Program, issue and dispatch by overnight courier to the address as
specified in the Exercise Notice, a certificate, registered in the
Company's share register in the name of the Holder or its designee,
for the number of Warrant Shares to which the Holder is entitled
pursuant to such exercise. The Company shall be responsible for all
fees and expenses of the Transfer Agent and all fees and expenses
with respect to the issuance of Warrant Shares via DTC, if any,
including without limitation for same day processing. Upon delivery
of the Exercise Notice, the Holder shall be deemed for all
corporate purposes to have become the holder of record of the
Warrant Shares with respect to which this Warrant has been
exercised, irrespective of the date such Warrant Shares are
credited to the Holder's DTC account or the date of delivery of the
certificates evidencing such Warrant Shares, as the case may be. If
this Warrant is submitted in connection with any exercise pursuant
to this Section 1(a) and the number of Warrant Shares represented
by this Warrant submitted for exercise is greater than the number
of Warrant Shares being acquired upon an exercise, then the Company
shall as soon as practicable and in no event later than five (5)
Trading Days after any exercise and at its own expense, issue a new
Warrant (in accordance with Section 7(d)) representing the right to
purchase the number of Warrant Shares issuable immediately prior to
such exercise under this Warrant, less the number of Warrant Shares
with respect to which this Warrant is exercised. No fractional
Warrant Shares are to be issued upon the exercise of this Warrant,
but rather the number of Warrant Shares to be issued shall be
rounded up to the nearest whole number. The Company shall pay any
and all taxes which may be payable with respect to the issuance and
delivery of Warrant Shares upon exercise of this Warrant. The
Company's obligations to issue and deliver Warrant Shares in
accordance with the terms and subject to the conditions hereof are
absolute and unconditional, irrespective of any action or inaction
by the Holder to enforce the same, any waiver or consent with
respect to any provision hereof, the recovery of any judgment
against any Person or any action to enforce the same, or any
setoff, counterclaim, recoupment, limitation or
termination.

 


 


1 Insert number of
Warrant Shares set forth opposite the Holder's name in column (6)
of Schedule I attached to the Settlement
Agreement.

 




 

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(b) Exercise Price. For purposes of
this Warrant, "Exercise
Price" means $0.20,
subject to adjustment as provided herein. The aggregate Exercise
Price of this Warrant was deemed to be pre-funded to the Company on
a cashless basis in conjunction with the Holder’s exchange
the Original Notes and Original Warrants for the Settlement
Securities pursuant to the Settlement Agreement (and other terms
therein) and, consequently no additional consideration shall be
required to be paid by the Holder to any Person to effect any
exercise of this Warrant. The Holder shall not be entitled to the
return or refund of all, or any portion, of such pre-paid aggregate
Exercise Price under any circumstance or for any reason whatsoever,
including in the event this Warrant shall not have been exercised
prior to the Expiration Date.

 

(c) Company's Failure to Timely Deliver
Securities. If the Company shall fail for any reason or for
no reason to issue to the Holder on or prior to the applicable
Share Delivery Date either (I) if the Transfer Agent is not
participating in the DTC Fast Automated Securities Transfer
Program, a certificate for the number of shares of Common Stock to
which the Holder is entitled and register such shares of Common
Stock on the Company's share register or (II) if the Transfer Agent
is participating in the DTC Fast Automated Securities Transfer
Program, to credit the Holder's balance account with DTC, for such
number of shares of Common Stock to which the Holder is entitled
upon the Holder's exercise of this Warrant by crediting such
aggregate number of Warrant Shares to which the Holder is entitled
pursuant to such exercise to the Holder's or its designee's balance
account with DTC through its Deposit / Withdrawal At Custodian
system (an "Exercise
Failure"), then, in addition to all other remedies available
to the Holder, (X) the Company shall pay in cash to the Holder on
each day after the applicable Share Delivery Date and during such
Exercise Failure an amount equal to 1.5% of the product of (A) the
sum of the number of shares of Common Stock not issued to the
Holder on or prior to the Share Delivery Date and to which the
Holder is entitled, and (B) any trading price of the Common Stock
selected by the Holder in writing as in effect at any time during
the period beginning on the date of the applicable exercise and
ending on the applicable Share Delivery Date, and (Y) the Holder,
upon written notice to the Company, may void its Exercise Notice
with respect to, and retain or have returned, as the case may be,
any portion of this Warrant that has not been exercised pursuant to
such Exercise Notice; provided that the voiding of an Exercise
Notice shall not affect the Company's obligations to make any
payments which have accrued prior to the date of such notice
pursuant to this Section 1(c) or otherwise. In addition to the
foregoing, if on or prior to the applicable Share Delivery Date,
and if the Transfer Agent is not participating in the DTC Fast
Automated Securities Transfer Program, the Company shall fail to
issue and deliver a certificate to the Holder and register such
shares of Common Stock on the Company's share register or, if the
Transfer Agent is participating in the DTC Fast Automated
Securities Transfer Program, credit the Holder's balance account
with DTC for the number of shares of Common Stock to which the
Holder is entitled upon the Holder's exercise hereunder or pursuant
to the Company's obligation pursuant to clause (ii) below, and if
on or after such Trading Day the Holder purchases (in an open
market transaction or otherwise) shares of Common Stock to deliver
in satisfaction of a sale by the Holder of shares of Common Stock
issuable upon such exercise that the Holder anticipated receiving
from the Company (a "Buy-In"), then the Company shall, within
three (3) Trading Days after the Holder's request and in the
Holder's discretion, either (i) pay cash to the Holder in an amount
equal to the Holder's total purchase price (including brokerage
commissions and other out-of-pocket expenses, if any) for the
shares of Common Stock so purchased (the "Buy-In Price"), at which point the
Company's obligation to deliver such certificate (and to issue such
shares of Common Stock) or credit such Holder's balance account
with DTC for such shares of Common Stock shall terminate, or (ii)
promptly honor its obligation to deliver to the Holder a
certificate or certificates representing such shares of Common
Stock or credit such Holder's balance account with DTC, as
applicable, and pay cash to the Holder in an amount equal to the
excess (if any) of the Buy-In Price over the product of (A) such
number of shares of Common Stock, times (B) any trading price of
the Common Stock selected by the Holder in writing as in effect at
any time during the period beginning on the date of the applicable
exercise and ending on the applicable Share Delivery Date. Nothing
shall limit the Holder's right to pursue any other remedies
available to it hereunder, at law or in equity, including, without
limitation, a decree of specific performance and/or injunctive
relief with respect to the Company's failure to timely deliver
certificates representing shares of Common Stock (or to
electronically deliver such shares of Common Stock) upon the
exercise of this Warrant as required pursuant to the terms
hereof.

 


 




 

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(d) Holding Period of Warrant
Shares. For purposes of Rule 144(d) promulgated under the
1933 Act, as in effect on the date hereof, the Company hereby
acknowledges and agrees that the Warrant Shares issued in an
exercise of this Warrant shall be deemed to have been acquired by
the Holder, and the holding period for the Warrant Shares shall be
deemed to have commenced, on the date the Original Warrants and
Original Notes (each as defined in the Settlement Agreement) were
originally issued pursuant to that certain Securities Purchase
Agreement dated as of January 22, 2018 by and among the Company and
the investors listed on the signature pages attached
thereto.

 

(e) Disputes. In the case of a
dispute as to the determination of the Exercise Price or the
arithmetic calculation of the Warrant Shares, the Company shall
promptly issue to the Holder the number of Warrant Shares that are
not disputed and resolve such dispute in accordance with Section
12.

 

(f) Beneficial
Ownership. Notwithstanding
anything to the contrary contained herein, the Company shall not
effect the exercise of any portion of this Warrant, and the Holder
shall not have the right to exercise any portion of this Warrant,
pursuant to the terms and conditions of this Warrant and any such
exercise shall be null and void and treated as if never made, to
the extent that after giving effect to such exercise, the Holder
together with the other Attribution Parties collectively would
beneficially own in excess of 4.99% (the "Maximum
Percentage") of the number of
shares of Common Stock outstanding immediately after giving effect
to such exercise. For purposes of the foregoing sentence, the
aggregate number of shares of Common Stock beneficially owned by
the Holder and the other Attribution Parties shall include the
number of shares of Common Stock held by the Holder and all other
Attribution Parties plus the number of shares of Common Stock
issuable upon exercise of this Warrant with respect to which the
determination of such sentence is being made, but shall exclude the
number of shares of Common Stock which would be issuable upon (A)
exercise of the remaining, unexercised portion of this Warrant
beneficially owned by the Holder or any of the other Attribution
Parties and (B) exercise or conversion of the unexercised or
unconverted portion of any other securities of the Company
(including, without limitation, any convertible notes or
convertible preferred stock or warrants, including the other
Settlement Warrants) beneficially owned by the Holder or any other
Attribution Party subject to a limitation on conversion or exercise
analogous to the limitation contained in this Section 1(f). For
purposes of this Section 1(f), beneficial ownership shall be
calculated in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended (the "1934 Act"). For purposes of determining the number of
outstanding shares of Common Stock the Holder may acquire upon the
exercise of this Warrant without exceeding the Maximum Percentage,
the Holder may rely on the number of outstanding shares of Common
Stock as reflected in (x) the Company's most recent Annual Report
on Form 10-K, Quarterly Report on Form 10-Q, Current Report on Form
8-K or other public filing with the Securities and Exchange
Commission (the "SEC"), as
the case may be, (y) a more recent public announcement by the
Company or (3) any other written notice by the Company or the Transfer Agent
setting forth the number of shares of Common Stock
outstanding (the
"Reported
Outstanding Share Number"). If
the Company receives an Exercise Notice from the Holder at a time
when the actual number of outstanding shares of Common Stock is
less than the Reported Outstanding Share Number, the Company shall
notify the Holder in writing of the number of shares of Common
Stock then outstanding and, to the extent that such Exercise Notice
would otherwise cause the Holder's beneficial ownership, as
determined pursuant to this Section 1(f), to exceed the Maximum
Percentage, the Holder must notify the Company of a reduced number
of Warrant Shares to be purchased pursuant to such Exercise
Notice (the number of shares by
which such purchase is reduced, the "Reduction
Shares"). For any reason
at any time, upon the written or oral request of the Holder,
the Company shall within one (1)
Trading Day confirm orally and
in writing or by electronic mail to the Holder the number of shares
of Common Stock then outstanding. In any case, the number of
outstanding shares of Common Stock shall be determined after giving
effect to the conversion or exercise of securities of the Company,
including this Warrant, by the Holder and any other Attribution
Party since the date as of which the Reported Outstanding Share
Number was reported. In the event that the issuance of shares of
Common Stock to the Holder upon exercise of this Warrant results in
the Holder and the other Attribution Parties being deemed to
beneficially own, in the aggregate, more than the Maximum
Percentage of the number of outstanding shares of Common Stock (as
determined under Section 13(d) of the 1934 Act), the number of
shares so issued by which the Holder's and the other Attribution
Parties' aggregate beneficial ownership exceeds the Maximum
Percentage (the "Excess
Shares") shall be deemed null
and void and shall be cancelled ab initio, and the Holder shall not
have the power to vote or to transfer the Excess Shares.
Upon delivery of a written notice to the Company, the Holder may
from time to time increase or decrease the Maximum Percentage to
any other percentage not in excess of 9.99% as specified in such
notice; provided that (i) any such increase in the Maximum
Percentage will not be effective until the sixty-first
(61st) day
after such notice is delivered to the Company and (ii) any such
increase or decrease will apply only to the Holder and the other
Attribution Parties and not to any other holder of Settlement
Warrants that is not an Attribution Party of the Holder. For
purposes of clarity, the shares of Common Stock issuable pursuant
to the terms of this Warrant in excess of the Maximum Percentage
shall not be deemed to be beneficially owned by the Holder for any
purpose including for purposes of Section 13(d) or Rule 16a-1(a)(1)
of the 1934 Act. No prior inability to exercise this Warrant
pursuant to this paragraph shall have any effect on the
applicability of the provisions of this paragraph with respect to
any subsequent determination of exercisability. The provisions of this paragraph shall be
construed and implemented in a manner otherwise than in strict
conformity with the terms of this Section 1(f) to the extent
necessary to correct this paragraph or any portion of this
paragraph which may be defective or inconsistent with the intended
beneficial ownership limitation contained in this Section 1(f) or
to make changes or supplements necessary or desirable to properly give effect to
such limitation. The limitation contained in this paragraph may not
be waived and shall apply to a successor holder of this
Warrant.

 


 




 

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(g) Insufficient Authorized Shares.
If at any time while this Warrant remains outstanding the Company
does not have a sufficient number of authorized and unreserved
shares of Common Stock to satisfy its obligation to reserve for
issuance upon exercise of this Warrant at least a number of shares
of Common Stock equal to the number of shares of Common Stock as
shall from time to time be necessary to effect the exercise of all
of this Warrant then outstanding (the "Required Reserve Amount" and the failure
to have such sufficient number of authorized and unreserved shares
of Common Stock, an "Authorized
Share Failure"), then the Company shall immediately take all
action necessary to increase the Company's authorized shares of
Common Stock to an amount sufficient to allow the Company to
reserve the Required Reserve Amount for this Warrant then
outstanding. Without limiting the generality of the foregoing
sentence, as soon as practicable after the date of the occurrence
of an Authorized Share Failure, but in no event later than sixty
(60) days after the occurrence of such Authorized Share Failure,
the Company shall hold a meeting of its stockholders for the
approval of an increase in the number of authorized shares of
Common Stock. In connection with such meeting, the Company shall
provide each stockholder with a proxy statement and shall use its
best efforts to solicit its stockholders' approval of such increase
in authorized shares of Common Stock and to cause its board of
directors to recommend to the stockholders that they approve such
proposal. Notwithstanding the foregoing, if any such time of an
Authorized Share Failure, the Company is able to obtain the written
consent of a majority of the shares of its issued and outstanding
Common Stock to approve the increase in the number of authorized
shares of Common Stock, the Company may satisfy this obligation by
obtaining such consent and submitting for filing with the SEC an
Information Statement on Schedule 14C. In the event that upon any
exercise of this Warrant, the Company does not have sufficient
authorized shares to deliver in satisfaction of such exercise, then
unless the Holder elects to void such attempted exercise, the
Holder may require the Company to pay to the Holder within three
(3) Trading Days of the applicable exercise, cash in an amount
equal to the product of the product of (A) the sum of the number of
shares of Common Stock not issued to the Holder on or prior to the
Share Delivery Date and to which the Holder is entitled, and (B)
any trading price of the Common Stock selected by the Holder in
writing as in effect at any time during the period beginning on the
date of the applicable exercise and ending on the date that the
Company makes the applicable cash payment.

 

2. ADJUSTMENT OF EXERCISE PRICE AND
NUMBER OF WARRANT SHARES. The Exercise Price and the number
of Warrant Shares shall be adjusted from time to time as
follows:

 

(h) Adjustment Upon Subdivision or
Combination of Shares of Common Stock. If the Company at any
time on or after the Settlement Date subdivides (by any stock
split, stock dividend, recapitalization or otherwise) one or more
classes of its outstanding shares of Common Stock into a greater
number of shares, the Exercise Price in effect immediately prior to
such subdivision will be proportionately reduced and the number of
Warrant Shares will be proportionately increased such that the
aggregate Exercise Price of this Warrant that was pre-funded to the
Company shall remain unchanged. If the Company at any time on or
after the Settlement Date combines (by combination, reverse stock
split or otherwise) one or more classes of its outstanding shares
of Common Stock into a smaller number of shares, the Exercise Price
in effect immediately prior to such combination will be
proportionately increased and the number of Warrant Shares will be
proportionately decreased such that aggregate Exercise Price of
this Warrant that was pre-funded to the Company shall remain
unchanged.. Any adjustment under this Section 2(a) shall
become effective at the close of business on the date the
subdivision or combination becomes effective.

 


 




 

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(i) [Reserved].

 

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

 

4. PURCHASE RIGHTS; FUNDAMENTAL
TRANSACTIONS.

 

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

 


 




 

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(k) Fundamental Transaction. The
Company shall not enter into or be party to a Fundamental
Transaction unless the Successor Entity assumes in writing all of
the obligations of the Company under this Warrant in accordance
with the provisions of this Section 4(b), including agreements to
deliver to the Holder in exchange for this Warrant a security of
the Successor Entity evidenced by a written instrument
substantially similar in form and substance to this Warrant,
including, without limitation, which is exercisable for a
corresponding number of shares of capital stock equivalent to the
shares of Common Stock acquirable and receivable upon exercise of
this Warrant (without regard to any limitations on the exercise of
this Warrant) prior to such Fundamental Transaction, and with an
exercise price which applies the Exercise Price hereunder to such
shares of capital stock (but taking into account the relative value
of the shares of Common Stock pursuant to such Fundamental
Transaction and the value of such shares of capital stock, such
adjustments to the number of shares of capital stock and such
exercise price being for the purpose of protecting the economic
value of this Warrant immediately prior to the consummation of such
Fundamental Transaction). Upon the consummation of each Fundamental
Transaction, the Successor Entity shall succeed to, and be
substituted for the Company (so that from and after the date of the
applicable Fundamental Transaction, the provisions of this Warrant
and the Settlement Agreement referring to the “Company”
shall refer instead to the Successor Entity), and may exercise
every right and power of the Company and shall assume all of the
obligations of the Company under this Warrant with the same effect
as if such Successor Entity had been named as the Company herein.
Upon consummation of each Fundamental Transaction, the Successor
Entity shall deliver to the Holder confirmation that there shall be
issued upon exercise of this Warrant at any time after the
consummation of the applicable Fundamental Transaction, in lieu of
the shares of Common Stock (or other securities, cash, assets or
other property (except such items still issuable under Sections 3
and 4(a) above, which shall continue to be receivable thereafter))
issuable upon the exercise of this Warrant prior to the applicable
Fundamental Transaction, such shares of common stock (or its
equivalent) of the Successor Entity (including its Parent Entity)
which the Holder would have been entitled to receive upon the
happening of the applicable Fundamental Transaction had this
Warrant been exercised immediately prior to the applicable
Fundamental Transaction (without regard to any limitations on the
exercise of this Warrant), as adjusted in accordance with the
provisions of this Warrant. Notwithstanding the foregoing, and
without limiting Section 1(f) hereof, the Holder may elect, at its
sole option, by delivery of written notice to the Company to waive
this Section 4(b) to permit the Fundamental Transaction without the
assumption of this Warrant. In addition to and not in substitution
for any other rights hereunder, prior to the consummation of each
Fundamental Transaction pursuant to which holders of shares of
Common Stock are entitled to receive securities or other assets
with respect to or in exchange for shares of Common Stock (a
“Corporate
Event”), the Company shall make appropriate provision
to insure that the Holder will thereafter have the right to receive
upon an exercise of this Warrant at any time after the consummation
of the applicable Fundamental Transaction but prior to the
Expiration Date, in lieu of the shares of the Common Stock (or
other securities, cash, assets or other property (except such items
still issuable under Sections 3 and 4(a) above, which shall
continue to be receivable thereafter)) issuable upon the exercise
of the Warrant prior to such Fundamental Transaction, such shares
of stock, securities, cash, assets or any other property whatsoever
(including warrants or other purchase or subscription rights)
(collectively, the “Corporate
Event Consideration”) which the Holder would have been
entitled to receive upon the happening of the applicable
Fundamental Transaction had this Warrant been exercised immediately
prior to the applicable Fundamental Transaction (without regard to
any limitations on the exercise of this Warrant). The provision
made pursuant to the preceding sentence shall be in a form and
substance reasonably satisfactory to the Holder. The provisions of
this Section 4(b) shall apply similarly and equally to successive
Fundamental Transactions and Corporate Events.

 


 




 

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5. NONCIRCUMVENTION. The Company
hereby covenants and agrees that the Company will not, by amendment
of its Certificate of Incorporation or Bylaws, or through any
reorganization, transfer of assets, consolidation, merger, scheme
of arrangement, dissolution, issue or sale of securities, or any
other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, and will at all
times in good faith carry out all of the provisions of this Warrant
and take all action as may be required to protect the rights of the
Holder. Without limiting the generality of the foregoing, the
Company (i) shall not increase the par value of any shares of
Common Stock receivable upon the exercise of this Warrant above the
Exercise Price of this Warrant, (ii) shall take all such
actions as may be necessary or appropriate in order that the
Company may validly and legally issue fully paid and non-assessable
shares of Common Stock upon the exercise of this Warrant, and (iii)
shall, so long as any of the Settlement Warrants are outstanding,
take all action necessary to reserve and keep available out of its
authorized and unissued shares of Common Stock, solely for the
purpose of effecting the exercise of the Settlement Warrants, the
number of shares of Common Stock as shall from time to time be
necessary to effect the exercise of the Settlement Warrants then
outstanding (without regard to any limitations on
exercise).

 

6. WARRANT HOLDER NOT DEEMED A
STOCKHOLDER. Except as otherwise specifically provided
herein, the Holder, solely in such Person's capacity as a holder of
this Warrant, shall not be entitled to vote or receive dividends or
be deemed the holder of capital stock of the Company for any
purpose, nor shall anything contained in this Warrant be construed
to confer upon the Holder, solely in such Person's capacity as the
Holder of this Warrant, any of the rights of a stockholder of the
Company or any right to vote, give or withhold consent to any
corporate action (whether any reorganization, issue of stock,
reclassification of stock, consolidation, merger, conveyance or
otherwise), receive notice of meetings, receive dividends or
subscription rights, or otherwise, prior to the issuance to the
Holder of the Warrant Shares which such Person is then entitled to
receive upon the due exercise of this Warrant. In addition, nothing
contained in this Warrant shall be construed as imposing any
liabilities on the Holder to purchase any securities (upon exercise
of this Warrant or otherwise) or as a stockholder of the Company,
whether such liabilities are asserted by the Company or by
creditors of the Company. Notwithstanding this Section 6, the
Company shall provide the Holder with copies of the same notices
and other information given to the stockholders of the Company
generally, contemporaneously with the giving thereof to the
stockholders.

 

7. REISSUANCE OF
WARRANTS.

 

(l) Transfer of Warrant. If this
Warrant is to be transferred, the Holder shall surrender this
Warrant to the Company, whereupon the Company will forthwith issue
and deliver upon the order of the Holder a new Warrant (in
accordance with Section 7(d)), registered as the Holder may
request, representing the right to purchase the number of Warrant
Shares being transferred by the Holder and, if less than the total
number of Warrant Shares then underlying this Warrant is being
transferred, a new Warrant (in accordance with Section 7(d)) to the
Holder representing the right to purchase the number of Warrant
Shares not being transferred.

 


 




 

7








 






 


 

 

(m) Lost, Stolen or Mutilated
Warrant. Upon receipt by the Company of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or
mutilation of this Warrant, and, in the case of loss, theft or
destruction, of any indemnification undertaking by the Holder to
the Company in customary form and, in the case of mutilation, upon
surrender and cancellation of this Warrant, the Company shall
execute and deliver to the Holder a new Warrant (in accordance with
Section 7(d)) representing the right to purchase the Warrant Shares
then underlying this Warrant.

 

(n) Exchangeable for Multiple
Warrants. This Warrant is exchangeable, upon the surrender
hereof by the Holder at the principal office of the Company, for a
new Warrant or Warrants (in accordance with Section 7(d))
representing in the aggregate the right to purchase the number of
Warrant Shares then underlying this Warrant, and each such new
Warrant will represent the right to purchase such portion of such
Warrant Shares as is designated by the Holder at the time of such
surrender; provided, however, that no Settlement
Warrants for fractional Warrant Shares shall be given.

 

(o) Issuance of New Warrants.
Whenever the Company is required to issue a new Warrant pursuant to
the terms of this Warrant, such new Warrant (i) shall be of like
tenor with this Warrant, (ii) shall represent, as indicated on the
face of such new Warrant, the right to purchase the Warrant Shares
then underlying this Warrant (or in the case of a new Warrant being
issued pursuant to Section 7(a) or Section 7(c), the Warrant Shares
designated by the Holder which, when added to the number of shares
of Common Stock underlying the other new Warrants issued in
connection with such issuance, does not exceed the number of
Warrant Shares then underlying this Warrant), (iii) shall have an
issuance date, as indicated on the face of such new Warrant which
is the same as the Issuance Date, and (iv) shall have the same
rights and conditions as this Warrant.

 

8. NOTICES. Whenever notice is
required to be given under this Warrant, unless otherwise provided
herein, such notice shall be given in accordance with Section 20 of
the Settlement Agreement. The Company shall provide the Holder with
prompt written notice of all actions taken pursuant to this
Warrant, including in reasonable detail a description of such
action and the reason therefor. Without limiting the generality of
the foregoing, the Company will give written notice to the Holder
(i) immediately upon any adjustment of the Exercise Price, setting
forth in reasonable detail, and certifying, the calculation of such
adjustment and (ii) at least fifteen (15) days prior to the date on
which the Company closes its books or takes a record (A) with
respect to any dividend or distribution upon the shares of Common
Stock, (B) with respect to any grants, issuances or sales of any
Options, Convertible Securities or rights to purchase stock,
warrants, securities or other property to holders of shares of
Common Stock or (C) for determining rights to vote with respect to
any Fundamental Transaction, dissolution or liquidation;
provided in each
case that such information shall be made known to the public prior
to or in conjunction with such notice being provided to the Holder.
It is expressly understood and agreed that the time of exercise
specified by the Holder in each Exercise Notice shall be definitive
and may not be disputed or challenged by the Company.

 


 




 

8








 






 


 

 

9. AMENDMENT AND WAIVER. Any
provision of this Warrant may be changed or amended with the prior
written consent of the Holder and the Company, and any provision of
this Warrant may be waived with the prior written consent of the
Holder. In addition, the affirmative vote of the Required Holders
at a meeting duly called for such purpose or the written consent
without a meeting of the Required Holders shall be required for any
change or amendment or waiver of any provision of all Settlement
Warrants. Any change or amendment by the Company and the Required
Holders, and any waiver by the Required Holders, shall be binding
on all holders of Settlement Warrants (including the Holder of this
Warrant). The Company hereby covenants and agrees that if, and
whenever on or after the date hereof, the Company amends or
modifies any term of any of the Settlement Warrants held by any
Person (each document amending such terms, an "Amendment Document"), then (i) the
Company shall provide notice thereof to the Holder immediately
following the occurrence thereof and (ii) the terms and conditions
of this Warrant shall be, without any further action by the Holder
or the Company, automatically amended and modified in an
economically and legally equivalent manner such that the Holder
shall receive the benefit of such amended or modified terms and/or
conditions (as the case may be) set forth in such Amendment
Document, provided that upon written notice to the Company at any
time the Holder may elect not to accept the benefit of any such
amended or modified term or condition, in which event the term or
condition contained in this Warrant shall apply to the Holder as it
was in effect immediately prior to such amendment or modification
as if such amendment or modification never occurred with respect to
the Holder. The provisions of the foregoing sentence shall apply
similarly and equally to each Amendment Document.

 

10. GOVERNING
LAW; JURISDICTION; JURY TRIAL. This Warrant shall be
governed by and construed and enforced in accordance with, and all
questions concerning the construction, validity, interpretation and
performance of this Warrant shall be governed by, the internal laws
of the State of New York, without giving effect to any choice of
law or conflict of law provision or rule (whether of the State of
New York or any other jurisdictions) that would cause the
application of the laws of any jurisdictions other than the State
of New York. The Company hereby irrevocably submits to the
exclusive jurisdiction of the state and federal courts sitting in
The City of New York, Borough of Manhattan, for the adjudication of
any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby
irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or
proceeding is brought in an inconvenient forum or that the venue of
such suit, action or proceeding is improper. The Company hereby
irrevocably waives personal service of process and consents to
process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address set forth in
Section 20 of the Settlement Agreement and agrees that such service
shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any
way any right to serve process in any manner permitted by law.
Nothing contained herein shall be deemed or operate to preclude the
Holder from bringing suit or taking other legal action against the
Company in any other jurisdiction to collect on the Company's
obligations to the Holder, to realize on any collateral or any
other security for such obligations, or to enforce a judgment or
other court ruling in favor of the Holder. THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT
IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR
ARISING OUT OF THIS WARRANT OR ANY TRANSACTION CONTEMPLATED
HEREBY.

 


 




 

9








 






 


 

 

11. CONSTRUCTION; HEADINGS. This
Warrant shall be deemed to be jointly drafted by the Company and
all of the initial holders of the Settlement Warrants and shall not
be construed against any Person as the drafter hereof. The headings
of this Warrant are for convenience of reference and shall not form
part of, or affect the interpretation of, this
Warrant.

 

12. DISPUTE RESOLUTION. In the case
of a dispute as to the determination of the Exercise Price or the
arithmetic calculation of the Warrant Shares, the Company shall
submit the disputed determinations or arithmetic calculations via
facsimile or electronic mail within one (1) Business Day of receipt
of the Exercise Notice giving rise to such dispute, as the case may
be, to the Holder. If the Holder and the Company are unable to
agree upon such determination or calculation of the Exercise Price
or the Warrant Shares within one (1) Business Day of such disputed
determination or arithmetic calculation being submitted to the
Holder, then the Company shall, within one (1) Business Day submit
via facsimile or electronic mail (a) the disputed determination of
the Exercise Price to an independent, reputable investment bank
selected by the Holder and approved by the Company, such approval
not to be unreasonably withheld, conditioned or delayed or (b) the
disputed arithmetic calculation of the Warrant Shares to an
independent, outside accountant, selected by the Holder and
approved by the Company, such approval not to be unreasonably
withheld, conditioned or delayed. The Company shall cause at its
expense the investment bank or the accountant, as the case may be,
to perform the determinations or calculations and notify the
Company and the Holder of the results no later than five (5)
Business Days from the time it receives the disputed determinations
or calculations. Such investment bank's or accountant's
determination or calculation, as the case may be, shall be binding
upon all parties absent demonstrable error.

 

13. REMEDIES, OTHER OBLIGATIONS, BREACHES
AND INJUNCTIVE RELIEF. The remedies provided in this Warrant
shall be cumulative and in addition to all other remedies available
under this Warrant and the other Settlement Documents (as defined
in the Settlement Agreement), at law or in equity (including a
decree of specific performance and/or other injunctive relief), and
nothing herein shall limit the right of the Holder to pursue actual
damages for any failure by the Company to comply with the terms of
this Warrant. The Company acknowledges that a breach by it of its
obligations hereunder will cause irreparable harm to the Holder and
that the remedy at law for any such breach may be inadequate. The
Company therefore agrees that, in the event of any such breach or
threatened breach, the holder of this Warrant shall be entitled, in
addition to all other available remedies, to an injunction
restraining any breach, without the necessity of showing economic
loss and without any bond or other security being
required.

 

14. TRANSFER.                                      This
Warrant and the Warrant Shares may be offered for sale, sold,
transferred, pledged or assigned without the consent of the
Company.

 

15. SEVERABILITY.                                                If
any provision of this Warrant is prohibited by law or otherwise
determined to be invalid or unenforceable by a court of competent
jurisdiction, the provision that would otherwise be prohibited,
invalid or unenforceable shall be deemed amended to apply to the
broadest extent that it would be valid and enforceable, and the
invalidity or unenforceability of such provision shall not affect
the validity of the remaining provisions of this Warrant so long as
this Warrant as so modified continues to express, without material
change, the original intentions of the parties as to the subject
matter hereof and the prohibited nature, invalidity or
unenforceability of the provision(s) in question does not
substantially impair the respective expectations or reciprocal
obligations of the parties or the practical realization of the
benefits that would otherwise be conferred upon the parties. The
parties will endeavor in good faith negotiations to replace the
prohibited, invalid or unenforceable provision(s) with a valid
provision(s), the effect of which comes as close as possible to
that of the prohibited, invalid or unenforceable
provision(s).

 


 




 

10








 






 


 

 

16. DISCLOSURE. Upon receipt or
delivery by the Company of any notice in accordance with the terms
of this Warrant, unless the Company has in good faith determined
that the matters relating to such notice do not constitute
material, nonpublic information relating to the Company or its
subsidiaries, the Company shall within one (1) Business Day after
any such receipt or delivery publicly disclose such material,
nonpublic information on a Current Report on Form 8-K or otherwise.
In the event that the Company believes that a notice contains
material, nonpublic information relating to the Company or its
subsidiaries, the Company so shall indicate to such Holder
contemporaneously with delivery of such notice, and in the absence
of any such indication, the Holder shall be allowed to presume that
all matters relating to such notice do not constitute material,
nonpublic information relating to the Company or its
subsidiaries.

 

17. CERTAIN DEFINITIONS. For
purposes of this Warrant, the following terms shall have the
following meanings:

 

(p) "1933 Act" means the Securities Act of
1933, as amended.

 

(q) "Affiliate" means, with respect to any
Person, any other Person that directly or indirectly controls, is
controlled by, or is under common control with, such Person, it
being understood for purposes of this definition that "control" of
a Person means the power directly or indirectly either to vote 10%
or more of the stock having ordinary voting power for the election
of directors of such Person or direct or cause the direction of the
management and policies of such Person whether by contract or
otherwise.

 

(r) "Attribution Parties" means,
collectively, the following Persons and entities: (i) any
investment vehicle, including, any funds, feeder funds or managed
accounts, currently, or from time to time after the Issuance Date,
directly or indirectly managed or advised by the Holder's
investment manager or any of its Affiliates or principals, (ii) any
direct or indirect Affiliates of the Holder or any of the
foregoing, (iii) any Person acting or who could be deemed to be
acting as a Group together with the Holder or any of the foregoing
and (iv) any other Persons whose beneficial ownership of the
Company's Common Stock would or could be aggregated with the
Holder's and the other Attribution Parties for purposes of Section
13(d) of the 1934 Act. For clarity, the purpose of the foregoing is
to subject collectively the Holder and all other Attribution
Parties to the Maximum Percentage.

 

(s) "Bid Price" means, for any date, the
price determined by the first of the following clauses that
applies: (a) if the Common Stock is then listed or quoted on an
Eligible Market, the bid price of the Common Stock for the time in
question (or the nearest preceding date) on the Eligible Market on
which the Common Stock is then listed or quoted as reported by
Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York
City time) to 4:02 p.m. (New York City time)), (b) if the 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 on the
Pink Open Market (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 (c) in all other cases,
the fair market value of a share of Common Stock as determined by
an independent appraiser selected in good faith by the Purchasers
of a majority in interest of the Securities then outstanding and
reasonably acceptable to the Company, the fees and expenses of
which shall be paid by the Company.

 


 




 

11








 






 


 

 

(t) "Bloomberg" means Bloomberg Financial
Markets.

 

(u) "Business Day" means any day other than
Saturday, Sunday or other day on which commercial banks in The City
of New York are authorized or required by law to remain
closed.

 

(v) "Closing Bid Price" and "Closing Sale Price" means, for any
security as of any date, the last closing bid price and last
closing trade price, respectively, for such security on the
Principal Market, as reported by Bloomberg, or, if the Principal
Market begins to operate on an extended hours basis and does not
designate the closing bid price or the closing trade price, as the
case may be, then the last bid price or the last trade price,
respectively, of such security prior to 4:00:00 p.m., New York
time, as reported by Bloomberg, or, if the Principal Market is not
the principal securities exchange or trading market for such
security, the last closing bid price or last trade price,
respectively, of such security on the principal securities exchange
or trading market where such security is listed or traded as
reported by Bloomberg, or if the foregoing do not apply, the last
closing bid price or last trade price, respectively, of such
security in the over-the-counter market on the electronic bulletin
board for such security as reported by Bloomberg, or, if no closing
bid price or last trade price, respectively, is reported for such
security by Bloomberg, the average of the bid prices, or the ask
prices, respectively, of any market makers for such security as
reported on the Pink Open Market (formerly Pink OTC Markets Inc.).
If the Closing Bid Price or the Closing Sale Price cannot be
calculated for a security on a particular date on any of the
foregoing bases, the Closing Bid Price or the Closing Sale Price,
as the case may be, of such security on such date shall be the fair
market value as mutually determined by the Company and the Holder.
If the Company and the Holder are unable to agree upon the fair
market value of such security, then such dispute shall be resolved
pursuant to Section 12. All such determinations to be appropriately
adjusted for any stock dividend, stock split, stock combination,
reclassification or other similar transaction during the applicable
calculation period.

 

(w) "Common Stock" means (i) the
Company's shares of Common Stock, par value $0.001 per share, and
(ii) any capital stock into which such Common Stock shall have
been changed or any capital stock resulting from a reclassification
of such Common Stock.

 

(x) "Convertible Securities" means any stock
or securities (other than Options) directly or indirectly
convertible into or exercisable or exchangeable for shares of
Common Stock.

 

(y) "Eligible Market" means the Principal
Market, the NYSE American, the Nasdaq Global Market, the Nasdaq
Global Select Market, the Nasdaq Capital Market, the OTC QX or The
New York Stock Exchange, Inc.

 

(z) "Expiration Date" means the date sixty
(60) months after the Issuance
Date or, if such date falls on a day other than a Business
Day or on which trading does not take place on the Principal Market
(a "Holiday"), the next day
that is not a Holiday.

 


 




 

12








 






 


 

 

(aa) "Fundamental
Transaction" means (A) that the Company shall, directly or
indirectly, including through subsidiaries, Affiliates or
otherwise, in one or more related transactions, (i) consolidate or
merge with or into (whether or not the Company is the surviving
corporation) another Subject Entity, or (ii) sell, assign,
transfer, convey or otherwise dispose of all or substantially all
of the properties or assets of the Company or any of its
"significant subsidiaries" (as defined in Rule 1-02 of Regulation
S-X) to one or more Subject Entities, or (iii) make, or allow one
or more Subject Entities to make, or allow the Company to be
subject to or have its Common Stock be subject to or party to one
or more Subject Entities making, a purchase, tender or exchange
offer that is accepted by the holders of at least either (x) 50% of
the outstanding shares of Common Stock, (y) 50% of the outstanding
shares of Common Stock calculated as if any shares of Common Stock
held by all Subject Entities making or party to, or Affiliated with
any Subject Entities making or party to, such purchase, tender or
exchange offer were not outstanding; or (z) such number of shares
of Common Stock such that all Subject Entities making or party to,
or Affiliated with any Subject Entity making or party to, such
purchase, tender or exchange offer, become collectively the
beneficial owners (as defined in Rule 13d-3 under the 1934 Act) of
at least 50% of the outstanding shares of Common Stock, or (iv)
consummate a stock purchase agreement or other business combination
(including, without limitation, a reorganization, recapitalization,
spin-off or scheme of arrangement) with one or more Subject
Entities whereby such Subject Entities, individually or in the
aggregate, acquire, either (x) at least 50% of the outstanding
shares of Common Stock, (y) at least 50% of the outstanding shares
of Common Stock calculated as if any shares of Common Stock held by
all the Subject Entities making or party to, or Affiliated with any
Subject Entity making or party to, such stock purchase agreement or
other business combination were not outstanding; or (z) such number
of shares of Common Stock such that the Subject Entities become
collectively the beneficial owners (as defined in Rule 13d-3 under
the 1934 Act) of at least 50% of the outstanding shares of Common
Stock, or (v) reorganize, recapitalize or reclassify its Common
Stock, (B) that the Company shall, directly or indirectly,
including through subsidiaries, Affiliates or otherwise, in one or
more related transactions, allow any Subject Entity individually or
the Subject Entities in the aggregate to be or become the
"beneficial owner" (as defined in Rule 13d-3 under the 1934 Act),
directly or indirectly, whether through acquisition, purchase,
assignment, conveyance, tender, tender offer, exchange, reduction
in outstanding shares of Common Stock, merger, consolidation,
business combination, reorganization, recapitalization, spin-off,
scheme of arrangement, reorganization, recapitalization or
reclassification or otherwise in any manner whatsoever, of either
(x) at least 50% of the aggregate ordinary voting power represented
by issued and outstanding Common Stock, (y) at least 50% of the
aggregate ordinary voting power represented by issued and
outstanding Common Stock not held by all such Subject Entities as
of the Settlement Date calculated as if any shares of Common Stock
held by all such Subject Entities were not outstanding, or (z) a
percentage of the aggregate ordinary voting power represented by
issued and outstanding shares of Common Stock or other equity
securities of the Company sufficient to allow such Subject Entities
to effect a statutory short form merger or other transaction
requiring other stockholders of the Company to surrender their
shares of Common Stock without approval of the stockholders of the
Company or (C) directly or indirectly, including through
subsidiaries, Affiliates or otherwise, in one or more related
transactions, the issuance of or the entering into any other
instrument or transaction structured in a manner to circumvent, or
that circumvents, the intent of this definition in which case this
definition shall be construed and implemented in a manner otherwise
than in strict conformity with the terms of this definition to the
extent necessary to correct this definition or any portion of this
definition which may be defective or inconsistent with the intended
treatment of such instrument or transaction.

 


 




 

13








 






 


 

 

(bb) "Group"
means a "group" as that term is used in Section 13(d) of the 1934
Act and as defined in Rule 13d-5 thereunder.

 

(cc) "Options"
means any rights, warrants or options to subscribe for or purchase
shares of Common Stock or Convertible Securities.

 

(dd) "Parent
Entity" of a Person means an entity that, directly or
indirectly, controls the applicable Person, including such entity
whose common capital or equivalent equity security is quoted or
listed on an Eligible Market (or, if so elected by the Required
Holders, any other market, exchange or quotation system), or, if
there is more than one such Person or such entity, the Person or
such entity designated by the Required Holders or in the absence of
such designation, such Person or entity with the largest public
market capitalization as of the date of consummation of the
Fundamental Transaction.

 

(ee) "Person"
means an individual, a limited liability company, a partnership, a
joint venture, a corporation, a trust, an unincorporated
organization, any other entity and a government or any department
or agency thereof.

 

(ff) "Principal
Market" means the OTC QB.

 

(gg) "Required
Holders" means the holders of the Settlement Warrants
representing at least a majority of the shares of Common Stock
underlying the Settlement Warrants then outstanding and shall
include Empery Asset Management, LP so long as Empery Asset
Management, LP or any of its Affiliates holds any Settlement
Warrants.

 

(hh) "Standard
Settlement Period" means the standard settlement period,
expressed in a number of Trading Days, on the Company's primary
trading market with respect to the Common Stock as in effect on the
date of delivery of the applicable Exercise Notice.

 

(ii) "Subject
Entity" means any Person, Persons or Group or any Affiliate
or associate of any such Person, Persons or Group.

 

(jj) "Successor
Entity" means one or more Person or Persons (or, if so
elected by the Required Holders, the Company or Parent Entity)
formed by, resulting from or surviving any Fundamental Transaction,
or one or more Person or Persons (or, if so elected by the Required
Holders, the Company or the Parent Entity) with which such
Fundamental Transaction shall have been entered into.

 

(kk) "Trading
Day" means any day on which the Common Stock is traded on
the Principal Market, or, if the Principal Market is not the
principal trading market for the Common Stock on such day, then on
the principal securities exchange or securities market on which the
Common Stock is then traded.

 


 




 

14








 






 


 

 

(ll) "Weighted
Average Price" means, for any security as of any date, the
dollar volume-weighted average price for such security on the
Principal Market during the period beginning at 9:30:00 a.m., New
York time (or such other time as the Principal Market publicly
announces is the official open of trading), and ending at 4:00:00
p.m., New York time (or such other time as the Principal Market
publicly announces is the official close of trading), as reported
by Bloomberg through its "Volume at Price" function or, if the
foregoing does not apply, the dollar volume-weighted average price
of such security in the over-the-counter market on the electronic
bulletin board for such security during the period beginning at
9:30:00 a.m., New York time (or such other time as such market
publicly announces is the official open of trading), and ending at
4:00:00 p.m., New York time (or such other time as such market
publicly announces is the official close of trading), as reported
by Bloomberg, or, if no dollar volume-weighted average price is
reported for such security by Bloomberg for such hours, the average
of the highest Closing Bid Price and the lowest closing ask price
of any of the market makers for such security as reported on the
Pink Open Market (formerly Pink OTC Markets Inc.). If the Weighted
Average Price cannot be calculated for a security on a particular
date on any of the foregoing bases, the Weighted Average Price of
such security on such date shall be the fair market value as
mutually determined by the Company and the Holder. If the Company
and the Holder are unable to agree upon the fair market value of
such security, then such dispute shall be resolved pursuant to
Section 12 with the term "Weighted Average Price" being substituted
for the term "Exercise Price." All such determinations shall be
appropriately adjusted for any stock dividend, stock split, stock
combination, reclassification or other similar transaction during
the applicable calculation period.

 



[Signature Page Follows]




 

15








 






IN WITNESS WHEREOF, the Company has
caused this Pre-Funded Warrant to Purchase Common Stock to be duly
executed as of the Issuance Date set out above.


 


 



GT
BIOPHARMA, INC.






 


 


By:___________________________



Name:                      

Steven
Weldon







Title:                      

Chief Financial
Officer








[Signature
Page—Settlement Warrant]

16








 







  EXHIBIT A


 



EXERCISE NOTICE



TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE
THIS



PRE-FUNDED WARRANT TO PURCHASE COMMON STOCK


 



GT BIOPHARMA, INC.


The
undersigned holder hereby exercises the right to purchase
_________________ of the shares of Common Stock ("Warrant Shares") of GT Biopharma, Inc.,
a Delaware corporation (the "Company"), evidenced by the attached
Pre-Funded Warrant to Purchase Common Stock (the "Warrant").


 


The
Company shall deliver to the holder __________ Warrant Shares in
accordance with the terms of the Warrant.


 


 


 


Date:
_______________ __, ______


 


 


 


   Name
of Registered Holder


 


 



By:           






Name:


Title:


 


 




 

17








 







ACKNOWLEDGMENT


 


 


The
Company hereby acknowledges this Exercise Notice and hereby directs
Computershare Trust Company, N.A. to issue the above indicated
number of shares of Common Stock.


 



GT
BIOPHARMA, INC.






 


 


 


By:________________________________


Name:


Title:


 


 


 


 


 


 


 


 


 


 


 




 

18