Blueprint





 


 









 Exhibit 10.1



 


SECURITIES
PURCHASE AGREEMENT

 


SECURITIES PURCHASE AGREEMENT (the
"Agreement"), dated as of
January 22, 2018, by and among GT Biopharma, Inc., a Delaware
corporation, with headquarters located at 1825 K Street, Suite 510,
Washington, D.C. 20006 (the "Company"), and the investors listed on
the Schedule of Buyers attached hereto (individually, a
"Buyer" and collectively,
the "Buyers").

 


WHEREAS:

 

A. The Company and
each Buyer is executing and delivering this Agreement in reliance
upon the exemption from securities registration afforded by Section
4(a)(2) of the Securities Act of 1933, as amended (the
"1933 Act"), and Rule 506(b)
of Regulation D ("Regulation D") as promulgated by
the United States Securities and Exchange Commission (the
"SEC") under the 1933
Act.

 

B. The Company has
authorized a new series of senior convertible notes of the Company,
in substantially the form attached hereto as Exhibit A (the "Notes"), which Notes shall be
convertible into the Company's common stock, par value $0.001 per
share (the "Common
Stock") (the shares of Common Stock issuable pursuant to the
terms of the Notes, including, without limitation, upon conversion
or otherwise, collectively, the "Conversion Shares"), in accordance with
the terms of the Notes.

 

C. Each Buyer wishes
to purchase, and the Company wishes to sell, upon the terms and
conditions stated in this Agreement, (i) that aggregate principal
amount of Notes set forth opposite such Buyer's name in column (3)
on the Schedule of Buyers attached hereto (which aggregate
principal amount of Notes for all Buyers shall be $7,760,510), and
(ii) Warrants, in substantially the form attached hereto as
Exhibit B (the
"Warrants"), representing
the right to acquire that number of shares of Common Stock set
forth opposite such Buyer's name in column (4) on the Schedule of
Buyers (as exercised, collectively, the "Warrant Shares").

 

D. The Notes will rank
senior to all outstanding and future indebtedness of the Company
and its Subsidiaries (as defined below).

 

E. Contemporaneously
with the execution and delivery of this Agreement, the parties
hereto are executing and delivering a Registration Rights
Agreement, substantially in the form attached hereto as
Exhibit C (the
"Registration Rights
Agreement"), pursuant to which the Company has agreed to
provide certain registration rights with respect to the Registrable
Securities (as defined in the Registration Rights Agreement) under
the 1933 Act and the rules and regulations promulgated thereunder,
and applicable state securities laws.

 

F. The Notes, the
Conversion Shares, the Warrants and the Warrant Shares collectively
are referred to herein as the "Securities".

 



 

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NOW, THEREFORE, the Company and each
Buyer hereby agree as follows:

 

1. PURCHASE AND SALE OF NOTES AND
WARRANTS.

 

(a) Purchase of Notes and Warrants.
Subject to the satisfaction (or waiver) of the conditions set forth
in Sections 6 and 7 below, the Company shall issue and sell to each
Buyer, and each Buyer severally, but not jointly, agrees to
purchase from the Company on the Closing Date (as defined below),
(x) a principal amount of Notes as is set forth opposite such
Buyer's name in column (3) on the Schedule of Buyers and (y)
Warrants to acquire up to that number of Warrant Shares as is set
forth opposite such Buyer's name in column (4) on the Schedule of
Buyers (the "Closing").

 

(b) Closing. The date and time of
the Closing (the "Closing
Date") shall be 10:00 a.m., New York City time, on the date
hereof (or such other date and time as is mutually agreed to by the
Company and each Buyer) after notification of satisfaction (or
waiver) of the conditions to the Closing set forth in Sections 6
and 7 below, at the offices of Schulte Roth & Zabel LLP, 919
Third Avenue, New York, New York 10022.

 

(c) Purchase Price. The aggregate
purchase price for the Notes and the Warrants to be purchased by
each Buyer at the Closing (the "Purchase Price") shall be the amount set
forth opposite each Buyer's name in column (5) of the Schedule of
Buyers. Each Buyer shall pay $909.09 for each $1,000 of principal
amount of Notes and related Warrants to be purchased by such Buyer
at the Closing. The Buyers and the Company agree that the Notes and
the Warrants constitute an "investment unit" for purposes of
Section 1273(c)(2) of the Internal Revenue Code of 1986, as amended
(the "Code"). The Buyers and
the Company mutually agree that the allocation of the issue price
of such investment unit between the Notes and the Warrants in
accordance with Section 1273(c)(2) of the Code and Treasury
Regulation Section 1.1273-2(h) shall be an aggregate amount of
$75.06164 per $909.09 of Purchase Price to be allocated to the
Warrants and the balance of the Purchase Price allocated to the
Notes, and neither the Buyers nor the Company shall take any
position inconsistent with such allocation in any tax return or in
any judicial or administrative proceeding in respect of
taxes.

 

(d) Form of Payment. On the Closing
Date, (i) each Buyer shall pay its Purchase Price to the Company
for the Notes and the Warrants to be issued and sold to such Buyer
at the Closing (less, in the case of Empery Asset Master Ltd.
("Empery"), the amounts
withheld pursuant to Section 4(g)), by wire transfer of immediately
available funds in accordance with the Company's written wire
instructions and (ii) the Company shall deliver to each Buyer
the Notes (allocated in the principal amounts as such Buyer shall
request) which such Buyer is then purchasing hereunder along with
the Warrants (allocated in the amounts as such Buyer shall request)
which such Buyer is purchasing hereunder, in each case duly
executed on behalf of the Company and registered in the name of
such Buyer or its designee.

 



 

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2. BUYER'S REPRESENTATIONS AND
WARRANTIES. Each Buyer, severally and not jointly,
represents and warrants with respect to only itself that, as of the
date hereof and as of the Closing Date:

 

(a) No Public Sale or Distribution.
Such Buyer is (i) acquiring the Notes and the Warrants and (ii)
upon exercise of the Warrants (other than pursuant to a Cashless
Exercise (as defined in the Warrants)) will acquire the Warrant
Shares issuable upon exercise of the Warrants, for its own account
and not with a view towards, or for resale in connection with, the
public sale or distribution thereof, except pursuant to sales
registered or exempted under the 1933 Act; provided, however, that by making the
representations herein, such Buyer does not agree to hold any of
the Securities for any minimum or other specific term and reserves
the right to dispose of the Securities at any time in accordance
with or pursuant to a registration statement or an exemption under
the 1933 Act. Such Buyer is acquiring the Securities hereunder in
the ordinary course of its business. Such Buyer does not presently
have any agreement or understanding, directly or indirectly, with
any Person (as defined below) to distribute any of the Securities.
For purposes of this Agreement, "Person" means an individual, a limited
liability company, a partnership, a joint venture, a corporation, a
trust, an unincorporated organization, any other entity and any
government or any department or agency thereof.

 

(b) Accredited Investor Status.
Such Buyer is an "accredited investor" as that term is defined in
Rule 501(a) of Regulation D.

 

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

 

(d) Information. Such Buyer and its
advisors, if any, have been furnished with all materials relating
to the business, finances and operations of the Company and
materials relating to the offer and sale of the Securities that
have been requested by such Buyer. Such Buyer and its advisors, if
any, have been afforded the opportunity to ask questions of the
Company. Neither such inquiries nor any other due diligence
investigations conducted by such Buyer or its advisors, if any, or
its representatives shall modify, amend or affect such Buyer's
right to rely on the Company's representations and warranties
contained herein. Such Buyer understands that its investment in the
Securities involves a high degree of risk. Such Buyer has sought
such accounting, legal and tax advice as it has considered
necessary to make an informed investment decision with respect to
its acquisition of the Securities.

 

(e) No Governmental Review. Such
Buyer understands that no United States federal or state agency or
any other government or governmental agency has passed on or made
any recommendation or endorsement of the Securities or the fairness
or suitability of the investment in the Securities nor have such
authorities passed upon or endorsed the merits of the offering of
the Securities.

 



 

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(f) Transfer or Resale. Such Buyer
understands that except as provided in the Registration Rights
Agreement: (i) the Securities have not been and are not being
registered under the 1933 Act or any state securities laws, and may
not be offered for sale, sold, assigned or transferred unless (A)
subsequently registered thereunder, (B) such Buyer shall have
delivered to the Company an opinion of counsel, in a generally
acceptable form, to the effect that such Securities to be sold,
assigned or transferred may be sold, assigned or transferred
pursuant to an exemption from such registration, or (C) such Buyer
provides the Company with reasonable assurance that such Securities
can be sold, assigned or transferred pursuant to Rule 144 or Rule
144A promulgated under the 1933 Act, as amended, (or a successor
rule thereto) (collectively, "Rule
144"); (ii) any sale of the Securities made in reliance on
Rule 144 may be made only in accordance with the terms of Rule 144
and further, if Rule 144 is not applicable, any resale of the
Securities under circumstances in which the seller (or the Person)
through whom the sale is made) may be deemed to be an underwriter
(as that term is defined in the 1933 Act) may require compliance
with some other exemption under the 1933 Act or the rules and
regulations of the SEC thereunder; and (iii) neither the Company
nor any other Person is under any obligation to register the
Securities under the 1933 Act or any state securities laws or to
comply with the terms and conditions of any exemption thereunder.
Notwithstanding the foregoing, the Securities may be pledged in
connection with a bona fide margin account or other loan or
financing arrangement secured by the Securities and such pledge of
Securities shall not be deemed to be a transfer, sale or assignment
of the Securities hereunder, and no Buyer effecting a pledge of
Securities shall be required to provide the Company with any notice
thereof or otherwise make any delivery to the Company pursuant to
this Agreement or any other Transaction Document (as defined in
Section 3(b)), including, without limitation, this Section
2(f).

 

(g) Legends. Such Buyer understands
that the certificates or other instruments representing the Notes
and the Warrants and, until such time as the resale of the
Conversion Shares and the Warrant Shares have been registered under
the 1933 Act as contemplated by the Registration Rights Agreement,
the stock certificates representing the Conversion Shares and the
Warrant Shares, except as set forth below, shall bear a restrictive
legend in substantially the following form (and a stop-transfer
order may be placed against transfer of such stock
certificates):

 


[NEITHER THE ISSUANCE AND SALE OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO
WHICH THESE SECURITIES ARE [CONVERTIBLE] [EXERCISABLE] HAVE BEEN][THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN]
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED
FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A)
AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL
SELECTED BY THE HOLDER, IN A GENERALLY ACCEPTABLE FORM, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD
PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING
THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A
BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT
SECURED BY THE SECURITIES.

 



 

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The
legend set forth above shall be removed and the Company shall issue
a certificate without such legend to the holder of the Securities
upon which it is stamped or issue to such holder by electronic
delivery at the applicable balance account at The Depository Trust
Company ("DTC"), if (i) such
Securities are registered for resale under the 1933 Act, (ii) in
connection with a sale, assignment or other transfer, such holder
provides the Company with an opinion of counsel, in a generally
acceptable form, to the effect that such sale, assignment or
transfer of the Securities may be made without registration under
the applicable requirements of the 1933 Act, or (iii) the
Securities can be sold, assigned or transferred pursuant to Rule
144 or Rule 144A. The Company shall be responsible for the fees of
its transfer agent and all DTC fees associated with such issuance.
The Company shall cause its counsel to issue a legal opinion to the
Transfer Agent promptly if required by the Transfer Agent, and/or
to any Buyer if requested by such Buyer, to effect the removal of
the legend hereunder.

 

(h) Validity; Enforcement. This
Agreement and the Registration Rights Agreement have been duly and
validly authorized, executed and delivered on behalf of such Buyer
and shall constitute the legal, valid and binding obligations of
such Buyer enforceable against such Buyer in accordance with their
respective terms, except as such enforceability may be limited by
general principles of equity or to applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation and other
similar laws relating to, or affecting generally, the enforcement
of applicable creditors' rights and remedies.

 

(i) No Conflicts. The execution,
delivery and performance by such Buyer of this Agreement and the
Registration Rights Agreement and the consummation by such Buyer of
the transactions contemplated hereby will not (i) result in a
violation of the organizational documents of such Buyer or (ii)
conflict with, or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or
give to others any rights of termination, amendment, acceleration
or cancellation of, any agreement, indenture or instrument to which
such Buyer is a party, or (iii) result in a violation of any law,
rule, regulation, order, judgment or decree (including federal and
state securities laws) applicable to such Buyer, except in the case
of clauses (ii) and (iii) above, for such conflicts, defaults,
rights or violations which would not, individually or in the
aggregate, reasonably be expected to have a material adverse effect
on the ability of such Buyer to perform its obligations
hereunder.

 

3. REPRESENTATIONS AND WARRANTIES OF THE
COMPANY.

 


The
Company makes the following representations and warranties to each
of the Buyers, as of the date hereof and as of the Closing Date,
subject to the disclosures of the Company set forth in the
disclosure schedules delivered to the Buyers as of the date hereof
(the “Disclosure
Schedules”). The Disclosure Schedules shall be
arranged in sections corresponding to the numbered and lettered
sections and subsections contained in this Section 3 and certain other
sections of this Agreement.

 



 

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(a) Organization and Qualification.
Each of the Company and each of its "Subsidiaries" (which for purposes of
this Agreement means any entity in which the Company, directly or
indirectly, owns any of the capital stock or holds an equity or
similar interest) are entities duly organized and validly existing
and in good standing under the laws of the jurisdiction in which
they are formed, and have the requisite power and authorization to
own their properties and to carry on their business as now being
conducted and as presently proposed to be conducted. Each of the
Company and each of its Subsidiaries is duly qualified as a foreign
entity to do business and is in good standing in every jurisdiction
in which its ownership of property or the nature of the business
conducted by it makes such qualification necessary, except to the
extent that the failure to be so qualified or be in good standing
would not reasonably be expected to have a Material Adverse Effect.
As used in this Agreement, "Material Adverse Effect" means any
material adverse effect on the business, properties, assets,
liabilities, operations, results of operations, condition
(financial or otherwise) or prospects of the Company and its
Subsidiaries, individually or taken as a whole, or on the
transactions contemplated hereby or on the other Transaction
Documents or by the agreements and instruments to be entered into
in connection herewith or therewith, or on the authority or ability
of the Company to perform any of its obligations under any of the
Transaction Documents (as defined below). The Company has no
Subsidiaries except as set forth on Schedule 3(a).

 

(b) Authorization; Enforcement;
Validity. The Company has the requisite power and authority
to enter into and perform its obligations under this Agreement, the
Notes, the Warrants, the Registration Rights Agreement, the
Irrevocable Transfer Agent Instructions (as defined in Section
5(b)) and each of the other agreements entered into by the parties
hereto in connection with the transactions contemplated by this
Agreement (collectively, the "Transaction Documents") and to issue the
Securities in accordance with the terms hereof and thereof. The
execution and delivery of this Agreement and the other Transaction
Documents by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby, including, without
limitation, the issuance of the Notes and the Warrants, and the
reservation for issuance and the issuance of the Conversion Shares
and the reservation for issuance and issuance of Warrant Shares
issuable upon exercise of the Warrants have been duly authorized by
the Company's Board of Directors and (other than the filing with
the SEC of one or more Registration Statements (as defined in the
Registration Rights Agreement) in accordance with the requirements
of the Registration Rights Agreement, the filing of a Form D with
the SEC and other filings as may be required by state securities
agencies) no further filing, consent, or authorization is required
by the Company, its Board of Directors or its stockholders. This
Agreement and the other Transaction Documents have been duly
executed and delivered by the Company, and constitute the legal,
valid and binding obligations of the Company, enforceable against
the Company in accordance with their respective terms, except as
such enforceability may be limited by general principles of equity
or applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally,
the enforcement of applicable creditors' rights and
remedies.

 



 

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(c) Issuance of Securities. The
issuance of the Notes and the Warrants are duly authorized and,
upon issuance, shall be validly issued and free from all preemptive
or similar rights, taxes, liens, charges and other encumbrances
with respect to the issue thereof. As of the Closing, a number of
shares of Common Stock shall have been duly authorized and reserved
for issuance which equals or exceeds (the "Required Reserved Amount") the sum of
(i) 200% of the maximum number of Conversion Shares issued and
issuable pursuant to the Notes based on the Conversion Price (as
defined in the Notes) (without taking into account any limitations
on the issuance thereof pursuant to the terms of the Notes) and
(ii) the maximum number of Warrant Shares issued and issuable
pursuant to the Warrants, each as of the Trading Day (as defined in
the Warrants) immediately preceding the applicable date of
determination (without taking into account any limitations on the
exercise of the Warrants set forth in the Warrants). As of the date
hereof, there are 699,882,002 shares of Common Stock authorized and
unissued. Upon conversion of the Notes in accordance with the Notes
or exercise of the Warrants in accordance with the Warrants, as the
case may be, the Conversion Shares and the Warrant Shares,
respectively, will be validly issued, fully paid and nonassessable
and free from all preemptive or similar rights, taxes, liens,
charges and other encumbrances with respect to the issue thereof,
with the holders being entitled to all rights accorded to a holder
of Common Stock. Assuming the accuracy of each of the
representations and warranties set forth in Section 2 of this
Agreement, the offer and issuance by the Company of the Securities
is exempt from registration under the 1933 Act.

 

(d) No Conflicts. The execution,
delivery and performance of the Transaction Documents by the
Company and the consummation by the Company of the transactions
contemplated hereby and thereby (including, without limitation, the
issuance of the Notes and the Warrants and reservation for issuance
and issuance of the Conversion Shares and the Warrant Shares) will
not (i) result in a violation of the Certificate of Incorporation
(as defined in Section (3(r)) or Bylaws (as defined in Section
(3(r)), any memorandum of association, certificate of
incorporation, certificate of formation, bylaws, any certificate of
designations or other constituent documents of the Company or any
of its Subsidiaries, any capital stock of the Company or any of its
Subsidiaries or the articles of association or bylaws of the
Company or any of its Subsidiaries or (ii) conflict with, or
constitute a default (or an event which with notice or lapse of
time or both would become a default) in any respect under, or give
to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which
the Company or any of its Subsidiaries is a party, or (iii) result
in a violation of any law, rule, regulation, order, judgment or
decree (including other foreign, federal and state securities laws
and regulations and the rules and regulations of the OTC QB (the
"Principal Market") and
including all applicable laws of the State of Delaware and any
foreign, federal and state laws, rules and regulations) applicable
to the Company or any of its Subsidiaries or by which any property
or asset of the Company or any of its Subsidiaries is bound or
affected.

 

(e) Consents. The Company is not
required to obtain any consent, authorization or order of, or make
any filing or registration with (other than the filing with the SEC
of one or more Registration Statements in accordance with the
requirements of the Registration Rights Agreement, a Form D with
the SEC and other filings as may be required by state securities
agencies), any court, governmental agency or any regulatory or
self-regulatory agency or any other Person in order for it to
execute, deliver or perform any of its obligations under or
contemplated by the Transaction Documents, in each case in
accordance with the terms hereof or thereof. All consents,
authorizations, orders, filings and registrations which the Company
is required to obtain pursuant to the preceding sentence have been
obtained or effected on or prior to the Closing Date (or in the
case of the filings detailed above, will be made timely after the
Closing Date), and the Company is unaware of any facts or
circumstances that might prevent the Company from obtaining or
effecting any of the registration, application or filings pursuant
to the preceding sentence. The Company is not in violation of the
listing requirements of the Principal Market and has no knowledge
of any facts or circumstances that would reasonably lead to
delisting or suspension of the Common Stock in the foreseeable
future. The issuance by the Company of the Securities shall not
have the effect of delisting or suspending the Common Stock from
the Principal Market.

 



 

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(f) Acknowledgment Regarding Buyer's
Purchase of Securities. The Company acknowledges and agrees
that each Buyer is acting solely in the capacity of an arm's length
purchaser with respect to the Transaction Documents and the
transactions contemplated hereby and thereby and that no Buyer is
(i) an officer or director of the Company or any of its
Subsidiaries, (ii) an "affiliate" of the Company or any of its
Subsidiaries (as defined in Rule 144) or (iii) to the knowledge of
the Company, a "beneficial owner" of more than 10% of the shares of
Common Stock (as defined for purposes of Rule 13d-3 of the
Securities Exchange Act of 1934, as amended (the "1934 Act")). The Company further
acknowledges that no Buyer is acting as a financial advisor or
fiduciary of the Company or any of its Subsidiaries (or in any
similar capacity) with respect to the Transaction Documents and the
transactions contemplated hereby and thereby, and any advice given
by a Buyer or any of its representatives or agents in connection
with the Transaction Documents and the transactions contemplated
hereby and thereby is merely incidental to such Buyer's purchase of
the Securities. The Company further represents to each Buyer that
the Company's decision to enter into the Transaction Documents has
been based solely on the independent evaluation by the Company and
its representatives.

 

(g) No General Solicitation; Placement
Agent's Fees. Neither the Company, nor any of its
Subsidiaries or affiliates, nor any Person acting on its or their
behalf, has engaged in any form of general solicitation or general
advertising (within the meaning of Regulation D) in connection with
the offer or sale of the Securities. The Company shall be
responsible for the payment of any placement agent's fees,
financial advisory fees, or brokers' commissions (other than for
persons engaged by any Buyer or its investment advisor) relating to
or arising out of the transactions contemplated hereby, including,
without limitation, any placement agent fees payable to Oppenheimer
& Co. Inc., as placement agent (the "Placement Agent") in connection with the
sale of the Securities. The Company shall pay, and hold each Buyer
harmless against, any liability, loss or expense (including,
without limitation, attorney's fees and out-of-pocket expenses)
arising in connection with any such claim. The Company acknowledges
that it has engaged the Placement Agent in connection with the sale
of the Securities. Other than the Placement Agent, neither the
Company nor any of its Subsidiaries has engaged any placement agent
or other agent in connection with the sale of the
Securities.

 

(h) No Integrated Offering. None of
the Company, its Subsidiaries, any of their affiliates, nor any
Person acting on 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 require registration of
the issuance of any of the Securities under the 1933 Act, whether
through integration with prior offerings or otherwise, or cause
this offering of the Securities to require approval of stockholders
of the Company for purposes of the 1933 Act or any applicable
stockholder approval provisions, including, without limitation,
under the rules and regulations of any exchange or automated
quotation system on which any of the securities of the Company are
listed or designated for quotation. None of the Company, its
Subsidiaries, their affiliates nor any Person acting on their
behalf will take any action or steps referred to in the preceding
sentence that would require registration of the issuance of any of
the Securities under the 1933 Act or cause the offering of any of
the Securities to be integrated with other offerings for purposes
of any such applicable stockholder approval
provisions.

 



 

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(i) Dilutive Effect. The Company
understands and acknowledges that the number of Conversion Shares
issuable pursuant to terms of the Notes will increase in certain
circumstances. The Company further acknowledges that its obligation
to issue Conversion Shares pursuant to the terms of the Notes in
accordance with this Agreement and the Notes is absolute and
unconditional regardless of the dilutive effect that such issuance
may have on the ownership interests of other stockholders of the
Company.

 

(j) Application of Takeover Protections;
Rights Agreement. The Company and its board of directors
have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, interested shareholder,
business combination, poison pill (including, without limitation,
any distribution under a rights agreement) or other similar
anti-takeover provision under the Certificate of Incorporation,
Bylaws or other organizational documents or the laws of the
jurisdiction of its formation which is or could become applicable
to any Buyer as a result of the transactions contemplated by this
Agreement, including, without limitation, the Company's issuance of
the Securities and any Buyer's ownership of the Securities. The
Company has not adopted a stockholder rights plan or similar
arrangement relating to accumulations of beneficial ownership of
Common Stock or a change in control of the Company or any of its
Subsidiaries.

 

(k) SEC Documents; Financial
Statements. Except as disclosed in Schedule 3(k), during the two
(2) years prior to the date hereof, the Company has timely filed
all reports, schedules, forms, statements and other documents
required to be filed by it with the SEC pursuant to the reporting
requirements of the 1934 Act (all of the foregoing filed prior to
the date hereof or prior to the Closing Date, and all exhibits
included therein and financial statements, notes and schedules
thereto and documents incorporated by reference therein being
hereinafter referred to as the "SEC
Documents"). All of the SEC Documents are available on the
EDGAR system. As of their respective filing dates, the SEC
Documents complied in all material respects with the requirements
of the 1934 Act and the rules and regulations of the SEC
promulgated thereunder applicable to the SEC Documents, and none of
the SEC Documents, at the time they were filed with the SEC,
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. As of
their respective filing dates, the financial statements of the
Company included in the SEC Documents complied as to form in all
material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto.
Such financial statements have been prepared in accordance with
generally accepted accounting principles, consistently applied,
during the periods involved ("GAAP") (except (i) as may be otherwise
indicated in such financial statements or the notes thereto, or
(ii) in the case of unaudited interim statements, to the extent
they may exclude footnotes or may be condensed or summary
statements) and fairly present in all material respects the
financial position of the Company and its Subsidiaries as of the
dates thereof and the results of its operations and cash flows for
the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments which will not be
material either individually or in the aggregate). No other
information provided by or on behalf of the Company to any of the
Buyers which is not included in the SEC Documents, including,
without limitation, information referred to in Section 2(d) of this
Agreement or in the disclosure schedules to this Agreement,
contains any untrue statement of a material fact or omits to state
any material fact necessary in order to make the statements
therein, in the light of the circumstance under which they are or
were made, not misleading.

 



 

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(l) Absence of Certain Changes.
Except as disclosed in Schedule 3(l), since December
31, 2016, there has been no material adverse change and no material
adverse development in the business, assets, liabilities,
properties, operations, condition (financial or otherwise), results
of operations or prospects of the Company or any of its
Subsidiaries. Except as disclosed in Schedule 3(l), since December
31, 2016, neither the Company nor any of its Subsidiaries has (i)
declared or paid any dividends, (ii) sold any assets, individually
or in the aggregate, in excess of $250,000 outside of the ordinary
course of business or (iii) had capital expenditures, individually
or in the aggregate, in excess of $250,000. Neither the Company nor
any of its Subsidiaries has taken any steps to seek protection
pursuant to any law or statute relating to bankruptcy, insolvency,
reorganization, receivership, liquidation or winding up nor does
the Company or any Subsidiary have any knowledge or reason to
believe that any of its respective creditors intend to initiate
involuntary bankruptcy proceedings or any actual knowledge of any
fact that would reasonably lead a creditor to do so. The Company
and its Subsidiaries, individually and on a consolidated basis,
after giving effect to the transactions contemplated hereby to
occur at the Closing, will not be Insolvent (as defined below). For
purposes of this Section 3(l), "Insolvent" means, with respect to any
Person, (i) the present fair saleable value of such Person's assets
is less than the amount required to pay such Person's total
Indebtedness (as defined in Section 3(s)), (ii) such Person is
unable to pay its debts and liabilities, subordinated, contingent
or otherwise, as such debts and liabilities become absolute and
matured, (iii) such Person intends to incur or believes that it
will incur debts that would be beyond its ability to pay as such
debts mature or (iv) such Person has unreasonably small capital
with which to conduct the business in which it is engaged as such
business is now conducted and is proposed to be
conducted.

 

(m) No Undisclosed Events, Liabilities,
Developments or Circumstances. No event, liability,
development or circumstance has occurred or exists, or is
contemplated to occur with respect to the Company, its Subsidiaries
or their respective business, properties, prospects, operations or
financial condition, that would be required to be disclosed by the
Company under applicable securities laws on a registration
statement on Form S-1 filed with the SEC relating to an issuance
and sale by the Company of its Common Stock and which has not been
publicly announced.

 

(n) Conduct of Business; Regulatory
Permits. Neither the Company nor any of its Subsidiaries is
in violation of any term of or in default under any certificate of
designations of any outstanding series of preferred stock of the
Company (if any), its Articles of Incorporation or Bylaws or their
organizational charter or memorandum of association or certificate
of incorporation or articles of association or bylaws,
respectively. Neither the Company nor any of its Subsidiaries is in
violation of any judgment, decree or order or any statute,
ordinance, rule or regulation applicable to the Company or any of
its Subsidiaries, and neither the Company nor any of its
Subsidiaries will conduct its business in violation of any of the
foregoing, except for possible violations which could not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. Without limiting the generality of the
foregoing, the Company is not in violation of any of the rules,
regulations or requirements of the Principal Market and has no
knowledge of any facts or circumstances that would reasonably lead
to delisting or suspension of the Common Stock by the Principal
Market in the foreseeable future. Except as set forth in
Schedule 3(n),
during the two (2) years prior to the date hereof, the Common Stock
has been designated for quotation on the Principal Market. Except
as set forth in Schedule
3(n), during the two (2) years prior to the date hereof, (i)
trading in the Common Stock has not been suspended by the SEC or
the Principal Market and (ii) the Company has received no
communication, written or oral, from the SEC or the Principal
Market regarding the suspension or delisting of the Common Stock
from the Principal Market. The Company and its Subsidiaries possess
all certificates, authorizations and permits issued by the
appropriate federal, state or foreign regulatory authorities
necessary to conduct their respective businesses, except where the
failure to possess such certificates, authorizations or permits
would not have, individually or in the aggregate, a Material
Adverse Effect, and neither the Company nor any such Subsidiary has
received any notice of proceedings relating to the revocation or
modification of any such certificate, authorization or
permit.

 



 

10







 





 

(o) Foreign Corrupt Practices.
Neither the Company, nor any of its Subsidiaries, nor, to the
Company's knowledge, any director, officer, agent, employee or
other Person acting on behalf of the Company or any of its
Subsidiaries has, in the course of its actions for, or on behalf
of, the Company or any of its Subsidiaries (i) used any corporate
funds for any unlawful contribution, gift, entertainment or other
unlawful expenses relating to political activity; (ii) made any
direct or indirect unlawful payment to any foreign or domestic
government official or employee from corporate funds; (iii)
violated or is in violation of any provision of the U.S. Foreign
Corrupt Practices Act of 1977, as amended; or (iv) made any
unlawful bribe, rebate, payoff, influence payment, kickback or
other unlawful payment to any foreign or domestic government
official or employee.

 

(p) Sarbanes-Oxley Act. The Company
is in compliance in all material respects with any and all
applicable requirements of the Sarbanes-Oxley Act of 2002, as
amended, that are effective as of the date hereof, and any and all
applicable rules and regulations promulgated by the SEC thereunder
that are effective as of the date hereof.

 

(q) 

 

Transactions With
Affiliates. Except as set forth on Schedule 3(q), none of the
officers, directors or employees of the Company or any of its
Subsidiaries is presently a party to any transaction with the
Company or any of its Subsidiaries (other than for ordinary course
services as employees, officers or 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, or otherwise requiring payments to or
from any such officer, director or employee or, to the knowledge of
the Company or any of its Subsidiaries, any corporation,
partnership, trust or other entity in which any such officer,
director, or employee has a substantial interest or is an officer,
director, employee, trustee or partner.

 



 

11







 





 

(r) Equity Capitalization. As of
the date hereof, the authorized capital stock of the Company
consists of (i) 750,000,000 shares of Common Stock, of which as of
the date hereof, 50,117,978 shares are issued and outstanding,
150,000 shares are reserved for issuance pursuant to the Company's
stock option and purchase plans and 1,163,548 shares are reserved
for issuance pursuant to securities (other than the aforementioned
options, the Notes and the Warrants) exercisable or exchangeable
for, or convertible into, Common Stock, (ii) 15,000,000 shares of
preferred stock, par value $0.001 per share, of which (w) 92,230
shares are designated as Series C preferred stock, 92,230 of which
are issued and outstanding, (x) 25,000 shares are designated as
Series H preferred stock, 0 of which are issued and outstanding,
(y) 1,666,667 shares are designated as Series I preferred stock, 0
of which are issued and outstanding and (z) (w) 2,000,000 shares
are designated as Series J preferred stock, 1,163,548 of which are
issued and outstanding and (iii) there are 23,956,712 shares of
Common Stock held by non-affiliates of the Company. All of such
outstanding shares have been, or upon issuance will be, validly
issued and are fully paid and nonassessable. Except as disclosed in
(i) Schedule
3(r)(i), none of the Company's capital stock is subject to
preemptive rights or any other similar rights or any liens or
encumbrances suffered or permitted by the Company; (ii)
Schedule 3(r)(ii),
there are no outstanding options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, or
exercisable or exchangeable for, any shares of capital stock of the
Company or any of its Subsidiaries, or contracts, commitments,
understandings or arrangements by which the Company or any of its
Subsidiaries is or may become bound to issue additional shares of
capital stock of the Company or any of its Subsidiaries or options,
warrants, scrip, rights to subscribe to, calls or commitments of
any character whatsoever relating to, or securities or rights
convertible into, or exercisable or exchangeable for, any shares of
capital stock of the Company or any of its Subsidiaries; (iii)
Schedule 3(r)(iii),
there are no outstanding debt securities, notes, credit agreements,
credit facilities or other agreements, documents or instruments
evidencing Indebtedness of the Company or any of its Subsidiaries
or by which the Company or any of its Subsidiaries is or may become
bound; (iv) Schedule
3(r)(iv), there are no financing statements securing
obligations in any material amounts, either singly or in the
aggregate, filed in connection with the Company or any of its
Subsidiaries; (v) Schedule
3(r)(v) or pursuant to the Registration Rights Agreement,
there are no agreements or arrangements under which the Company or
any of its Subsidiaries is obligated to register the sale of any of
their securities under the 1933 Act; (vi) Schedule 3(r)(vi), there are no
outstanding securities or instruments of the Company or any of its
Subsidiaries which contain any redemption or similar provisions,
and there are no contracts, commitments, understandings or
arrangements by which the Company or any of its Subsidiaries is or
may become bound to redeem a security of the Company or any of its
Subsidiaries; (vii) Schedule 3(r)(vii), there are
no securities or instruments containing anti-dilution or similar
provisions that will be triggered by the issuance of the
Securities; (viii) Schedule 3(r)(viii), neither
the Company nor any Subsidiary has any stock appreciation rights or
"phantom stock" plans or agreements or any similar plan or
agreement; and (ix) Schedule 3(r)(ix), the Company
and its Subsidiaries have no liabilities or obligations required to
be disclosed in the SEC Documents but not so disclosed in the SEC
Documents, other than those incurred in the ordinary course of the
Company's or any of its Subsidiary's' respective businesses and
which, individually or in the aggregate, do not or would not have a
Material Adverse Effect. The SEC Documents contain true, correct
and complete copies of the Company's Certificate of Incorporation,
as amended and as in effect on the date hereof (the "Certificate of Incorporation"), and the Company's
Bylaws, as amended and as in effect on the date hereof (the
"Bylaws"), and the terms of
all securities convertible into, or exercisable or exchangeable for
shares of Common Stock and the material rights of the holders
thereof in respect thereto.

 



 

12







 





 

(s) Indebtedness and Other
Contracts. Neither the Company nor any of its Subsidiaries
(i) except as disclosed in Schedule 3(s)(i), has any
outstanding Indebtedness (as defined below), (ii) except as
disclosed in Schedule
3(s)(ii), is a party to any contract, agreement or
instrument, the violation of which, or default under which, by the
other party(ies) to such contract, agreement or instrument could
reasonably be expected to result in a Material Adverse Effect,
(iii) except as disclosed in Schedule 3(s)(iii), is in
violation of any term of or in default under any contract,
agreement or instrument relating to any Indebtedness, except where
such violations and defaults would not result, individually or in
the aggregate, in a Material Adverse Effect, or (iv) except as
disclosed in Schedule
3(s)(iv), is a party to any contract, agreement or
instrument relating to any Indebtedness, the performance of which,
in the judgment of the Company's officers, has or is expected to
have a Material Adverse Effect. Schedule 3(s) provides a
detailed description of the material terms of any such outstanding
Indebtedness. For purposes of this Agreement: (x) "Indebtedness" of any Person means,
without duplication (A) all indebtedness for borrowed money, (B)
all obligations issued, undertaken or assumed as the deferred
purchase price of property or services, including, without
limitation, "capital leases" in accordance with GAAP (other than
trade payables entered into in the ordinary course of business
consistent with past practice), (C) all reimbursement or payment
obligations with respect to letters of credit, surety bonds and
other similar instruments, (D) all obligations evidenced by notes,
bonds, debentures or similar instruments, including obligations so
evidenced incurred in connection with the acquisition of property,
assets or businesses, (E) all indebtedness created or arising under
any conditional sale or other title retention agreement, or
incurred as financing, in either case with respect to any property
or assets acquired with the proceeds of such indebtedness (even
though the rights and remedies of the seller or bank under such
agreement in the event of default are limited to repossession or
sale of such property), (F) all monetary obligations under any
leasing or similar arrangement which, in connection with GAAP,
consistently applied for the periods covered thereby, is classified
as a capital lease, (G) all indebtedness referred to in clauses (A)
through (F) above secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be
secured by) any mortgage, deed of trust, lien, pledge, charge,
security interest or other encumbrance of any nature whatsoever in
or upon any property or assets (including accounts and contract
rights) with respect to any asset or property owned by any Person,
even though the Person which owns such assets or property has not
assumed or become liable for the payment of such indebtedness, and
(H) all Contingent Obligations in respect of indebtedness or
obligations of others of the kinds referred to in clauses (A)
through (G) above; and (y) "Contingent Obligation" means, as to any
Person, any direct or indirect liability, contingent or otherwise,
of that Person with respect to any Indebtedness, lease, dividend or
other obligation of another Person if the primary purpose or intent
of the Person incurring such liability, or the primary effect
thereof, is to provide assurance to the obligee of such liability
that such liability will be paid or discharged, or that any
agreements relating thereto will be complied with, or that the
holders of such liability will be protected (in whole or in part)
against loss with respect thereto.

 



 

13







 





 

(t) Absence of Litigation. There is
no action, suit, proceeding, inquiry or investigation before or by
the Principal Market, any court, public board, government agency,
self-regulatory organization or body pending or, to the knowledge
of the Company, threatened against or affecting the Company or any
of its Subsidiaries, the Common Stock or any of the Company's
Subsidiaries or any of the Company's or its Subsidiaries' officers
or directors, whether of a civil or criminal nature or otherwise,
in their capacities as such, except as set forth in Schedule 3(t). The matters set
forth in Schedule
3(t) would not reasonably be expected to have a Material
Adverse Effect.

 

(u) Insurance. The Company and each
of its Subsidiaries are insured against such losses and risks and
in such amounts as management of the Company believes to be prudent
and customary in the businesses in which the Company and its
Subsidiaries are engaged. Neither the Company nor any such
Subsidiary has been refused any insurance coverage sought or
applied for. The Company believes that it either will be able to
renew its existing insurance coverage as and when such coverage
expires or obtain similar coverage from similar insurers as may be
necessary to continue its business, in each case, at a cost that
would not reasonably be expected to have a Material Adverse
Effect.

 

(v) Employee
Relations.

 


(i)           Neither
the Company nor any of its Subsidiaries is a party to any
collective bargaining agreement or employs any member of a union.
The Company and its Subsidiaries believe that their relations with
their respective employees are good. No executive officer of the
Company or any of its Subsidiaries (as defined in Rule 501(f) of
the 1933 Act) has notified the Company or any such Subsidiary that
such officer intends to leave the Company or any such Subsidiary or
otherwise terminate such officer's employment with the Company or
any such Subsidiary. No executive officer of the Company or any of
its Subsidiaries, to the knowledge of the Company or any of its
Subsidiaries, is, or is now expected to be, in violation of any
material term of any employment contract, confidentiality,
disclosure or proprietary information agreement, non-competition
agreement, or any other contract or agreement or any restrictive
covenant, and, to the knowledge of the Company, the continued
employment of each such executive officer does not subject the
Company or any of its Subsidiaries to any liability with respect to
any of the foregoing matters.

 


(ii)           The
Company and its Subsidiaries are in compliance with all federal,
state, local and foreign laws and regulations respecting labor,
employment and employment practices and benefits, terms and
conditions of employment and wages and hours, except where failure
to be in compliance would not, either individually or in the
aggregate, reasonably be expected to result in a Material Adverse
Effect.

 

(w) Title. The Company and its
Subsidiaries have good and marketable title in fee simple to all
real property and good and marketable title to all personal
property owned by them which is material to the business of the
Company and its Subsidiaries, in each case free and clear of all
liens, encumbrances and defects except such as do not materially
affect the value of such property and do not interfere with the use
made and proposed to be made of such property by the Company and
any of its Subsidiaries. Any real property and facilities held
under lease by the Company and any of its Subsidiaries are held by
them under valid, subsisting and enforceable leases with such
exceptions as are not material and do not interfere with the use
made and proposed to be made of such property and buildings by the
Company and its Subsidiaries.

 



 

14







 





 

(x) Intellectual Property Rights.
The Company and its Subsidiaries own or possess adequate rights or
licenses to use all trademarks, trade names, service marks, service
mark registrations, service names, original works of authorship,
patents, patent rights, copyrights, inventions, licenses,
approvals, governmental authorizations, trade secrets and other
intellectual property rights and all applications and registrations
therefor ("Intellectual Property
Rights") necessary to conduct their respective businesses as
now conducted and as presently proposed to be conducted. Each of
patents owned by the Company or any of its Subsidiaries is listed
on Schedule
3(x)(i). Except as set forth in Schedule 3(x)(ii), none of the
Company's or its Subsidiaries' Intellectual Property Rights have
expired or terminated or have been abandoned or are expected to
expire or terminate or are expected to be abandoned, within three
years from the date of this Agreement. The Company does not have
any knowledge of any infringement by the Company or its
Subsidiaries of Intellectual Property Rights of others. There is no
claim, action or proceeding being made or brought, or to the
knowledge of the Company or any of its Subsidiaries, being
threatened, against the Company or any of its Subsidiaries
regarding its Intellectual Property Rights. Neither the Company nor
any of its Subsidiaries is aware of any facts or circumstances
which might give rise to any of the foregoing infringements or
claims, actions or proceedings. The Company and its Subsidiaries
have taken reasonable security measures to protect the secrecy,
confidentiality and value of all of their Intellectual Property
Rights.

 

(y) Environmental Laws. The Company
and its Subsidiaries (i) are in compliance with any and all
Environmental Laws (as hereinafter defined), (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
of the foregoing clauses (i), (ii) and (iii), the failure to so
comply could be reasonably expected to have, individually or in the
aggregate, a Material Adverse Effect. The term "Environmental Laws" means all federal,
state, local or foreign laws relating to pollution or protection of
human health or the environment (including, without limitation,
ambient air, surface water, groundwater, land surface or subsurface
strata), including, without limitation, 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.

 

(z) Subsidiary Rights. The Company
or one of its Subsidiaries has the unrestricted right to vote, and
(subject to limitations imposed by applicable law) to receive
dividends and distributions on, all capital securities of its
Subsidiaries as owned by the Company or such
Subsidiary.

 



 

15







 





 

(aa) Investment
Company Status. Neither the Company nor any Subsidiary is,
and upon consummation of the sale of the Securities, and for so
long any Buyer holds any Securities, will be, an "investment
company," a company controlled by an "investment company" or an
"affiliated person" of, or "promoter" or "principal underwriter"
for, an "investment company" as such terms are defined in the
Investment Company Act of 1940, as amended.

 

(bb) Tax
Status. The Company and each of its Subsidiaries (i) has
made or filed all U.S. federal, state and foreign income and all
other 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, except those being contested in good faith and (iii)
has set aside on its books provision reasonably adequate for the
payment of all 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 know
of no basis for any such claim.

 

(cc) Internal
Accounting and Disclosure Controls. The Company and each of
its 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
generally accepted accounting principles and to maintain asset and
liability accountability, (iii) access to assets or incurrence of
liabilities is permitted only in accordance with management's
general or specific authorization and (iv) the recorded
accountability for assets and liabilities is compared with the
existing assets and liabilities at reasonable intervals and
appropriate action is taken with respect to any difference. The
Company maintains disclosure controls and procedures (as such term
is defined in Rule 13a-15 under the 1934 Act) that are effective in
ensuring that information required to be disclosed by the Company
in the reports that it files or submits under the 1934 Act is
recorded, processed, summarized and reported, within the time
periods specified in the rules and forms of the SEC, including,
without limitation, controls and procedures designed to ensure that
information required to be disclosed by the Company in the reports
that it files or submits under the 1934 Act is accumulated and
communicated to the Company's management, including its principal
executive officer or officers and its principal financial officer
or officers, as appropriate, to allow timely decisions regarding
required disclosure. During the twelve months prior to the date
hereof neither the Company nor any of its Subsidiaries has received
any notice or correspondence from any accountant relating to any
material weakness in any part of the system of internal accounting
controls of the Company or any of its Subsidiaries.

 

(dd) Off
Balance Sheet Arrangements. There is no transaction,
arrangement, or other relationship between the Company and an
unconsolidated or other off balance sheet entity that is required
to be disclosed by the Company in its 1934 Act filings and is not
so disclosed or that otherwise would be reasonably likely to have a
Material Adverse Effect.

 

(ee) Ranking
of Notes. Except as set forth in Schedule 3(ee), no Indebtedness
of the Company or any of its Subsidiaries is senior to or ranks
pari passu with the Notes
in right of payment, whether with respect of payment of
redemptions, interest, damages or upon liquidation or dissolution
or otherwise.

 



 

16







 





 

(ff) Eligibility
for Registration. As of the date hereof, the Company is
eligible to register the Conversion Shares and the Warrant Shares
for resale by the Buyers using Form S-3 promulgated under the 1933
Act.

 

(gg) Transfer
Taxes. On the Closing Date, all stock transfer or other
taxes (other than income or similar taxes) which are required to be
paid in connection with the sale and transfer of the Securities to
be sold to each Buyer hereunder will be, or will have been, fully
paid or provided for by the Company, and all laws imposing such
taxes will be or will have been complied with.

 

(hh) Manipulation
of Price. 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, or that could reasonably be
expected to cause or 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) other than the Placement
Agent, sold, bid for, purchased, or paid any compensation for
soliciting purchases of, any of the Securities, or (iii) other than
the Placement Agent, paid or agreed to pay to any person any
compensation for soliciting another to purchase any other
securities of the Company.

 

(ii) Acknowledgement
Regarding Buyers' Trading Activity. The Company acknowledges
and agrees that (i) none of the Buyers has been asked to agree, nor
has any Buyer 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) any Buyer, and counter-parties in
"derivative" transactions to which any such Buyer is a party,
directly or indirectly, presently may have a "short" position in
the Common Stock, and (iii) each Buyer 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 one or more Buyers may engage in hedging
and/or trading activities at various times during the period that
the Securities are outstanding, including, without limitation,
during the periods that the value of the Conversion Shares and/or
the Warrant Shares are being determined and (b) such hedging and/or
trading activities, if any, can reduce the value of the existing
stockholders' equity interest in the Company both at and after the
time the hedging and/or trading activities are being conducted. The
Company acknowledges that such aforementioned hedging and/or
trading activities do not constitute a breach of this Agreement,
the Notes, the Warrants or any of the documents executed in
connection herewith.

 

(jj) U.S.
Real Property Holding Corporation. The Company is not, has
never been, and so long as any Securities remain outstanding, shall
not become, a U.S. real property holding corporation within the
meaning of Section 897 of the Code and the Company shall so certify
upon any Buyer'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 (25%) 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.

 



 

17







 





 

(ll) No
Additional Agreements. Neither the Company nor any of its
Subsidiaries has any agreement or understanding with any Buyer with
respect to the transactions contemplated by the Transaction
Documents other than as specified in the Transaction
Documents.

 

(mm) Disclosure.
Except for discussions specifically regarding the offer and sale of
the Securities, the Company confirms that neither it nor any other
Person acting on its behalf has provided any of the Buyers or their
agents or counsel with any information that constitutes or could
reasonably be expected to constitute material, nonpublic
information concerning the Company or any of its Subsidiaries,
other than the existence of the transactions contemplated by this
Agreement and the other Transaction Documents. The Company
understands and confirms that each of the Buyers will rely on the
foregoing representations in effecting transactions in securities
of the Company. All disclosure provided to the Buyers regarding the
Company and its Subsidiaries, their businesses and the transactions
contemplated hereby, including the schedules to this Agreement,
furnished by or on behalf of the Company or any of its Subsidiaries
is true and correct and does not contain any untrue statement of a
material fact or omit to state any material fact necessary in order
to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. All of
the written information furnished after the date hereof by or on
behalf of the Company or any of its Subsidiaries to you pursuant to
or in connection with this Agreement and the other Transaction
Documents, taken as a whole, will be true and correct in all
material respects as of the date on which such information is so
provided and will not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make
the statements made therein, in the light of the circumstances
under which they are made, not misleading. Each press release
issued by the Company or any of its Subsidiaries during the twelve
(12) months preceding the date of this Agreement did not at the
time of release contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. No
event or circumstance has occurred or information exists with
respect to the Company or any of its Subsidiaries or its or their
business, properties, liabilities, prospects, operations (including
results thereof) or conditions (financial or otherwise), which,
under applicable law, rule or regulation, requires public
disclosure by the Company at or before the date hereof or
announcement by the Company but which has not been so publicly
announced or disclosed. The Company acknowledges and agrees that no
Buyer makes or has made any representations or warranties with
respect to the transactions contemplated hereby other than those
specifically set forth in Section 2.

 

(nn) Shell
Company Status. The Company is not, and has never been, an
issuer identified in Rule 144(i)(1) of the 1933 Act.

 



 

18







 





 

(oo) Stock
Option Plans. Each stock option granted by the Company was
granted (i) in accordance with the terms of the applicable stock
option plan of the Company and (ii) with an exercise price at least
equal to the fair market value of the Common Stock on the date such
stock option would be considered granted under GAAP and applicable
law. No stock option granted under the Company's stock option plan
has been backdated. The Company has not knowingly granted, and
there is no and has been no policy or practice of the Company to
knowingly grant, stock options prior to, or otherwise knowingly
coordinate the grant of stock options with, the release or other
public announcement of material information regarding the Company
or its Subsidiaries or their financial results or
prospects.

 

(pp) No
Disagreements with Accountants and Lawyers. There are no
material disagreements of any kind presently existing, or
reasonably anticipated by the Company to arise, between the Company
and the accountants and lawyers formerly or presently employed by
the Company and the Company is current with respect to any fees
owed to its accountants and lawyers which could affect the
Company's ability to perform any of its obligations under any of
the Transaction Documents.

 

(qq) Compliance
with Anti-Money Laundering Laws. The operations of the Company and its
Subsidiaries are and have been conducted at all times in compliance
with applicable financial recordkeeping and reporting requirements
and all other applicable U.S. and non-U.S. anti-money laundering
laws and regulations, including, but not limited to, those of the
Currency and Foreign Transactions Reporting Act of 1970, as
amended, the USA Patriot Act of 2001 and the applicable money
laundering statutes of all applicable jurisdictions, the rules and
regulations thereunder and any related or similar rules,
regulations or guidelines, issued, administered or enforced by any
governmental agency (collectively, the "Anti-Money
Laundering Laws"),
and no action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving
the Company or any of its Subsidiaries with respect to the
Anti-Money Laundering Laws is pending or, to the knowledge of the
Company, threatened.

 

(rr) No
Conflicts with Sanctions Laws. Neither
the Company nor any of the Subsidiaries has made any contribution
or other payment to any official of, or candidate for, any federal,
state or foreign office in violation of any law which violation is
required to be disclosed in the Prospectus. Neither the Company nor any of its
Subsidiaries, nor, to the knowledge of the Company, any director,
officer, employee, agent, affiliate or other person associated with
or acting on behalf of the Company or any of its Subsidiaries or
affiliates is, or is directly or indirectly owned or controlled by,
a Person that is currently the subject or the target of any
sanctions administered or enforced by the U.S. government
(including, without limitation, the Office of Foreign Assets
Control of the U.S. Department of the Treasury
("OFAC")
or the U.S. Departments of State or Commerce and including, without
limitation, the designation as a "specially designated national" or
"blocked person"), the United Nations Security Council
("UNSC"),
the European Union, Her Majesty's Treasury ("HMT")
or any other relevant sanctions authority (collectively,
"Sanctions"),
or is the Company, any of its Subsidiaries located, organized or
resident in a country or territory that is the subject or target of
a comprehensive embargo or Sanctions prohibiting trade with the
country or territory, including, without limitation, Cuba, Iran,
North Korea, Sudan and Syria (each, a "Sanctioned
Country"); no action
of the Company or any of its Subsidiaries in connection with (i)
the execution, delivery and performance of this Agreement and the
other Transaction Documents, (ii) the issuance and sale of the
Securities or (iii) the direct or indirect use of proceeds from the
Securities or the consummation of any other transaction
contemplated hereby or by the other Transaction Documents or the
fulfillment of the terms hereof or thereof, will result in the
proceeds of the transactions contemplated hereby and by the other
Transaction Documents being used, or loaned, contributed or
otherwise made available, directly or indirectly, to any
Subsidiary, joint venture partner or other person or entity, for
the purpose of (i) unlawfully funding or facilitating any
activities of or business with any person that, at the time of such
funding or facilitation, is the subject or target of Sanctions,
(ii) unlawfully funding or facilitating any activities of or
business in any Sanctioned Country or (iii) in any other manner
that will result in a violation by any Person (including any Person
participating in the transaction, whether as underwriter, advisor,
investor or otherwise) of Sanctions. For the past five years, the
Company and its Subsidiaries have not knowingly engaged in and are
not now knowingly engaged in any dealings or transactions with any
person that at the time of the dealing or transaction is or was the
subject or the target of Sanctions or with any Sanctioned
Country.

 



 

19







 





 

(ss) Anti-Bribery.
Neither the Company, nor any of its Subsidiaries or affiliates,
nor, to the knowledge of the Company, any director, officer, agent,
employee or other person associated with or acting on behalf of the
Company, or any of its Subsidiaries or affiliates, has (i) used any
funds for any unlawful contribution, gift, entertainment or other
unlawful expense relating to political activity, (ii) made any
direct or indirect unlawful payment to any foreign or domestic
government official or employee, to any employee or agent of a
private entity with which the Company does or seeks to do business
(a "Private Sector
Counterparty") or to
foreign or domestic political parties or campaigns from corporate
funds, (iii) violated or is in violation of any provision of any
applicable law or regulation implementing the OECD Convention on
Combating Bribery of Foreign Public Officials in International
Business Transactions or any applicable provision of the U.S.
Foreign Corrupt Practices Act of 1977, as amended (the
"FCPA"),
the U.K Bribery Act 2010, or any other similar law of any other
jurisdiction in which the Company operates its business, including,
in each case, the rules and regulations thereunder, (iv) taken, is
currently taking or will take any action in furtherance of an
offer, payment, gift or anything else of value, directly or
indirectly, to any person while knowing that all or some portion of
the money or value will be offered, given or promised to anyone to
improperly influence official action, to obtain or retain business
or otherwise to secure any improper advantage or (v) otherwise made
any bribe, rebate, payoff, influence payment, unlawful kickback or
other unlawful payment; the Company and each of its respective
Subsidiaries has instituted and has maintained, and will continue
to maintain, policies and procedures reasonably designed to promote
and achieve compliance with the laws referred to in (iii) above and
with this representation and warranty; and none of the Company, nor
any of its Subsidiaries or affiliates will directly or indirectly
use the proceeds of the convertible securities or lend, contribute
or otherwise make available such proceeds to any subsidiary,
affiliate, joint venture partner or other person or entity for the
purpose of financing or facilitating any activity that would
violate the laws and regulations referred to in (iii)
above.

 

(tt) No
Disqualification Events. With respect to Securities to be
offered and sold hereunder in reliance on Rule 506(b) under the
1933 Act ("Regulation D
Securities"), none of the Company, any of its predecessors,
any affiliated issuer, any director, executive officer, other
officer of the Company participating in the offering hereunder, any
beneficial owner of 20% or more of the Company's outstanding voting
equity securities, calculated on the basis of voting power, nor any
promoter (as that term is defined in Rule 405 under the 1933 Act)
connected with the Company in any capacity at the time of sale
(each, an "Issuer Covered
Person" and, together, "Issuer Covered Persons") is subject to
any of the "Bad Actor" disqualifications described in Rule
506(d)(1)(i) to (viii) under the 1933 Act (a "Disqualification Event"), except for a
Disqualification Event covered by Rule 506(d)(2) or (d)(3). The
Company has exercised reasonable care to determine whether any
Issuer Covered Person is subject to a Disqualification Event. The
Company has complied, to the extent applicable, with its disclosure
obligations under Rule 506(e), and has furnished to the Buyers a
copy of any disclosures provided thereunder.

 



 

20







 





 

(uu) Other
Covered Persons. The Company is not aware of any Person
(other than the Placement Agent) that has been or will be paid
(directly or indirectly) remuneration for solicitation of Buyers or
potential purchasers in connection with the sale of any Regulation
D Securities.

 

4. COVENANTS.

 

(a) Best Efforts. Each party shall
use its best efforts timely to satisfy each of the covenants and
the conditions to be satisfied by it as provided in Sections 6 and
7 of this Agreement.

 

(b) Form D and Blue Sky. If
required by applicable Law, the Company agrees to file a Form D
with respect to the Securities as required under Regulation D. The
Company shall, on or before the Closing Date, 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 Buyers at the Closing pursuant to this Agreement under
applicable securities or "Blue Sky" laws of the states of the
United States (or to obtain an exemption from such qualification),
and shall provide evidence of any such action so taken to the
Buyers on or prior to the Closing Date. The Company shall make all
filings and reports relating to the offer and sale of the
Securities required under applicable securities or "Blue Sky" laws
of the states of the United States following the Closing
Date.

 

(c) Reporting Status. Until the
date on which the Buyers shall have sold all of the Conversion
Shares and Warrant Shares and none of the Notes
or Warrants are
outstanding (the "Reporting
Period"), the Company shall timely file all reports required
to be filed with the SEC pursuant to the 1934 Act, and the Company
shall not terminate its status as an issuer required to file
reports under the 1934 Act even if the 1934 Act or the rules and
regulations thereunder would no longer require or otherwise permit
such termination, and the
Company shall take all actions necessary to maintain its
eligibility to register the Conversion Shares and Warrant Shares
for resale by the Investors on Form S-3.

 

(d) Use of Proceeds. The Company
will use the proceeds from the sale of the Securities solely as set
forth on Schedule
4(d).

 

(e) [Intentionally
Omitted]

 



 

21







 





 

(f) Listing. The Company shall
promptly secure the listing of all the Registrable Securities, upon
each national securities exchange and automated quotation system,
if any, upon which the Common Stock then listed (subject to
official notice of issuance) and shall maintain such listing of all
Registrable Securities from time to time issuable under the terms
of the Transaction Documents. Until the earlier of three (3) years
from the date hereof or when Securities are no longer held by any
Buyers or registered in the names of any Buyer on the books and
records of the Company, (i) the Company shall maintain the
authorization for quotation of the Common Stock on the Principal
Market or any other Eligible Market (as defined in the Warrants)
and (ii) the Company shall use commercially reasonable efforts to
avoid the delisting or suspension of the Common Stock on the
Principal Market. The Company shall pay all fees and expenses in
connection with satisfying its obligations under this Section
4(f).

 

(g) Fees. The Company shall
reimburse Empery (a Buyer) or its designee(s) (in addition to any
other expense amounts paid to any Buyer or its counsel prior to the
date of this Agreement) for all costs and expenses incurred in
connection with the transactions contemplated by the Transaction
Documents (including all legal fees and disbursements in connection
therewith, documentation and implementation of the transactions
contemplated by the Transaction Documents and due diligence in
connection therewith), which amount may be withheld by such Buyer
from its purchase price for any Notes purchased at the Closing to
the extent not previously reimbursed by the Company and which shall
not exceed $60,000 without the prior approval of the Company. The
Company shall be responsible for the payment of any placement
agent's fees, financial advisory fees, or broker's commissions
(other than for Persons engaged by any Buyer) relating to or
arising out of the transactions contemplated hereby, including,
without limitation, any fees or commissions payable to the
Placement Agent. The Company shall pay, and hold each Buyer
harmless against, any liability, loss or expense (including,
without limitation, reasonable attorney's fees and out-of-pocket
expenses) arising in connection with any claim relating to any such
payment. Except as otherwise set forth in the Transaction
Documents, each party to this Agreement shall bear its own expenses
in connection with the sale of the Securities to the
Buyers.

 

(h) Pledge of Securities. The
Company acknowledges and agrees that the Securities may be pledged
by an Investor in connection with a bona fide margin agreement or
other loan or financing arrangement that is secured by the
Securities. The pledge of Securities shall not be deemed to be a
transfer, sale or assignment of the Securities hereunder, and no
Investor effecting a pledge of Securities shall be required to
provide the Company with any notice thereof or otherwise make any
delivery to the Company pursuant to this Agreement or any other
Transaction Document, including, without limitation, Section 2(f)
hereof; provided
that an Investor and its pledgee shall be required to comply with
the provisions of Section 2(f) hereof in order to effect a sale,
transfer or assignment of Securities to such pledgee. The Company
hereby agrees to execute and deliver such documentation as a
pledgee of the Securities may reasonably request in connection with
a pledge of the Securities to such pledgee by an
Investor.

 

(i) Disclosure of Transactions and Other
Material Information. On or before 9:00 a.m., New York City
time, on the first Business Day after this Agreement has been
executed, the Company shall issue a press release reasonably
acceptable to the Buyers and file a Current Report on Form 8-K
describing the terms of the transactions contemplated by the
Transaction Documents in the form required by the 1934 Act and
attaching the material Transaction Documents (including, without
limitation, this Agreement (and all schedules and exhibits to this
Agreement), the form of the Registration Rights Agreement, the form
of the Warrants and the form of Notes as exhibits to such filing
(including all attachments), the "8-K Filing"). From and after the filing
of the 8-K Filing with the SEC, no Buyer shall be in possession of
any material, nonpublic information received from the Company, any
of its Subsidiaries or any of their respective officers, directors,
employees, affiliates or agents, that is not disclosed in the 8-K
Filing. In addition, effective upon the filing of the 8-K Filing,
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, employees, affiliates
or agents, on the one hand, and any of the Buyers or any of their
affiliates, on the other hand, shall terminate and be of no further
force or effect. The
Company shall not, and shall cause each of its Subsidiaries and its
and each of their respective officers, directors, employees,
affiliates and agents, not to, provide any Buyer with any material,
nonpublic information regarding the Company or any of its
Subsidiaries from and after the date hereof and for so long as any Buyer beneficially owns any
Notes or Warrants without the express prior written consent
of such Buyer. If
such Buyer has, or believes it has, received any such material,
nonpublic information regarding the Company or any of its
Subsidiaries from the Company, any of its Subsidiaries or any of
their respective officers, directors, employees, affiliates or
agents at a time when any Buyer beneficially owns any Notes or
Warrants, it may provide the Company with written notice thereof.
The Company shall, within two (2) Trading Days of receipt of such
notice, make public disclosure of such material, nonpublic
information. To the
extent that the Company delivers any material, nonpublic
information to a Buyer without such Buyer's consent at a time when
any Buyer beneficially owns any Notes or Warrants, the Company
hereby covenants and agrees that such Buyer shall not have any duty
of confidentiality to the Company, any of its Subsidiaries or any
of their respective officers, directors, employees, affiliates or
agent with respect to, or a duty to the Company, any of its
Subsidiaries or any of their respective officers, directors,
employees, affiliates or agent not to trade on the basis of, such
material, nonpublic information. Subject to the foregoing, neither
the Company, its Subsidiaries nor any Buyer shall issue any press
releases or any other public statements with respect to the
transactions contemplated hereby; provided, however, that the
Company shall be entitled, without the prior approval of any Buyer,
to make any press release or other public disclosure with respect
to such transactions (i) in substantial conformity with the 8-K
Filing and contemporaneously therewith and (ii) as is required by
applicable law and regulations (provided that in the case of clause
(i) each Buyer shall be consulted by the Company in connection with
any such press release or other public disclosure prior to its
release). Except for the Registration Statement required to be
filed pursuant to the Registration Rights Agreement, without the
prior written consent of any applicable Buyer, neither the Company
nor any of its Subsidiaries or affiliates shall disclose the name
of such Buyer in any filing, announcement, release or otherwise. As
used herein, "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.

 



 

22







 





 

(j) Additional
Notes; Variable Securities. So long as any Buyer beneficially
owns any Notes, the Company will not issue any Notes other than to
the Buyers as contemplated hereby and the Company shall not issue
any other securities that would cause a breach or default under the
Notes. For so long as any Notes remain outstanding, the Company
shall not, in any manner, (i) issue or sell any rights, warrants or
options to subscribe for or purchase Common Stock or directly or
indirectly convertible into or exchangeable or exercisable for
Common Stock at a price which varies or may vary with the market
price of the Common Stock, including by way of one or more reset(s)
to any fixed price unless the conversion, exchange or exercise
price of any such security cannot be less than the then applicable
Conversion Price (as defined in the Notes) with respect to the
Common Stock into which any Note is convertible or the then
applicable Exercise Price (as defined in the Warrants) with respect
to the Common Stock into which any Warrant is exercisable or (ii)
enter into any agreement, or issue any securities pursuant to any
agreement, including, without limitation, an equity line of credit,
at-the-market offering or similar agreement, whereby the Company
may issue securities at a future determined
price.

 

(k) Corporate Existence. So long as
any Buyer beneficially owns any Notes or Warrants, the Company
shall (i) maintain its corporate existence and (ii) not be party to
any Fundamental Transaction (as defined in the Notes) unless the
Company is in compliance with the applicable provisions governing
Fundamental Transactions set forth in the Notes and the
Warrants.

 

(l) Reservation of
Shares. So long as any Buyer
owns any Securities, the Company shall take all action necessary to
at all times have authorized, and reserved for the purpose of
issuance, no less than the Required Reserve Amount. If at any time
the number of shares of Common Stock authorized and reserved
for issuance is not sufficient to meet
the Required Reserved Amount, the Company will promptly take all
corporate action necessary to authorize and reserve a sufficient
number of shares, including, without limitation, calling a special
meeting of stockholders to
authorize additional shares to meet the Company's obligations under
Section 3(c), in the case of an insufficient number of authorized
shares, obtain stockholder approval of an increase in such authorized number
of shares, and voting the management shares of the Company in favor
of an increase in the authorized shares of the Company to ensure
that the number of authorized shares is sufficient to meet the
Required Reserved Amount.

 

(m) Conduct of Business. The
business of the Company and its Subsidiaries shall not be conducted
in violation of any law, ordinance or regulation of any
governmental entity, except where such violations would not result,
either individually or in the aggregate, in a Material Adverse
Effect.

 

(n) Public Information. At any time
during the period commencing from the six (6) month anniversary of
the Closing Date and ending at such time that all of the
Securities, if a registration statement is not available for the
resale of all of the Securities, may be sold without restriction or
limitation pursuant to Rule 144 and without the requirement to be
in compliance with Rule 144(c)(1), if the Company shall (i) fail
for any reason to satisfy the requirements of Rule 144(c)(1),
including, without limitation, the failure to satisfy the current
public information requirement under Rule 144(c) or (ii) if the
Company has ever been an issuer described in Rule 144(i)(1)(i) or
becomes such an issuer in the future, and the Company shall fail to
satisfy any condition set forth in Rule 144(i)(2) (a "Public Information Failure") then, as
partial relief for the damages to any holder of Securities by
reason of any such delay in or reduction of its ability to sell the
Securities (which remedy shall not be exclusive of any other
remedies available at law or in equity), the Company shall pay to
each such holder an amount in cash equal to two percent (2.0%) of
the aggregate Purchase Price of such holder's Securities on the day
of a Public Information Failure and on every thirtieth day (pro
rated for periods totaling less than thirty days) thereafter until
the earlier of (i) the date such Public Information Failure is
cured and (ii) such time that such Public Information Failure no
longer prevents a holder of Securities from selling such Securities
pursuant to Rule 144 without any restrictions or limitations. The
payments to which a holder shall be entitled pursuant to this
Section 4(n) are referred to herein as "Public Information Failure Payments."
Public Information Failure Payments shall be paid on the
earlier of (I) the last day of the calendar month during which such
Public Information Failure Payments are incurred and (II) the
third Business Day after the event or failure giving rise to the
Public Information Failure Payments is cured. In the event
the Company fails to make Public Information Failure Payments in a timely manner, such
Public Information Failure Payments shall bear interest at
the rate of 1.5% per month (prorated for partial months) until paid
in full.

 



 

23







 





 

(o) Additional Issuances of
Securities.

 

(i) For purposes of
this Section 4(o), the following definitions shall
apply.

 

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

 

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

 

(3) "Common Stock Equivalents" means,
collectively, Options and Convertible Securities.

 

(4) "Subsequent Placement" means any direct
or indirect, offer, sale, grant any option to purchase, or other
disposition of any of its or its Subsidiaries' equity or equity
equivalent securities, including without limitation any debt,
preferred stock or other instrument or security whether or not such
security is, at any time during its life and under any
circumstances, convertible into or exchangeable or exercisable for
Common Stock or Common Stock Equivalents.

 

(ii) From
the date hereof until the date that is thirty (30) days following
the time of the registration of all of the Registrable Securities
pursuant to and in accordance with the Registration Rights
Agreement and the Company shall have
no knowledge of any fact that would cause the Registration
Statements required pursuant to the Registration Rights Agreement
not to be effective and available for the resale of all remaining
Registrable Securities in accordance with the terms of the
Registration Rights Agreement, the Company will not directly
or indirectly, file any registration statement with the SEC other
than the Registration Statement and shall not file any Prospectus
Supplement with respect to any Subsequent Placement (as defined
below).

 



 

24







 





 

(iii) From the Closing Date until the
earlier of (x) the second (2nd) anniversary of the Closing Date and
(y) the first (1st) day following the
date that the Company raises aggregate gross proceeds of at least
$20,000,000 in one or more Subsequent Placement(s) occurring after
the Closing Date, the Company will not, directly or indirectly,
effect any Subsequent Placement unless the Company shall have first
complied with this Section 4(o)(iii).

 

(1) The Company shall
deliver to each Buyer an irrevocable written notice
(the "Offer Notice") of
any proposed or intended issuance or sale or exchange
(the "Offer") of the
securities being offered (the "Offered Securities") in a Subsequent
Placement, which Offer Notice shall (w) identify and describe the
Offered Securities, (x) describe the price and other terms
upon which they are to be issued, sold or exchanged, and the number
or amount of the Offered Securities to be issued, sold or
exchanged, (y) identify the persons or entities (if known) to
which or with which the Offered Securities are to be offered,
issued, sold or exchanged and (z) offer to issue and sell to or
exchange with such Buyers at least thirty-five percent (35%) of the
Offered Securities, allocated among such Buyers (a) based on such
Buyer's pro rata portion of the aggregate principal amount of Notes
purchased hereunder (the "Basic
Amount") and (b) with respect to each Buyer that elects to
purchase its Basic Amount, any additional portion of the Offered
Securities attributable to the Basic Amounts of other Buyers as
such Buyer shall indicate it will purchase or acquire should the
other Buyers subscribe for less than their Basic Amounts (the
"Undersubscription Amount"),
which process shall be repeated until the Buyers shall have an
opportunity to subscribe for any remaining Undersubscription
Amount.

 

(2) To accept an Offer,
in whole or in part, such Buyer must deliver a written notice to
the Company prior to the end of the second (2nd) Business Day after
such Buyer's receipt of the Offer Notice (the "Offer Period"), setting forth the
portion of such Buyer's Basic Amount that such Buyer elects to
purchase and, if such Buyer shall elect to purchase all of its
Basic Amount, the Undersubscription Amount, if any, that such Buyer
elects to purchase (in either case, the "Notice of Acceptance"). If the Basic
Amounts subscribed for by all Buyers are less than the total of all
of the Basic Amounts, then each Buyer who has set forth an
Undersubscription Amount in its Notice of Acceptance shall be
entitled to purchase, in addition to the Basic Amounts subscribed
for, the Undersubscription Amount it has subscribed for;
provided,
however, that if
the Undersubscription Amounts subscribed for exceed the difference
between the total of all the Basic Amounts and the Basic Amounts
subscribed for (the "Available
Undersubscription Amount"), each Buyer who has subscribed
for any Undersubscription Amount shall be entitled to purchase only
that portion of the Available Undersubscription Amount as the Basic
Amount of such Buyer bears to the total Basic Amounts of all Buyers
that have subscribed for Undersubscription Amounts, subject to
rounding by the Company to the extent its deems reasonably
necessary. Notwithstanding anything to the contrary contained
herein, if the Company desires to modify or amend the terms and
conditions of the Offer prior to the expiration of the Offer
Period, the Company may deliver to the Buyers a new Offer Notice
and the Offer Period shall expire on the second (2nd) Business Day after
such Buyer's receipt of such new Offer Notice.

 



 

25







 





 

(3) The Company shall
have five (5) Business Days from the expiration of the Offer Period
above to offer, issue, sell or exchange all or any part of such
Offered Securities as to which a Notice of Acceptance has not been
given by the Buyers (the "Refused
Securities") pursuant to a definitive agreement (the
"Subsequent Placement
Agreement"), but only to the offerees described in the Offer
Notice (if so described therein) and only upon terms and conditions
(including, without limitation, unit prices and interest rates)
that are not more favorable to the acquiring Person or Persons or
less favorable to the Company than those set forth in the Offer
Notice and (ii) to publicly announce (a) the execution of such
Subsequent Placement Agreement and (b) either (x) the consummation
of the transactions contemplated by such Subsequent Placement
Agreement or (y) the termination of such Subsequent Placement
Agreement, which shall be filed with the SEC on a Current Report on
Form 8-K with such Subsequent Placement Agreement and any documents
contemplated therein filed as exhibits thereto.

 

(4) In the event the
Company shall propose to sell less than all the Refused Securities
(any such sale to be in the manner and on the terms specified in
Section 4(o)(iii)(3) above), then each Buyer may, at its sole
option and in its sole discretion, reduce the number or amount of
the Offered Securities specified in its Notice of Acceptance to an
amount that shall be not less than the number or amount of the
Offered Securities that such Buyer elected to purchase pursuant to
Section 4(o)(iii)(2) above multiplied by a fraction, (i) the
numerator of which shall be the number or amount of Offered
Securities the Company actually proposes to issue, sell or exchange
(including Offered Securities to be issued or sold to Buyers
pursuant to Section 4(o)(iii)(3) above prior to such reduction) and
(ii) the denominator of which shall be the original amount of the
Offered Securities. In the event that any Buyer so elects to reduce
the number or amount of Offered Securities specified in its Notice
of Acceptance, the Company may not issue, sell or exchange more
than the reduced number or amount of the Offered Securities unless
and until such securities have again been offered to the Buyers in
accordance with Section 4(o)(iii)(1) above.

 

(5) Upon the closing of
the issuance, sale or exchange of all or less than all of the
Refused Securities, the Buyers shall acquire from the Company, and
the Company shall issue to the Buyers, the number or amount of
Offered Securities specified in the Notices of Acceptance, as
reduced pursuant to Section 4(o)(iii)(3) above if the Buyers have
so elected, upon the terms and conditions specified in the Offer.
Notwithstanding anything to the contrary contained in this
Agreement, if the Company does not consummate the closing of the
issuance, sale or exchange of all or less than all of the Refused
Securities, within five (5) Business Days of the expiration of the
Offer Period, the Company shall issue to the Buyers, the number or
amount of Offered Securities specified in the Notice of Acceptance,
as reduced pursuant to Section 4(o)(iii)(4) above if the Buyers
have so elected, upon the terms and conditions specified in the
Offer. The purchase by the Buyers of any Offered Securities is
subject in all cases to the preparation, execution and delivery by
the Company and the Buyers of a purchase agreement relating to such
Offered Securities reasonably satisfactory in form and substance to
the Buyers and their respective counsel.

 



 

26







 





 

(6) Any Offered
Securities not acquired by the Buyers or other persons in
accordance with Section 4(o)(iii)(3) above may not be issued, sold
or exchanged until they are again offered to the Buyers under the
procedures specified in this Agreement.

 

(7) The Company and the
Buyers agree that if any Buyer elects to participate in the Offer,
(x) neither the Subsequent Placement Agreement with respect to such
Offer nor any other transaction documents related thereto
(collectively, the "Subsequent
Placement Documents") shall include any term or provisions
whereby any Buyer shall be required to agree to any restrictions in
trading as to any securities of the Company owned by such Buyer
prior to such Subsequent Placement and (y) any registration rights
set forth in such Subsequent Placement Documents shall be similar
in all material respects to the registration rights contained in
the Registration Rights Agreement.

 

(8) Notwithstanding
anything to the contrary in this Section 4(o) and unless otherwise
agreed to by the Buyers, the Company shall either confirm in
writing to the Buyers that the transaction with respect to the
Subsequent Placement has been abandoned or shall publicly disclose
its intention to issue the Offered Securities, in either case in
such a manner such that the Buyers will not be in possession of
material non-public information, by the fifth (5th) Business Day
following delivery of the Offer Notice. If by the fifth
(5th)
Business Day following delivery of the Offer Notice no public
disclosure regarding a transaction with respect to the Offered
Securities has been made, and no notice regarding the abandonment
of such transaction has been received by the Buyers, such
transaction shall be deemed to have been abandoned and the Buyers
shall not be deemed to be in possession of any material, non-public
information with respect to the Company. Should the Company decide
to pursue such transaction with respect to the Offered Securities,
the Company shall provide each Buyer with another Offer Notice and
each Buyer will again have the right of participation set forth in
this Section 4(o)(iii). The Company shall not be permitted to
deliver more than one such Offer Notice to the Buyers in any 60 day
period (other than the Offer Notices contemplated by the last
sentence of Section 4(o)(iii)(2) of this Agreement).

 

(iv) The
restrictions contained in subsections (ii) and (iii) of this
Section 4(o) shall not apply in connection with the issuance of any
Excluded Securities (as defined in the Warrants).

 

(p) Notice of Disqualification
Events. The Company will notify the Buyers in writing, prior
to the Closing Date of (i) any Disqualification Event relating to
any Issuer Covered Person and (ii) any event that would, with the
passage of time, become a Disqualification Event relating to any
Issuer Covered Person.

 

(q) FAST Compliance. While any
Notes or Warrants are outstanding, the Company shall maintain a
transfer agent that participates in the DTC Fast Automated
Securities Transfer Program.

 



 

27







 





 

(r) Closing Documents. On or prior
to thirty (30) calendar days after the Closing Date, the Company
agrees to deliver, or cause to be delivered, to each Buyer and
Schulte Roth & Zabel LLP a complete closing set of the executed
Transaction Documents, Securities and any other documents required
to be delivered to any party pursuant to Section 7 hereof or
otherwise.

 

5. REGISTER; TRANSFER AGENT
INSTRUCTIONS.

 

(a) Register. The Company shall
maintain at its principal executive offices (or such other office
or agency of the Company as it may designate by notice to each
holder of Securities), a register for the Notes and the Warrants in
which the Company shall record the name and address of the Person
in whose name the Notes and the Warrants have been issued
(including the name and address of each transferee), the principal
amount of Notes held by such Person, the number of Conversion
Shares issuable pursuant to the terms of the Notes and the number
of Warrant Shares issuable upon exercise of the Warrants held by
such Person. The Company shall keep the register open and available
at all times during business hours for inspection of any Buyer or
its legal representatives.

 

(b) Transfer Agent Instructions.
The Company shall issue irrevocable instructions to its transfer
agent, and any subsequent transfer agent, in the form of
Exhibit D attached
hereto (the "Irrevocable Transfer
Agent Instructions") to issue certificates or credit shares
to the applicable balance accounts at DTC, registered in the name
of each Buyer or its respective nominee(s), for the Conversion
Shares and the Warrant Shares issued at the Closing or pursuant to
the terms of the Notes or exercise of the Warrants in such amounts
as specified from time to time by each Buyer to the Company upon
conversion of the Notes or exercise of the Warrants. The Company
warrants that no instruction other than the Irrevocable Transfer
Agent Instructions referred to in this Section 5(b), and stop
transfer instructions to give effect to Section 2(f) hereof, will
be given by the Company to its transfer agent, and that the
Securities shall otherwise be freely transferable on the books and
records of the Company as and to the extent provided in this
Agreement and the other Transaction Documents. If a Buyer effects a
sale, assignment or transfer of the Securities in accordance with
Section 2(f), the Company shall permit the transfer and shall
promptly instruct its transfer agent to issue one or more
certificates or credit shares to the applicable balance accounts at
DTC in such name and in such denominations as specified by such
Buyer to effect such sale, transfer or assignment. In the event
that such sale, assignment or transfer involves the Conversion
Shares or the Warrant Shares sold, assigned or transferred pursuant
to an effective registration statement or pursuant to Rule 144, the
transfer agent shall issue such Securities to the Buyer, assignee
or transferee, as the case may be, without any restrictive legend.
The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to a Buyer. Accordingly, the
Company acknowledges that the remedy at law for a breach of its
obligations under this Section 5(b) will be inadequate and agrees,
in the event of a breach or threatened breach by the Company of the
provisions of this Section 5(b), that a Buyer shall be entitled, in
addition to all other available remedies, to an order and/or
injunction restraining any breach and requiring immediate issuance
and transfer, without the necessity of showing economic loss and
without any bond or other security being required.

 



 

28







 





 

6. CONDITIONS TO THE COMPANY'S OBLIGATION
TO SELL.

 


The
obligation of the Company hereunder to issue and sell the Notes and
the related Warrants to each Buyer at the Closing is subject to the
satisfaction, at or before the Closing Date, of each of the
following conditions, provided that these conditions are for the
Company's sole benefit and may be waived by the Company at any time
in its sole discretion by providing each Buyer with prior written
notice thereof:

 

(i) Such Buyer shall
have executed each of the Transaction Documents to which it is a
party and delivered the same to the Company.

 

(ii) Such
Buyer shall have delivered its Purchase Price to the Company (less,
in the case of Empery, the amounts withheld pursuant to Section
4(g)), for the Notes and the related Warrants being purchased by
such Buyer at the Closing by wire transfer of immediately available
funds pursuant to the wire instructions provided by the
Company.

 

(iii) The
representations and warranties of such Buyer shall be true and
correct as of the date when made and as of the Closing Date as
though made at that time (except for representations and warranties
that speak as of a specific date which shall be true and correct as
of such specified date), and such Buyer shall have performed,
satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be
performed, satisfied or complied with by such Buyer at or prior to
the Closing Date.

 

7. CONDITIONS TO EACH BUYER'S OBLIGATION
TO PURCHASE.

 


The
obligation of each Buyer hereunder to purchase the
Notes and the related
Warrants at the Closing is subject to the satisfaction, at or
before the Closing Date, of each of the following conditions,
provided that these conditions are for each Buyer's sole benefit
and may be waived by such Buyer at any time in its sole discretion
by providing the Company with prior written notice
thereof:

 

(i) The Company and
each of its Subsidiaries shall have duly executed and delivered to
such Buyer each of the following documents to which it is a party:
(A) each of the Transaction Documents, (B) the Notes (allocated in
such principal amounts as such Buyer shall request), being
purchased by such Buyer at the Closing pursuant to this Agreement
and (C) the related Warrants (allocated in such amounts as such
Buyer shall request) being purchased by such Buyer at the Closing
pursuant to this Agreement.

 

(ii) Such
Buyer shall have received the opinion of DLA Piper LLP (US), the
Company's outside counsel, dated as of the Closing Date, in
substantially the form of Exhibit E attached
hereto.

 

(iii) The
Company shall have delivered to such Buyer a copy of the
Irrevocable Transfer Agent Instructions, in the form of
Exhibit D attached
hereto, which instructions shall have been delivered to and
acknowledged in writing by the Company's transfer
agent.

 



 

29







 





 

(iv) The
Company shall have delivered to such Buyer a certificate evidencing
the formation and good standing of the Company and each of its
Subsidiaries in such entity's jurisdiction of formation issued by
the Secretary of State (or comparable office) of such jurisdiction,
as of a date within ten (10) days of the Closing Date.

 

(v) The Company shall
have delivered to such Buyer a certificate evidencing the Company's
qualification as a foreign corporation and good standing issued by
the Secretary of State (or comparable office) of the State of
Florida, the State of California and the District of Columbia
(which are the only jurisdictions in which the Company is required
to register as a foreign corporation), as of a date within ten (10)
days of the Closing Date.

 

(vi) The
Company shall have delivered to such Buyer a certificate, executed
by the Secretary of the Company and dated as of the Closing Date,
as to (i) the resolutions consistent with Section 3(b) as adopted
by the Company's and each of its Subsidiaries' Board of Directors
in a form reasonably acceptable to such Buyer, (ii) the Certificate
of Incorporation of the Company and (iii) the Bylaws of the
Company, each as in effect at the Closing, in the form attached
hereto as Exhibit
F.

 

(vii) The
representations and warranties of the Company shall be true and
correct in all material respects (except for those representations
and warranties that are qualified by materiality or Material
Adverse Effect, which shall be accurate in all respects) as of the
date when made and as of the Closing Date as though made at that
time (except for representations and warranties that speak as of a
specific date which shall be true and correct as of such specified
date) and the Company shall have performed, satisfied and complied
in all material respects with the covenants, agreements and
conditions required by the Transaction Documents to be performed,
satisfied or complied with by the Company at or prior to the
Closing Date (except for covenants, agreement and conditions that
are qualified by materiality or Material Adverse Effect, which
shall be performed, satisfied or complied with, in all respects).
Such Buyer shall have received a certificate, executed by an
executive officer of the Company, dated as of the Closing Date, to
the foregoing effect and as to such other matters as may be
reasonably requested by such Buyer in the form attached hereto as
Exhibit
G.

 

(viii) The
Company shall have delivered to such Buyer a letter from the
Company's transfer agent certifying the number of shares of Common
Stock outstanding as of a date within five (5) days of the Closing
Date.

 

(ix)  The
Common Stock (I) shall be designated for quotation or listed on the
Principal Market and (II) shall not have been suspended, as of the
Closing Date, by the SEC or the Principal Market from trading on
the Principal Market nor shall suspension by the SEC or the
Principal Market have been threatened, as of the Closing Date,
either (A) in writing by the SEC or the Principal Market or (B) by
falling below the minimum listing maintenance requirements of the
Principal Market.

 

(x) The Company shall
have obtained all governmental, regulatory or third party consents
and approvals, if any, necessary for the sale of the
Securities.

 



 

30







 





 

(xi) Such
Buyer shall have received the Company's wire instructions on
Company's letterhead duly executed by an authorized officer of the
Company.

 

(xii) The
Company shall have delivered to such Buyer such other documents
relating to the transactions contemplated by this Agreement as such
Buyer or its counsel may reasonably request.

 

8. TERMINATION. In the event that
the Closing shall not have occurred with respect to a Buyer on or
before five (5) Business Days from the date hereof due to the
Company's or such Buyer's failure to satisfy the conditions set
forth in Sections 6 and 7 above (and the nonbreaching party's
failure to waive such unsatisfied condition(s)), the nonbreaching
party shall have the option to terminate this Agreement with
respect to such breaching party at the close of business on such
date by delivering a written notice to that effect to each other
party to this Agreement and without liability of any party to any
other party; provided, however, that if this Agreement
is terminated pursuant to this Section 8, the Company shall remain
obligated to reimburse Empery or its designee(s), as applicable,
for the expenses described in Section 4(g) above.

 

9. MISCELLANEOUS.

 

(a) Governing Law; Jurisdiction; Jury
Trial. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement 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. 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, 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. 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 to such party at the address for such
notices to it under this Agreement and agrees that such service
shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any
way any right to serve process in any manner permitted by law.
EACH PARTY 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 AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY.

 

(b) Counterparts. This Agreement
may be executed in two or more identical counterparts, all of which
shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and
delivered to the other party; provided that a facsimile or .pdf
signature shall be considered due execution and shall be binding
upon the signatory thereto with the same force and effect as if the
signature were an original, not a facsimile or .pdf
signature.

 



 

31







 





 

(c) Headings. The headings of this
Agreement are for convenience of reference and shall not form part
of, or affect the interpretation of, this Agreement.

 

(d) Severability. If any provision
of this Agreement 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 Agreement so long as this
Agreement 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).

 

(e) Entire Agreement; Amendments.
This Agreement and the other Transaction Documents supersede all
other prior oral or written agreements between the Buyers, the
Company, their affiliates and Persons acting on their behalf with
respect to the matters discussed herein, and this Agreement, the
other Transaction Documents and the instruments referenced herein
and therein contain the entire understanding of the parties with
respect to the matters covered herein and therein and, except as
specifically set forth herein or therein, neither the Company nor
any Buyer makes any representation, warranty, covenant or
undertaking with respect to such matters. Provisions of this
Agreement may be amended and the observance thereof may be waived
(either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of
the Company and the holders of at least a majority of the aggregate
number of shares of Common Stock issued or issuable under the Notes
and Warrants (without regard to any restriction or limitation on
the exercise of the Warrants or conversion of the Notes contained
therein) and shall include (i) affiliates of Empery Asset
Management, LP ("Empery") so
long as Empery or any of its affiliates holds any Securities and
(ii) affiliates of Ayrton Capital LLC ("Ayrton") so long as Ayrton or any of its
affiliates holds any Securities (the "Required Holders"). Any amendment or
waiver effected in accordance with this Section 9(e) shall be
binding upon each Buyer and holder of Securities and the Company.
No such amendment shall be effective to the extent that it applies
to less than all of the Buyers or holders of Securities. No
consideration shall be offered or paid to any Person to amend or
consent to a waiver or modification of any provision of any of the
Transaction Documents unless the same consideration (other than the
reimbursement of legal fees) also is offered to all of the parties
to the Transaction Documents, holders of Notes or holders of the
Warrants, as the case may be. The Company has not, directly or
indirectly, made any agreements with any Buyers relating to the
terms or conditions of the transactions contemplated by the
Transaction Documents except as set forth in the Transaction
Documents. Without limiting the foregoing, the Company confirms
that, except as set forth in this Agreement, no Buyer has made any
commitment or promise or has any other obligation to provide any
financing to the Company or otherwise.

 



 

32







 





 

(f) Notices. Any notices, consents,
waivers or other communications required or permitted to be given
under the terms of this Agreement or any of the other Transaction
Document's must be in writing and will be deemed to have been
delivered: (i) upon receipt, when delivered personally; (ii) upon
delivery, when sent by facsimile (provided confirmation of
transmission is mechanically or electronically generated and kept
on file by the sending party), (iii) upon delivery, when sent by
electronic mail (provided that the sending party does not receive
an automated rejection notice); or (iv) one Business Day after
deposit with an overnight courier service, in each case properly
addressed to the party to receive the same. The addresses,
facsimile numbers and e-mail addresses for such communications
shall be:

 


If to
the Company:

 


GT
Biopharma, Inc.


1825 K
Street, Suite 510


Washington, D.C.
20006

Telephone: (800)
304-9888

Facsimile:
202-785-0529

Attention: Steven
Weldon

E-mail:
sww@gtbiopharma.com


 


With a
copy to (for informational purposes only):

 


DLA
Piper LLP (US)


401
Congress Ave., Suite 2500


Austin,
Texas 78701

Telephone:
512-457-7037

Facsimile:
512-721-2212

Attention: Jenifer
Smith

E-mail:
jenifer.smith@dlapiper.com


 


If to
the Transfer Agent:

 


ComputerShare Trust
Company, N.A.


8742
Lucent Blvd, Suite 225

Telephone:
303-262-0787

Facsimile:
303-262-0610

Attention: Stevie
Marcus

E-mail:
stevie.marcus@computershare.com


 



 

33







 






 


If to a
Buyer, to its address, facsimile number and e-mail address set
forth on the Schedule of Buyers, with copies to such Buyer's
representatives as set forth on the Schedule of
Buyers,

 


with a
copy (for informational purposes only) to:

 


Schulte
Roth & Zabel LLP


919
Third Avenue


New
York, New York 10022

Telephone: (212)
756-2000

Facsimile: (212)
593-5955

Attention: Eleazer
N. Klein, Esq.

E-mail:
eleazer.klein@srz.com

 


or to
such other address, facsimile number and/or e-mail address and/or
to the attention of such other Person as the recipient party has
specified by written notice given to each other party five (5) days
prior to the effectiveness of such change. Written confirmation of
receipt (A) given by the recipient of such notice, consent, waiver
or other communication, (B) mechanically or electronically
generated by the sender's facsimile machine or e-mail containing
the time, date, recipient facsimile number and an image of the
first page of such transmission or (C) provided by an overnight
courier service shall be rebuttable evidence of personal service,
receipt by facsimile or receipt from an overnight courier service
in accordance with clause (i), (ii) or (iii) above,
respectively.

 

(g) Successors and Assigns. This
Agreement shall be binding upon and inure to the benefit of the
parties and their respective successors and assigns, including any
purchasers of the Notes or the Warrants. The Company shall not
assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Required Holders,
including by way of a Fundamental Transaction (unless the Company
is in compliance with the applicable provisions governing
Fundamental Transactions set forth in the Notes and the Warrants).
A Buyer may assign some or all of its rights hereunder without the
consent of the Company, in which event such assignee shall be
deemed to be a Buyer hereunder with respect to such assigned
rights.

 

(h) No Third Party Beneficiaries.
This Agreement is intended for the benefit of the parties hereto
and their respective permitted successors and assigns, and is not
for the benefit of, nor may any provision hereof be enforced by,
any other Person, except that each Indemnitee shall have the right
to enforce the obligations of the Company with respect to Section
9(k).

 

(i) Survival. Unless this Agreement
is terminated under Section 8, the representations and warranties
of the Company and the Buyers contained in Sections 2 and 3, and
the agreements and covenants set forth in Sections 4, 5 and 9 shall
survive the Closing. Each Buyer shall be responsible only for its
own representations, warranties, agreements and covenants
hereunder.

 

(j) Further Assurances. Each party
shall do and perform, or cause to be done and performed, all such
further acts and things, and shall execute and deliver all such
other agreements, certificates, instruments and documents, as any
other party may reasonably request in order to carry out the intent
and accomplish the purposes of this Agreement and the consummation
of the transactions contemplated hereby.

 



 

34







 





 

(k) Indemnification. In
consideration of each Buyer's execution and delivery of the
Transaction Documents and acquiring the Securities thereunder and
in addition to all of the Company's other obligations under the
Transaction Documents, the Company shall defend, protect, indemnify
and hold harmless each Buyer and each other holder of the
Securities and all of their stockholders, partners, members, officers,
directors, employees and direct or indirect investors and any of
the foregoing Persons' agents or other representatives (including,
without limitation, those retained in connection with the
transactions contemplated by this Agreement) (collectively, the
"Indemnitees") from and
against any and all actions, causes of action, suits, claims,
losses, costs, penalties, fees, liabilities and damages, and
expenses in connection therewith (irrespective of whether any such
Indemnitee is a party to the action for which indemnification
hereunder is sought), and including reasonable attorneys' fees and
disbursements (the "Indemnified
Liabilities"), incurred by any Indemnitee as a result of, or
arising out of, or relating to (a) any misrepresentation or breach
of any representation or warranty made by the Company in the
Transaction Documents or any other certificate, instrument or
document contemplated hereby or thereby, (b) any breach of any
covenant, agreement or obligation of the Company contained in the
Transaction Documents or any other certificate, instrument or
document contemplated hereby or thereby or (c) any cause of action,
suit or claim brought or made against such Indemnitee by a third
party (including for these purposes a derivative action brought on
behalf of the Company) and arising out of or resulting from (i) the
execution, delivery, performance or enforcement of the Transaction
Documents or any other certificate, instrument or document
contemplated hereby or thereby, (ii) any transaction financed or to
be financed in whole or in part, directly or indirectly, with the
proceeds of the issuance of the Securities, or (iii) the status of
such Buyer or holder of the Securities as an investor in the
Company pursuant to the transactions contemplated by the
Transaction Documents. To the extent that the foregoing undertaking
by the Company may be unenforceable for any reason, the Company
shall make the maximum contribution to the payment and satisfaction
of each of the Indemnified Liabilities that is permissible under
applicable law. Except as otherwise set forth herein, the mechanics
and procedures with respect to the rights and obligations under
this Section 9(k) shall be the same as those set forth in Section 6
of the Registration Rights Agreement. The Company will not be
liable to any Buyer under this indemnity: (i) for any settlement by
a Buyer in connection with any claim effected without the
Company’s prior written consent, which consent shall not be
unreasonably withheld, conditioned or delayed; or (ii) to the
extent, but only to the extent, that a claim is attributable to any
Buyer’s breach of any of the representations, warranties,
covenants or agreements made by such Buyer in this Agreement or in
the other Transaction Documents.

 

(l) No Strict Construction. The
language used in this Agreement will be deemed to be the language
chosen by the parties to express their mutual intent, and no rules
of strict construction will be applied against any
party.

 

(m) Remedies. Each Buyer and each
holder of the Securities shall have all rights and remedies set
forth in the Transaction Documents and all rights and remedies
which such holders have been granted at any time under any other
agreement or contract and all of the rights which such holders have
under any law. Any Person having any rights under any provision of
this Agreement shall be entitled to enforce such rights
specifically (without posting a bond or other security), to recover
damages by reason of any breach of any provision of this Agreement
and to exercise all other rights granted by law. Furthermore, the
Company recognizes that in the event that it fails to perform,
observe, or discharge any or all of its obligations under the
Transaction Documents, any remedy at law may prove to be inadequate
relief to the Buyers. The Company therefore agrees that the Buyers
shall be entitled to seek temporary and permanent injunctive relief
in any such case without the necessity of proving actual damages
and without posting a bond or other security.

 



 

35







 





 

(n) Rescission
and Withdrawal
Right. Notwithstanding anything to the contrary contained in
(and without limiting any similar provisions of) the Transaction
Documents, whenever any Buyer 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 Buyer 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.

 

(o) Payment Set Aside. To the
extent that the Company makes a payment or payments to the Buyers
hereunder or pursuant to any of the other Transaction Documents or
the Buyers enforce or exercise their rights hereunder or
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, foreign, 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.

 

(p) Independent Nature of Buyers'
Obligations and Rights. The obligations of each Buyer under
any Transaction Document are several and not joint with the
obligations of any other Buyer, and no Buyer shall be responsible
in any way for the performance of the obligations of any other
Buyer under any Transaction Document. Nothing contained herein or
in any other Transaction Document, and no action taken by any Buyer
pursuant hereto or thereto, shall be deemed to constitute the
Buyers as, and the Company acknowledges that the Buyers do not so
constitute, a partnership, an association, a joint venture or any
other kind of entity, or create a presumption that the Buyers are
in any way acting in concert or as a group, and the Company shall
not assert any such claim with respect to such obligations or the
transactions contemplated by the Transaction Documents and the
Company acknowledges that the Buyers are not acting in concert or
as a group with respect to such obligations or the transactions
contemplated by the Transaction Documents. The Company acknowledges
and each Buyer confirms that it has independently participated in
the negotiation of the transaction contemplated hereby with the
advice of its own counsel and advisors. Each Buyer shall be
entitled to independently protect and enforce its rights,
including, without limitation, the rights arising out of this
Agreement or out of any other Transaction Documents, and it shall
not be necessary for any other Buyer to be joined as an additional
party in any proceeding for such purpose.

 


[Signature
Page Follows]

 


 




 

36








 






IN WITNESS WHEREOF, each Buyer and the
Company have caused their respective signature page to this
Securities Purchase Agreement to be duly executed as of the date
first written above.

 


	
 

	
 

	
 

	

COMPANY:


	
 

	
 

	
 

	
 


	
 

	
 

	
 

	

GT
BIOPHARMA, INC.


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	

By:

	
 


	
 

	
 

	
 

	
 

	

Name:


	
 

	
 

	
 

	
 

	

Title:


	
 

	
 

	
 

	
 

	
 







 

 


 




	
 

	
 

	











[Signature Page to Securities Purchase Agreement]

37








 






IN WITNESS WHEREOF, each Buyer and the
Company have caused their respective signature page to this
Securities Purchase Agreement to be duly executed as of the date
first written above.

 


	
 

	
 

	
 

	

BUYERS:


	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	

By:

	
 


	
 

	
 

	
 

	
 

	

Name:


	
 

	
 

	
 

	
 

	

Title:


	
 

	
 

	
 

	
 

	
 







 


 




	
 

	
 

	










 

38








 









 


SCHEDULE
OF BUYERS

 


	
(1) 




	
 

	

(2)


	
 

	
(3) 




	
 

	
(4) 




	
 

	
(5) 




	
 

	
(6) 





	

Buyer  



	
 

	

Address
and


Facsimile


Number



	
 

	

Aggregate
Principal


Amount


of
Notes 

	
 

	

Number
of


Warrant
Shares 

	
 

	

Purchase


Price 

	
 

	

Legal
Representative's


Address
and


Facsimile
Number 


	

 

	
 

	

 

	
 

	

 

	
 

	

 

	
 

	

 

	
 

	

 


	

Empery
Asset Master Ltd.


 

	
 

	

c/o
Empery Asset Management, LP1 Rockefeller Plaza, Suite 1205New York,
NY 10020Attention: Ryan M. LaneFacsimile: +1 212 608 3307Telephone:
+1 212 608 3300Email: notices@emperyam.com

	
 

	

$963,600.96


 

	
 

	

210,394


 

	
 

	

$876,000.00


 

	
 

	

Schulte
Roth & Zabel LLP919 Third AvenueNew York, New York
10022Attention: Eleazer Klein, Esq.Facsimile: (212)
593-5955Telephone: (212) 756-2376


	

 

	
 

	

 

	
 

	

 

	
 

	

 

	
 

	

 

	
 

	

 


	

Empery
Tax Efficient, LP


 

	
 

	

c/o
Empery Asset Management, LP1 Rockefeller Plaza, Suite 1205New York,
NY 10020Attention: Ryan M. LaneFacsimile: +1 212 608 3307Telephone:
+1 212 608 3300Email: notices@emperyam.com

	
 

	

$366,300.37


 

	
 

	

79,979


 

	
 

	

$333,000.00


 

	
 

	

Schulte
Roth & Zabel LLP919 Third AvenueNew York, New York
10022Attention: Eleazer Klein, Esq.Facsimile: (212)
593-5955Telephone: (212) 756-2376


	

 

	
 

	
 




	
 

	

 

	
 

	

 

	
 

	

 

	
 

	

 


	

Empery
Tax Efficient II, LP


 

	
 

	

c/o
Empery Asset Management, LP1 Rockefeller Plaza, Suite 1205New York,
NY 10020Attention: Ryan M. LaneFacsimile: +1 212 608 3307Telephone:
+1 212 608 3300Email: notices@emperyam.com

	
 

	

$870,100.87


 

	
 

	

189,979


 

	
 

	

$791,000.00


 

	
 

	

Schulte
Roth & Zabel LLP919 Third AvenueNew York, New York
10022Attention: Eleazer Klein, Esq.Facsimile: (212)
593-5955Telephone: (212) 756-2376


	

 

	
 

	

 

	
 

	

 

	
 

	

 

	
 

	

 

	
 

	

 


	

Siesta
Fiesta Holdings, LLC

	
 

	

c/o
Siesta Fiesta Holdings, LLC


7924
Midnight Pass Road


Sarasota, FL
34242


Attention: Scott
Williams


Facsimile:
407-657-4280


Telephone :
941-724-3504


Email
Address: scoot61@comcast.net

	
 

	

$55,000.06


 

	
 

	

12,009


 

	
 

	

$50,000.00


 

	
 

	
 


	
 




	
 

	

 

	
 

	

 

	
 

	

 

	
 

	

 

	
 

	
 


	

James
Heavener

	
 

	

James
W. Heavener


3300
University Blvd., Suite 218


Winter
Park, FL 32792


Facsimile:
407-657-4280


Telephone :
407-865-4875


Email
Address:bheavener@fullsail.com

	
 

	

$918,500.92

	
 

	

200,547

	
 

	

$835,000.00

	
 

	
 


	
 




	
 

	

 

	
 

	

 

	
 

	

 

	
 

	

 

	
 

	
 


	

Alto
Opportunity Master Fund, SPC - Segregated Master Portfolio
B

	
 

	

c/o
Ayrton Capital LLC


1180
Avenue of Americas, Suite 842


New
York, NY 10036


Telephone:
+1-646-793-9056


Email:
wk@ayrtonllc.com

	
 

	

$2,200,002.20


 

	
 

	

480,350


 

	
 

	

$2,000,000.00


 

	
 

	
 


	
 




	
 

	

 

	
 

	

 

	
 

	

 

	
 

	

 

	
 

	
 


	

Adam
Kasower

	
 

	

25170
Jim Bridger Road


Hidden
Hills, CA 91302


Telephone:
818-429-1551


Email:
adam@kasower.com

	
 

	

$550,000.55


 

	
 

	

120,088


 

	
 

	

$500,000.00


 

	
 

	
 


	
 




	
 

	

 

	
 

	

 

	
 

	

 

	
 

	

 

	
 

	
 


	

Red
Mango Enterprises Limited

	
 

	

Pictet
& Cie (Europe) S.A. Hong Kong Branch, 9/F Chater House 8
Connaught Road Central, Hong Kong


Facsimile: 852 3131
1808


Telephone: 852 3191
1805


Email
Address: mchow@pictet.com

	
 

	

$918,500.92


 

 


 

	
 

	

200,547


 

	
 

	

$835,000.00


 

	
 

	
 


	
 




	
 

	

 

	
 

	

 

	
 

	

 

	
 

	

 

	
 

	
 


	

The
Rosalinde and Arthur Gilbert Foundation

	
 

	

2730
Wilshire Blvd., Suite 301


Santa
Monica, CA 90403


Attention: Martin
H. Blank, Jr.


Telephone:
310-736-1617


Email:
marty@mblank.com

	
 

	

$385,000.39


 

	
 

	

84,062


 

	
 

	

$350,000.00


 

	
 

	
 


	

 

	
 

	

 

	
 

	

 

	
 

	

 

	
 

	

 

	
 

	
 


	

The
RSZ Trust

	
 

	

11620
Wilshire Blvd., Suite 1000


Los
Angeles, CA 90025


Attention: Richard
S. Ziman


Telephone:
310-966-3802


Email:
rziman@rexfordindustrial.com

	
 

	

$126,500.13


 

	
 

	

27,621


 

	
 

	

$115,000.00


 

	
 

	
 


	

 

	
 

	

 

	
 

	

 

	
 

	

 

	
 

	

 

	
 

	
 


	

Jeffrey
Bronfman Revocable Living Trust

	
 

	

1000
Cordova Place #710


Santa
Fe, NM 87505


Attention: Jeffrey
Bronfman


Telephone:
505-988-5924


Email:
jeffreyudv@aol.com

	
 

	

$165,000.17


 

	
 

	

36,027


 

	
 

	

$150,000.00


 

	
 

	
 


	
 




	
 

	

 

	
 

	

 

	
 

	

 

	
 

	

 

	
 

	
 


	

Lipp
Irrevocable Trust

	
 

	

270
18th St.


Santa
Monica, CA 90402


Attention: Diane S.
Lipp


Telephone:
310-395-2679


Email:
dedelipp@gmail.com

	
 

	

$44,000.04


 

	
 

	

9,607


 

	
 

	

$40,000.00


 

	
 

	
 


	

 

	
 

	

 

	
 

	

 

	
 

	

 

	
 

	

 

	
 

	
 


	

Robert
H. Lipp Separate Property Trust

	
 

	

270
18th St.


Santa
Monica, CA 90402


Attention: Robert
H. Lipp


Telephone:
310-395-2679


Email:
roblipp@gam-llc.com

	
 

	

$154,000.15


 

	
 

	

33,625


 

	
 

	

$140,000.00


 

	
 

	
 


	
 




	
 

	

 

	
 

	

 

	
 

	

 

	
 

	

 

	
 

	
 


	

Diane
S. Lipp Separate Property Trust

	
 

	

270
18th St.


Santa
Monica, CA 90402


Attention: Diane S.
Lipp


Telephone:
310-395-2679


Email:
dedelipp@gmail.com

	
 

	

$44,000.04


 

	
 

	

9,607


 

	
 

	

$40,000.00


 

	
 

	
 







 




	
 

	
 

	










 

39








 






 



EXHIBITS

 




Exhibit
A

Form of
Notes








Exhibit
B

Form of
Warrants








Exhibit
C

Form of
Registration Rights Agreement








Exhibit
D

Form of Irrevocable
Transfer Agent Instructions








Exhibit
E

Form of Opinion of
Company Counsel








Exhibit
F

Form of Secretary's
Certificate








Exhibit
G

Form of Officer's
Certificate






 

 


 



SCHEDULES

 




Schedule
3(a)

Subsidiaries








Schedule
3(k)

SEC
Documents








Schedule
3(l)

Absence of Certain
Changes








Schedule
3(n)

Regulatory
Permits








Schedule
3(q)

Transactions with
Affiliates








Schedule
3(r)

Equity
Capitalization








Schedule
3(s)

Indebtedness and
Other Contracts








Schedule
3(t)

Absence of
Litigation








Schedule
3(x)

Intellectual
Property Rights








Schedule
3(ee)

Ranking of
Notes








Schedule
4(d)

Use of
Proceeds






 


 




	
 

	
 

	










 

40








 







EXHIBIT A


 


Form of
Note


 


(See
attached.)


 




 

41








 







EXHIBIT B


 


Form of
Warrant


 


(See
attached.)


 




 

42








 







EXHIBIT C


 


Form of
Registration Rights Agreement


 


(See
attached.)


 




 

43








 







EXHIBIT D


 


Form of
Irrevocable Transfer Agent Instructions


 


GT
BIOPHARMA, INC.

 


January
__, 2018

 


Computershare Trust
Company, N.A.


250
Royall Street


Canton,
MA 02066


Attn:
Kathy Heagerty


 


Ladies
and Gentlemen:

 


Reference is made
to that certain Securities Purchase Agreement, dated as of January
__, 2018 (the "Agreement"),
by and among GT Biopharma, Inc., a Delaware corporation (the
"Company"), and the
investors named on the Schedule of Buyers attached thereto
(collectively, the "Holders"), pursuant to which the Company
is issuing to the Holders (i) senior convertible notes (the
"Notes"), which are
convertible into shares of the common stock of the Company, par
value $0.001 per share (the "Common
Stock") and (ii) warrants (the "Warrants"), which are exercisable to
purchase shares of Common Stock.

 


This
letter shall serve as our irrevocable authorization and direction
to you (provided that you are the transfer agent of the Company at
such time):

 


(i) to
issue shares of Common Stock upon conversion of the Notes (the
"Conversion Shares"),
promptly upon your receipt of an instruction letter on Company
letterhead and signed by a duly authorized officer of the Company,
which Company shall provide to you upon its receipt of a properly
completed and duly executed Conversion Notice, in the form attached
hereto as Exhibit
I. The Company shall instruct you as to whether such shares
of Common Stock will contain a restrictive legend, and the details
of such legends, if applicable.

 


 (ii) to issue
shares of Common Stock upon exercise of the Warrants (the
"Warrant Shares"), promptly
upon your receipt of an instruction letter on Company letterhead
and signed by a duly authorized officer of the Company, which
Company shall provide to you upon its receipt of a properly
completed and duly executed Exercise Notice, in the form attached
hereto as Exhibit
II. The Company shall instruct you as to whether such Shares
will contain a restrictive legend, and the details of such legends,
if applicable.

 



 

44







 





 


Subject
to compliance with Computershare’s issuance, transfer, and
restricted stock processing requirements, including, but not
limited to, documents being submitted in good order, you
acknowledge and agree that so long as you have previously received
(a) written confirmation from the Company's legal counsel that either (i) a registration
statement covering resales of the Conversion Shares and the Warrant
Shares has been declared effective by the Securities and Exchange
Commission (the "SEC") under the Securities Act of 1933, as amended
(the "1933
Act"), or (ii) sales of the
Conversion Shares and/or the Warrant Shares may be made in
conformity with Rule 144 under the 1933 Act ("Rule 144") and (b) if applicable, a copy of such
registration statement, then within two (2) business days for
routine items of your receipt of a Company issuance instruction,
you shall issue the certificates
representing the Conversion Shares and/or the Warrant
Shares, as applicable, registered in the names of such
transferees, and such certificates
shall not bear any legend restricting transfer of the Conversion
Shares and/or the Warrant Shares thereby and should not be subject
to any stop-transfer restriction; provided, however, that if such
Conversion Shares and Warrant
Shares are not registered for resale under the 1933 Act or able to
be sold under Rule 144, then the certificates for such Conversion Shares and/or Warrant Shares
shall bear the following legend:

 


THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL SELECTED BY THE
HOLDER, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT
REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR
RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE
SECURITIES.

 


A form
of written confirmation from the Company's outside legal counsel
that a registration statement covering resales of the Conversion Shares and the Warrant Shares
has been declared effective by the SEC under the 1933 Act is
attached hereto as Exhibit
III.

 


The
Company issues this instruction in accordance with, and this
instruction and your performance hereunder are subject to, the
terms of the Transfer Agency and Service Agreement currently in
effect between you and the Company.

 


 




 

45








 






Please
execute this letter in the space indicated to acknowledge your
agreement to act in accordance with these instructions. Should you
have any questions concerning this matter, please contact me at
____________.

 


Very
truly yours,

 


GT
BIOPHARMA, INC.

 


 


By:
___________________________


Name:


Title:

 


THE
FOREGOING INSTRUCTIONS ARE


ACKNOWLEDGED AND
AGREED TO

 


this
___ day of January, 2018

 


 


COMPUTERSHARE
TRUST COMPANY, N.A.

 


 



By:                                             





 



Name:                      





 



Title:                      





 


 


Enclosures

 


 




 

46








 







EXHIBIT I


 


GT
BIOPHARAMA, INC.


 

 


CONVERSION
NOTICE

 


Reference is made
to the Senior Convertible Note (the "Note") issued to the undersigned by GT
Biopharma, Inc., a Delaware corporation (the "Company"). In accordance with and
pursuant to the Note, the undersigned hereby elects to convert the
Conversion Amount (as defined in the Note) of the Note indicated
below into shares of Common Stock par value $0.001 per share (the
"Common Stock") of the
Company, as of the date specified below.

 


	

Date of
Conversion:

	
 


	

Aggregate
Conversion Amount to be converted or number of Conversion Shares to
be issued upon conversion:

	
 


	

Please
confirm the following information:


	

Conversion
Price:

	
 


	

If
Aggregate Conversion Amount is provided above, number of shares of
Common Stock to be issued:

	
 


	

Please
issue the Common Stock into which the Note is being converted in
the following name and to the following address:


	

Issue
to:

	
 


	
 

	
 


	
 

	
 


	

Facsimile Number
and Electronic Mail:

	
 


	

Authorization:

	
 


	

By:

	
 


	

Title:

	
 


	

Dated:

	
 


	

Account
Number:

	
 


	

  (if
electronic book entry transfer)

	
 


	

Transaction Code
Number:

	
 


	

  (if
electronic book entry transfer)

	
 







 

 


 




 

47








 







EXHIBIT II

 


 


EXERCISE
NOTICE


TO
BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS


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 Warrant to Purchase Common Stock (the "Warrant"). Capitalized terms used herein
and not otherwise defined shall have the respective meanings set
forth in the Warrant.


 


1. Form
of Exercise Price. The Holder intends that payment of the Exercise
Price shall be made as:


 



____________ 

a "Cash Exercise" with respect to
_________________ Warrant Shares; and/or






 



____________ 

a "Cashless Exercise" with
respect to _______________ Warrant Shares.






 


2.
Payment of Exercise Price. In the event that the holder has elected
a Cash Exercise with respect to some or all of the Warrant Shares
to be issued pursuant hereto, the holder shall pay the Aggregate
Exercise Price in the sum of $___________________ to the Company in
accordance with the terms of the Warrant.


 


3.
Delivery of Warrant Shares. 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:


 


 




 

48








 







EXHIBIT III

 


FORM
OF NOTICE OF EFFECTIVENESS

 


OF
REGISTRATION STATEMENT

 


 


ComputerShare Trust
Company, N.A.


[______]


[______]


Attention:
[______]

 



Re:            


GT Biopharma, Inc.





 


Ladies
and Gentlemen:

 


[We
are][I am] counsel to GT Biopharma, Inc., a Delaware corporation
(the "Company"), and have
represented the Company in connection with that certain Securities
Purchase Agreement, dated as of January 22, 2018 (the "Securities Purchase Agreement"), entered into by
and among the Company and the buyers named therein (collectively,
the "Holders") pursuant to
which the Company issued to the Holders senior convertible notes
(the "Notes") pursuant to
which shares of the Company's common stock, par value $0.001 per
share (the "Common Stock")
are issuable thereunder and warrants exercisable for shares of
Common Stock (the "Warrants"). Pursuant to the Securities
Purchase Agreement, the Company also has entered into a
Registration Rights Agreement with the Holders (the "Registration Rights Agreement") pursuant
to which the Company agreed, among other things, to register the
resale of the Registrable Securities (as defined in the
Registration Rights Agreement), including the shares of Common
Stock issuable pursuant to the terms of the Notes and upon exercise
of the Warrants under the Securities Act of 1933, as amended (the
"1933 Act"). In connection
with the Company's obligations under the Registration Rights
Agreement, on ____________ ___, 2014, the Company filed a
Registration Statement on Form S-3 (File No. 333-_____________)
(the "Registration
Statement") with the Securities and Exchange Commission (the
"SEC") relating to the
Registrable Securities which names each of the Holders as a selling
stockholder thereunder.

 


In
connection with the foregoing, [we][I] advise you that a member of
the SEC's staff has advised [us][me] by telephone that the SEC has
entered an order declaring the Registration Statement effective
under the 1933 Act at [ENTER
TIME OF EFFECTIVENESS] on
[ENTER DATE OF
EFFECTIVENESS] and [we][I]
have no knowledge, after telephonic inquiry of a member of the
SEC's staff, that any stop order suspending its effectiveness has
been issued or that any proceedings for that purpose are pending
before, or threatened by, the SEC and the Registrable Securities
are available for resale under the 1933 Act pursuant to the
Registration Statement.

 


This
letter shall serve as our standing instruction to you that the
shares of Common Stock are freely transferable by the Holders
pursuant to the Registration Statement. You need not require
further letters from us to effect any future legend-free issuance
or reissuance of shares of Common Stock to the Holders as
contemplated by the Company's Irrevocable Transfer Agent
Instructions dated January [●], 2018.

 


Very
truly yours,

 


[ISSUER'S COUNSEL]

 


By:_____________________

 



CC:            

[LIST NAMES OF HOLDERS]






 

 


 


 




 

49








 







EXHIBIT E


 


Form of
Opinion of Company Counsel


 


January
[__], 2018


 


Each
Buyer identified on the signature


pages
to the Purchase Agreement (as defined below)


 


RE: GT
Biopharma, Inc.


 


Ladies
and Gentlemen:


 


We have
acted as counsel to GT Biopharma, Inc., a Delaware corporation (the
“Company”), in
connection with the execution and delivery of the Securities
Purchase Agreement, dated as of January 22, 2018 (the
“Purchase Agreement”),
by and among the Company and each Buyer identified on the signature
pages thereto (the “Buyers”).

 


This
opinion is being delivered to you pursuant to Section 7(ii) of the
Purchase Agreement. Capitalized terms used in this opinion and not
otherwise defined in this opinion shall have the meanings ascribed
to them in the Purchase Agreement.

 


In
connection with the opinions expressed herein, we have made such
examination of law as we considered appropriate or advisable for
purposes hereof. We have also examined originals or copies,
certified or otherwise identified to our satisfaction
of:

 



(i) 

executed copies of
the Purchase Agreement, the Registration Rights Agreement, the
Notes and the Warrants (collectively, the “Agreements”);





 



(ii) 

the Company’s
Second Amended and Restated Certificate of Incorporation, and the
Company’s Amended and Restated Bylaws, each as amended and in
effect as of the date hereof, certified as true, accurate and
complete by an officer of the Company (collectively, the
“Organizational Documents”);





 



(iii) 

the Certificate of
Designations, Preferences and Rights of Series C Convertible
Preferred Stock, filed with the Securities and Exchange Commission
on April 1, 2002, and the Certificate of Designations, Preferences
and Rights of Series J Convertible Preferred Stock, filed with the
Securities and Exchange Commission on November 14, 2017
(collectively, the “Certificates of
Designations”);





 



(iv) 

the original or
electronically transmitted certificates of good standing and
qualification of the Company and its Subsidiaries issued as of a
recent date by the Secretary of State of Delaware, the Department
of State of Florida, the Department of Consumer and Regulatory
Affairs, Corporations Division of the Government of the District of
Columbia and the Secretary of State of California (the
“Good
Standing Certificates”);





 



 

50







 





 



(v) 

the records of the
proceedings and actions of the Company’s Board of Directors
(the “Board”) with
respect to the transactions contemplated by the Purchase Agreement,
certified as true, accurate and complete, and in full force and
effect, by an officer of the Company;





 



(vi) 

a certificate of an
officer of the Company (the “Officer
Certificate”), dated the
date hereof, as to certain factual matters; and





 



(vii) 

such other
certificates, documents and matters as we have deemed necessary and
appropriate to render the opinions set forth in this opinion,
subject to the limitations, assumptions, and qualifications noted
in this opinion.





 


All
references in this opinion letter to the Agreements shall refer
only to the body of such agreements and the disclosure schedules
attached to the Purchase Agreement, exclusive of any other
documents incorporated by reference therein and no opinion is
expressed with respect to any documents or provisions of any
documents which purport to be incorporated by reference in any
other document.

 


As to
factual matters, we have relied solely upon, and assumed the
accuracy, completeness, and genuineness of, the representations and
warranties contained in the Purchase Agreement, statements made in
the Officer’s Certificate, certificates of public officials
and oral and written representations made to us by officers of the
Company. With your permission, we have made no independent
investigation of any of the facts stated in any such certificate or
representation.

 


For
purposes of this opinion letter, we have assumed that: (i) each
party to the Agreements (other than the Company) is duly organized,
validly existing and in good standing under the laws of the
respective state or jurisdiction in which it is organized and is
duly qualified to engage in the transactions contemplated by the
Agreements; (ii) the execution and delivery of the Agreements, and
the consummation and performance of the transactions contemplated
by the Agreements, by all parties (other than the Company) have
been duly authorized by all necessary actions; (iii) each party to
the Agreements (other than the Company) has the requisite power and
authority to perform its obligations under the Agreements; (iv)
each of the Agreements constitutes the legal, valid, and binding
obligations of all parties thereto (other than the Company),
enforceable against such parties (other than the Company) in
accordance with their respective terms; (v) each party to the
Agreements (other than the Company) is in compliance with all
applicable laws, rules and regulations governing the transactions
contemplated by the Agreements and the conduct of its respective
businesses and is not subject to any statute, rule, regulation,
agreement or other impediment that requires it to obtain the
consent of or to make any declaration or filing with any
governmental authority or any other person in connection with the
transactions contemplated by the Agreements; (vi) all natural
persons who are signatories to the Agreements were legally
competent at the time of execution and delivery of the Agreements;
(vii) all signatures on the Agreements and other documents reviewed
by us are genuine; (viii) with respect to the transactions
contemplated by the Agreements, all terms and conditions of the
relationship among the Company and you are correctly and completely
reflected in the Agreements; (ix) there has not been any mutual
mistake of fact or understanding with respect to the Agreements,
(x) if you are a corporation or other entity, that you have filed
any required state franchise, income or similar tax returns and
have paid any required state franchise, income or similar taxes;
and (xi) that there are no extrinsic agreements or
understandings among the parties to the Agreements that would
modify or interpret the terms of the Agreements or the respective
rights or obligations of the parties thereunder; and (xii) the
Agreements, and the transactions contemplated thereby, were fair,
just and reasonable to the Company at the time of their
authorization, approval or ratification by the Board; and we
express no opinion as to such matters.

 



 

51







 





 


Based
upon the foregoing, and subject to the assumptions, qualifications
and limitations set forth herein, we are of the opinion
that:

 




G.

The Company is an
entity duly formed and validly existing under the laws of the
jurisdiction of its formation and is in good standing under such
laws. The Company is duly qualified as a foreign corporation to do
business and is in good standing in the State of Florida, the
Government of the District of Columbia and the State of
California.





 




H.

The Company has the
requisite corporate power and authority to execute, deliver and
perform all of its obligations under the Agreements, including,
without limitation, the issuance of the Notes and the Warrants,
and, upon conversion of the Notes, issue the Conversion Shares and,
upon exercise of the Warrants, issue the Warrant Shares, in each
case, in accordance with the terms thereof. The execution and
delivery of the Agreements by the Company and the consummation by
it of the transactions contemplated therein (including, without
limitation, the issuance and sale of the Notes and the Warrants)
have been duly authorized by the Board and no further consent or
authorization of the Company, the Board or its stockholders is
required therefor. The Agreements have been duly executed and
delivered by the Company. The Agreements constitute valid and
binding agreements or obligations of the Company, enforceable
against the Company in accordance with their respective terms,
except as enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, arrangement, moratorium or other
similar laws affecting creditors’ rights, and subject to
general equity principles and to limitations on availability of
equitable relief, including specific performance.





 




I.

The execution and
delivery of the Agreements by the Company does not and the
performance by the Company of its obligations thereunder will not
conflict with or violate any provision of the Organizational
Documents or any of the Certificates of Designations, and does not
and will not, as the case may be, conflict with or violate (a) any
governmental statute, rule or regulation which in our experience is
typically applicable to transactions of the nature contemplated by
the Agreements, (b) any order, writ, judgment, injunction, decree,
determination or award which has been entered against the Company
and of which we are aware, in each case to the extent the violation
of which would materially and adversely affect the Company, taken
as a whole or (c) any of the agreements listed on Exhibit A
attached hereto.





 




J.

When so issued in
accordance with the terms of the Notes, the Warrants and the
Organizational Documents, the Conversion Shares and the Warrant
Shares will be duly authorized and validly issued, fully paid and
nonassessable upon receipt by the Company of full consideration
therefor. The Conversion Shares and the Warrant Shares have been
duly and validly reserved for issuance by all proper corporate
action.





 



 

52







 





 




K.

Subject to the
accuracy of the information provided by the Buyers pursuant to the
Purchase Agreement, the offer and sale of the Notes and the
Warrants in accordance with the Purchase Agreement and the issuance
and delivery of the Conversion Shares and the Warrant Shares in
accordance with the terms of the Notes and Warrants, as applicable,
do not require registration under the Securities Act of 1933, as
amended.





 




L.

The execution,
delivery and performance by the Company of the Agreements and the
issuance of the Notes, Warrants, Conversion Shares and Warrant
Shares contemplated thereby, do not require any consent, license,
permit, waiver, approval or authorization of, or designation,
declaration, registration or filing with, any U.S. federal court,
governmental or regulatory authority, or self-regulatory
organization (other than any filing
with the U.S. Securities and Exchange Commission, state securities
regulatory authorities, or the OTC QB that may be required to be
made by the Company) or from
the stockholders of the Company.





 




M.

The Company and its
Board of Directors have taken all necessary action, if any, 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 as a result of the Buyers
and the Company fulfilling their obligations or exercising their
rights under the Transaction Documents, including without
limitation, the Company's issuance of Notes on the date hereof (and
the Conversion Shares issuable pursuant to the terms thereof ) and
the Warrants (and the Warrant Shares issuable pursuant to the terms
thereof) and the Buyers' and their affiliates' ownership of such
securities or any other securities of the Company acquired by the
Buyer or their affiliates.





 




N.

To our knowledge,
no action, suit, proceeding, inquiry or investigation before or by
any court, public board or body or any governmental agency or
self-regulatory organization is pending or threatened against the
Company or any of its Subsidiaries or any of their properties or
assets.





 




O.


The sale of the Notes and the use of the proceeds thereof as
contemplated in the Transaction Documents will not violate or be
inconsistent with the provisions of Regulation T, U or X of the
Board of Governors of the Federal Reserve System of the United
States.





 


Our
opinions are qualified as follows:

 

A. Where we render an
opinion “to our knowledge” or concerning an item
“known to us” or our opinion otherwise uses a phrase of
similar meaning, it is intended to indicate that, during the course
of our representation of the Company, no information that would
give us current actual knowledge of the inaccuracy of such
statement has come to the attention of Jenifer Smith, Jay Buchanan
and Nicole Huang, the attorneys in this firm who have rendered or
are rendering substantive legal services to the Company in the
transactions contemplated by the Purchase Agreement. However,
except as otherwise expressly indicated, with your permission we
have not undertaken any independent investigation to determine the
accuracy of such statements and any limited inquiry undertaken by
us during the preparation of this opinion letter should not be
regarded as such an investigation. No inference as to our knowledge
of any matters bearing on the accuracy of any such statement should
be drawn from the fact of our representation of the
Company.

 



 

53







 





 

B. The foregoing
opinions are limited to the federal laws of the United States of
America, the laws of the State of Texas and the Delaware General
Corporation Law, each as in effect on the date hereof, and which in
our experience are normally applicable to the transactions
contemplated by the Purchase Agreement, but in each case without
our having made any special investigation concerning any other law,
rule or regulation (collectively, “Applicable
Laws”). The members of this Firm that have worked on
the transaction are not admitted to practice in the State of
Delaware or the State of New York and do not purport to be experts
on the laws of the State of Delaware generally or on the laws of
the State of New York. Our opinions herein with respect to the
Delaware General Corporation Law are based solely upon a review of
such laws as reported in standard compilations and, with your
permission, such opinions are based solely on such limited review.
Any opinions herein regarding the Transaction Documents that are
governed by the laws of the State of New York assume that the laws
of the State of New York are identical to the laws of the State of
Texas and are limited to the application of the laws of the State
of Texas by the courts located in the State of Texas, without
regard to principles regarding conflicts of laws.

 

C. We express no
opinion as to compliance with U.S. federal securities laws (except
as otherwise set forth in this opinion), state or non-U.S.
securities laws, anti-trust, unfair competition, tax, banking,
financial services, insurance, usury, anti-terrorism, anti-money
laundering, pension, intellectual property, health, safety and
welfare, environmental, land use, criminal, or privacy laws. We
also express no opinion as to any laws that may apply to a party to
the Agreements due to the nature of any person’s business or
activities or the industry in which such person does business. We
express no opinion as to the Company’s compliance or
noncompliance with applicable federal or state antifraud statutes,
laws, rules and regulations, including without limitation, the
accuracy or completeness of the information provided to you in
connection with the offer and sale of the Securities. Furthermore,
we express no opinion regarding (i) laws, rules or regulations
applicable to (1) patents, copyrights, trademarks and other
proprietary rights and licenses and (2) health care regulatory
matters or health care reimbursement, or (ii) matters regulated or
administered by the United States Food and Drug
Administration.

 

D. We express no
opinion concerning the past, present or future value of any
securities.

 


This
opinion letter is predicated solely upon laws in existence and
facts as we know them as of the date hereof and is limited to the
matters expressly stated herein, and no opinion is implied or may
be inferred beyond the matters expressly stated herein. We
expressly disclaim any obligation to update this opinion after the
date hereof for any reason, including but not limited to, any new
or changed facts or law which come to our attention after the date
hereof. This letter is based upon our professional knowledge and
judgment at this time; however, it is not to be construed as a
guaranty, nor is it a warranty that a court considering such
matters would not rule in a manner contrary to the opinions set
forth herein.

 


This
opinion letter is intended solely for your benefit solely with
respect to the transactions contemplated by the Purchase Agreement
and may not be used by you for any other purpose and may not be
made available to or relied upon by any other person or entity
without our express prior written consent.

 


 




 

54








 







EXHIBIT F


 


Form of
Secretary’s Certificate


 



GT BIOPHARMA, INC.


 



SECRETARY’S CERTIFICATE


 


 


The
undersigned hereby certifies that he is the duly elected, qualified
and acting Secretary of GT Biopharma, Inc., a Delaware corporation
(the "Company"), and that as
such he is authorized to execute and deliver this certificate in
the name and on behalf of the Company and in connection with the
Securities Purchase Agreement, dated as of January 22, 2018, by and
among the Company and the investors listed on the Schedule of
Buyers attached thereto (the "Securities Purchase Agreement"), and
further certifies in his official capacity, in the name and on
behalf of the Company, the items set forth below. Capitalized terms
used but not otherwise defined herein shall have the meaning set
forth in the Securities Purchase Agreement.

 




(i)

Attached hereto as
Exhibit A is a
true, correct and complete copy of the unanimous written consent of
the Board of Directors of the Company, dated January 22, 2018. The
resolutions contained in Exhibit A have not in any way been
amended, modified, revoked or rescinded, have been in full force
and effect since their adoption to and including the date hereof
and are now in full force and effect.





 




(ii)

Attached hereto as
Exhibit B is a
true, correct and complete copy of the Certificate of Incorporation
of the Company, together with any and all amendments thereto, and
no action has been taken to further amend, modify or repeal such
Certificate of Incorporation, the same being in full force and
effect in the attached form as of the date hereof.





 




(iii)

Attached hereto as
Exhibit C is a
true, correct and complete copy of the Bylaws of the Company and
any and all amendments thereto, and no action has been taken to
further amend, modify or repeal such Bylaws, the same being in full
force and effect in the attached form as of the date
hereof.





 


	
 

	
 

	
 







 




 

55








 






IN
WITNESS WHEREOF, the undersigned has hereunto set his hand as of
this __ day of January, 2018.

 


____________________________________


Steven
Weldon


Secretary


 


 


I,
Kathleen Clarence-Smith, Chief Executive Officer of the Company,
hereby certify that Steven Weldon is the duly elected, qualified
and acting Secretary of the Company and that the signature set
forth above is his true signature.

 


___________________________________


Kathleen
Clarence-Smith


Chief
Executive Officer


 




	
 

	
 

	










 

56








 







EXHIBIT G


 


Form of
Officer’s Certificate

 


GT
BIOPHARMA, INC.


 



OFFICER'S CERTIFICATE

 


 


The
undersigned officer of GT Biopharma, Inc., a Delaware corporation
(the "Company"), hereby
represents, warrants and certifies to the Buyers (as defined
below), pursuant to Section 7(vii) of the Agreement (as defined
below), as follows:


 



1. 

The representations
and warranties of the Company set forth in Section 3 of the
Securities Purchase Agreement, dated as of January __, 2018 (the
"Agreement"), among the
Company and the investors identified on the Schedule of Buyers
attached to the Agreement (the "Buyers"), are true and correct in all
material respects (except for those representations and warranties
that are qualified by materiality or Material Adverse Effect (as
defined in the Agreement), which are accurate in all respects) as
of the date hereof (except for representations and warranties that
speak as of a specific date, which are true and correct as of such
specified date).






 



2. 

The Company has
performed, satisfied and complied in all material respects with the
covenants, agreements and conditions required by the Transaction
Documents (as defined in the Agreement) to be performed, satisfied
and complied with by the Company as of the date hereof (except for
covenants, agreements and conditions that are qualified by
materiality or Material Adverse Effect, which have been performed,
satisfied or complied with, in all respects).






 


Capitalized terms
used but not otherwise defined herein shall have the meaning set
forth in the Agreement.


 


IN WITNESS WHEREOF, the undersigned has
executed this certificate this ___ day of January,
2018.


 


 


 


___________________________


Name:
Steven Weldon


Title:
Chief Financial Officer


 




 

57








 







SCHEDULES


 


These
Disclosure Schedules are provided pursuant to Sections 3 and 4 of
the Securities Purchase Agreement dated January 22, 2018
(the
“Agreement”)
by and among GT Biopharma, Inc., a Delaware corporation, with
headquarters located at 1825 K Street, Suite 510, Washington, D.C.
20006 (the “Company”),
and the investors listed on the Schedule of Buyers attached thereto
(individually, a “Buyer”
and collectively, the “Buyers”).
Capitalized terms used but not otherwise defined herein shall have
the meanings ascribed to them in the Agreement.


 


These
Disclosure Schedules are qualified in their entirety by the
provisions of the Agreement, and are not intended to constitute,
and shall not be construed as constituting, representations,
warranties, or covenants of the Company except as and only to the
extent explicitly provided in the Agreement. Matters reflected in
these Disclosure Schedules are not necessarily limited to matters
required by the Agreement to be reflected in the Disclosure
Schedules. All references to “Section” refer to a
section or subsection in the Agreement, unless the context
otherwise requires. The headings in these Disclosure Schedules are
for convenience of reference only and shall not affect the
disclosures contained herein. The disclosures in these Disclosure
Schedules shall apply to the corresponding numbered or lettered
sections of the Agreement. Inclusion of a matter in the Disclosure
Schedules with respect to a representation or warranty that
addresses matters having a Material Adverse Effect shall not be
deemed an indication that such matter does or may have a Material
Adverse Effect. These Disclosure Schedules may include matters not
required by the terms of the Agreement to be listed on the
Disclosure Schedules, which additional matters are disclosed for
purposes of information only, and inclusion of any such matter does
not mean that all such matters are included.


 


 


 




 

58








 






 

 



Schedule
3(a)


Organization
and Qualification






 


Oxis
Biotech, Inc.


 


Georgetown
Translational Pharmaceuticals, Inc.


 




 

59








 






 

 



Schedule
3(k)

SEC
Documents; Financial Statements






 


None.


 


 




 

60








 






 

 



Schedule
3(l)  


Absence
of Certain Changes






 


None.


 




 

61








 






 

 



Schedule
3(n)


Conduct
of Business; Regulatory Permits






 


None.


 




 

62








 






 

 



Schedule
3(q)


Transactions
with Affiliates






 


Master
Consulting Agreement by and between the Company and KM
Pharmaceuticals Consulting LLC, dated January 1, 2017.


 


 




 

63








 






 

 



Schedule
3(r)

Equity
Capitalization






 


None.


 


 




 

64








 






 

 



Schedule
3(s)

Indebtedness
and Other Contracts






 


(i)


 


On
November 8, 2010, the Company entered into a financing arrangement
with Gemini Pharmaceuticals, Inc., a product development and
manufacturing partner of the Company, pursuant to which Gemini
Pharmaceuticals made a $250,000 strategic equity investment in the
Company and agreed to make a $750,000 purchase order line of credit
facility available to the Company. Gemini Pharmaceuticals has lent
$31,000 to the Company pursuant to such letter of credit
facility.




 

65








 






 



Schedule
3(t)


Absence
of Litigation






 


On
June 23, 2016, the Company was served with a complaint filed in the
Circuit Court of the 13th Judicial Circuit in and for
Hillsborough County, FL, Case No. 16-CA-004791. Suit was brought
against the Company by Lippert/Heilshorn and Associates, Inc. who
is alleging they are owed compensation for consulting services
provided to the company. They are seeking payment of $73,898. The
Company has engaged legal counsel to answer the
complaint.


 


On
or immediately before February 15, 2017, MultiCell
Immunotherapeutics filed an arbitration proceeding against the
Company with the American Health Lawyers Association, Claim
#3821.  In its statement of claim, MultiCell is seeking
$207,783 plus interest and costs of arbitration pursuant to alleged
contract rights against the Company under a research agreement
between the parties.  Following a hearing held September 1,
2017, the arbitrator awarded MultiCell the payment amount of
$207,783 plus interest in the amount of $34,699. We are having
legal counsel review to determine the extent to which the
arbitrator’s award is legally binding on the
Company.


 


 


 




 

66








 






 



Schedule
3(x)

Intellectual
Property Rights






 


(i)


 


	


Appl. No./ Pat./Pub. No.

	
 

	


Title

	
 

	


Country

	
 

	


Status


	


PCT Patent Application Number PCT/US2016/055722

	
 

	


Therapeutic compounds and methods

	
 

	


US

	
 

	


Pending


	


U.S. Patent Number 9,371,386

	
 

	


Methods and compositions for bi-specific targeting of
cd19/cd22

	
 

	


US

	
 

	


Issued


	


U.S. Patent Application Number 15/187,579

	
 

	


Methods and compositions for bi-specific targeting of
cd19/cd22

	
 

	


US

	
 

	


Pending


	


U.S. Patent Number 9580382

	
 

	


P62­zz chemical inhibitor

	
 

	


US

	
 

	


Issued


	


U.S. Patent Application Number 14/727,710

	
 

	


P62­zz chemical inhibitor

	
 

	


US

	
 

	


Pending


	


Chinese Patent Application 201280048718

	
 

	


P62­zz chemical inhibitor

	
 

	


US

	
 

	


Pending


	


U.S. Patent Number 7,838,031

	
 

	


Method for administering a partial dose using a segmented
pharmaceutical tablet

	
 

	


US

	
 

	


Issued


	


U.S. Patent Number 7,879,352

	
 

	


Scored pharmaceutical tablets comprising a plurality of
segments

	
 

	


US

	
 

	


Issued


	


U.S. Patent Number 8,158,148

	
 

	


Pharmaceutical tablets comprising two or more unitary
segments

	
 

	


US

	
 

	


Issued


	


U.S. Patent Number 8,231,902 (ABT-054)

	
 

	


Segmented pharmaceutical dosage forms

	
 

	


US

	
 

	


Issued


	


U.S. Patent Application Number 62/449,599

	
 

	


Neostigmine combination for treating Myasthenia Gravis

	
 

	


US

	
 

	


Pending


	


U.S. Patent Application Number 62/536,595

	
 

	


Method and composition for treating Myasthenia Gravis

	
 

	


US

	
 

	


Pending


	


U.S. Patent Application Number 62/536,580

	
 

	


Neostigmine pharmaceutical combination for treating Myasthenia
Gravis

	
 

	


US

	
 

	


Pending


	


PCT Application Number PCT/US/18/12754

	
 

	


Use and composition for treating Myasthenia Gravis

	
 

	


PCT

	
 

	


Claims priority from US



62/443,904


	


PCT Application Number

	
 

	


Use and composition for preventing and treating motion
sickness

	
 

	


PCT

	
 

	


Claims priority from US


62/440,575




	
PCT/US/17/68944

	

	
 

	
 

	
 

	
 


	
Taiwan
Application Number 107100813

	

	
 

	


TW

	
 

	


Awaiting FC Report


	
Taiwan
Application Number 107100079

	

	
 

	


TW

	
 

	


Awaiting FC Report


	


US Patent Application Number 62/595,667

	
 

	


Use, method, and device for the prevention and treatment of motion
sickness

	
 

	


US

	
 

	


Pending







 


(ii)


 


	


Appl. No.

	

 

	


Title

	

 

	


Country

	

 

	


Status


	


U.S. Patent Application Number 62/237,835

	
 

	


Therapeutic compounds and its uses

	


US

	
 

	


Expired


	


U.S. Patent Application Number 61/160,530

	
 

	


Methods and compositions for bi-specific targeting of
cd19/cd22

	


US

	
 

	


Expired


	


U.S. Patent Application Number 61/521,287

	
 

	


P62­zz chemical inhibitor

	


US

	
 

	


Expired


	


PCT Patent Application Number PCT/US2012/049911

	
 

	


P62­zz chemical inhibitor

	


PCT

	
 

	


Expired


	
U.S.
Patent Application Number 62/443,904

	
 

	
Use
and composition for treating Myasthenia Gravis

	
 

	


US

	
 

	


Expired


	
U.S.
Patent Application Number 62/440,575

	
 

	
Use
and composition for preventing and treating motion
sickness

	
 

	


US

	
 

	


Expired







 




 

67








 






 

 



Schedule
3(cc)


Internal
Accounting and Disclosure Controls





 


As of
June 30, 2017, management of the Company conducted an assessment of
the effectiveness of the Company’s internal control over
financial reporting. In making this assessment, it used the
criteria set forth by the Committee of Sponsoring Organizations of
the Treadway Commission (“COSO”) in
Internal Control—Integrated Framework. In the course of the
assessment, material weaknesses were identified in the
Company’s internal control over financial
reporting.

 


Management
determined that fundamental elements of an effective control
environment were missing or inadequate as of June 30, 2017. The
most significant issues identified were: 1) lack of segregation of
duties due to very small staff and significant reliance on outside
consultants, and 2) risks of executive override also due to lack of
established policies, and small employee staff. Based on the
material weaknesses identified above, management has concluded that
internal control over financial reporting was not effective as of
June 30, 2017.

 


 

 




 

68








 






 

 



Schedule
3(ee)

Ranking
of Notes






 


None.


 




 

69








 






 

 



Schedule
4(d)

Use
of Proceeds






 


The
Company intends to use the proceeds from the sale of the Securities
for research and development, general and administrative expenses,
commissions and fees.


 


 




 

70