Exhibit 10.1


 


SECURITIES PURCHASE AGREEMENT


 


SECURITIES PURCHASE
AGREEMENT (the "Agreement"), dated as of March 12, 2012, by and among Bionovo, Inc., a Delaware
corporation, with headquarters located at 5858 Horton Street, Suite 400, Emeryville, California 94608
(the "Company"), and the investors listed on the Schedule of Buyers attached hereto (individually,
a "Buyer" and collectively, the "Buyers").


 


WHEREAS:


 


A.The Company and
the Buyers desire to enter into this transaction to purchase shares of the Company's voting common stock, par value $0.0001 per
share (the "Common Stock") and Warrants (as defined below) pursuant to the Registration Statement (as defined
below) which is currently effective, has at least $3,413,270 of initial offering price of unallocated securities available for
sale as of the date hereof and has been declared effective in accordance with the Securities Act of 1933, as amended (the "1933
Act"), by the United States Securities and Exchange Commission (the "SEC").


 


B.Each Buyer wishes
to purchase, and the Company wishes to sell, upon the terms and conditions stated in this Agreement, at the Closing (as defined
below) (i) that aggregate number of shares of Common Stock set forth opposite such Buyer's name in column (3) on the Schedule of
Buyers attached hereto (which aggregate amount for all Buyers shall be 14,231,696 shares of Common Stock) (the "Common
Shares") and (ii) warrants, in substantially the form attached hereto as Exhibit A (the "Warrants"),
to acquire up to that number of additional shares of Common Stock set forth opposite such Buyer's name in column (4) of the Schedule
of Buyers (as exercised, collectively, the "Warrant Shares"). All Warrant Shares shall be issued pursuant to the
Registration Statement, or if such Registration Statement is not available at the time of issuance of such Warrant Shares, upon
a "cashless exercise" pursuant to the terms of the Warrants, as securities exempt from registration pursuant to Section
3(a)(9) of the 1933 Act.


 


C.The Common Shares,
the Warrants and the Warrant Shares collectively are referred to herein as the "Securities".


 


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


 


1.PURCHASE
AND SALE OF Common Shares AND WARRANTS.


 


(a)Purchase
of Common Shares and Warrants.


 


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


 






    	 



    	 



    



 


(b)Purchase
Price. The aggregate purchase price for the Common Shares and the related Warrants to be purchased by each such Buyer at the
Closing (the "Purchase Price") shall be the amount set forth opposite such Buyer's name in column (5) of the Schedule
of Buyers (less, in the case of Empery Asset Master Ltd. ("Empery"), any amounts withheld pursuant to Section
4(f)).


 


(c)Closing
Date. The date and time of the Closing (the "Closing Date") shall be 10:00 a.m., New York City time, on the
date hereof (or such later date as is mutually agreed to by the Company and each Buyer) after notification of satisfaction (or
waiver) of the conditions to the Closing set forth in Sections 6 and 7 below at the offices of Schulte Roth & Zabel LLP, 919
Third Avenue, New York, New York 10022. The timing of the Closing shall be in accordance with Rule 15c6-1 promulgated under the
1934 Act.


 


(d)Form
of Payment. On the Closing Date, (i) each Buyer shall pay its respective Purchase Price (less, in the case of Empery, any amounts
withheld pursuant to Section 4(f)) to the Company for the Common Shares and the related Warrants to be issued and sold to such
Buyer at the Closing by wire transfer of immediately available funds in accordance with the Company's written wire instructions
and (ii) the Company shall deliver to each Buyer (x) the Common Shares (allocated in the amounts as such Buyer shall request)
which such Buyer is then purchasing hereunder by electronic delivery to the applicable balance account at The Depository Trust
Company ("DTC") as each such Buyer shall designate and (y) the Warrants (allocated in the amounts as such Buyer
shall request) such Buyer is purchasing, in each case duly executed on behalf of the Company and registered in the name of such
Buyer or its designee.


 


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


 


(a)Organization;
Authority. Such Buyer is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction
of its organization with the requisite power and authority to enter into and to consummate the transactions contemplated by the
applicable Transaction Documents (as defined below) to which it is a party and otherwise to carry out its obligations hereunder
and thereunder. The execution, delivery and performance by such Buyer of the transactions contemplated by this Agreement has been
duly authorized by all necessary action on the part of such Buyer. This Agreement has been duly executed by such Buyer, and when
delivered by such Buyer in accordance with the terms hereof, will constitute the valid and legally binding obligation of such Buyer,
enforceable against it in accordance with its terms, except as such enforceability may be limited by general principles of equity
or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally,
the enforcement of applicable creditors' rights and remedies.


 


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


 






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(c)Residency.
Such Buyer is a resident of that jurisdiction specified below its address on the Schedule of Buyers.


 


(d)Information.
The Company has provided such Buyer with information regarding the business, operations and financial condition of the Company
and has granted to such Buyer the opportunity to ask questions of and receive answers from representatives of the Company, its
officers, directors, employees and agents concerning the Company and materials relating to the terms and conditions of the purchase
and sale of the Securities hereunder, in order for such Buyer to make an informed decision with respect to its investment in the
Securities. Neither such information nor any other investigation conducted by such Buyer or any of its representatives shall modify,
amend or otherwise affect such Buyer’s right to rely on the Company's representations and warranties contained in this Agreement.


 


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


 


The Company acknowledges
and agrees that each Buyer does not make or has not made any representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in this Section 2.


 


3.REPRESENTATIONS
AND WARRANTIES OF THE COMPANY. The Company represents and warrants to each of the Buyers
that, as of the date hereof and as of the Closing Date:


 


(a)Shelf
Registration Statement. A "shelf" registration statement on Form S-3 (File No. 333-167466) with respect to the Securities
has been prepared by the Company in conformity in all material respects with the requirements of the 1933 Act, and the rules and
regulations (the "Rules and Regulations") of the SEC thereunder and has been filed with the SEC. The Company and
the transactions contemplated by this Agreement meet the requirements and comply with the conditions for the use of Form S-3. The
Registration Statement (as defined below) meets the requirements of Rule 415(a)(1)(x) under the 1933 Act and complies in all material
respects with said rule. Copies of such registration statement, including any amendments thereto, the base prospectus (meeting
in all material respects the requirements of the Rules and Regulations) contained therein (the "Base Prospectus")
and the exhibits, financial statements and schedules, as finally amended and revised, have heretofore been delivered by the Company
to the Buyers. Such registration statement, together with any registration statement filed by the Company pursuant to Rule 462(b)
under the 1933 Act, is herein referred to as the "Registration Statement", which shall be deemed to include all
information omitted therefrom in reliance upon Rules 430A, 430B or 430C under the 1933 Act and contained in the Prospectus referred
to below. The Registration Statement has become effective under the 1933 Act and no post-effective amendment to the Registration
Statement has been filed as of the date of this Agreement. The term "Prospectus" as used in this Agreement means
the Base Prospectus together with the final prospectus supplement relating to the Securities (the "Prospectus Supplement")
first filed with the SEC pursuant to and within the time limits described in Rule 424(b) under the 1933 Act. Any preliminary prospectus
relating to the Securities prior to the date hereof is referred to as a "Preliminary Prospectus". Any reference
herein to the Registration Statement, any Preliminary Prospectus or the Prospectus or to any amendment or supplement to any of
the foregoing documents shall be deemed to refer to and include any documents incorporated by reference therein, and, in the case
of any reference herein to the Prospectus, also shall be deemed to include any documents incorporated by reference therein, and
any supplements or amendments thereto, filed with the SEC after the date of filing of the Prospectus Supplement under Rule 424(b)
under the 1933 Act and prior to the termination of the offering of the Securities.


 






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(b)Prospectus.
As of the Applicable Time (as defined below) and as of the Closing Date, neither (x) the General Use Free Writing Prospectus(es)
(as defined below) issued at or prior to the Applicable Time, the Statutory Prospectus (as defined below), all considered together
(collectively, the "General Disclosure Package"), nor (y) any individual Limited Use Free Writing Prospectus (as
defined below), when considered together with the General Disclosure Package, included or will include any untrue statement of
a material fact or omitted or will omit to state a material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading. As used in this subsection and elsewhere in this Agreement:


 


(i)"Applicable
Time" means 5:30 p.m. (New York time) on the date of this Agreement or such other time as agreed to by the Company and
the Buyers.


 


(ii)"Statutory
Prospectus" as of any time means the Preliminary Prospectus included in the Registration Statement immediately prior to
that time.


 


(iii)"Issuer
Free Writing Prospectus" means any "issuer free writing prospectus," as defined in Rule 433 under the 1933 Act,
relating to the Securities in the form filed or required to be filed with the SEC or, if not required to be filed, in the form
retained in the Company's records pursuant to Rule 433(g) under the 1933 Act.


 


(iv)"General
Use Free Writing Prospectus" means any Issuer Free Writing Prospectus that is identified on Schedule I to this
Agreement.


 


(v)"Limited
Use Free Writing Prospectus" means any Issuer Free Writing Prospectus that is not a General Use Free Writing Prospectus.


 






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(c)Organization.
The Company has been duly organized and is validly existing as a corporation in good standing under the laws of the State of Delaware,
with corporate power and authority to own or lease its properties and conduct its business as described in the Registration Statement,
the General Disclosure Package and the Prospectus. The Company has no significant subsidiaries (as such term is defined in Rule
1-02 of Regulation S-X promulgated by the SEC) (collectively, the "Subsidiaries"). Each of the Subsidiaries has
been duly organized and is validly existing as an entity in good standing under the laws of the jurisdiction of its organization,
with corporate power and authority to own or lease its properties and conduct its business as described in the Registration Statement,
the General Disclosure Package and the Prospectus. The Subsidiaries are the only subsidiaries, direct or indirect, of the Company.
The Company and each of the Subsidiaries are duly qualified to transact business in all jurisdictions in which the conduct of their
business requires such qualification, except where the failure to be so qualified would not reasonably be expected to result in
any material adverse effect on, or any development that would reasonably be expected to result in a material adverse effect, in
or affecting (i) the business, properties, assets, operations, results of operations, condition (financial or otherwise) or prospects
of the Company and of the Subsidiaries, individually or taken as a whole, whether or not occurring in the ordinary course of business,
or (ii) on the transactions contemplated hereby and the other Transaction Documents or by the agreements and instruments to be
entered into in connection herewith or therewith, or on the authority or ability of the Company to perform its obligations under
the Transaction Documents (as defined below) (collectively a "Material Adverse Effect"). The outstanding shares
of capital stock of each of the Subsidiaries have been duly authorized and validly issued, are fully paid and non-assessable and
are owned by the Company or another Subsidiary free and clear of all liens, encumbrances and equities and claims, except as described
in the Registration Statement; and no options, warrants or other rights to purchase, agreements or other obligations to issue or
other rights to convert any obligations into shares of capital stock or ownership interests in the Subsidiaries are outstanding.


 


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


 


(e) Issuance
of Securities. The outstanding shares of Common Stock of the Company have been duly authorized and validly issued and are fully
paid and non-assessable; the Securities to be issued and sold by the Company have been duly authorized and when issued and paid
for as contemplated herein in accordance with the terms of the Transaction Documents will be free from all taxes, liens and charges
with respect to the issue thereof, validly issued, fully paid and non-assessable; and no preemptive rights of stockholders exist
with respect to any of the Securities or the issue and sale thereof. 11,485,844 shares of Common Stock have been duly authorized
and reserved for issuance for the shares of Common Stock issuable upon exercise of the Warrants. Neither the filing of the Registration
Statement nor the offering or sale of the Securities as contemplated by this Agreement gives rise to any rights, other than those
which have been waived or satisfied, for or relating to the registration of any shares of Common Stock. Upon exercise in accordance
with the Warrants, the Warrant Shares will be validly issued, fully paid and nonassessable and free from all preemptive or similar
rights, taxes, liens and charges with respect to the issue thereof, with the holders being entitled to all rights accorded to a
holder of Common Stock. Except as set forth in the Registration Statement and the Prospectus, there are no securities or instruments
issued by the Company containing anti-dilution or similar provisions that will be triggered by the issuance of the Securities.


 






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(f)Equity
Capitalization. As of the date hereof and as of the Closing Date, the Company has or will have, as the case may be, an authorized,
issued and outstanding capitalization as is set forth in the Registration Statement and the Prospectus (subject, in each case,
to the issuance of shares of Common Stock upon exercise of stock options and warrants disclosed as outstanding in the Registration
Statement and the Prospectus and the grant or issuance of options or shares under existing equity compensation plans or stock purchase
plans described in the Registration Statement or the Prospectus), and such authorized capital stock conforms to the description
thereof set forth in the Registration Statement and the Prospectus. All of the Securities conform to the description thereof contained
in the Registration Statement and the Prospectus. The form of certificates for the Common Shares, the Warrants and the Warrant
Shares, as applicable, will conform to the corporate law of the jurisdiction of the Company's incorporation.


 


(g)Disclosure.


 


(i)The SEC
has not issued an order preventing or suspending the use of any Preliminary Prospectus, any Issuer Free Writing Prospectus or the
Prospectus relating to the proposed offering of the Securities, and no proceeding for that purpose or pursuant to Section 8A of
the 1933 Act has been instituted or, to the Company's knowledge, threatened by the SEC. The Registration Statement conforms, and
the Prospectus and any amendments or supplements thereto will conform to the requirements of the 1933 Act and the Rules and Regulations.
The documents incorporated, or to be incorporated, by reference in the Prospectus, at the time filed with the SEC conformed in
all material respects, or will conform in all respects, to the requirements of the Securities Exchange Act of 1934, as amended
(the "1934 Act"), or the 1933 Act, as applicable, and the Rules and Regulations. The Registration Statement and
any amendments and supplements thereto do not contain, and on the Closing Date will not contain, any untrue statement of a material
fact and do not omit, and on any the Closing Date will not omit, to state a material fact required to be stated therein or necessary
to make the statements therein not misleading. The Prospectus and any amendments and supplements thereto do not contain, and on
the Closing Date will not contain, any untrue statement of a material fact; and do not omit, and on the Closing Date will not omit,
to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they
were made, not misleading.


 






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(ii)Each
Issuer Free Writing Prospectus, as of its issue date and at all subsequent times through the completion of the public offer and
sale of the Securities or until any earlier date that the Company notified or notifies the Buyers as described in the next sentence,
did not, does not and will not include any information that conflicted, conflicts or will conflict with the information contained
in the Registration Statement or the Prospectus, including any document incorporated by reference therein that has not been superseded
or modified. If at any time following issuance of an Issuer Free Writing Prospectus, there occurred or occurs an event or development
as a result of which such Issuer Free Writing Prospectus included or would include an untrue statement of a material fact or omitted
or would omit to state a material fact necessary in order to make the statements therein, in light of the circumstances, not misleading,
the Company has notified or will notify promptly the Buyers so that any use of such Issuer Free Writing Prospectus may cease until
it is amended or supplemented.


 


(iii)The
Company confirms that neither it nor any other Person acting on its behalf has provided any of the Buyers or their agents or counsel
with any information that constitutes or could reasonably be expected to constitute material, nonpublic information, that will
not be included in the 8-K Filing (as defined in Section 4(h)). The Company understands and confirms that each of the Buyers will
rely on the foregoing representations in effecting transactions in securities of the Company. All disclosure provided to the Buyers
regarding the Company or any of its Subsidiaries, their business and the transactions contemplated hereby, including the Schedules
to this Agreement, furnished by or on behalf of the Company does not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they
were made, not misleading. Each press release issued by the Company or any of its Subsidiaries during the twelve (12) months preceding
the date hereof did not at the time of release contain any untrue statement of material fact or omit to state a material fact required
to be stated therein or necessary in order to make such statements therein, in the light of the circumstances in which they were
made, not misleading. No event or circumstance has occurred or information exists with respect to the Company or any of its Subsidiaries
or its or their business, properties, 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. For the purpose
of this Agreement, "Person" means an individual, a limited liability company, a partnership, a joint venture,
a corporation, a trust, an unincorporated organization and a government or any department or agency thereof.


 


(h)Offering
Materials. The Company has not, directly or indirectly, distributed and will not distribute any offering material in connection
with the offering and sale of the Securities other than any Preliminary Prospectus, the Prospectus, any Issuer Free Writing Prospectus
and other materials, if any, permitted under the 1933 Act. The Company will file with the SEC all Issuer Free Writing Prospectuses
in the time required under Rule 433(d) under the 1933 Act.


 


(i)Ineligible
Issuer Status. At the time of filing the Registration Statement and (ii) as of the date hereof (with such date being used as
the determination date for purposes of this clause (ii)), the Company was not and is not an "ineligible issuer" (as defined
in Rule 405 under the 1933 Act, without taking into account any determination by the SEC pursuant to Rule 405 under the 1933 Act
that it is not necessary that the Company be considered an ineligible issuer), including, without limitation, for purposes of Rules
164 and 433 under the 1933 Act with respect to the offering of the Securities as contemplated by the Registration Statement.


 






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(j)Financial
Statements. The consolidated financial statements of the Company and the Subsidiaries, together with related notes and schedules
as set forth or incorporated by reference in the Registration Statement, the General Disclosure Package and the Prospectus, present
fairly in all material respects the financial position and the results of operations and cash flows of the Company and the consolidated
Subsidiaries, at the indicated dates and for the indicated periods. Such consolidated financial statements and related schedules
have been prepared in accordance with United States generally accepted principles of accounting consistently applied throughout
the periods involved ("GAAP"), except as disclosed therein, and all adjustments necessary for a fair presentation
of results for such periods have been made. The summary and selected consolidated financial and statistical data included or incorporated
by reference in the Registration Statement, the General Disclosure Package and the Prospectus presents fairly in all material respects
the information shown therein, at the indicated dates and for the indicated periods, and such data has been compiled on a basis
consistent with the financial statements presented therein and the books and records of the Company. All disclosures, if any, contained
in the Registration Statement, the General Disclosure Package and the Prospectus regarding "non-GAAP financial measures"
(as such term is defined by the Rules and Regulations) comply in all material respects with Regulation G of the 1934 Act and Item
10 of Regulation S-K under the 1933 Act, to the extent applicable. The Company and the Subsidiaries do not have any material liabilities
or obligations, direct or contingent (including any off-balance sheet obligations or any "variable interest entities"
within the meaning of Financial Accounting Standards Board Interpretation No. 46), not disclosed in the Registration Statement,
the General Disclosure Package and the Prospectus. There are no financial statements (historical or pro forma) that are required
to be included in the Registration Statement, the General Disclosure Package or the Prospectus that are not included as required.


 


(k)Accountants.
PMB Helin Donovan, LLP, who have certified certain of the financial statements filed with the SEC as part of, or incorporated by
reference in, the Registration Statement, the General Disclosure Package and the Prospectus, has represented to the Company that
it is an independent registered public accounting firm with respect to the Company and the Subsidiaries within the meaning of the
1933 Act and the applicable Rules and Regulations and the Public Company Accounting Oversight Board (United States) (the "PCAOB").


 


(l)Weaknesses
or Changes in Internal Accounting Controls. Neither the Company nor any of the Subsidiaries is aware of (i) any material weakness
in its internal control over financial reporting or (ii) change in internal control over financial reporting that has materially
affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.


 


(m)Sarbanes-
Oxley. Except as may be affected by events disclosed in the Registration Statement and Prospectus, and solely to the extent
that the Sarbanes-Oxley Act of 2002, as amended, and the rules and regulations promulgated by the SEC and the OTCQB (the "Principal
Market"), if applicable, thereunder (collectively, the "Sarbanes-Oxley Act") has been applicable to the
Company, there is and has been no failure on the part of the Company to comply in all material respects with any provision of the
Sarbanes-Oxley Act. The Company has taken all necessary actions to ensure that it is in compliance in all material respects with
all provisions of the Sarbanes-Oxley Act that are in effect with respect to which the Company is required to comply and is actively
taking steps to ensure that it will be in compliance with the other provisions of the Sarbanes-Oxley Act which will become applicable
to the Company.


 






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(n)Litigation.
There is no action, suit, claim or proceeding pending or, to the knowledge of the Company, threatened against the Company or any
of the Subsidiaries before any court or administrative agency or otherwise which if determined adversely to the Company or any
of the Subsidiaries would have, individually or in the aggregate, a Material Adverse Effect, except as set forth in the Registration
Statement, the General Disclosure Package and the Prospectus.


 


(o)Title.
The Company and the Subsidiaries have good and marketable title to all of the material properties and assets reflected in the consolidated
financial statements hereinabove described or described in the Registration Statement, the General Disclosure Package and the Prospectus,
subject to no lien, mortgage, pledge, charge or encumbrance of any kind except those reflected in such financial statements or
described in the Registration Statement, the General Disclosure Package and the Prospectus or which are not material in amount
or would not materially interfere with the use to be made of such properties or assets. The Company and the Subsidiaries occupy
their leased properties under valid and binding leases conforming in all material respects to the description thereof set forth
in the Registration Statement, the General Disclosure Package and the Prospectus.


 


(p)Taxes.
The Company and the Subsidiaries have filed all federal, state, local and foreign tax returns which have been required to be filed
and have paid all taxes indicated by such returns and all assessments received by them or any of them to the extent that such taxes
have become due and are not being contested in good faith and for which an adequate reserve for accrual has been established in
accordance with GAAP. All tax liabilities have been adequately provided for in the consolidated financial statements of the Company
in accordance with GAAP, and the Company does not know of any actual or proposed additional material tax assessments.


 


(q)Absence
of Certain Changes. Since the respective dates as of which information is given in the Registration Statement, the General
Disclosure Package and the Prospectus, as each may be amended or supplemented, and except as set forth therein, there has not been
any Material Adverse Effect and there has not been any material transaction entered into by the Company or the Subsidiaries, other
than transactions in the ordinary course of business and transactions described in the Registration Statement, the General Disclosure
Package and the Prospectus, as each may be amended or supplemented. The Company and the Subsidiaries have no material contingent
obligations which are not disclosed in the Company's consolidated financial statements which are included in the Registration Statement,
the General Disclosure Package and the Prospectus.


 


(r)No Conflicts.
Neither the Company nor any of the Subsidiaries is, or with the giving of notice or lapse of time or both, will be after giving
effect to the execution, delivery and performance of the Transaction Documents by the Company and the consummation by the Company
of the transactions contemplated hereby and thereby (including, without limitation, the issuance of the Securities), (i) in violation
of its certificate of incorporation, by-laws, any certificate of designations or other organizational documents or (ii) in violation
of or in default (or an event which with notice or lapse of time or both would become a default) in any respect under, or give
to others any rights of termination, amendment, acceleration or cancellation of under any agreement, indenture, mortgage, deed
of trust, lease, contract, indenture or other agreement or instrument or obligation to which the Company or any Subsidiary is a
party or by which the Company or any Subsidiary, or any of their respective properties, is bound or (iii) result in a violation
of any law, rule, regulation, order, judgment, writ or decree of any court or of any government, regulatory body or administrative
agency or other governmental body having jurisdiction (including U.S. federal and state securities laws and regulations and the
rules and regulations of the Principal Market 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, and, solely with respect to clauses (ii) and (iii), which
violation, conflict, breach or default would have a Material Adverse Effect.


 






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(s)Contracts.
There is no document, contract or other agreement required to be described in the Registration Statement or Prospectus or to be
filed as an exhibit to the Registration Statement which is not described or filed as required by the 1933 Act or the Rules and
Regulations. Each description of a contract, document or other agreement in the Registration Statement and the Prospectus accurately
reflects in all material respects the terms of the underlying contract, document or other agreement. Each contract, document or
other agreement described in the Registration Statement and Prospectus or listed in the exhibits to the Registration Statement
or incorporated by reference is in full force and effect and is valid and enforceable by and against the Company in accordance
with its terms (except as rights to indemnity and contribution thereunder may be limited by federal or state securities laws and
matter of public policy and except as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting the enforcement of creditors' rights generally and by general equitable principle). Neither the
Company nor any of its Subsidiaries nor, to the Company's knowledge, any other party is in default in the observance or performance
of any term or obligation to be performed by it under any such agreement or any other agreement or instrument to which the Company
or its Subsidiaries is a party or by which the Company or its Subsidiaries or their respective properties or businesses may be
bound, and no event has occurred which with notice or lapse of time or both would constitute such a default, in any such case in
which the default or event, individually or in the aggregate, would have a Material Adverse Effect.


 


(t)Regulatory
Approvals. Each approval, consent, order, authorization, designation, declaration or filing by or with any regulatory, administrative
or other governmental body necessary in connection with the execution and delivery by the Company of this Agreement and the consummation
of the transactions herein contemplated (except such additional steps as may be required by the SEC, the Financial Industry Regulatory
Authority, Inc. (the "FINRA") or such additional steps as may be required under state securities or Blue Sky laws)
has been obtained or made and is in full force and effect.


 


(u)Conduct
of Business. Neither the Company nor any of its Subsidiaries is in violation of any judgment, decree or order or any statute,
ordinance, rule or regulation applicable to the Company or its Subsidiaries and neither the Company nor any of its Subsidiaries
will conduct its business in violation of any of the foregoing, except in all cases for possible violations which could not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect. The Company has satisfied all eligibility requirements
necessary to enable its Common Stock to be listed or quoted one or more of the Principal Market, the OTC Bulletin Board, the OTCQX,
The New York Stock Exchange, the NYSE Amex Equities, The NASDAQ Capital Market, The NASDAQ Global Market or The NASDAQ Global Select
Market (each, an "Eligible Market"). The Company and its Subsidiaries possess all certificates, authorizations
and permits issued by the appropriate federal, state or foreign regulatory authorities necessary to conduct their respective businesses,
except where the failure to possess such certificates, authorizations or permits would not have, individually or in the aggregate,
a Material Adverse Effect, and neither the Company nor any such Subsidiary has received any notice of proceedings relating to the
revocation or modification of any such certificate, authorization or permit. Without limiting the generality of the foregoing,
neither the Company not any of its Subsidiaries is in violation of any of the rules, regulations or requirements of the Principal
Market and has no knowledge of any facts or circumstances that would reasonably lead to delisting or suspension of the Common Stock
by the Principal Market in the foreseeable future.


 






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(v)Intellectual
Property. Except as described in the Registration Statement or in any document incorporated by reference therein, the Company
and each of the Subsidiaries hold all material licenses, certificates and permits from governmental authorities which are necessary
to the conduct of their businesses in the manner in which they are being conducted; the Company and the Subsidiaries each own or
possess the right to use all patents, patent rights, trademarks, trade names, service marks, service names, copyrights, license
rights, know-how (including trade secrets and other unpatented and unpatentable proprietary or confidential information, systems
or procedures) and other intellectual property rights ("Intellectual Property") necessary to carry on their business
in all material respects in the manner in which it is being conducted; neither the Company nor any of the Subsidiaries has infringed,
and none of the Company or the Subsidiaries have received notice of conflict with, any Intellectual Property of any other person
or entity. The Company has taken all steps reasonably necessary to secure ownership interests in Intellectual Property created
for it by any contractors. There are no outstanding options, licenses or agreements of any kind relating to the Intellectual Property
of the Company that are required to be described in the Registration Statement, the General Disclosure Package and the Prospectus
and are not described therein in all material respects. The Company is not a party to or bound by any options, licenses or agreements
with respect to the Intellectual Property of any other person or entity that are required to be set forth in the Prospectus and
are not described therein in all material respects. None of the technology employed by the Company and material to the Company's
business has been obtained or is being used by the Company in violation of any contractual obligation binding on the Company or,
to the Company's knowledge, any of its officers, directors or employees or, to the Company's knowledge, otherwise in violation
of the rights of any persons; the Company has not received any written or oral communications alleging that the Company has violated,
infringed or conflicted with, or, by conducting its business as set forth in the Registration Statement, the General Disclosure
Package and the Prospectus, would violate, infringe or conflict with, any of the Intellectual Property of any other person or entity.
The Company knows of no infringement by others of Intellectual Property owned by or licensed to the Company.


 






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(w)Manipulation
of Prices. Neither the Company, nor to the Company's knowledge, any of its affiliates, has taken or may take, directly or indirectly,
any action designed to cause or result in, or which has constituted or which might reasonably be expected to constitute, the stabilization
or manipulation of the price of the shares of Common Stock to facilitate the sale or resale of the Securities.


 


(x)Investment
Company Act. Neither the Company nor any Subsidiary is or, after giving effect to the offering and sale of the Securities contemplated
hereunder and the application of the net proceeds from such sale as described in the Prospectus, and for so long as any Buyer holds
any Securities, will not be an "investment company" within the meaning of such term under the Investment Company Act
of 1940 as amended (the "1940 Act"), and the rules and regulations of the SEC thereunder.


 


(y)Internal
Accounting Controls. Except as set forth in the Registration Statement and the Prospectus:


 


(i)The Company
and each of the Subsidiaries maintains a system of internal accounting controls sufficient to provide reasonable assurances that
(i) transactions are executed in accordance with management's general or specific authorization; (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with GAAP and to maintain accountability for assets and
liabilities; (iii) access to assets or incurrence of liabilities is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets and liabilities is compared with existing assets and liabilities
at reasonable intervals and appropriate action is taken with respect to any differences.


 


(ii)The
Company has established and maintains "disclosure controls and procedures" (as defined in Rules 13a-15(e) and 15d-15(e)
under the 1934 Act); the Company's "disclosure controls and procedures" are reasonably designed to ensure that all information
(both financial and non-financial) required to be disclosed by the Company in the reports that it files or submits under the 1934
Act is recorded, processed, summarized and reported within the time periods specified in the rules and regulations of the 1934
Act, and that all such information is accumulated and communicated to the Company's management as appropriate to allow timely decisions
regarding required disclosure and to make the certifications of the Chief Executive Officer and Chief Financial Officer of the
Company required under the 1934 Act with respect to such reports.


 


(z)Industry
and Market Data. The statistical, industry-related and market-related data included in the Registration Statement, the General
Disclosure Package and the Prospectus are based on or derived from sources which the Company reasonably and in good faith believes
are reliable and accurate, and such data agree in all material respects with the sources from which they are derived.


 


(aa)Money
Laundering Laws. The operations of the Company and the Subsidiaries are and have been conducted at all times in compliance
with applicable financial record-keeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970,
as amended, applicable money laundering statutes and applicable rules and regulations thereunder (collectively, the "Money
Laundering Laws"), and no action, suit or proceeding by or before any court or governmental agency, authority or body
or any arbitrator involving the Company or any or its Subsidiaries with respect to the Money Laundering Laws is pending or, to
the Company's knowledge, threatened.


 






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(bb)Office
of Foreign Assets Control. Neither the Company nor, to the Company's knowledge, any director, officer, agent, employee or affiliate
of the Company is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury
Department ("OFAC"); and the Company will not directly or indirectly use the proceeds of the offering, or lend,
contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other person or entity, for the
purpose of financing the activities of any person currently subject to any U.S. sanctions administered by OFAC.


 


(cc)Insurance.
The Company and each of the Subsidiaries carry, or are covered by, insurance by insurers of recognized financial responsibility
in such amounts and covering such risks as is adequate for the conduct of their respective businesses and the value of their respective
properties and as is customary for companies engaged in similar businesses. Neither the Company nor any such Subsidiary has been
refused any insurance coverage sought or applied for and 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.


 


(dd)Employee
Benefits. The Company and each Subsidiary is in compliance in all material respects with all presently applicable provisions
of the Employee Retirement Income Security Act of 1974, as amended, including the regulations and published interpretations thereunder
("ERISA"); no "reportable event" (as defined in ERISA) has occurred with respect to any "pension
plan" (as defined in ERISA) for which the Company and each Subsidiary would have any material liability; the Company and each
Subsidiary has not incurred and does not expect to incur material liability under (i) Title IV of ERISA with respect to termination
of, or withdrawal from, any "pension plan" or (ii) Sections 412 or 4971 of the Internal Revenue Code of 1986, as amended,
including the regulations and published interpretations thereunder (the "Code"); and each "pension plan"
for which the Company or any Subsidiary would have any liability that is intended to be qualified under Section 401(a) of the Code
is so qualified in all material respects and nothing has occurred, whether by action or by failure to act, which would cause the
loss of such qualification.


 


(ee)Employee
Relations.


 


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


 






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


 


(ff)Transactions
with Affiliates. To the Company's knowledge, there are no affiliations or associations between any member of the FINRA and
any of the Company's officers, directors or 5% or greater securityholders, except as set forth in the Registration Statement. There
are no relationships or related-party transactions involving the Company or any of the Subsidiaries or, to the knowledge of the
Company, any other person required to be described in the Prospectus which have not been described as required.


 


(gg)Environmental
Laws. Neither the Company nor any of the Subsidiaries is in violation of any statute, rule, regulation, decision or order of
any governmental agency or body or any court, domestic or foreign, relating to the use, disposal or release of hazardous or toxic
substances or relating to the protection or restoration of the environment or human exposure to hazardous or toxic substances (collectively,
"environmental laws"), owns or operates any real property contaminated with any substance that is subject to environmental
laws, is liable for any off-site disposal or contamination pursuant to any environmental laws, or is subject to any claim relating
to any environmental laws, which violation, contamination, liability or claim would, individually or in the aggregate, have a Material
Adverse Effect; and the Company is not aware of any pending investigation which would reasonably be expected to lead to such a
claim.


 


(hh)Listing;
1934 Act Registration. The Common Stock is quoted for trading on the Principal Market. The Company has taken no action designed
to, or likely to have the effect of, terminating the registration of the Common Stock under the 1934 Act or the quotation of the
Common Stock on the Principal Market, nor has the Company received any notification that the SEC or the Principal Market is contemplating
terminating such registration or quotation.


 


(ii)Contributions;
Foreign Corrupt Practices. Neither the Company nor any of the Subsidiaries has made any contribution or other payment to any
official of, or candidate for, any federal, state or foreign office in violation of any law which violation is required to be disclosed
in the Prospectus.


 


(jj)No
Integrated Offering. The Company has not sold or issued any securities that would be integrated with the offering of the Securities
contemplated by this Agreement pursuant to the 1933 Act, the Rules and Regulations or the interpretations thereof by the SEC. None
of the Company, its Subsidiaries, any of their affiliates, and any Person acting on their behalf has, directly or indirectly, made
any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering
of the Securities to require approval of stockholders of the Company for purposes of any applicable stockholder approval provisions,
including, without limitation, under the rules and regulations of any exchange or automated quotation system on which any of the
securities of the Company are listed or designated. None of the Company, its Subsidiaries, their affiliates and any Person acting
on their behalf will take any action or steps referred to in the preceding sentence that would cause the offering of the Securities
to be integrated with other offerings for purposes of any such applicable stockholder approval provisions.


 






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(kk)Brokerage
Fees; Commissions. Except as described in the Registration Statement and the Prospectus, neither the Company nor any of its
Subsidiaries is a party to any contract, agreement or understanding with any person that would give rise to a valid claim against
the Company or the Buyers for a brokerage commission, finder's fee or like payment in connection with the offering and sale of
the Securities. The Company shall be responsible for the payment of any placement agent's fees, financial advisory fees, or broker's
commissions (other than for persons engaged by any Buyer or its investment advisor) relating to or arising out of the transactions
contemplated hereby. The Company shall pay, and hold each Buyer harmless against any liability, loss or expense(including, without
limitation, attorney's fees and out-of-pocket expenses) arising in connection with such claim (other than for claims made by Persons
engaged by the Buyers). Neither the Company nor any of its Subsidiaries has engaged any placement agent or other agent in connection
with the sale of the Securities.


 


(ll)Consents.
Other than as described in Section 3(t) hereof, or as have been previously obtained, filed or made, neither the Company nor any
of its Subsidiaries is required to obtain any consent, authorization or order of, or make any filing or registration with, any
court, governmental agency or any regulatory or self-regulatory agency or any other Person in order for it to execute, deliver
or perform any of its obligations under or contemplated by the Transaction Documents, in each case in accordance with the terms
hereof or thereof. The Company and its Subsidiaries are unaware of any facts or circumstances that might prevent the Company from
obtaining or effecting any of the registration, application or filings pursuant to the preceding sentence. The Company is not in
violation of the listing requirements of the Principal Market and has no knowledge of any facts that would reasonably lead to delisting
or suspension of the Common Stock in the foreseeable future.


 


(mm)Acknowledgment
Regarding Buyer's Purchase of Securities. The Company acknowledges and agrees that each Buyer is acting solely in the capacity
of an arm's length purchaser with respect to the Transaction Documents and the transactions contemplated hereby and thereby and
that no Buyer is (i) an officer or director of the Company, (ii) to the knowledge of the Company, an "affiliate" of the
Company or any of its Subsidiaries (as defined in Rule 405 of the 1933 Act) or (iii) to the knowledge of the Company, a "beneficial
owner" of more than 10% of the shares of Common Stock (as defined for purposes of Rule 13d-3 of the 1934 Act). The Company
further acknowledges that no Buyer is acting as a financial advisor or fiduciary of the Company or any of its Subsidiaries (or
in any similar capacity) with respect to the Transaction Documents and the transactions contemplated hereby and thereby, and any
advice given by a Buyer or any of its representatives or agents in connection with the Transaction Documents and the transactions
contemplated hereby and thereby is merely incidental to such Buyer's purchase of the Securities. The Company further represents
to each Buyer that the Company's decision to enter into the Transaction Documents has been based solely on the independent evaluation
by the Company and its representatives.


 






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(nn)Dilutive
Effect. The Company understands and acknowledges that the number of Warrant Shares issuable upon exercise of the Warrants,
will increase in certain circumstances. The Company further acknowledges that its obligation to issue Warrant Shares upon exercise
of the Warrants in accordance with this Agreement and the Warrants is, in each case, absolute and unconditional regardless of the
dilutive effect that such issuance may have on the ownership interests of other stockholders of the Company.


 


(oo)Application
of Takeover Protections; Rights Agreement. The Company and its board of directors have taken all necessary action, if any,
in order to exempt the Company's issuance of the Securities and any Buyer's ownership of the Securities from the provisions of
any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other
similar anti-takeover provision under the Certificate of Incorporation of the Company or the laws of the state of its incorporation
which is or could become applicable to any Buyer as a result of the transactions contemplated by this Agreement, including, without
limitation, the Company's issuance of Securities and each Buyer's ownership of the Securities. Except as set forth in the Registration
Statement and the Prospectus, the Company does not have any stockholder rights plan or similar arrangement relating to accumulations
of beneficial ownership of Common Stock or a change in control of the Company.


 


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


 


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


 


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


 


(ss)Acknowledgement
Regarding Buyers' Trading Activity. Anything in this Agreement or elsewhere herein to the contrary notwithstanding, it is understood
and acknowledged by the Company (i) that none of the Buyers have been asked by the Company or its Subsidiaries to agree, nor has
any Buyer agreed with the Company or its Subsidiaries, 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) that past or future open market or other transactions by any Buyer, including, without limitation, short sales or "derivative"
transactions, before or after the closing of the transactions contemplated by this Agreement or future transactions, may negatively
impact the market price of the Company's publicly-traded securities; (iii) that any Buyer, and counter parties in "derivative"
transactions to which any such Buyer is a party, directly or indirectly, presently may have a "short" position in the
Common Stock; and (iv) that such 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 (a) one or more Buyers may engage
in hedging and/or trading activities at various times during the periods that the Securities are outstanding and (b) such hedging
and/or trading activities (if any) could reduce the value of the existing stockholders' equity interests in the Company at and
after the time that the hedging and/or trading activities are being conducted. The Company acknowledges that such aforementioned
hedging and/or trading activities do not constitute a breach of this Agreement, the Warrants or any of the documents executed in
connection herewith.


 






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(tt)U.S.
Real Property Holding Corporation. The Company is not, nor has it ever been, nor, while any Buyer holds any Securities, will
not become, a U.S. real property holding corporation within the meaning of Section 897 of the Code and the Company shall so certify
upon any Buyer's request.


 


(uu)Shell
Company Status. The Company is not, and, except as described in the Registration Statement and the Prospectus, has never been,
an issuer identified in Rule 144(i)(1).


 


(vv)Bank
Holding Company. Neither the Company nor any of its Subsidiaries or affiliates is, nor, while any Buyer holds any Securities,
will become, 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, nor, while any Buyer holds any Securities, will own or control, directly or indirectly, five percent
or more of the outstanding shares of any class of voting securities or twenty-five percent or more of the total equity of a bank
or any entity that is subject to the BHCA and to regulation by the Federal Reserve. Neither the Company nor any of its Subsidiaries
or affiliates exercises, nor, while any Buyer holds any Securities, will exercise, 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.


 


(ww)SEC
Documents; Financial Statements. During the two (2) years prior to the date hereof, the Company has timely filed all reports,
schedules, forms, statements and other documents required to be filed by it with the SEC pursuant to the reporting requirements
of the 1934 Act (all of the foregoing filed prior to the date hereof, and all exhibits included therein and financial statements,
notes and schedules thereto and documents incorporated by reference therein being hereinafter referred to as the "SEC Documents").
The Company has delivered to the Buyers or their respective representatives true, correct and complete copies of the SEC Documents
not available on the EDGAR system. As of their respective filing dates, the SEC Documents complied in all material respects with
the requirements of the 1934 Act and the rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents,
and none of the SEC Documents, at the time they were filed with the SEC, contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. As of their respective filing dates, the financial statements of the
Company included in the SEC Documents complied as to form in all material respects with applicable accounting requirements and
the published rules and regulations of the SEC with respect thereto. Such financial statements have been prepared in accordance
with generally accepted accounting principles, consistently applied, during the periods involved (except (i) as may be otherwise
indicated in such financial statements or the notes thereto, or (ii) in the case of unaudited interim statements, to the extent
they may exclude footnotes or may be condensed or summary statements) and fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of its operations and cash flows for the periods then ended (subject,
in the case of unaudited statements, to normal year-end audit adjustments). No other information provided by or on behalf of the
Company to the Buyers which is not included in the SEC Documents contains any untrue statement of a material fact or omits to state
any material fact necessary in order to make the statements therein, in the light of the circumstance under which they are or were
made, not misleading.


 






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4.COVENANTS.


 


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


 


(b)Maintenance
of Registration Statement. For so long as any of the Warrants remain outstanding, the Company shall use its reasonable best
efforts to maintain the effectiveness of the Registration Statement for the issuance thereunder of the Registrable Securities (as
defined below). For the purpose of this Agreement, "Registrable Securities" means (i) the Common Shares,
(ii) the Warrant Shares issued or issuable upon exercise of the Warrants and (iii) any shares of capital stock of the Company issued
or issuable with respect to the Common Shares and Warrant Shares as a result of any stock split, stock dividend, recapitalization,
exchange or similar event or otherwise, without regard to any limitations on issuance or exercise thereof.


 


(c)Prospectus
Supplement and Blue Sky. In the manner required by law, the Company shall have delivered to the Buyers, and as soon as practicable
after the Closing, the Company shall file, the Prospectus Supplement with respect to the Securities as required under and in conformity
with the 1933 Act, including Rule 424(b) thereunder. If required, the Company, on or before the Closing Date, shall take such action
as the Company shall reasonably determine is necessary in order to obtain an exemption for or to qualify the Securities for sale
to the Buyers at the Closing pursuant to this Agreement under applicable securities or "Blue Sky" laws of the states
of the United States (or to obtain an exemption from such qualification), and shall provide evidence of any such action so taken
to the Buyers on or prior to the Closing Date. The Company shall make all filings and reports relating to the offer and sale of
the Securities required under applicable securities or "Blue Sky" laws of the states of the United States following the
Closing Date.


 


(d)Use
of Proceeds. The Company will use the proceeds from the sale of the Securities in the manner described in the Registration
Statement and the Prospectus.


 






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(e)Listing.
The Company shall promptly secure the listing of all of the Common Shares and Warrant Shares upon each securities exchange and
automated quotation system, if any, upon which the Common Stock is then listed or quoted, including the Principal Market (subject
to official notice of issuance) and shall use its reasonable best efforts to maintain, in accordance with the Transaction Documents,
such listing of all Common Shares and Warrant Shares from time to time issuable under the terms of the Transaction Documents. The
Company shall use reasonable best efforts to maintain the Common Stocks' authorization for quotation on the Principal Market or
if such authorization is not able to be maintained, on another Eligible Market (as defined in the Warrants). Neither the Company
nor any of its Subsidiaries shall take any action which would be reasonably expected to result in the delisting or suspension of
the Common Stock on the Principal Market. The Company shall pay all fees and expenses in connection with satisfying its obligations
under this Section 4(e).


 


(f)Fees.
The Company shall reimburse Empery (a Buyer) or its designee(s) for all reasonable costs and expenses, incurred in connection with
the transactions contemplated by the Transaction Documents (including all reasonable legal fees and disbursements in connection
therewith, documentation and implementation of the transactions contemplated by the Transaction Documents and due diligence in
connection therewith) in an amount not to exceed $15,000, which amount, at the option of such Buyer, may be withheld by such Buyer
from its Purchase Price at the Closing. The Company shall be responsible for the payment of any placement agent's fees, financial
advisory fees, or broker's commissions (other than for Persons engaged by any Buyer) relating to or arising out of the transactions
contemplated hereby, including, without limitation, any fees or commissions payable to the Agent. The Company shall pay, and hold
each Buyer harmless against, any liability, loss or expense (including, without limitation, reasonable attorney's fees and out-of-pocket
expenses) arising in connection with any claim relating to any such payment.


 


(g)Pledge
of Securities. The Company acknowledges and agrees that the Securities may be pledged by any holder of Securities (an "Investor")
in connection with a bona fide margin agreement or other loan or financing arrangement that is secured by the Securities. The pledge
of Securities shall not be deemed to be a transfer, sale or assignment of the Securities hereunder, and no Investor effecting a
pledge of Securities shall be required to provide the Company with any notice thereof or otherwise make any delivery to the Company
pursuant to this Agreement or any other Transaction Document. The Company hereby agrees, subject to applicable securities laws,
to execute and deliver such documentation as a pledgee of the Securities may reasonably request in connection with a pledge of
the Securities to such pledgee by an Investor.


 






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(h)Disclosure
of Transactions and Other Material Information. On or before 12:00 p.m., New York City time, on the date of this Agreement,
the Company shall issue a press release and file a Current Report on Form 8-K describing the terms of the transactions contemplated
by the Transaction Documents in the form required by the 1934 Act and attaching the material Transaction Documents (including,
without limitation, this Agreement and the form of Warrant as exhibits to such filing (including all attachments, the "8-K
Filing"). As of immediately following the filing of the 8-K Filing with the SEC, no Buyer shall be in possession of any
material, nonpublic information received from the Company, any of its Subsidiaries or any of their respective officers, directors,
employees or agents, that is not disclosed in the 8-K Filing or in prior filings with the SEC. The Company shall not, and shall
cause each of its Subsidiaries and its and each of their respective officers, directors, employees and agents, not to, provide
any Buyer with any material, nonpublic information regarding the Company or any of its Subsidiaries from and after the filing
of the 8-K Filing with the SEC without the express written consent of such Buyer. If a Buyer has, or believes it has, received
any such material, nonpublic information regarding the Company or any of its Subsidiaries provided in breach of the preceding
sentence, it shall provide the Company with written notice thereof in which case the Company shall, within two (2) Trading Days
(as defined in the Warrants) of receipt of such notice, make public disclosure of any such material, nonpublic information provided
in breach of the preceding sentence. In the event of a breach of the foregoing covenant by the Company, any of its Subsidiaries,
or any of its or their respective officers, directors, employees and agents, in addition to any other remedy provided herein or
in the Transaction Documents, a Buyer shall have the right to make a public disclosure, in the form of a press release, public
advertisement or otherwise, of such material, nonpublic information without the prior approval by the Company, its Subsidiaries,
or any of its or their respective officers, directors, employees or agents. No Buyer shall have any liability to the Company,
its Subsidiaries, or any of its or their respective officers, directors, employees, stockholders or agents for any such disclosure.
If the Company, its Subsidiaries or any of its or their respective officers, directors, employees, stockholders or agents delivers
any material, non-public information to a Buyer without such Buyer's consent, the Company hereby covenants and agrees that such
Buyer shall not have any duty of confidentiality with respect to, or a duty not to trade on the basis of, such material, non-public
information. Subject to the foregoing, neither the Company, its Subsidiaries nor any Buyer shall issue any press releases or any
other public statements with respect to the transactions contemplated hereby; provided, however, that the Company
shall be entitled, without the prior approval of any Buyer, to make any press release or other public disclosure with respect
to such transactions (i) in substantial conformity with the 8-K Filing and contemporaneously therewith and (ii) as is required
by applicable law, regulation or any Eligible Market on which the Company's securities are then listed or quoted (provided that
in the case of clause (i) each Buyer shall be consulted by the Company in connection with any such press release or other public
disclosure prior to its release). Without the prior written consent of any applicable Buyer, neither the Company nor any of its
Subsidiaries or affiliates shall disclose the name of such Buyer in any filing, announcement, release or otherwise other
than in connection with the Registration Statement unless such disclosure is required by law, regulation or any Eligible Market
on which the Company's securities are then listed or quoted. 


 


(i)Reservation
of Shares. While the Warrants are outstanding, the Company shall take all action necessary, at all times, to have authorized,
and reserved for the purpose of issuance, no less than 11,485,844 shares of Common Stock (such number as adjusted for any stock
dividend, stock split, stock combination or other similar transaction after the date hereof) for the issuance of shares of Common
Stock issuable upon exercise of the Warrants.


 


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


 






    	20



    	 



    
 


(k)No Reverse
Stock Splits, Distributions or Rights Offerings. While any Warrants remain outstanding, the Company shall not (i) combine (by
combination, reverse stock split or otherwise) its outstanding shares of Common Stock into a smaller number of shares, (ii) declare
or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock,
by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property
or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction),
or (iii) grant, issue or sell any options, convertible securities or rights to purchase stock, warrants, securities or other property
pro rata to the record holders of any class of Common Stock.


 


(l)Closing
Documents. On or prior to fourteen (14) calendar days after the last Closing Date, the Company agrees to deliver, or cause
to be delivered, to each Buyer and Schulte Roth & Zabel LLP executed copies of the Transaction Documents, Securities and other
documents required to be delivered to any party pursuant to Section 7 hereof.


 


5.REGISTER;
TRANSFER AGENT INSTRUCTIONS.


 


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


 


(b)Transfer
Agent Instructions. The Company shall issue irrevocable instructions to the Transfer Agent, and any subsequent transfer agent,
to issue certificates or credit shares to the applicable balance accounts at DTC, registered in the name of each Buyer or its respective
nominee(s), for the Warrant Shares in such amounts as specified from time to time by each Buyer to the Company upon exercise
of the Warrants in the form of Exhibit B attached hereto (the "Irrevocable Transfer Agent Instructions").
The Company represents and warrants that no instruction other than the Irrevocable Transfer Agent Instructions referred to in this
Section 5 will be given by the Company to the Transfer Agent, and any subsequent transfer agent with respect to the Securities,
and that the Securities shall otherwise be freely transferable on the books and records of the Company as and to the extent provided
in this Agreement and the other Transaction Documents. The Company acknowledges that a breach by it of its obligations hereunder
will cause irreparable harm to the Buyers. Accordingly, the Company acknowledges that the remedy at law for a breach of its obligations
under this Section 5 will be inadequate and agrees, in the event of a breach or threatened breach by the Company of the provisions
of this Section 5, that the Buyers shall be entitled, in addition to all other available remedies, to an order and/or injunction
restraining any breach and requiring immediate issuance and transfer, without the necessity of showing economic loss and without
any bond or other security being required.


 






    	21



    	 



    
 


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


 


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


 


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


 


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


 


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


 


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


 


(i)The Company
shall have duly executed and delivered to such Buyer (i) each of the Transaction Documents, (ii) the Common Shares (allocated in
such amounts as such Buyer shall request) being purchased by such Buyer at the Closing pursuant to this Agreement by electronic
delivery at the applicable balance account at DTC and (iii) the related Warrants (allocated in such amounts as such Buyer shall
request) being purchased by such Buyer at the Closing pursuant to this Agreement.


 






    	22



    	 



    
 


(ii)Such
Buyer shall have received the opinion of Greenberg Traurig, LLP, the Company's counsel, dated as of the Closing Date, in substantially
the form of Exhibit C attached hereto.


 


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


 


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


 


(v)The Company
shall have delivered to such Buyer a certificate evidencing the Company's qualification as a foreign corporation and good standing
issued by the Secretary of State (or comparable office) of each jurisdiction in which the Company conducts business and is required
to so qualify, as of a date within ten (10) days of the Closing Date.


 


(vi)The
Company shall have delivered to such Buyer a certified copy of the Certificate of Incorporation as certified by the Secretary of
State of the State of Delaware (or a fax or pdf copy of such certificate) within ten (10) days of the Closing Date.


 


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


 


(viii)The
representations and warranties of the Company shall be true and correct in all respects as of the date when made and as of the
Closing Date as though made at that time (except for representations and warranties that speak as of a specific date, which shall
be true and correct as of such specified date) and the Company shall have performed, satisfied and complied in all respects with
the covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or complied with by the
Company at or prior to the Closing Date. Such Buyer shall have received a certificate, executed by the Chief Executive Officer
of the Company, dated as of the Closing Date, to the foregoing effect in the form attached hereto as Exhibit E.


 


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


 


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


 






    	23



    	 



    
 


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


 


(xii)The
Registration Statement shall be effective and available for the issuance and sale of the Securities hereunder and the Company shall
have delivered to such Buyer the Prospectus and the Prospectus Supplement as required thereunder.


 


(xiii)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.


 


(xiv)Since
the date of this Agreement, no event or series of events shall have occurred that reasonably could be expected to result in a Material
Adverse Effect.


 


(xv)There
shall be no less than 11,485,844 shares of Common Stock (such number as adjusted for any stock dividend, stock split, stock combination
or other similar transaction after the date hereof) authorized, reserved and available for the issuance of shares of Common Stock
issuable upon exercise of the Warrants.


 


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


 


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


 


9.MISCELLANEOUS.


 


(a)Governing
Law; Jurisdiction; Jury Trial. All questions concerning the construction, validity, enforcement and interpretation of this
Agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict
of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the
laws of any jurisdictions other than the State of New York. Each party hereby irrevocably submits to the exclusive jurisdiction
of the state and federal courts sitting in The City of New York, Borough of Manhattan, for the adjudication of any dispute hereunder
or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees
not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court,
that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit,
action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees
that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be
deemed to limit in any way any right to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY
RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH
OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.


 






    	24



    	 



    
 


(b)Counterparts.
This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement
and shall become effective when counterparts have been signed by each party and delivered to the other party; provided that a facsimile
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 signature.


 


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


 


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


 


(e)Entire
Agreement; Amendments. This Agreement and the other Transaction Documents supersede all other prior oral or written agreements
between the Buyers, the Company, their affiliates and Persons acting on their behalf with respect to the matters discussed herein,
and this Agreement, the other Transaction Documents and the instruments referenced herein and therein contain the entire understanding
of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein,
neither the Company nor any Buyer makes any representation, warranty, covenant or undertaking with respect to such matters. No
provision of this Agreement may be amended other than by an instrument in writing signed by the Company and the holders of at least
a majority of the aggregate number of Registrable Securities issued and issuable hereunder, and any amendment to this Agreement
made in conformity with the provisions of this Section 9(e) shall be binding on all Buyers and holders of Securities as applicable.
No provision hereof may be waived other than by an instrument in writing signed by the party against whom enforcement is sought.
No such amendment shall be effective to the extent that it applies to less than all of the holders of the applicable Securities
then outstanding. No consideration shall be offered or paid to any Person to amend or consent to a waiver or modification of any
provision of any of the Transaction Documents unless the same consideration also is offered to all of the parties to the Transaction
Documents, the holders of the Common Shares and the holders of the Warrants, as the case may be. The Company has not, directly
or indirectly, made any agreements with any Buyers relating to the terms or conditions of the transactions contemplated by the
Transaction Documents except as set forth in the Transaction Documents. Without limiting the foregoing, the Company confirms that,
except as set forth in this Agreement, no Buyer has made any commitment or promise or has any other obligation to provide any financing
to the Company or otherwise.


 






    	25



    	 



    
 


(f)Notices.
Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must
be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent
by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending
party); or (iii) one Business Day after deposit with an overnight courier service, in each case properly addressed to the party
to receive the same. The addresses and facsimile numbers for such communications shall be:


 


If to the Company:


 


Bionovo, Inc.


5858 Horton Street, Suite 375


Emeryville, California 94086


Telephone:(510) 601-2000

Facsimile:(510) 601-5050

Attention:J. David Boyle II


 


with a copy (for informational purposes only) to:


 


Greenberg Traurig, LLP

MetLife Building

200 Park Avenue

New York, New York 10166

Telephone:(212) 801-9200


Facsimile:(212)
801-6400


Attention:Robert
H. Cohen, Esq.


 






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If to the Transfer Agent:


 


Computershare, Inc.

250 Royall Street


Canton, MA 02021

Telephone:[                           ]


Facsimile:  [                          
]


Attention:Stevie
Marcus


 


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


 


with a copy (for informational purposes only) to:


 


Schulte Roth & Zabel LLP

919 Third Avenue

New York, New York 10022

Telephone:(212) 756-2000

Facsimile:  (212) 593-5955

Attention: Eleazer N. Klein, Esq.


 


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


 


(g)Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and
assigns, including any purchasers of the Warrants. The Company shall not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the holders of at least a majority of the aggregate number of Registrable Securities issued
and issuable hereunder. A Buyer may assign some or all of its rights hereunder without the consent of the Company, in which event
such assignee shall be deemed to be a Buyer hereunder with respect to such assigned rights


 


(h)No Third
Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted successors
and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.


 


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


 






    	27



    	 



    



 


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


 


(k)Indemnification.
(i) In consideration of each Buyer's execution and delivery of the Transaction Documents and acquiring the Securities thereunder
and in addition to all of the Company's other obligations under the Transaction Documents, the Company shall defend, protect, indemnify
and hold harmless each Buyer and each other holder of the Securities and all of their stockholders, partners, members, officers,
directors, employees and direct or indirect investors and any of the foregoing Persons' agents or other representatives (including,
without limitation, those retained in connection with the transactions contemplated by this Agreement) (collectively, the "Indemnitees")
from and against any and all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages,
and expenses in connection therewith (irrespective of whether any such Indemnitee is a party to the action for which indemnification
hereunder is sought), and including reasonable attorneys' fees and disbursements (the "Indemnified Liabilities"),
incurred by any Indemnitee as a result of, or arising out of, or relating to (a) any misrepresentation or breach of any representation
or warranty made by the Company in the Transaction Documents or any other certificate, instrument or document contemplated hereby
or thereby, (b) any breach of any covenant, agreement or obligation of the Company contained in the Transaction Documents or any
other certificate, instrument or document contemplated hereby or thereby or (c) any cause of action, suit or claim brought or made
against such Indemnitee by a third party that is not an affiliate of such Indemnitee (including for these purposes a derivative
action brought on behalf of the Company) and arising out of or resulting from (i) the execution, delivery, performance or enforcement
of the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby, (ii) any transaction
financed or to be financed in whole or in part, directly or indirectly, with the proceeds of the issuance of the Securities, (iii)
any disclosure made by such Buyer pursuant to Section 4(h) or (iv) the status of such Buyer or holder of the Securities as an investor
in the Company pursuant to the transactions contemplated by the Transaction Documents. To the extent that the foregoing undertaking
by the Company may be unenforceable for any reason, the Company shall make the maximum contribution to the payment and satisfaction
of each of the Indemnified Liabilities which is permissible under applicable law.


 


(ii)Promptly after
receipt by an Indemnitee under this Section 9(k) of notice of the commencement of any action or proceeding (including any governmental
action or proceeding) involving an Indemnified Liability, such Indemnitee shall, if a claim for indemnification in respect thereof
is to be made against any indemnifying party under this Section 9(k), deliver to the indemnifying party a written notice of the
commencement thereof, and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party
so desires, jointly with any other indemnifying party similarly noticed, to assume control of the defense thereof with counsel
mutually satisfactory to the indemnifying party and the Indemnitee; provided, however, that an Indemnitee shall have
the right to retain its own counsel with the fees and expenses of not more than one counsel for such Indemnitee to be paid by the
indemnifying party, if, in the reasonable opinion of the Indemnitee, the representation by such counsel of the Indemnitee and the
indemnifying party would be inappropriate due to actual or potential differing interests between such Indemnitee and any other
party represented by such counsel in such proceeding. Legal counsel referred to in the immediately preceding sentence shall be
selected by the Investors holding at least a majority of the Registrable Securities. The Indemnitee shall cooperate fully with
the indemnifying party in connection with any negotiation or defense of any such action or Indemnified Liabilities by the indemnifying
party and shall furnish to the indemnifying party all information reasonably available to the Indemnitee that relates to such action
or Indemnified Liabilities. The indemnifying party shall keep the Indemnitee fully apprised at all times as to the status of the
defense or any settlement negotiations with respect thereto. No indemnifying party shall be liable for any settlement of any action,
claim or proceeding effected without its prior written consent, provided, however, that the indemnifying party shall
not unreasonably withhold, delay or condition its consent. No indemnifying party shall, without the prior written consent of the
Indemnitee, consent to entry of any judgment or enter into any settlement or other compromise which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such Indemnitee of a release from all liability in respect to such Indemnified
Liabilities or litigation. Following indemnification as provided for hereunder, the indemnifying party shall be subrogated to all
rights of the Indemnitee with respect to all third parties, firms or corporations relating to the matter for which indemnification
has been made. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of
any such action shall not relieve such indemnifying party of any liability to the Indemnitee under this Section 9(k), except to
the extent that the indemnifying party is prejudiced in its ability to defend such action.


 






    	28



    	 



    
 


(iii)The indemnification
required by this Section 9(k) shall be made by periodic payments of the amount thereof during the course of the investigation or
defense, as and when bills are received or Indemnified Liabilities are incurred.


 


(iv)The indemnity
agreements contained herein shall be in addition to (x) any cause of action or similar right of the Indemnitee against the indemnifying
party or others, and (y) any liabilities the indemnifying party may be subject to pursuant to the law.


 


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


 


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


 






    	29



    	 



    
 


(n)Rescission
and Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of)
the Transaction Documents, whenever any Buyer exercises a right, election, demand or option under a Transaction Document and the
Company does not timely perform its related obligations within the periods therein provided, then such Buyer may rescind or withdraw,
in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand or election in whole or
in part without prejudice to its future actions and rights.


 


(o)Payment
Set Aside. To the extent that the Company makes a payment or payments to the Buyers hereunder or pursuant to any of the other
Transaction Documents or the Buyers enforce or exercise their rights hereunder or thereunder, and such payment or payments or the
proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential,
set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee,
receiver or any other Person under any law (including, without limitation, any bankruptcy law, foreign, state or federal law, common
law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended
to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement
or setoff had not occurred.


 


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


 


[Signature Page
Follows]


 






    	30



    	 



    
 







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


 


 


	 	COMPANY:
	 	 
	 	BIONOVO, INC.
	 	 
	 	 
	 	By: 	/s/ Isaac Cohen
	 	 	Name: Isaac Cohen

	 	 	Title: Chief Executive
        Officer



 


 


 


 


[Signature Page
to Securities 

Purchase Agreement]


 






    	31



    	 



    
 


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


  


	 	BUYERS:
	 	 
	 	Empery Asset master
        Ltd.
	 	 
	 	By: EMPERY ASSET MANAGEMENT, LP, its Authorized Agent
	 	 
	 	By: EMPERY AM GP, LLC, its General Partner
	 	 
	 	 
	 	By: 	/s/ Ryan M. Lane  
	 	 	Name: Ryan M. Lane

	 	 	Title: Managing Member

 






    	32



    	 



    








 


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


 


 


	 	BUYERS:
	 	 
	 	HUDSON BAY MASTER FUND LTD.
	 	 
	 	By:	Hudson Bay Capital Management LP, as its
	 	 	Investment Manager
	 	 	 
	 	 	 
	 	 	 
	 	By:	/s/ Yoav Roth
	 	 	Name:    Yoav Roth
	 	 	Title:      Authorized Signatory









 






    	33



    	 



    
  





SCHEDULE OF BUYERS


 


	(1)	 	(2)	 	(3)	 	(4)	 	(5)	 	(6)
	Buyer

        
	 	Address
        and

        Facsimile Number

        
	 	Number
        of

        Common Shares 
	 	Number
        of

        Warrant Shares

        
	 	

        Purchase Price

        
	 	Legal
        Representative's Address


and Facsimile
Number

        

	 	 	 	 	 	 	 	 	 	 	 
	Empery Asset  

Master Ltd.	 	

        c/o Empery Asset Management, LP

        1 Rockefeller Plaza, Suite
        1205

        New York, NY 10020

         

        Attention: Ryan
        M. Lane

        Facsimile: 212-608-3307

        Telephone: 212-608-3300

        Residence: Cayman
        Islands

        Email: ryan.lane@emperyam.com
	 	7,115,848	 	5,742,922	 	$213,485.44	 	Schulte Roth & Zabel
        LLP

        919 Third Avenue

        New York, New York 10022

        Attention: Eleazer Klein, Esq.

        Facsimile: (212) 593-5955

        Telephone: (212) 756-2376


Email: Eleazer.Klein@srz.com

	 	 	 	 	 	 	 	 	 	 	 
	Hudson Bay 

Master Fund
    Ltd.	 	777 Third Avenue, 30
    FL

    New York, NY 10017

    Attention:Yoav Roth

                      George Antonopolous

    Facsimile:646-214-7946

    Telephone:212-571-1244

    Residence:Cayman Islands

    E-mail:    investments@hudsonbaycapital.com

                     operations@hudsonbaycapital.com	 	7,115,848	 	5,742,922	 	$213,485.44	 	 
	 	 	 	 	 	 	 	 	 	 	 










 



    	



    	 



    



  





EXHIBITS


  





	Exhibit A	Form of Warrant
	Exhibit B	Form of Irrevocable Transfer Agent Instructions
	Exhibit C	Form of Opinion of Company's Counsel
	Exhibit D	Form of Secretary's Certificate
	Exhibit E	Form of Officers Certificate







 



 


SCHEDULES


 





	Schedule I 	List of General Use Free Writing Prospectus


 


 






    	 



    	 



    
  


SCHEDULE I