Exhibit 10.1


 


SECURITIES PURCHASE
AGREEMENT


 


This
SECURITIES PURCHASE AGREEMENT (the “Agreement”), dated as of March 11, 2021, by and between NEXGEL, INC.,
a Delaware corporation, with headquarters located at 2150 Cabot Blvd West, Suite B, Langhorne, PA 19047 (the “Company”),
and AUCTUS FUND, LLC, a Delaware limited liability company, with its address at 545 Boylston Street, 2nd Floor,
Boston, MA 02116 (the “Buyer”).


 


WHEREAS:


 


A.   
The Company and the Buyer are 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) promulgated
by the United States Securities and Exchange Commission (the “SEC”) under the 1933 Act;


 


B.  
Buyer desires to purchase from the Company, and the Company desires to issue and sell to the Buyer, upon the terms and conditions
set forth in this Agreement, a senior secured promissory note of the Company, in the aggregate principal amount of $1,500,000.00
(as the principal amount thereof may be increased pursuant to the terms thereof, and together with any note(s) issued in replacement
thereof or as a dividend thereon or otherwise with respect thereto in accordance with the terms thereof, in the form attached hereto
as Exhibit A, (the “Note”), convertible into shares of common stock, $0.001 par value per share, of the Company
(the “Common Stock”), upon the terms and subject to the limitations and conditions set forth in such Note;


 


C.  
The Buyer wishes to purchase, upon the terms and conditions stated in this Agreement, such principal amount of the Note
as is set forth immediately below its name on the signature pages hereto;


 


D.   
The Company wishes to issue to the Warrants (as defined below) to the Buyer as additional consideration for the purchase
of the Note, exercisable into shares of Common Stock, which shall be earned in full as of the Closing Date, as further provided
herein.


 


NOW
THEREFORE, in consideration of the foregoing and of the agreements and covenants herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the Company and the Buyer hereby agree as follows:


 


		1.	Purchase and Sale of Note.



 


a.
Purchase of Note. On the Closing Date (as defined below), the Company shall issue and sell to the Buyer, and the Buyer agrees
to purchase from the Company, the Note, as further provided herein. As used in this Agreement, the term “business day”
shall mean any day other than a Saturday, Sunday, or a day on which commercial banks in the city of New York, New York are authorized
or required by law or executive order to remain closed. Additionally, up and until fourteen calendar days from the Closing Date,
the Company may issue junior secured promissory notes in the total aggregate amount of up to $1,000,000.00 (the “Junior Notes”),
on the same terms and conditions of the Note, except that the rights and interests of the holder(s) of the Junior Notes must be
fully subordinated to the Buyer’s rights and interests under the Note, the Security Agreement, this Agreement, and the other
related transaction document entered into between the Company and the Buyer on or around the Closing Date. Accordingly, prior to
the issuance of any Junior Notes, the holder(s) of such Junior Notes shall enter into a subordination agreement with the Buyer
in such form and substance that is acceptable to the Buyer.


 


b. Form of Payment. On
the Closing Date: (i) the Buyer shall pay the purchase price of $1,500,000.00 (the “Purchase Price”) for the
Note, to be issued and sold to it at the Closing (as defined below), by wire transfer of immediately available funds to the
Company, in accordance with the Company’s written wiring instructions, against delivery of the Note, and (ii) the
Company shall deliver such duly executed Note and Warrants on behalf of the Company, to the Buyer, against delivery of such
Purchase Price. On the Closing Date, the Buyer shall withhold a non-accountable sum of $18,000.00 from the Purchase Price to
cover the Buyer’s legal fees in connection with the transactions contemplated by this Agreement. On the Closing Date,
the Company shall pay $25,000.00 to Auctus Fund Management, LLC (“Auctus Management”) to cover the Buyer's due
diligence, monitoring, and other transaction costs incurred for services rendered in connection herewith (the
 “Transaction Expense Amount”). The Transaction Expense Amount shall be offset against the proceeds of the Note
and shall be paid to Auctus Management on the Closing Date.





 






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c. Closing Date. Subject
to the satisfaction (or written waiver) of the conditions thereto set forth in Section 6 and Section 7 below, the date and time
of the issuance and sale of the Note pursuant to this Agreement (the “Closing Date”) shall be on the date that the
Purchase Price for the Note is paid by Buyer pursuant to terms of this Agreement.


 


d. Closing. The
closing of the transactions contemplated by this Agreement (the “Closing”) shall occur on the Closing Date at such
location as may be agreed to by the parties (including via exchange of electronic signatures).


 


1A. Warrants.
On the Closing Date, the Company shall issue the first common stock purchase warrant to Buyer to purchase 6,000,000 shares of the
Company’s common stock (the “First Warrant”) upon the terms and subject to the limitations and conditions set
forth in such First Warrant as well as issue the second common stock purchase warrant to Buyer to purchase 5,000,000 shares of
the Company’s common stock (the “Second Warrant”, and collectively with the First Warrant, the “Warrants”)
upon the terms and subject to the limitations and conditions set forth in such Second Warrant.


 


		2.	Buyer’s Representations and Warranties.
The Buyer represents and warrants to the Company as of the Closing Date that:



 


a.  Investment
Purpose. As of the Closing Date, the Buyer is purchasing the Note and Warrants (the Note, Warrants, shares of Common Stock
issuable upon conversion of or otherwise pursuant to the Note (the “Conversion Shares”), and shares of Common Stock
issuable upon exercise of or otherwise pursuant to the Warrants (the “Exercise Shares”) shall collectively be referred
to herein as the “Securities”) for its own account and not with a present view towards the public sale or distribution
thereof, except pursuant to sales registered or exempted from registration under the 1933 Act; provided, however,
that by making the representations herein, the 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.


 


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


 


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


 


d. 
Information. The Buyer and its advisors, if any, have been, and for so long as the Note remains outstanding will
continue to be, 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 which have been requested by the Buyer or its advisors. The Buyer and its advisors, if
any, have been, and for so long as the Note remains outstanding will continue to be, afforded the opportunity to ask questions
of the Company regarding its business and affairs. Notwithstanding the foregoing, the Company has not disclosed to the Buyer any
material nonpublic information regarding the Company or otherwise and will not disclose such information unless such information
is disclosed to the public prior to or promptly following such disclosure to the Buyer. Neither such inquiries nor any other due
diligence investigation conducted by Buyer or any of its advisors or representatives shall modify, amend or affect Buyer’s
right to rely on the Company’s representations and warranties contained in Section 3 below.


 


e.  Governmental Review. The Buyer understands that no United States federal or state agency or any other government
or governmental agency has passed upon or made any recommendation or endorsement of the Securities.


 






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f.  Transfer
or Resale. The Buyer understands that (i) the sale or resale of the Securities has not been and is not being registered
under the 1933 Act or any applicable state securities laws, and the Securities may not be transferred unless (a) the
Securities are sold pursuant to an effective registration statement under the 1933 Act, (b) the Buyer shall have delivered to
the Company, at the cost of the Company, an opinion of counsel (which may be the Legal Counsel Opinion (as defined below))
that shall be in form, substance and scope customary for opinions of counsel in comparable transactions to the effect that
the Securities to be sold or transferred may be sold or transferred pursuant to an exemption from such registration, which
opinion shall be accepted by the Company, (c) the Securities are sold or transferred to an “affiliate” (as
defined in Rule 144 promulgated under the 1933 Act (or a successor rule) (“Rule 144”)) of the Buyer who agrees to
sell or otherwise transfer the Securities only in accordance with this Section 2(f) and who is an Accredited Investor, (d)
the Securities are sold pursuant to Rule 144 or other applicable exemption, or (e) the Securities are sold pursuant to
Regulation S under the 1933 Act (or a successor rule) (“Regulation S”), and the Buyer shall have delivered to the
Company, at the cost of the Company, an opinion of counsel that shall be in form, substance and scope customary for opinions
of counsel in corporate transactions, which opinion shall be accepted by the Company; (ii) any sale of such Securities made
in reliance on Rule 144 may be made only in accordance with the terms of said Rule and further, if said Rule is not
applicable, any re-sale of such 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 such Securities under the 1933 Act or any state securities laws or to comply with
the terms and conditions of any exemption thereunder (in each case). Notwithstanding the foregoing or anything else contained
herein to the contrary, the Securities may be pledged in connection with a bona fide margin account or other lending
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 the Buyer in effecting such pledge of Securities shall be not required to provide the
Company with any notice thereof or otherwise make any delivery to the Company pursuant to this Agreement or otherwise.


 


g. 
Legends. The Buyer understands that until such time as the Note, Warrants, Conversion Shares, and/or Exercise Shares,
have been registered under the 1933 Act or may be sold pursuant to Rule 144, Rule 144A under the 1933 Act, Regulation S, or other
applicable exemption without any restriction as to the number of securities as of a particular date that can then be immediately
sold, the Securities may bear a restrictive legend in substantially the following form (and a stop-transfer order may be placed
against transfer of such Securities):


 


“NEITHER THE
ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE [CONVERTIBLE/EXERCISABLE]
HAVE 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 (WHICH COUNSEL SHALL BE 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, RULE 144A,
REGULATION S, OR OTHER APPLICABLE EXEMPTION 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.”


 


The
legend set forth above shall be removed and the Company shall issue a certificate or book entry statement for the applicable
shares of Common Stock without such legend to the holder of any Security upon which it is stamped or (as requested by such
holder) issue the applicable shares of Common Stock to such holder by electronic delivery by crediting the account of such
holder’s broker with The Depository Trust Company (“DTC”), if, unless otherwise required by
applicable state securities laws, (a) such Security is registered for sale under an effective registration statement filed
under the 1933 Act or otherwise may be sold pursuant to Rule 144, Rule 144A, Regulation S, or other applicable exemption
without any restriction as to the number of securities as of a particular date that can then be immediately sold, or (b) the
Company or the Buyer provides the Legal Counsel Opinion (as contemplated by and in accordance with Section 4(m) hereof) to
the effect that a public sale or transfer of such Security may be made without registration under the 1933 Act, which opinion
shall be accepted by the Company so that the sale or transfer is effected. The Company shall be responsible for the fees of
its transfer agent and all DTC fees associated with any such issuance. The Buyer agrees to sell all Securities, including
those represented by a certificate(s) from which the legend has been removed, in compliance with applicable prospectus
delivery requirements, if any. In the event that the Company does not accept the opinion of counsel provided by the Buyer
with respect to the transfer of Securities pursuant to an exemption from registration, such as Rule 144, Rule 144A,
Regulation S, or other applicable exemption at the Deadline (as defined in the Note), it will be considered an Event of
Default pursuant to Section 3.2 of the Note.


 






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h. 
Authorization; Enforcement. This Agreement has been duly and validly authorized by the Buyer and has been duly executed
and delivered on behalf of the Buyer, and this Agreement constitutes a valid and binding agreement of the Buyer enforceable in
accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors’ rights generally and except as may be limited by the exercise of judicial discretion in
applying principles of equity.


 


3.     
Representations and Warranties of the Company. The Company represents and warrants to the Buyer as of the Closing
Date that:


 


a. 
Organization and Qualification. The Company and each of its Subsidiaries (as defined below), if any, is a corporation
duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is incorporated, with full
power and authority (corporate and other) to own, lease, use and operate its properties and to carry on its business as and where
now owned, leased, used, operated and conducted. Schedule 3(a), if attached hereto, sets forth a list of all of the Subsidiaries
of the Company and the jurisdiction in which each is incorporated. The Company and each of its Subsidiaries is duly qualified as
a foreign corporation to do business and is in good standing in every jurisdiction in which its ownership or use of property or
the nature of the business conducted by it makes such qualification necessary except where the failure to be so qualified or in
good standing would not have a Material Adverse Effect. “Material Adverse Effect” means any material adverse effect
on the business, operations, assets, financial condition or prospects of the Company or its Subsidiaries, if any, taken as a whole,
or on the transactions contemplated hereby or by the agreements or instruments to be entered into in connection herewith. “Subsidiaries”
means any corporation or other organization, whether incorporated or unincorporated, in which the Company owns, directly or indirectly,
any equity or other ownership interest.


 


b.  
Authorization; Enforcement. (i) The Company has all requisite corporate power and authority to enter into and perform
this Agreement, the Note, and to consummate the transactions contemplated hereby and thereby and to issue the Securities, in accordance
with the terms hereof and thereof, (ii) the execution and delivery of this Agreement, the Warrants, the Note, Conversion Shares,
and the Exercise Shares by the Company and the consummation by it of the transactions contemplated hereby and thereby (including
without limitation, the issuance of the Note, Warrants, as well as the issuance and reservation for issuance of the Conversion
Shares and Exercise Shares issuable upon conversion of the Note and/or exercise of the Warrants) have been duly authorized by
the Company’s Board of Directors and no further consent or authorization of the Company, its Board of Directors, its shareholders,
or its debt holders is required, (iii) this Agreement and the Note (together with any other instruments executed in connection
herewith or therewith) have been duly executed and delivered by the Company by its authorized representative, and such authorized
representative is the true and official representative with authority to sign this Agreement, the Note and the other instruments
documents executed in connection herewith or therewith and bind the Company accordingly, and (iv) this Agreement constitutes,
and upon execution and delivery by the Company of the Note, each of such instruments will constitute, a legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with their terms.




 


c.   Capitalization;
Governing Documents. As of March 11, 2021, the authorized capital stock of the Company consists of: 3,000,000,000
authorized shares of Common Stock, of which 102,894,079 shares were issued and outstanding, and 5,000,000 authorized shares
of preferred stock, of which 0 were issued and outstanding. All of such outstanding shares of capital stock of the Company,
Conversion Shares, and the Exercise Shares, are, or upon issuance will be, duly authorized, validly issued, fully paid and
non-assessable. No shares of capital stock of the Company are subject to preemptive rights or any other similar rights of the
shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. As of
the effective date of this Agreement, other than as publicly announced prior to such date and reflected in the SEC Documents
(as defined below) of the Company (i) there are no outstanding options, warrants, scrip, rights to subscribe for, puts,
calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever
relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of the Company or any
of its Subsidiaries, 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, (ii) there are no agreements or arrangements
under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under
the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the
Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of any of the
Securities. True and correct copies of the Company’s Certificate of Incorporation as in effect on the date hereof and
as amended (collectively, “Certificate of Incorporation”) and the terms of all securities convertible into or
exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto are included
within the SEC Documents.


 






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d. 
Issuance of Conversion Shares. The Conversion Shares and Exercise Shares are duly authorized and reserved for issuance
and, upon conversion of the Note and/or exercise of the Warrants in accordance with its terms, will be validly issued, fully paid
and non-assessable, and free from all taxes, liens, claims and encumbrances with respect to the issue thereof and shall not be
subject to preemptive rights or other similar rights of shareholders of the Company and will not impose personal liability upon
the holder thereof.


 


e. 
Issuance of Warrants. The issuance of the Warrants are duly authorized and will be validly issued, fully paid and
non-assessable, and free from all taxes, liens, claims and encumbrances with respect to the issue thereof and shall not be subject
to preemptive rights or other similar rights of shareholders of the Company and will not impose personal liability upon the holder
thereof.


 


f. 
Acknowledgment of Dilution. The Company understands and acknowledges the potentially dilutive effect of the Conversion
Shares and Exercise Shares to the Common Stock upon the conversion of the Note and/or exercise of the Warrants. The Company further
acknowledges that its obligation to issue, upon conversion of the Note and/or exercise of the Warrants, the Conversion Shares and/or
Exercise Shares, are absolute and unconditional regardless of the dilutive effect that such issuance may have on the ownership
interests of other shareholders of the Company.


 


g.  Ranking;
No Conflicts. The Note shall have priority in payment and performance over all indebtedness of the Company as further
provided in that certain security agreement entered into between the Company and the Buyer on the date of this Agreement (the
 “Security Agreement”). The Company represents and warrants that there are no security interests in, or liens on,
the Company’s assets as of the date of this Agreement except as created in favor of the Buyer pursuant to the Security
Agreement. The execution, delivery and performance of this Agreement and the Note by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance and reservation for
issuance of the Conversion Shares and Exercise Shares) will not (i) conflict with or result in a violation of any provision
of the Certificate of Incorporation or By-laws, or (ii) violate or conflict with, or result in a breach of any provision of,
or constitute a default (or an event which with notice or lapse of time or both could become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation of, any agreement, note, evidence of indebtedness,
indenture, patent, patent license 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 federal and state securities laws and
regulations and regulations of any self-regulatory organizations to which the Company or its securities is subject)
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 (except for such conflicts, defaults, terminations, amendments, accelerations,
cancellations and violations as would not, individually or in the aggregate, have a Material Adverse Effect), or (iv) trigger
any anti-dilution and/or ratchet provision contained in any other contract in which the Company is a party thereto or any
security issued by the Company. Neither the Company nor any of its Subsidiaries is in violation of its Certificate of
Incorporation, By-laws or other organizational documents and neither the Company nor any of its Subsidiaries is in default
(and no event has occurred which with notice or lapse of time or both could put the Company or any of its Subsidiaries in
default) under, and neither the Company nor any of its Subsidiaries has taken any action or failed to take any action that
would 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 by which any property or assets of the Company or
any of its Subsidiaries is bound or affected, except for possible defaults as would not, individually or in the aggregate,
have a Material Adverse Effect. The businesses of the Company and its Subsidiaries, if any, are not being conducted, and
shall not be conducted so long as the Buyer owns any of the Securities, in violation of any law, ordinance or regulation of
any governmental entity. Except as specifically contemplated by this Agreement and as required under the 1933 Act and any
applicable state securities laws, the Company is not required to obtain any consent, authorization or order of, or make any
filing or registration with, any court, governmental agency, regulatory agency, self-regulatory organization or stock market
or any third party in order for it to execute, deliver or perform any of its obligations under this Agreement and the Note in
accordance with the terms hereof or thereof or to issue and sell the Note in accordance with the terms hereof and, upon conversion
of the Note and/or exercise of the Warrants, issue Conversion Shares and/or Exercise Shares as applicable. 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 date hereof. The Company is not in violation of the listing requirements of
the Principal Market (as defined herein) and does not reasonably anticipate that the Common Stock will be delisted by the
Principal Market in the foreseeable future. The Company and its Subsidiaries are unaware of any facts or circumstances which
might give rise to any of the foregoing. The “Principal Market” shall mean the principal securities exchange or
trading market where such Common Stock is listed or traded, including but not limited to any tier of the OTC Markets, any
tier of the NASDAQ Stock Market (including NASDAQ Capital Market), the New York Stock Exchange, or the NYSE American, or any
successor to such markets.


 






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h. SEC
Documents; Financial Statements. The Company has 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 Securities Exchange Act of 1934, as amended (the
 “1934 Act”) (all of the foregoing filed prior to the date hereof and all exhibits included therein and financial statements
and schedules thereto and documents (other than exhibits to such documents) incorporated by reference therein, being hereinafter
referred to herein as the “SEC Documents”). As of their respective 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
light of the circumstances under which they were made, not misleading. None of the statements made in any such SEC Documents is,
or has been, required to be amended or updated under applicable law (except for such statements as have been amended or updated
in subsequent filings prior the date hereof). As of their respective 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 United States
generally accepted accounting principles, consistently applied, during the periods involved and fairly present in all material
respects the consolidated financial position of the Company and its consolidated Subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods then ended (subject, in the case of unaudited statements,
to normal year-end audit adjustments). Except as set forth in the financial statements of the Company included in the SEC Documents,
the Company has no liabilities, contingent or otherwise, other than (i) liabilities incurred in the ordinary course of business
subsequent to September 30, 2020, and (ii) obligations under contracts and commitments incurred in the ordinary course of business
and not required under generally accepted accounting principles to be reflected in such financial statements, which, individually
or in the aggregate, are not material to the financial condition or operating results of the Company. The Company is subject to
the reporting requirements of the 1934 Act. The Company has never been a “shell company” as described in Rule 144(i)(1)(i).


 


i.  
Absence of Certain Changes. Since September 30, 2020, there has been no material adverse change and no material adverse
development in the assets, liabilities, business, properties, operations, financial condition, results of operations, prospects
or 1934 Act reporting status of the Company or any of its Subsidiaries.


 


j.   Absence of Litigation. There is no action, suit, claim, proceeding, inquiry or investigation before or by any court,
public board, government agency, self-regulatory organization or body pending or, to the knowledge of the Company or any of its
Subsidiaries, threatened against or affecting the Company or any of its Subsidiaries, or their officers or directors in their capacity
as such, that could have a Material Adverse Effect. The SEC Documents contain a complete list and summary description of any pending
or, to the knowledge of the Company, threatened proceeding against or affecting the Company or any of its Subsidiaries, without
regard to whether it would have a Material Adverse Effect. The Company and its Subsidiaries are unaware of any facts or circumstances
which might give rise to any of the foregoing.


 


k.  Intellectual
Property. The Company and each of its Subsidiaries owns or possesses the requisite licenses or rights to use all patents,
patent applications, patent rights, inventions, know-how, trade secrets, trademarks, trademark applications, service marks,
service names, trade names and copyrights (“Intellectual Property”) necessary to enable it to conduct its
business as now operated (and, as presently contemplated to be operated in the future); there is no claim or action by any
person pertaining to, or proceeding pending, or to the Company’s knowledge threatened, which challenges the right of
the Company or of a Subsidiary with respect to any Intellectual Property necessary to enable it to conduct its business as
now operated (and, as presently contemplated to be operated in the future); to the best of the Company’s knowledge, the
Company’s or its Subsidiaries’ current and intended products, services and processes do not infringe on any
Intellectual Property or other rights held by any person; and the Company is unaware of any facts or circumstances which
might give rise to any of the foregoing. The Company and each of its Subsidiaries have taken
reasonable security measures to protect the secrecy, confidentiality and value of their Intellectual Property.


 






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l. 
No Materially Adverse Contracts, Etc. Neither the Company nor any of its Subsidiaries is subject to any charter,
corporate or other legal restriction, or any judgment, decree, order, rule or regulation which in the judgment of the Company’s
officers has or is expected in the future to have a Material Adverse Effect. Neither the Company nor any of its Subsidiaries is
a party to any contract or agreement which in the judgment of the Company’s officers has or is expected to have a Material
Adverse Effect.


 


m. 
Tax Status. The Company and each of its Subsidiaries has made or filed all federal, state and foreign income and
all other tax returns, reports and declarations required by any jurisdiction to which it is subject (unless and only to the extent
that the Company and each of its Subsidiaries has set aside on its books provisions reasonably adequate for the payment of all
unpaid and unreported taxes) and 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 has set
aside on its books provisions 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. The Company has not executed a waiver
with respect to the statute of limitations relating to the assessment or collection of any foreign, federal, state or local tax.
None of the Company’s tax returns is presently being audited by any taxing authority.


 


n.  Transactions
with Affiliates. Except for arm’s length transactions pursuant to which the Company or any of its Subsidiaries makes
payments in the ordinary course of business upon terms no less favorable than the Company or any of its Subsidiaries could obtain
from third parties and other than the grant of stock options described in the SEC Documents, none of the officers, directors,
or employees of the Company is presently a party to any transaction with the Company or any of its Subsidiaries (other than for
services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing
of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from
any officer, director or such employee or, to the knowledge of the Company, any corporation, partnership, trust or other entity
in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner.


 


o. 
Disclosure. All information relating to or concerning the Company or any of its Subsidiaries set forth in this Agreement
and provided to the Buyer pursuant to Section 2(d) hereof and otherwise in connection with the transactions contemplated hereby
is true and correct in all material respects and the Company has not omitted to state any material fact necessary in order to make
the statements made herein or therein, in light of the circumstances under which they were made, not misleading. No event or circumstance
has occurred or exists with respect to the Company or any of its Subsidiaries or its or their business, properties, prospects,
operations or financial conditions, which, under applicable law, rule or regulation, requires public disclosure or announcement
by the Company but which has not been so publicly announced or disclosed (assuming for this purpose that the Company’s reports
filed under the 1934 Act are being incorporated into an effective registration statement filed by the Company under the 1933 Act).


 


p.  Acknowledgment
Regarding Buyer’s Purchase of Securities. The Company acknowledges and agrees that the Buyer is acting solely in the
capacity of arm’s length purchaser with respect to this Agreement and the transactions contemplated hereby. The Company
further acknowledges that the Buyer is not acting as a financial advisor or fiduciary of the Company (or in any similar capacity)
with respect to this Agreement and the transactions contemplated hereby and any statement made by the Buyer or any of its respective
representatives or agents in connection with this Agreement and the transactions contemplated hereby is not advice or a recommendation
and is merely incidental to the Buyer’s purchase of the Securities. The Company further represents to the Buyer that the
Company’s decision to enter into this Agreement has been based solely on the independent evaluation of the Company and its
representatives.


 






     7


     


    

 





q. 
No Integrated Offering. Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf,
has directly or indirectly made any offers or sales in any security or solicited any offers to buy any security under circumstances
that would require registration under the 1933 Act of the issuance of the Securities to the Buyer. The issuance of the Securities
to the Buyer will not be integrated with any other issuance of the Company’s securities (past, current or future) for purposes
of any shareholder approval provisions applicable to the Company or its securities.


 






     8


     


    

 


r.   No Brokers; No Solicitation. Except with respect to Cova Capital Partners LLC, a registered broker-dealer (CRD#:
109761/SEC#: 8-53105) (the “Placement Agent”), the Company has taken no action which would give rise to any claim by
any person for brokerage commissions, transaction fees or similar payments relating to this Agreement or the transactions contemplated
hereby. The Company acknowledges and agrees that neither the Buyer nor its employee(s), member(s), beneficial owner(s), or partner(s)
solicited the Company to enter into this Agreement and consummate the transactions described in this Agreement.


 


s. 
Permits; Compliance. The Company and each of its Subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, easements, variances, exemptions, consents, certificates, approvals and orders necessary to own, lease and operate
its properties and to carry on its business as it is now being conducted (collectively, the “Company Permits”), and
there is no action pending or, to the knowledge of the Company, threatened regarding suspension or cancellation of any of the Company
Permits. Neither the Company nor any of its Subsidiaries is in conflict with, or in default or violation of, any of the Company
Permits, except for any such conflicts, defaults or violations which, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect. Since September 30, 2020, neither the Company nor any of its Subsidiaries has received
any notification with respect to possible conflicts, defaults or violations of applicable laws, except for notices relating to
possible conflicts, defaults or violations, which conflicts, defaults or violations would not have a Material Adverse Effect.


 


		t.	  Environmental Matters.



 


(i) 
There are, to the Company’s knowledge, with respect to the Company or any of its Subsidiaries or any predecessor of
the Company, no past or present violations of Environmental Laws (as defined below), releases of any material into the environment,
actions, activities, circumstances, conditions, events, incidents, or contractual obligations which may give rise to any common
law environmental liability or any liability under the Comprehensive Environmental Response, Compensation and Liability Act of
1980 or similar federal, state, local or foreign laws and neither the Company nor any of its Subsidiaries has received any notice
with respect to any of the foregoing, nor is any action pending or, to the Company’s knowledge, threatened in connection
with any of the foregoing. 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.


 


(ii)  
Other than those that are or were stored, used or disposed of in compliance with applicable law, no Hazardous Materials
are contained on or about any real property currently owned, leased or used by the Company or any of its Subsidiaries, and no Hazardous
Materials were released on or about any real property previously owned, leased or used by the Company or any of its Subsidiaries
during the period the property was owned, leased or used by the Company or any of its Subsidiaries, except in the normal course
of the Company’s or any of its Subsidiaries’ business.


 


(iii) 
There are no underground storage tanks on or under any real property owned, leased or used by the Company or any of its
Subsidiaries that are not in compliance with applicable law.


 


u.  Title
to Property. 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 are described in Schedule
3(u), if attached hereto, or such as would not have a Material Adverse Effect. Any real property and facilities held under
lease by the Company and its Subsidiaries are held by them under valid, subsisting and enforceable leases with such
exceptions as would not have a Material Adverse Effect.


 






     9


     


    

 


v.   
Insurance. The Company and each of its Subsidiaries are insured by insurers of recognized financial responsibility
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 any reason to believe that
it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a cost that would not have a Material Adverse Effect. Upon written
request the Company will provide to the Buyer true and correct copies of all policies relating to directors’ and officers’
liability coverage, errors and omissions coverage, and commercial general liability coverage.


 


w.  
Internal Accounting Controls. The Company and each of its Subsidiaries maintain a system of internal accounting controls
sufficient, in the judgment of the Company’s board of directors, 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
accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization
and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.


 


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


 


y.  
Solvency. The Company (after giving effect to the transactions contemplated by this Agreement) is solvent (i.e.,
its assets have a fair market value in excess of the amount required to pay its probable liabilities on its existing debts as they
become absolute and matured) and currently the Company has no information that would lead it to reasonably conclude that the Company
would not, after giving effect to the transaction contemplated by this Agreement, have the ability to, nor does it intend to take
any action that would impair its ability to, pay its debts from time to time incurred in connection therewith as such debts mature.
The Company’s financial statements for its most recent fiscal year end and interim financial statements have been prepared
assuming the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities
in the normal course of business.


 


z.  
No Investment Company. The Company is not, and upon the issuance and sale of the Securities as contemplated by this
Agreement will not be an “investment company” required to be registered under the Investment Company Act of 1940 (an
 “Investment Company”). The Company is not controlled by an Investment Company.


 


aa. No
Off Balance Sheet Arrangements. There is no transaction, arrangement, or other relationship between the Company or any of its
Subsidiaries 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 could be reasonably likely to have a Material Adverse Effect.


 


bb. No
Disqualification Events. 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”) 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.


 






     10


     


    

 


cc. 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) sold, bid for, purchased,
or paid any compensation for soliciting purchases of, any of the Securities, or (iii) paid or agreed to pay to any person any compensation
for soliciting another to purchase any other securities of the Company.


 


dd. Bank
Holding Company Act. Neither the Company nor any of its Subsidiaries 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.


 


ee. Illegal
or Unauthorized Payments; Political Contributions. Neither the Company nor any of its Subsidiaries nor, to the Company’s
knowledge, any of the officers, directors, employees, agents or other representatives of the Company or any of its Subsidiaries
or any other business entity or enterprise with which the Company or any Subsidiary is or has been affiliated or associated, has,
directly or indirectly, made or authorized any payment, contribution or gift of money, property, or services, whether or not in
contravention of applicable law, (i) as a kickback or bribe to any person or (ii) to any political organization, or the holder
of or any aspirant to any elective or appointive public office except for personal political contributions not involving the direct
or indirect use of funds of the Company or any of its Subsidiaries.


 


ff. Breach
of Representations and Warranties by the Company. The Company agrees that if the Company breaches any of the representations
or warranties set forth in this Section 3 and in addition to any other remedies available to the Buyer pursuant to this Agreement,
it will be considered an Event of Default under Section 3.4 of the Note.


 


		4.	ADDITIONAL COVENANTS, AGREEMENTS AND ACKNOWLEDGEMENTS.



 


a.   
Best Efforts. The parties shall use their best efforts to satisfy timely each of the conditions described in Section
6 and 7 of this Agreement.


 


b. 
Form D; Blue Sky Laws. The Company agrees to file a Form D with respect to the Securities if required under Regulation
D and to provide a copy thereof to the Buyer promptly after such filing. The Company shall, on or before the Closing Date, take
such action as the Company shall reasonably determine is necessary to qualify the Securities for sale to the Buyer at the applicable
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 Buyer on or
prior to the Closing Date.


 


c.  
Use of Proceeds. The Company shall use the proceeds for business development, and not for (i) the repayment of any
indebtedness owed to officers, directors or employees of the Company or their affiliates, (iii) any loan to or investment in any
other corporation, partnership, enterprise or other person (except in connection with the Company’s currently existing operations),
(iv) any loan, credit, or advance to any officers, directors, employees, or affiliates of the Company, or (v) in violation or contravention
of any applicable law, rule or regulation.


 


		d.	  Right of Participation and First Refusal.



 


(i)   Other
than arrangements that are in place or disclosed in SEC Documents prior to the
date of this Agreement, so long as the Company shall have obligations under the Note which equal or exceed $250,000 in
Principal Amount (as defined in the Note) (the “Principal Amount”),
the Company will not, (i) directly or indirectly, offer, sell, grant any option to purchase, or otherwise dispose of (or
announce any offer, sale, grant or any option to purchase or other disposition of) any of its or its
Subsidiaries’ debt, equity, or equity equivalent securities, including without limitation any debt, preferred shares or
other instrument or security that is, at any time during its life and/or under any circumstances, convertible into,
exchangeable, or exercisable for Common Stock (any such offer, sale, grant, disposition or announcement being referred to as
a “Subsequent Placement”) or (ii) enter into any definitive agreement with regard to the foregoing, in each case
unless the Company shall have first complied with this Section 4(d).


 






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(ii) 
The Company shall deliver to the Buyer an irrevocable written notice (the “Offer Notice”)
of any proposed or intended Subsequent Placement, which shall (w) identify and describe the Subsequent Placement, (x) describe
the price and other terms upon which they are to be issued, sold or exchanged, and the number or amount of the securities in the
Subsequent Placement to be issued, sold, or exchanged and (y) offer to issue and sell to or exchange with the Buyer at least one
hundred percent (100%) of the securities in the Subsequent Placement (in each case, an “Offer”).


 


(iii)  To
accept an Offer, in whole or in part, the Buyer must deliver a written notice (the “Notice of Acceptance”) to the
Company prior to the end of the fifth (5th) Trading Day (as defined in the Note) after the Buyer’s receipt
of the Offer Notice (the “Offer Period”), setting forth the amount that the Buyer elects to purchase (the
 “Subscription Amount”). The Company shall complete the Subsequent Placement and issue and sell the Subscription
Amount to the Buyer upon terms and conditions (including, without limitation, unit prices and interest rates) set forth in
the Offer Notice, unless a change to such terms and conditions is agreed to in writing between the Company and
Buyer.


 


(iv)  Notwithstanding
anything to the contrary contained herein, if the Company desires to modify or amend the terms or conditions of a Subsequent
Placement at any time after the Offer Notice is given to Buyer (provided, however, that such modification or amendment to the
terms or conditions cannot occur during any Offer Period), the Company shall deliver to the Buyer a new Offer Notice and the
Offer Period of such new Offer shall expire at the end of the fifth (5th) Trading Day after the Buyer’s
receipt of such new Offer Notice.


 


e.
 Usury. To the extent it may lawfully do so, the Company hereby agrees not to insist upon or plead or in any manner
whatsoever claim, and will resist any and all efforts to be compelled to take the benefit or advantage of, usury laws wherever
enacted, now or at any time hereafter in force, in connection with any action or proceeding that may be brought by the Buyer in
order to enforce any right or remedy under this Agreement, the Note and any document, agreement or instrument contemplated thereby.
Notwithstanding any provision to the contrary contained in this Agreement, the Note and any document, agreement or instrument contemplated
thereby, it is expressly agreed and provided that the total liability of the Company under this Agreement, the Note or any document,
agreement or instrument contemplated thereby for payments which under applicable law are in the nature of interest shall not exceed
the maximum lawful rate authorized under applicable law (the “Maximum Rate”), and, without limiting the foregoing,
in no event shall any rate of interest or default interest, or both of them, when aggregated with any other sums which under applicable
law in the nature of interest that the Company may be obligated to pay under this Agreement, the Note and any document, agreement
or instrument contemplated thereby exceed such Maximum Rate. It is agreed that if the maximum contract rate of interest allowed
by law applicable to this Agreement, the Note and any document, agreement or instrument contemplated thereby is increased or decreased
by statute or any official governmental action subsequent to the date hereof, the new maximum contract rate of interest allowed
by law will be the Maximum Rate applicable to this Agreement, the Note and any document, agreement or instrument contemplated thereby
from the effective date thereof forward, unless such application is precluded by applicable law. If under any circumstances whatsoever,
interest in excess of the Maximum Rate is paid by the Company to the Buyer with respect to indebtedness evidenced by this Agreement,
the Note and any document, agreement or instrument contemplated thereby, such excess shall be applied by the Buyer to the unpaid
principal balance of any such indebtedness or be refunded to the Company, the manner of handling such excess to be at the Buyer’s
election.


 


f.    Restriction
on Activities. Commencing as of the date first above written, and until the later of payment of the Note in full or full
exercise of the Warrants, the Company shall not, directly or indirectly, without the Buyer’s prior written consent,
which consent shall not be unreasonably withheld: (a) change the nature of its business; or (b) sell, divest, acquire, change
the structure of any material assets other than in the ordinary course of business.


 






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g.  Listing.
The Company will, beginning on the date that is one hundred twenty (120) calendar days after the date of this Agreement and
continuing so long as the Buyer owns any of the Securities, maintain the listing and trading of its Common Stock on a
Principal Market or any equivalent replacement exchange or electronic quotation system (including but not limited to the Pink
Sheets electronic quotation system) and will comply in all respects with the Company’s reporting, filing and other
obligations under the bylaws or rules of the Financial Industry Regulatory Authority (“FINRA”) and such
exchanges, as applicable. The Company shall promptly provide to the Buyer copies of any notices it receives from the
Principal Market and any other exchanges or electronic quotation systems on which the Common Stock is then traded regarding
the continued eligibility of the Common Stock for listing on such exchanges and quotation systems.


 


h. 
Corporate Existence. The Company will, so long as the Buyer beneficially owns any of the Securities, maintain its
corporate existence and shall not sell all or substantially all of the Company’s assets, except in the event of a merger
or consolidation or sale of all or substantially all of the Company’s assets, where the surviving or successor entity in
such transaction (i) assumes the Company’s obligations hereunder and under the agreements and instruments entered into in
connection herewith and (ii) is a publicly traded corporation whose Common Stock is listed for trading or quotation on the Principal
Market, any tier of the NASDAQ Stock Market, the New York Stock Exchange or the NYSE MKT.


 


i.  No
Integration. The Company shall not make any offers or sales of any security (other than the Securities) under
circumstances that would require registration of the Securities being offered or sold hereunder under the 1933 Act or cause
the offering of the Securities to be integrated with any other offering of securities by the Company for the purpose of any
stockholder approval provision applicable to the Company or its securities.


 


j.   Breach
of Covenants. The Company acknowledges and agrees that if the Company breaches any of the covenants set forth in this
Section 4, in addition to any other remedies available to the Buyer pursuant to this Agreement, it will be considered an
Event of Default under Section 3.3 of the Note.


 


k. 
Compliance with 1934 Act; Public Information Failures. For so long as the Buyer beneficially owns the Note, Warrants, Conversion
Shares, or any Exercise Shares, the Company shall comply with the reporting requirements of the 1934 Act; and the Company shall
continue to be subject to the reporting requirements of the 1934 Act. During the period that the Buyer beneficially owns the Note,
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 requirements 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) (each, a “Public Information Failure”) then, as partial relief for the damages to the Buyer
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 pursuant to this Agreement, the Note, or at law or in equity), the Company shall pay to the Buyer an
amount in cash equal to three percent (3%) of the Purchase Price on each of the day of a Public Information Failure and on every
thirtieth day (pro rated for periods totaling less than thirty days) thereafter until the date such Public Information Failure
is cured. The payments to which a holder shall be entitled pursuant to this Section 4(k) 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 (iii) 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 5% per month
(prorated for partial months) until paid in full.


 


l. 
Exchange Right. In addition to all other rights in this Agreement, the Company shall provide written notice to the
Buyer at least three (3) business days prior to the Company’s consummation of an offering of Common Stock (or units consisting
of Common Stock and warrants to purchase Common Stock) that will result in the immediate listing for trading of the Common Stock
on the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock
Exchange, or any other national securities exchange (or any successors to any of the foregoing) (an “Uplist Offering”),
and the Buyer shall have the right in its sole discretion to exchange all or a portion of the then remaining outstanding balance
of the Note for the Common Stock (or units consisting of Common Stock and warrants to purchase Common Stock) being offered in the
Uplist Offering pursuant to the transaction terms of the Uplist Offering.


 






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m.   
Disclosure of Transactions and Other Material Information. By 9:00 a.m., New York time within four (4) Trading Days of
this Agreement being fully executed, the Company shall file a Current Report on Form 8-K (if required) describing the terms
of the transactions contemplated by this Agreement in the form required by the 1934 Act and attaching this Agreement, the
form of Note (the “8-K Filing”). From and after the filing of the 8-K Filing with the SEC, the Buyer shall not be
in possession of any material, nonpublic information received from the Company, any of its Subsidiaries or any of their
respective officers, directors, employees 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, affiliates, employees or agents, on the one hand, and the Buyer or any of its affiliates, on the other hand, shall
terminate.


 


n. 
Legal Counsel Opinions. Upon the request of the Buyer from to time to time, the Company shall be responsible (at
its cost) for promptly supplying to the Company’s transfer agent and the Buyer a customary legal opinion letter of its counsel
(the “Legal Counsel Opinion”) to the effect that the resale of the Conversion Shares and/or Exercise Shares by the
Buyer or its affiliates, successors and assigns is exempt from the registration requirements of the 1933 Act pursuant to Rule 144
(provided the requirements of Rule 144 are satisfied and provided the Conversion Shares and/or Exercise Shares are not then registered
under the 1933 Act for resale pursuant to an effective registration statement) or other applicable exemption (provided the requirements
of such other applicable exemption are satisfied). In addition, the Buyer may (at the Company’s cost) at any time secure
its own legal counsel to issue the Legal Counsel Opinion, and the Company will instruct its transfer agent to accept such opinion.
The Company hereby agrees that it may never take the position that it is a “shell company” in connection with its obligations
under this Agreement or otherwise.


 


o.   Registration
Rights. The Company has granted the Buyer the registration rights set forth in the registration rights agreement entered
into between the Company and the Buyer on the date of this Agreement (the “Registration Rights Agreement”) as
well as hereby grants to Buyer the piggy-back registration rights set forth on Exhibit B hereto.


 


p.  Most
Favored Nation. While the Note or any Principal Amount, interest or fees or expenses due thereunder remain outstanding
and unpaid, the Company shall not enter into any public or private offering of its securities (including securities
convertible into shares of Common Stock) with any individual or entity (an “Other Investor”) that has the effect
of establishing rights or otherwise benefiting such Other Investor in a manner more favorable in any material respect to such
Other Investor than the rights and benefits established in favor of the Buyer by this Agreement or the Note unless, in any
such case, the Buyer has been provided with such rights and benefits pursuant to a definitive written agreement or agreements
between the Company and the Buyer.


 


q.  Subsequent
Variable Rate Transactions. So long as the Company shall have obligations under the Note which equal or exceed $250,000
in Principal Amount, the Company shall be prohibited from effecting or entering into an agreement involving a Variable Rate
Transaction. “Variable Rate Transaction” means a transaction in which the Company (i) issues or sells any debt or
equity securities that are convertible into, exchangeable or exercisable for, or include the right to receive, additional
shares of Common Stock either (A) at a conversion price, exercise price or exchange rate or other price that is based upon,
and/or varies with, the trading prices of or quotations for the shares of Common Stock at any time after the initial issuance
of such debt or equity securities or (B) with a conversion, exercise or exchange price that is subject to being reset at some
future date after the initial issuance of such debt or equity security or upon the occurrence of specified or contingent
events directly or indirectly related to the business of the Company or the market for the Common Stock or (ii) enters into
any agreement, including, but not limited to, an equity line of credit, whereby the Company may issue securities at a future
determined price. The Buyer shall be entitled to obtain injunctive relief against the Company to preclude any such issuance,
which remedy shall be in addition to any right to collect damages.


 






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 r.   [Intentionally Omitted].


 






s.  Non-Public
Information. The Company covenants and agrees that neither it, nor any other person acting on its behalf will provide the
Buyer or its agents or counsel with any information that constitutes, or the Company reasonably believes constitutes,
material non-public information, unless prior thereto the Buyer shall have consented to the receipt of such information and
agreed with the Company to keep such information confidential. The Company understands and confirms that the Buyer shall be
relying on the foregoing covenant in effecting transactions in securities of the Company. To the extent that the Company
delivers any material, non-public information to the Buyer without such Buyer’s consent, 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, agents, employees or affiliates, not to trade on the basis of, such material, non-
public information, provided that the Buyer shall remain subject to applicable law. To the extent that any notice provided,
information provided, or any other communications made by the Company, to the Buyer, constitutes or contains material
non-public information regarding the Company or any Subsidiaries, the Company shall simultaneously file such notice or other
material information with the SEC pursuant to a Current Report on Form 8- K. In addition to any other remedies provided by
this Agreement or the related transaction documents, if the Company provides any material non-public information to the Buyer
without their prior written consent, and it fails to immediately (no later than that business day) file a Form 8-K disclosing
this material non-public information, it shall pay the Buyer as partial liquidated damages and not as a penalty a sum equal
to $3,000 per day beginning with the day the information is disclosed to the Buyer and ending and including the day the Form
8-K disclosing this information is filed.


 


t.   D&O
Insurance. Within 60 calendar days of the Closing, the Company shall purchase director and officer insurance on behalf of
the Company's (including its subsidiary) officers and directors for a period of 18 months after the Closing with respect to
any losses, claims, damages, liabilities, costs and expense in connection with any actual or threatened claim or proceeding
that is based on, or arises out of their status as a director or officer of the Company. The insurance policy shall provide
for two years of tail coverage.


 


5.     Transfer
Agent Instructions. The Company shall issue irrevocable instructions to the Company’s transfer agent to issue
certificates and/or issue shares electronically at the Buyer’s option, registered in the name of the Buyer or its
nominee, upon conversion of the Note and/or exercise of the Warrants, the Conversion Shares and Exercise Shares, in such
amounts as specified from time to time by the Buyer to the Company in accordance with the terms thereof (the
 “Irrevocable Transfer Agent Instructions”). In the event that the Company proposes to replace its transfer agent,
the Company shall provide, prior to the effective date of such replacement, a fully executed Irrevocable Transfer Agent
Instructions in a form as initially delivered pursuant to this Agreement (including but not limited to the provision to
irrevocably reserved shares of Common Stock in the Reserved Amount (as defined in the Note)) signed by the successor transfer
agent to the Company and the Company. Prior to registration of the Conversion Shares and/or Exercise Shares under the 1933
Act or the date on which the Conversion Shares and/or Exercise Shares may be sold pursuant to Rule 144, Rule 144A, Regulation
S, or other applicable exemption without any restriction as to the number of Securities as of a particular date that can then
be immediately sold, all such certificates or book entry shares shall bear the restrictive legend specified in Section 2(g)
of this Agreement. The Company warrants that: (i) no instruction other than the Irrevocable Transfer Agent Instructions
referred to in this Section 5 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 Note;
(ii) it will not direct its transfer agent not to transfer or delay, impair, and/or hinder its transfer agent in transferring
(or issuing)(electronically or in certificated form) any certificate for Securities to be issued to the Buyer upon conversion
of or otherwise pursuant to the Note and/or upon exercise of or otherwise pursuant to the Warrants as and when required by
the Note and this Agreement; (iii) it will not fail to remove (or directs its transfer agent not to remove or impairs,
delays, and/or hinders its transfer agent from removing) any restrictive legend (or to withdraw any stop transfer
instructions in respect thereof) on any certificate for any Securities issued to the Buyer upon conversion of or otherwise
pursuant to the Note and/or upon exercise of or otherwise pursuant to the Warrants as and when required by the Note,
Warrants, and/or this Agreement and (iv) it will provide any required corporate resolutions and issuance approvals to its
transfer agent within 6 hours of each conversion of the Note and/or exercise of the Warrants. Nothing in this Section shall
affect in any way the Buyer’s obligations and agreement set forth in Section 2(g) hereof to comply with all applicable
prospectus delivery requirements, if any, upon re-sale of the Securities. If the Buyer provides the Company, at the cost of
the Company, with (i) an opinion of counsel in form, substance and scope customary for opinions in comparable transactions,
to the effect that a public sale or transfer of such Securities may be made without registration under the 1933 Act and such
sale or transfer is effected or (ii) the Buyer provides reasonable assurances that the Securities can be sold pursuant to
144, Rule 144A, Regulation S, or other applicable exemption, the Company shall permit the transfer, and, in the case of the
Securities, promptly instruct its transfer agent to issue one or more certificates, free from restrictive legend, in such
name and in such denominations as specified by the Buyer. The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to the Buyer, by vitiating the intent and purpose of the transactions contemplated
hereby. Accordingly, the Company acknowledges that the remedy at law for a breach of its obligations under this Section 5 may
be inadequate and agrees, in the event of a breach or threatened breach by the Company of the provisions of this Section,
that the Buyer shall be entitled, in addition to all other available remedies, to an injunction restraining any breach and
requiring immediate transfer, without the necessity of showing economic loss and without any bond or other security being
required.


 






    15 


     


    

 


6.    
Conditions to the Company’s Obligation to Sell. The obligation of the Company hereunder to issue and sell the
Note to the Buyer at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions
thereto, 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:


 


 a.  The Buyer shall have executed this Agreement and delivered the same to the Company.




 


b.  The Buyer shall
have delivered the Purchase Price in accordance with Section 1(b) above.


 


c. 
The representations and warranties of the Buyer shall be true and correct in all material 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),
and the 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 the Buyer at or prior to the Closing Date.


 


d. 
No litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory organization
having authority over the matters contemplated hereby which prohibits the consummation of any of the transactions contemplated
by this Agreement.


 


7.  
  Conditions to The Buyer’s Obligation to Purchase. The obligation of the Buyer hereunder to purchase the Note,
on the Closing Date, is subject to the satisfaction, at or before the Closing Date, of each of the following conditions, provided
that these conditions are for the Buyer’s sole benefit and may be waived by the Buyer at any time in its sole discretion:


 


 a.  The Company shall have executed this Agreement and delivered the same to the Buyer.




 


b. 
The Company shall have delivered to the Buyer the duly executed Note in such denominations as the Buyer shall request and
in accordance with Section 1(b) above.


 


 c. The Company shall have executed and delivered the Warrants to the Buyer.




 


d.
 The Irrevocable Transfer Agent Instructions, in form and substance satisfactory to the Buyer, shall have been delivered
to and acknowledged in writing by the Company’s Transfer Agent.


 


e. 
The representations and warranties of the Company shall be true and correct in all material respects as of the date when
made and as of Closing Date, as though made at such time (except for representations and warranties that speak as of a specific
date) and the Company 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 the Company at or prior to the Closing Date.


 


f. 
No litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory organization
having authority over the matters contemplated hereby which prohibits the consummation of any of the transactions contemplated
by this Agreement.


 


g.
 No event shall have occurred which could reasonably be expected to have a Material Adverse Effect on the Company including
but not limited to a change in the 1934 Act reporting status of the Company or the failure of the Company to be timely in its 1934
Act reporting obligations.


 


h. 
The Company shall have delivered to the Buyer (i) 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 and (ii) resolutions adopted by the Company’s
Board of Directors at a duly called meeting or by unanimous written consent authorizing this Agreement and all other documents,
instruments and transactions contemplated hereby.


 






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8.     Governing
Law; Miscellaneous.




 


a.   Governing
Law; Venue. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware
without regard to principles of conflicts of laws. Any action brought by either party against the other concerning the
transactions contemplated by this Agreement, the Note, or any other agreement, certificate, instrument or document
contemplated hereby shall be brought only in the state courts located in the Commonwealth of Massachusetts or in the federal
courts located in the Commonwealth of Massachusetts. The parties to this Agreement hereby irrevocably waive any objection to
jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or
venue or based upon forum non conveniens. 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 TRANSACTIONS CONTEMPLATED HEREBY. The prevailing party shall be entitled to recover from the other party
its reasonable attorney’s fees and costs. Each party hereby irrevocably waives personal service of process and consents
to process being served in any suit, action or proceeding in connection with this Agreement, the Note, or any other
agreement, certificate, instrument or document contemplated hereby or thereby by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it
under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof.
Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by
law.


 


b.   Counterparts.
This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same agreement and shall become effective when counterparts have been signed by each party and
delivered to the other party. 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.
Delivery of a counterpart signature hereto by facsimile or email/.pdf transmission shall be deemed validly delivery
thereof.


 


c.  Construction;
Headings. This Agreement shall be deemed to be jointly drafted by the Company and the Buyer and shall not be construed against
any person as the drafter hereof. The headings of this Agreement are for convenience of reference only and shall not form part
of, or affect the interpretation of, this Agreement.


 


d.   Severability.
In the event that any provision of this Agreement, the Note, or any other agreement or instrument delivered in connection
herewith is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of
law. Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or
enforceability of any other provision of this Agreement, the Note, or any other agreement, certificate, instrument or
document contemplated hereby or thereby.


 


e. 
Entire Agreement; Amendments. This Agreement, the Note, and the instruments referenced herein 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 the Buyer makes any representation, warranty, covenant or undertaking with respect to such
matters. No provision of this Agreement or any agreement or instrument contemplated hereby may be waived or amended other than
by an instrument in writing signed by the Buyer.


 


f.
  Notices. All notices, demands, requests, consents, approvals, and other communications required or permitted
hereunder shall be in writing and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the
mail, registered or certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier service
with charges prepaid, or (iv) transmitted by hand delivery, telegram, e-mail or facsimile, addressed as set forth below or to
such other address as such party shall have specified most recently by written notice. Any notice or other communication
required or permitted to be given hereunder shall be deemed effective (a) upon hand delivery or delivery by e-mail or
facsimile, with accurate confirmation generated by the transmitting facsimile machine, at the address or number designated
below (if delivered on a business day during normal business hours where such notice is to be received), or the first
business day following such delivery (if delivered other than on a business day during normal business hours where such
notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully
prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be:


 






    17 


     


    

 


If to the Company, to:


 


NEXGEL, INC.


2150 Cabot Blvd West, Suite B


Langhorne, PA 19047


Attention: Adam Levy


e-mail: alevy@nexgel.com


 


If to the Buyer:


 


AUCTUS FUND, LLC


545 Boylston Street, 2nd Floor


Boston, MA 02116


 


g. 
Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors
and assigns. The Company shall not assign this Agreement or any rights or obligations hereunder without the prior written consent
of the Buyer. The Buyer may assign its rights hereunder to any “accredited investor” (as defined in Rule 501(a) of
the 1933 Act) in a private transaction from the Buyer or to any of its “affiliates”, as that term is defined under
the 1934 Act, without the consent of the Company.


 


h.  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.


 


i.   Survival.
The representations and warranties of the Company and the agreements and covenants set forth in this Agreement shall survive
the closing hereunder notwithstanding any due diligence investigation conducted by or on behalf of the Buyer. The Company
agrees to indemnify and hold harmless the Buyer and all their officers, directors, employees and agents for loss or damage
arising as a result of or related to any breach or alleged breach by the Company of any of its representations, warranties
and covenants set forth in this Agreement or any of its covenants and obligations under this Agreement, including advancement
of expenses as they are incurred.


 


j.   Publicity.
The Company, and the Buyer shall have the right to review a reasonable period of time before issuance of any press releases,
SEC, Principal Market or FINRA filings, 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 the Buyer, to make any press release or SEC, Principal
Market (or other applicable trading market) or FINRA filings with respect to such transactions as is required by applicable
law and regulations (although the Buyer shall be consulted by the Company in connection with any such press release prior to
its release and shall be provided with a copy thereof and be given an opportunity to comment thereon).


 


k.  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 the 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.


 


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.


 






    18 


     


    

 



 


m.    Indemnification.
In consideration of the Buyer’s execution and delivery of this Agreement and acquiring the Securities hereunder, and in
addition to all of the Company’s other obligations under this Agreement or the Note, the Company shall defend, protect,
indemnify and hold harmless the Buyer and its 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 this Agreement, the
Note or any other agreement, certificate, instrument or document contemplated hereby or thereby, (b) any breach of any
covenant, agreement or obligation of the Company contained in this Agreement, the Note or any other agreement, 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 this Agreement, the Note or any other
agreement, 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 the Buyer or holder of the Securities as an investor in the Company pursuant to the transactions contemplated by
this Agreement. 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.


n. 
Remedies. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to
the Buyer by vitiating the intent and purpose of the transaction contemplated hereby. Accordingly, the Company acknowledges that
the remedy at law for a breach of its obligations under this Agreement, the Note, the Warrants, or any other agreement, certificate,
instrument or document contemplated hereby or thereby will be inadequate and agrees, in the event of a breach or threatened breach
by the Company of the provisions of this Agreement, the Note, the Warrants, or any other agreement, certificate, instrument or
document contemplated hereby or thereby, that the Buyer shall be entitled, in addition to all other available remedies at law or
in equity, and in addition to the penalties assessable herein, to an injunction or injunctions restraining, preventing or curing
any breach of this Agreement, the Note, the Warrants, or any other agreement, certificate, instrument or document contemplated
hereby or thereby, and to enforce specifically the terms and provisions hereof and thereof, without the necessity of showing economic
loss and without any bond or other security being required.


 


o. 
Payment Set Aside. To the extent that the (i) Company makes a payment or payments to the Buyer hereunder, pursuant
to the Note, pursuant to the Warrants, or pursuant to any other agreement, certificate, instrument or document contemplated hereby
or thereby, or (ii) the Buyer enforces or exercises its rights hereunder, pursuant to the Note, pursuant to the Warrants, or pursuant
to any other agreement, certificate, instrument or document contemplated hereby or thereby, and such payment or payments or the
proceeds of such enforcement or exercise or any part thereof (including but not limited to the sale of the Securities) are for
any reason (i) subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, or disgorged by
the Buyer, or (ii) are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other person
or entity under any law (including, without limitation, any bankruptcy law, foreign, state or federal law, common law or equitable
cause of action), then (i) 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 and (ii) the Company shall immediately pay to the Buyer a dollar amount equal to the amount that was for any reason
(i) subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, or disgorged by the Buyer,
or (ii) required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other person or entity
under any law (including, without limitation, any bankruptcy law, foreign, state or federal law, common law or equitable cause
of action).


 


p. 
Failure or Indulgence Not Waiver. No failure or delay on the part of the Buyer in the exercise of any power, right
or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or
privilege preclude other or further exercise thereof or of any other right, power or privileges. All rights and remedies of the
Buyer existing hereunder are cumulative to, and not exclusive of, any rights or remedies otherwise available.


 


[Signature Page Follows]


 






    19 


     


    

 


IN WITNESS WHEREOF, the
undersigned Buyer and the Company have caused this Agreement to be duly executed as of the date first above written.


 


	NEXGEL, INC.	 
	 	 
	By: 	 	 
	 	Name: ADAM LEVY	 
	 	Title: CHIEF EXECUTIVE OFFICER	 
	 	 
	AUCTUS FUND, LLC	 
	 	 
	By:	 	 
	 	Name: LOU POSNER	 
	 	Title: MANAGING DIRECTOR	 
	 	 
	SUBSCRIPTION AMOUNT:	 



 


	Principal Amount of Note: $1,500,000.00
	Actual Amount of Purchase Price of Note: $1,500,000.00



 



    20 


     


    

 





EXHIBIT
A


 


FORM OF NOTE


 


[attached hereto]


 



    21 


     


    




 


EXHIBIT
B


 


REGISTRATION RIGHTS


All
of the Conversion Shares and Exercise Shares shall be deemed “Registrable Securities” subject to the provisions of
this Exhibit B. All capitalized terms used but not defined in this Exhibit B shall have the meanings ascribed to such terms in
the Securities Purchase Agreement to which this Exhibit is attached.


 


		1.	Piggy-Back Registration.



 


1.1            Piggy-Back
Rights. If at any time on or after the date of the Closing the Company proposes to file any Registration Statement under the
1933 Act (a “Registration Statement”) with respect to any offering of equity securities, or securities or other obligations
exercisable or exchangeable for, or convertible into, equity securities, by the Company for its own account or for shareholders
of the Company for their account (or by the Company and by shareholders of the Company), other than a Registration Statement (i)
filed in connection with any employee stock option or other benefit plan on Form S-8, (ii) for a dividend reinvestment plan or
(iii) in connection with a merger or acquisition, then the Company shall (x) give written notice of such proposed filing to the
holders of Registrable Securities appearing on the books and records of the Company as such a holder as soon as practicable but
in no event less than ten (10) days before the anticipated filing date of the Registration Statement, which notice shall describe
the amount and type of securities to be included in such Registration Statement, the intended method(s) of distribution, and the
name of the proposed managing underwriter or underwriters, if any, of the offering, and (y) offer to the holders of Registrable
Securities in such notice the opportunity to register the sale of such number of Registrable Securities as such holders may request
in writing within three (3) days following receipt of such notice (a “Piggy-Back Registration”). The Company shall
cause such Registrable Securities to be included in such registration and shall cause the managing underwriter or underwriters
of a proposed underwritten offering to permit the Registrable Securities requested to be included in a Piggy-Back Registration
on the same terms and conditions as any similar securities of the Company and to permit the sale or other disposition of such
Registrable Securities in accordance with the intended method(s) of distribution thereof (with the understanding that the Company
shall file the initial prospectus covering the Buyer’s sale of the Registrable Securities on the same date that the Registration
Statement is declared effective by the SEC).


 


1.2            Withdrawal.
Any holder of Registrable Securities may elect to withdraw such holder’s request for inclusion of Registrable Securities
in any Piggy-Back Registration by giving written notice to the Company of such request to withdraw prior to the effectiveness
of the Registration Statement. The Company (whether on its own determination or as the result of a withdrawal by persons making
a demand pursuant to written contractual obligations) may withdraw a Registration Statement at any time prior to the effectiveness
of such Registration Statement. Notwithstanding any such withdrawal, the Company shall pay all expenses incurred by the holders
of Registrable Securities in connection with such Piggy-Back Registration as provided in Section 1.5 below.


 


1.3            The Company shall notify the holders of Registrable Securities at any time when a prospectus relating to such holder’s
Registrable Securities is required to be delivered under the 1933 Act, upon discovery that, or upon the happening of any event
as a result of which, the prospectus included in such Registration Statement, as then in effect, includes an untrue statement of
a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing. At the request of such holder, the Company shall also prepare, file and
furnish to such holder a reasonable number of copies of a supplement to or an amendment of such prospectus as may be necessary
so that, as thereafter delivered to the purchasers of the Registrable Securities, such prospectus shall not include an untrue statement
of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing. The holders of Registrable Securities shall not to offer or sell any Registrable
Securities covered by the Registration Statement after receipt of such notification until the receipt of such supplement or amendment.


 


1.4            The
Company may request a holder of Registrable Securities to furnish the Company such information with respect to such holder
and such holder’s proposed distribution of the Registrable Securities pursuant to the Registration Statement as the
Company may from time to time reasonably request in writing or as shall be required by law or by the SEC in connection
therewith, and such holders shall furnish the Company with such information.


 






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1.5           All
fees and expenses incident to the performance of or compliance with this Exhibit B by the Company shall be borne by the
Company whether or not any Registrable Securities are sold pursuant to a Registration Statement. The fees and expenses
referred to in the foregoing sentence shall include, without limitation, (i) all registration and filing fees (including,
without limitation, fees and expenses of the Company’s counsel and independent registered public accountants) (A) with
respect to filings made with the SEC, (B) with respect to filings required to be made with any trading market on which the
Common Stock is then listed for trading, (C) in compliance with applicable state securities or Blue Sky laws reasonably
agreed to by the Company in writing (including, without limitation, fees and disbursements of counsel for the Company in
connection with Blue Sky qualifications or exemptions of the Registrable Securities) and (D) with respect to any filing that
may be required to be made by any broker through which a holder of Registrable Securities intends to make sales of
Registrable Securities with the FINRA, (ii) printing expenses, (iii) messenger, telephone and delivery expenses, (iv) fees
and disbursements of counsel for the Company, (v) 1933 Act liability insurance, if the Company so desires such insurance,
(vi) fees and expenses of all other persons or entities retained by the Company in connection with the consummation of the
transactions contemplated by this Exhibit B and (vii) reasonable fees and disbursements of a single special counsel for the
holders of Registrable Securities (selected by holders of the majority of the Registrable Securities requesting such
registration). In addition, the Company shall be responsible for all of its internal expenses incurred in connection with the
consummation of the transactions contemplated by this Agreement (including, without limitation, all salaries and expenses of
its officers and employees performing legal or accounting duties), the expense of any annual audit and the fees and expenses
incurred in connection with the listing of the Registrable Securities on any securities exchange as required hereunder. In no
event shall the Company be responsible for any broker or similar commissions of any holder of Registrable Securities.


 


1.6           The
Company and its successors and assigns shall indemnify and hold harmless the Buyer, each holder of Registrable Securities, the
officers, directors, members, partners, agents and employees (and any other individuals or entities with a functionally equivalent
role of a person holding such titles, notwithstanding a lack of such title or any other title) of each of them, each individual
or entity who controls the Buyer or any such holder of Registrable Securities (within the meaning of Section 15 of the 1933 Act
or Section 20 of the 1934 Act) and the officers, directors, members, stockholders, partners, agents and employees (and any other
individuals or entities with a functionally equivalent role of a person holding such titles, notwithstanding a lack of such title
or any other title) of each such controlling individual or entity (each, an “Indemnified Party”), to the fullest extent
permitted by applicable law, from and against any and all losses, claims, damages, liabilities, costs (including, without limitation,
reasonable attorneys’ fees) and expenses (collectively, “Losses”), as incurred, arising out of or relating
to (1) any untrue or alleged untrue statement of a material fact contained in a Registration Statement, any related prospectus
or any form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating
to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein
(in the case of any such prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading
or (2) any violation or alleged violation by the Company of the 1933 Act, the 1934 Act or any state securities law, or any rule
or regulation thereunder, in connection with the performance of its obligations under this Exhibit B, except to the extent, but
only to the extent, that (i) such untrue statements or omissions are based upon information regarding the Buyer or such holder
of Registrable Securities furnished to the Company by such party for use therein. The Company shall notify the Buyer and each
holder of Registrable Securities promptly of the institution, threat or assertion of any proceeding arising from or in connection
with the transactions contemplated by this Exhibit B of which the Company is aware.


 






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1.7             If
the indemnification under Section 1.6 is unavailable to an Indemnified Party or insufficient to hold an Indemnified Party
harmless for any Losses, then the Company shall contribute to the amount paid or payable by such Indemnified Party, in such
proportion as is appropriate to reflect the relative fault of the Company and Indemnified Party in connection with the
actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations. The
relative fault of the Company and Indemnified Party shall be determined by reference to, among other things, whether any
action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission of a
material fact, has been taken or made by, or relates to information supplied by, the Company or the Indemnified Party, and
the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action,
statement or omission. The amount paid or payable by a party as a result of any Losses shall be deemed to include any
reasonable attorneys’ or other fees or expenses incurred by such party in connection with any proceeding to the extent
such party would have been indemnified for such fees or expenses if the indemnification provided for in Section 1.6 was
available to such party in accordance with its terms. It is agreed that it would not be just and equitable if contribution
pursuant to this Section 1.7 were determined by pro rata allocation or by any other method of allocation that does not take
into account the equitable considerations referred to in the immediately preceding sentence. Notwithstanding the provisions
of this Section 1.7, neither the Buyer nor any holder of Registrable Securities shall be required to contribute, in the
aggregate, any amount in excess of the amount by which the net proceeds actually received by such party from the sale of all
of their Registrable Securities pursuant to such Registration Statement or related prospectus exceeds the amount of any
damages that such party has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission.


 


[End of Exhibit B]




 






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