Exhibit
10.21


 


FORM
OF SECURITIES PURCHASE AGREEMENT


 


This
SECURITIES PURCHASE AGREEMENT (the “Agreement”), dated as of November 21, 2017, by and between ADIAL PHARMACEUTICALS,
INC., a Delaware corporation, with headquarters located at 1180 Seminole Trail, Charlottesville, VA 22901 (the “Company”),
and the investors named on the signature pages hereto (each a “Buyer” and collectively, the “Buyers”).


 


WHEREAS:


 


A.
The Company and the Buyers 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.
The Buyers desire 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 $115,000.00
(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”), upon the terms and subject to the limitations and conditions set forth in
such Note;


 


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


 


D.
The Company wishes to issue that certain warrant to purchase shares of Common Stock in the form attached hereto as Exhibit
B (the “Warrant”), to the Buyer as additional consideration for the purchase of the Note, 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.


 


b.
Form of Payment. On the Closing Date: (i) Each Buyer shall pay the purchase price as set forth immediately below his name
on the signature pages hereto (the “Purchase Price”) for each Note, to be issued and sold to each Buyer (the principal
amount to be issued to each Buyer as set forth on the signature page) 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 on behalf of the Company, to each Buyer, against delivery of such Purchase
Price.


 


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 4:00 PM, Eastern Time on the date first written above, or such other mutually agreed upon time.


 


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).


 






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1A.Warrant.


 


a. Upon
an Initial Public Offering (“IPO”). Within three (3) business days of the consummation of the
Company’s initial public offering (the “IPO”), the Company shall issue to each Buyer the
following:


 


(i)
The Warrant pursuant to the terms contained in the form attached as Exhibit B. At issuance of the Warrant, the number of
Warrant Shares (as defined in the Warrant) purchasable under the Warrant shall be equal to the principal amount set forth
immediately below his name on the signature pages hereto divided by the price per share of Common Stock obtainable under the
IPO (the “IPO Price”) and the Exercise Price (as defined in the Warrant) shall be equal to IPO Price;
and


 


b. Upon
a Next Financing. In the event a Next Financing (defined below) is consummated prior to the IPO, then the Company shall
provide Buyer ten (10) business days written notice of the terms of the Next Financing, but not sooner than twenty (20)
business days prior to consummation of the Next Financing, and, upon the election of Buyer (the “Election”), at
Buyer’s sole discretion, and written notice of such election, the Company shall, instead of issuing the securities
stated in 1A.a. above, issue Buyer the following:


 


(i) A
Warrant to purchase the amount and kind of securities sold in the Next Financing that could be purchased in the IPO at the Next
Financing Price (defined below). The aggregate price to exercise the Warrant will be $115,000. To the extent reasonably possible,
a Warrant will be issued using the form attached hereto as Exhibit B (e.g. the Warrant Shares will be modified to be the securities
offered in the Next Financing). If any of the securities to be issued upon exercise of the Warrant provide that they convert into
securities of the Company upon consummation of an IPO then the Warrant shall provide that the Warrant shall terminate upon the
consummation of the IPO unless exercised at least thirty (30) days prior to consummation of the IPO; and


 


For
clarity, if Buyer does not make the Election for any Next Financing, then Buyer shall retain the right to make the Election upon
a subsequent Next Financing; and if Byer makes the Election for any Next Financing, Buyer will not have the right to make the
Election for subsequent Next Financings.


 


The
“Next Financing” means a financing of the Company (i) that is not an IPO, (ii) that is prior to the IPO, and (iii)
in which the Company receives net proceeds in excess of $250,000.00 (to be aggregated with respect to any financings with common
terms from the sale, grant, or disposition of any of its or its Subsidiaries’ convertible debt, equity or equity equivalent
securities, including without limitation any debt, common stock, preferred stock or other instrument or security).


 


The
“Next Financing Price” means the lowest price paid by an investor in the Next Financing.


 


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.


 


2.
Buyers’ Representations and Warranties. Each Buyer represents and warrants, severally and not jointly, to the Company
as of the Closing Date that:


 


a.
Investment Purpose. As of the Closing Date, the Buyer is purchasing the Note, the Warrant, and the shares of Common Stock
issuable upon exercise of the Warrant, such shares of Common Stock being collectively referred to herein as the “Conversion
Shares” and, collectively with the Note, Warrant, and Warrant Shares, 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.


 






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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.


 


f.
Transfer or Re-sale. 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. 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, Warrant, and, upon exercise of the Warrant in accordance
with its respective terms, the Conversion Shares, have been registered under the 1933 Act or may be sold pursuant to Rule 144,
Rule 144A under the 1933 Act or Regulation S 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 the certificates for 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. 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 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 (b) the Company or the Buyer provides the Legal
Counsel Opinion 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.


 






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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.


 


i. Residency.
The Buyer is a resident of the jurisdiction set forth immediately below the Buyer’s name on the signature pages
hereto.


 


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 of formation, 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 or organized. The Company and each of its Subsidiaries is duly qualified as a foreign
entity to do business and is in good standing in every jurisdiction in which its ownership 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 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 Warrant, the Note, and the issuance of the Conversion
Shares by the Company and the consummation by it of the transactions contemplated hereby and thereby (including without limitation,
the issuance of the Note, Warrant, as well as the issuance and reservation for issuance of the Conversion Shares issuable upon
exercise of the Warrant) 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.
This section intentionally left blank.


 


d.
Issuance of Conversion Shares. The Conversion Shares are duly authorized and reserved for issuance and, upon exercise of
the Warrant 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 Warrant. The issuance of the Warrant is duly authorized and will be validly issued 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.


 






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f.
Acknowledgment of Dilution. The Company understands and acknowledges the potentially dilutive effect of the Conversion
Shares to the Common Stock. The Company further acknowledges that its obligation to issue, upon exercise of the Warrant, the Conversion
Shares, in accordance with this Agreement, and the Note 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 be a senior secured debt obligation of the Company, with priority in payment and
performance over all existing and future indebtedness of the Company other than the senior secured note of the Company in the
principal amount of $250,000. 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) will not (i) conflict with or result in a violation of any provision of the Certificate
of Incorporation or Bylaws, 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). Neither the Company nor any of its Subsidiaries is in violation of its Certificate of Incorporation, Bylaws 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 exercise of the Warrant, issue Conversion Shares. 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.


 


h.
Non-Shell. The Company has never been a “shell company” as described in Rule 144(i)(1)(i).


 


i.
Absence of Certain Changes. Since January 1, 2017, there has been no material adverse change and no material adverse development
in the assets, liabilities, business, properties, operations, financial condition, results of operations, or prospects 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 Company and its Subsidiaries are unaware of any facts or circumstances which might
give rise to any of the foregoing.


 






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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.


 


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 the transactions contemplated by this Agreement and 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, 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.


 






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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.


 


r.
No Brokers. 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.


 


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 January 1, 2017, 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.


 






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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. 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 has not been disclosed to Buyer.


 


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.


 






    	 	8	 



     


    

 


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.
Breach of Representations and Warranties by the Company. The Company agrees that if the Company breaches any of the material
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. If required, the Company agrees to file a Form D with respect to the Securities as 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 the payment of all outstanding amounts owed to the Company’s
auditor, accountant, and legal counsel, and for working capital and other general corporate purposes, provided, however, that
the proceeds shall not be used for the repayment of any indebtedness owed to officers (except payment of expense reports submitted
in the ordinary course of business), directors or employees of the Company or their affiliates or in violation or contravention
of any applicable law, rule or regulation.


 


d.
Restrictions on Sale. The Buyer hereby agrees not to sell or otherwise transfer, make any short sale of, grant any option
for the purchase of, or enter into any hedging or similar transaction with the same economic effect as a sale, of any Common Stock
(or other securities) of the Company held by the Buyer (other than those included in the registration) during the 180-day period
following the effective date of the registration statement for the Company’s IPO (including, without limitation, to accommodate
regulatory restrictions on (i) the publication or other distribution of research reports and (ii) analyst recommendations and
opinions, including, but not limited to, the restrictions contained in NASD Rule 2711(f)(4) or NYSE Rule 472(f)(4), or any successor
provisions or amendments thereto) (the “Lock-Up Period”); provided, that substantially all current holders,
including all officers, directors and 5% holders, of the Company’s voting securities are bound by the same requirement during
the Lock-Up Period. The obligations described in this Section 4(d) shall not apply to a registration relating solely to employee
benefit plans on Form S-l or Form S-8 or similar forms that may be promulgated in the future, or a registration relating solely
to a transaction on Form S-4 or similar forms that may be promulgated in the future. The Company may impose stop-transfer instructions
and may stamp each certificate with a legend as substantially set forth below with respect to the shares of Common Stock subject
to the foregoing restriction until the end of such 180-day period. To effect the above, the Buyer agrees to execute a market stand-off
agreement with the underwriters in the offering in customary form consistent with the provisions of this Section 4(d).


 


THE
SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE, INCLUDING A LOCK-UP PERIOD IN
THE EVENT OF A PUBLIC OFFERING, AS SET FORTH IN THE NOTE PURSUANT TO WHICH THESE SHARES WERE ISSUED, A COPY OF WHICH MAY BE OBTAINED
AT THE PRINCIPAL OFFICE OF THE COMPANY.


 






    	 	9	 



     


    

 


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 New York 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 New York 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 New York law and 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 payment of the Note in full, 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; (b) sell, divest, acquire, change the structure of any material assets other
than in the ordinary course of business; or (c) solicit any offers for, respond to any unsolicited offers for, or conduct any
negotiations with any other person or entity in respect of any Variable Rate Transaction (as defined herein), whether a transaction
similar to the one contemplated hereby or any other investment.


 


g.
This section intentionally left blank.


 


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
assumes the Company’s obligations hereunder and under the agreements and instruments entered into in connection herewith.


 


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 material 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 3.4 of the Note.


 


k.
Compliance with 1934 Act; Public Information Failures. At the time that the Company becomes subject to the reporting requirements
of the 1934 Act, and for so long as the Buyer beneficially owns the Note, 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.


 


l.
Acknowledgement Regarding Buyer’s Trading Activity. The Company acknowledges and agrees that (i) the Buyer has not
been asked to agree, nor has the Buyer agreed, to desist from purchasing or selling, long and/or short, securities of the Company,
or “derivative” securities based on securities issued by the Company or to hold the Securities for any specified term;
(ii) the Buyer, and counter-parties in “derivative” transactions to which any the Buyer is a party, directly or indirectly,
presently may have a “short” position in the Common Stock, and (iii) the Buyer shall not be deemed to have any affiliation
with or control over any arm’s length counter-party in any “derivative” transaction. The Company further understands
and acknowledges that the Buyer may engage in hedging and/or trading activities at various times during the period that the Securities
are outstanding, including, without limitation, during the periods that the value of the Conversion Shares are being determined
and (b) such hedging and/or trading activities, if any, can reduce the value of the existing stockholders’ equity interest
in the Company both at and after the time the hedging and/or trading activities are being conducted. The Company acknowledges
that such aforementioned hedging and/or trading activities do not constitute a breach of this Agreement or any of the documents
executed in connection herewith.


 






    	 	10	 



     


    

 


m.
This section intentionally left blank.


 


n.
This section intentionally left blank.


 


o.
This section intentionally left blank.


 


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 written notice (the “Company Notice”) and no less than 10 days to exercise the right, but not the
obligation, to exchange its rights and obligations hereunder (i.e. to the Securities) for the rights and obligations established
with the Other Investor, except that Buyer shall retain a senior position to the Other Investor. In order to exercise such right,
Buyer shall send the Company a written notice of its exercise (the “Buyer Notice”). If the Buyer Notice is not received
by the Company within ten (10) days of Buyer’s receipt of the Company Notice, the rights under this Section 4.14 shall terminate
with respect to such offering of the Company’s securities.


 


q.
Subsequent Variable Rate Transactions. From the date hereof until such time as the Buyer no longer holds the Note 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. Any Purchaser 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.


 


5.
Transfer Agent Instruction s. The Company shall issue irrevocable instructions to the Company’s transfer agent once
its common stock is publicly traded to issue certificates, registered in the name of the Buyer or its nominee, upon exercise of
the Warrant, the Conversion 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 under the 1933 Act or the date on which the
Conversion Shares may be sold pursuant to Rule 144 without any restriction as to the number of Securities as of a particular date
that can then be immediately sold, all such certificates 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 as and when required by 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 as and when required by the and this Agreement and (iv) it will provide any required corporate resolutions and issuance
approvals to its transfer agent within 6 hours of each exercise of the Warrant. 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 Rule 144, 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.


 






    	 	11	 



     


    

 


6.
Conditions to the Company’ s Obligation to Sell. The obligation of the Company hereunder to issue and sell the Note
to each 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.
Each Buyer shall have executed this Agreement and delivered the same to the Company.


 


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


 


c.
The representations and warranties of each 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 Each Buyer’s Obligation to Purchase. The obligation of each 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.
This section intentionally left blank.


 


d.
This section intentionally left blank.


 


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.


 






    	 	12	 



     


    

 


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.


 


h.
This section intentionally left blank.


 


i.
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 written consent duly authorizing this Agreement and all other documents, instruments
and transactions contemplated hereby.


 


8.
Governing Law; Miscellaneous.


 


a.
Governing Law; Venue. This Agreement s hall be governed by and construed in accordance with the laws of the State of New
York 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 of New York or in the federal courts located in the state and county of New York. 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.


 






    	 	13	 



     


    

 


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:


 


If
to the Company, to:


 


ADIAL
PHARMACEUTICALS, INC.


1180
Seminole Trail, Suite 495


Charlottesville,
VA 229012


Attention:
William Stilley


e-mail:
wstilley@adialpharma.com


 


With
a copy by e-mail only to (which copy shall not constitute notice):


 


GRACIN
& MARLOW, LLP


405
Lexington Avenue


26th
Floor


New
York, New York 10174


Attn:
Leslie Marlow, Esq.


e-mail:
lmarlow@gracinmarlow.com


 


If
to the Buyer:


 


The
name and address stated on the relevant signature page hereto.


 


g.
Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors
and assigns. Neither the Company nor the Buyer shall assign this Agreement or any rights or obligations hereunder without the
prior written consent of the other. Notwithstanding the foregoing, subject to Section 2(f), the Buyer may assign its rights hereunder
to any person that purchases Securities 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 and the Company may assign it as part of a reincorporation
merger or a reorganization to convert to a corporation.


 


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.


 






    	 	14	 



     


    

 


j.
Publicity. The Company and the Buyer shall have the right to review a reasonable period of time before issuance of any
press releases 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, OTCBB (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. Expense
Reimbursement; Further Assurances. Each party shall pay its own legal expenses incurred in connection with
this Agreement. 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.


 


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 material
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 material 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 or the Note will be inadequate and agrees, in the event of
a breach or threatened breach by the Company of the provisions of this Agreement or the Note, 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 or the Note and to enforce specifically the terms
and provisions hereof, 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 Company makes a payment or payments to the Buyer hereunder or pursuant to the
Note, or the Buyer enforces or exercises its rights hereunder or thereunder, and such payment or payments or the proceeds of such
enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside,
recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver
or any other person or entity under any law (including, without limitation, any bankruptcy law, foreign, state or federal law,
common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally
intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such
enforcement or setoff had not occurred.


 


p.
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]


 




    	 	15	 



     


    


 


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


 


	ADIAL PHARMACEUTICALS, INC.	 
	 	 	 
	By:	             	 
	 	Name: WILLIAM STILLEY	 
	 	Title: CHIEF EXECUTIVE OFFICER	 






	 	 	 
	BUYER: 	                  	 
	 	 	 






	By:	          	 
	 	Print:	 
	 	Title (if applicable):	 


 


	 	Address:	                	 
	 	 	 	 
	 	 	 	 


 


SUBSCRIPTION
AMOUNT:


 


Principal
Amount of Note: $[           ].00


Actual
Amount of Purchase Price of Note: $[           ].00*


 


* The
purchase price shall be paid within one (1) business day after the full execution of the Note and all related transaction documents.


 




    	 	16	 



     


    


 


EXHIBIT
A


 


FORM
OF NOTE


 





Reference
is made to Exhibit 4.16 to the Registration Statement on Form S-1 (File Number 333- 220368) of the Company, which is incorporated
by reference.


 


 


 


 


 


 


 


 


 


 


 




    	 	17	 



     


    


 


EXHIBIT
B


 


FORM
OF WARRANT


 





Reference is made to Exhibit 4.17 to the Registration Statement
on Form S-1 (File Number 333- 220368) of the Company, which is incorporated by reference.


 


 


 


 


 


 


 


 


 


 


18