Exhibit 10.12


 





SECURITIES
PURCHASE AGREEMENT


 


This
SECURITIES PURCHASE AGREEMENT (this “Agreement”), dated as of May 16, 2019 (the “Effective
Date”), is by and among TFF Pharmaceuticals, Inc., a Delaware corporation (the “Company”),
and the investors listed on the Schedule of Buyers, attached hereto as Exhibit A (individually, a “Buyer”
and collectively, the “Buyers”).


 


RECITALS


 


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


 


B.
The Company has authorized the issuance of Series A Convertible Preferred Stock, par value $0.001 (the “Shares”)
in accordance with the form of the Second Amended and Restated Certificate of Incorporation attached hereto as Exhibit B
(the “Certificate”), which Shares shall be convertible into shares of the Company’s common
stock, par value $0.001 (the “Common Stock”) (as converted, collectively, the “Conversion
Shares”), in accordance with the terms of the Certificate.


 


C.
Each Buyer wishes to purchase, and the Company wishes to sell, upon the terms and conditions stated in this Agreement, the aggregate
number of Shares set forth opposite such Buyer’s name in column (3) on the Schedule of Buyers.


 


D.
At each Closing (as defined below), the parties hereto shall execute and deliver an Amended and Restated Registration Rights Agreement,
in the form attached hereto as Exhibit C (the “Registration Rights Agreement”), pursuant
to which the Company has agreed to provide certain registration rights with respect to the Registrable Securities (as defined
in the Registration Rights Agreement), under the 1933 Act and the rules and regulations promulgated thereunder, and applicable
state securities laws.


 


E.
In connection with this offer and sale of the Shares (the “Offering”), the Company, together
with National Securities Corporation (the “Placement Agent”), have entered into an escrow agreement,
in the form attached hereto as Exhibit D (the “Escrow Agreement”), with Delaware Trust
Company (the (“Escrow Agent”), to hold the Purchase Price (as hereinafter defined), to be released at
each Closing to the Company, upon the written consent of the Company and the Placement Agent.


 


F.
The Shares and the Conversion Shares are collectively referred to herein as the “Securities.”


 






     


     


    

 


AGREEMENT


 


NOW,
THEREFORE, in consideration of the premises and the mutual covenants contained herein and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Company and each Buyer hereby agree as follows:





  


1.
AUTHORIZATION, SALE AND ISSUANCE OF SERIES A CONVERTIBLE PREFERRED STOCK.


 


(a)
Authorization. The Company will, prior to the Initial Closing Date (as defined below), authorize (a) the sale and
issuance of the Shares, having the rights, privileges, preferences and restrictions set forth in the Certificate; and (b) the
reservation of Conversion Shares for issuance upon conversion of the Shares.


 


(b)
Series A Convertible Preferred Stock. 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, shall purchase from the
Company on each Closing Date, the number of Shares as is set forth opposite such Buyer’s name in column (3) on the Schedule
of Buyers.


 


(c)
Closing. The closing of the purchase of the Shares by the Buyers shall occur at one or more closings (each of which is
referred to as a “Closing” and the date of each is referred to as a “Closing Date”).
Each Closing shall take place at the offices of Greenberg Traurig, LLP, 3161 Michelson Drive, Suite 1000, Irvine, CA 92612.
The date and time of the initial Closing (the “Initial Closing Date”) shall be 11:00 a.m., New York
time, on the first Business Day on which the conditions to the initial Closing (“Initial Closing”) set
forth in Sections 6 and 7 below are satisfied or waived (or such later date as is mutually agreed to by the Company and each Buyer).
As used herein “Business Day” means any day other than a Saturday, Sunday or other day on which commercial
banks in New York, New York are authorized or required by law to remain closed.


 


(d)
Purchase Price. The aggregate of all Shares purchased and sold shall be no less than Six Million Dollars ($6,000,000) at
a cash purchase price of $2.50 per share (the “Per Share Purchase Price”). The aggregate purchase price
for the Shares to be purchased by each Buyer (the “Purchase Price”) shall be the amount set forth opposite
such Buyer’s name in column (4) on the Schedule of Buyers.


 


(e)
Payment of Purchase Price; Delivery of Shares. On each Closing Date, (i) each Buyer shall pay its respective Purchase
Price to the Company through the Escrow Agent for their respective Shares to be issued and sold to such Buyer at such Closing,
and (ii) the Company shall deliver to each Buyer either (A) a certificate registered in such Buyer’s name (representing
the number of Shares as is set forth opposite such Buyer’s name in column (3) on the Schedule of Buyers) or (B) an irrevocable
instruction letter to the Company’s transfer agent to issue a certificate registered in such Buyer’s name (representing
the number of Shares as is set forth opposite such Buyer’s name in column (3) on the Schedule of Buyers) and deliver such
certificate to the Buyer as soon thereafter as possible.


 


2.
BUYER’S REPRESENTATIONS AND WARRANTIES.


 


Each
Buyer represents and warrants to the Company with respect to only itself that:


 


(a)
Organization; Authority. Such Buyer (i) if an entity, is 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 Transaction Documents (as defined below) to which it is a party and otherwise to carry out its obligations
hereunder and thereunder, or (ii) if an individual, has the legal capacity to enter into and to consummate the transactions contemplated
by the Transaction Documents to which it is a party and otherwise to carry out its obligations hereunder and thereunder.


 


(b)
No Public Sale or Distribution. Such Buyer (i) is acquiring its Shares, and (ii) upon conversion of its Shares will acquire
the Conversion Shares issuable upon conversion thereof, in each case, for its own account and not with a view towards, or for
resale in connection with, the public sale or distribution thereof in violation of applicable securities laws, except pursuant
to sales registered or exempted under the 1933 Act; provided, however, by making the representations herein, such Buyer does not
agree, or make any representation or warranty, to hold any of the Securities for any minimum or other specific term and reserves
the right to dispose of the Securities at any time in accordance with or pursuant to a registration statement or an exemption
under the 1933 Act. Such Buyer does not presently have any agreement or understanding, directly or indirectly, with any Person
(as defined below) to distribute any of the Securities in violation of applicable securities laws.


 






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


 


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


 


(e)
Information. Such Buyer and its advisors, if any, have been furnished with the Company’s private placement memorandum,
dated March 14, 2019, (the “Private Placement Memorandum”), and all other materials relating to the
business, finances and operations of the Company and materials relating to the offer and sale of the Securities which have been
requested by such Buyer. Such Buyer and its advisors, if any, have been afforded the opportunity to ask questions of the Company.
Such Buyer understands that its investment in the Securities involves a high degree of risk. Such Buyer has sought such accounting,
legal and tax advice as it has considered necessary to make an informed investment decision with respect to its acquisition of
the Securities, and it is not relying on any statements or representations of the Company or its agents for legal advice with
respect to this investment or the transactions contemplated by this Agreement. Such Buyer believes that it has received all the
information such Buyer considers necessary or appropriate for deciding whether to purchase the Securities. Such Buyer understands
that such discussions, as well as any information provided by the Company, including the Private Placement Memorandum, were intended
to describe certain aspects of the Company’s business and prospects, but were not necessarily a thorough or exhaustive description.
The foregoing provisions of this Section 2(e), however, do not limit or modify the representations and warranties of the Company
in Section 3 of this Agreement or the right of the Buyers to rely thereon.


 


(f)
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.


 


(g)
Transfer or Resale. Such Buyer understands that except as provided in the Registration Rights Agreement or Section 4(g)
hereof: (i) the Securities have not been and are not being registered under the 1933 Act or any state securities laws, and may
not be offered for sale, sold, assigned or transferred unless (A) subsequently registered thereunder, (B) such Buyer shall have
delivered to the Company (if requested by the Company) an opinion of counsel to such Buyer, in a form reasonably acceptable to
the Company, to the effect that such Securities to be sold, assigned or transferred may be sold, assigned or transferred pursuant
to an exemption from such registration, or (C) such Buyer provides the Company with reasonable assurance and documentation as
may be requested by the Company or its legal counsel that such Securities can be sold, assigned or transferred pursuant to Rule
144 or Rule 144A promulgated under the 1933 Act (or a successor rule thereto) (collectively, “Rule 144”);
(ii) any sale of the Securities made in reliance on Rule 144 may be made only in accordance with the terms of Rule 144, and further,
if Rule 144 is not applicable, any resale of the Securities under circumstances in which the seller (or the Person through whom
the sale is made) may be deemed to be an underwriter (as that term is defined in the 1933 Act) may require compliance with some
other exemption under the 1933 Act or the rules and regulations of the SEC promulgated thereunder; and (iii) neither the Company
nor any other Person is under any obligation to register the Securities under the 1933 Act or any state securities laws or to
comply with the terms and conditions of any exemption thereunder.


 






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


 


(i)
No Conflicts. The execution, delivery and performance by such Buyer of this Agreement and the consummation by such Buyer
of the transactions contemplated hereby will not (i) result in a violation of the organizational documents of such Buyer, (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.


 


(j)
Buyer’s Principal Residence/Office. The address of Buyer’s principal residence, if Buyer is a natural Person,
or principal office, if Buyer is a non-natural Person, such as a corporation, limited liability company or other entity, is set
forth in column (2) of the Schedule of Buyers.


 


(k)
No Engagements. Such Buyer has not engaged any brokers, finders or agents, and the Company has not, nor will, incur, directly
or indirectly, as a result of any action taken by such Buyer, any liability for brokerage or finders’ fees or agents’
commissions or any similar charges in connection with the transactions consummated under this Agreement. Neither such Buyer, nor
any of Buyer’s officers, directors, employees, agents, stockholders or partners has either directly or indirectly, including
through a broker or finder: (i) engaged in or received any general solicitation or (ii) published or received any advertisement
in connection with the offer or sale of the Securities.


 


3.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY.


 


The
Company represents and warrants to each Buyer as of the date of this Agreement and as of the Initial Closing Date and on each
subsequent Closing Date (except for representations and warranties that speak as of a particular date, which shall be true and
correct in all material respects as of such dates) that:


 


(a)
Organization and Qualification. The Company is an entity duly organized and validly existing and in good standing under
the laws of the jurisdiction in which it is formed, and has the requisite power and authorization to own its properties and to
carry on its business as now being conducted and as presently proposed to be conducted. The Company is duly qualified as a foreign
entity to do business and is in good standing in every jurisdiction in which its ownership of property or the nature of the business
conducted by it makes such qualification necessary, except to the extent that the failure to be so qualified or be in good standing
would not be reasonably expected to have a Material Adverse Effect. “Material Adverse Effect” means
any material adverse effect on (i) the business, properties, assets, liabilities, operations (including results thereof) or condition
(financial or otherwise) of the Company, either individually or taken as a whole, (ii) the transactions contemplated hereby or
in any of the other Transaction Documents, or (iii) the authority or ability of the Company to perform any of its obligations
under any of the Transaction Documents. The Company has no Subsidiaries. “Subsidiaries” means any Person
in which the Company, directly or indirectly, (I) owns any of the outstanding capital stock or holds any equity or similar interest
of such Person or (II) controls or operates all or any part of the business, operations or administration of such Person, and
each of the foregoing, is individually referred to herein as a “Subsidiary.” Additionally, to the extent
that any Subsidiary is hereafter created, and the context of the provision of this Agreement would ordinarily include a Subsidiary,
then the term “Company” will be deemed to include such Subsidiary.


 






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(b)
Authorization; Enforcement; Validity. The Company has the requisite power and authority to enter into and perform its obligations
under this Agreement and the other Transaction Documents and to issue the Securities in accordance with the terms hereof and thereof.
The execution and delivery of this Agreement and the other Transaction Documents by the Company, and the consummation by the Company
of the transactions contemplated hereby and thereby (including, without limitation, the issuance of the Shares and the reservation
for issuance and issuance of the Conversion Shares issuable upon conversion of the Shares) have been duly authorized by the Company’s
board of directors or other governing body, as applicable, and (other than the filing with the SEC of one or more Registration
Statements in accordance with the requirements of the Registration Rights Agreement, a Form D with the SEC and any other filings
as may be required by any state securities agencies) no further filing, consent or authorization is required by the Company, its
respective boards of directors or the stockholders or other governing body. The Shares, when issued in accordance with the terms
of this Agreement, will be validly issued, fully paid and non-assessable and free from all preemptive or similar rights, taxes,
liens, charges and other encumbrances with respect to the issue thereof under the terms thereof. This Agreement has been, and
the other Transaction Documents will be prior to the Initial Closing, duly executed and delivered by the Company, and each constitutes
the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with its 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 and except as rights to indemnification and to contribution may be limited by federal or state securities law. “Transaction
Documents” means, collectively, this Agreement, the Registration Rights Agreement, the Irrevocable Transfer Agent
Instructions (as defined in the Registration Rights Agreement) and each of the other agreements and instruments entered into or
delivered by any of the parties hereto in connection with the consummation of the transactions contemplated hereby and thereby,
as may be amended from time to time.


 


(c)
Issuance of Conversion Shares. The Conversion Shares, when issued in accordance with the terms of the Certificate, will
be validly issued, fully paid and non-assessable and free from all preemptive or similar rights, taxes, liens, charges and other
encumbrances with respect to the issue thereof under the terms thereof, with the holders being entitled to all rights accorded
to a holder of Common Stock. The Company shall have reserved from its duly authorized capital stock not less than one hundred
ten percent (110%) of the maximum number of Conversion Shares issuable upon conversion of the Shares in accordance with the terms
of the Certificate. Subject to the accuracy of the representations and warranties of the Buyers in this Agreement, the offer and
issuance by the Company of the Securities is exempt from registration under the 1933 Act.


 


(d)
No Conflicts. The execution, delivery and performance of the Transaction Documents by the Company and the consummation
by the Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance of the Shares,
the Conversion Shares upon conversion of the Shares, the reservation for issuance of the Conversion Shares) will not (i) result
in a violation of the Certificate of Incorporation (as defined below) (including, without limitation, the Certificate or any other
certificate of designation contained therein) or other organizational documents of the Company, any capital stock of the Company
or Bylaws (as defined below) of the Company, (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 the Company is a party or (iii) result in a violation of any law, rule, regulation,
order, judgment or decree (including, without limitation, foreign, federal and state securities laws and regulations) applicable
to the Company or by which any property or asset of the Company is bound or affected except, in the case of clause (ii) or (iii)
above, to the extent such violations that could not reasonably be expected to have a Material Adverse Effect.


 






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(e)
Consents. Other than the written consent of holders of Shares as of the date hereof representing the requisite number of
Shares in accordance with the Company’s Amended and Restated Certificate of Incorporation (the “Series A Approval”),
the Company is not required to obtain any consent from, authorization or order of, or make any filing or registration with (other
than the filing with the SEC of one or more Registration Statements in accordance with the requirements of the Registration Rights
Agreement, a Form D with the SEC and any other filings as may be required by any state securities agencies), any court, governmental
agency or any regulatory or self-regulatory agency or any other Person in order for it to execute, deliver or perform any of its
respective obligations under, or contemplated by, the Transaction Documents, in each case, in accordance with the terms hereof
or thereof. All consents, authorizations, orders, filings and registrations which the Company is required to obtain at or prior
to the Initial Closing have been obtained or made on or prior to the Initial Closing Date, and the Company is not aware of any
facts or circumstances which might prevent the Company from obtaining or effecting any of the registration, application or filings
contemplated by the Transaction Documents.


 


(f)
Acknowledgment Regarding Buyer’s Purchase of Securities. The Company acknowledges and agrees that each Buyer is acting
solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated
hereby and thereby and that no Buyer is (i) an “affiliate” (as defined in Rule 144) of the Company or (ii) to its
knowledge, a “beneficial owner” of more than ten percent (10%) of the shares of Common Stock (as defined for purposes
of Rule 13d-3 of the Securities and Exchange Act of 1934 Act, as amended (“1934 Act”)). The Company
further acknowledges that no Buyer is acting as a financial advisor or fiduciary of the Company (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 to which it is a party has been based solely on the independent
evaluation by the Company and its respective representatives.


 


(g)
No General Solicitation; Placement Agent’s Fees. Except as set forth in Schedule 3(g) attached to the Disclosure
Letter, neither the Company nor any Person acting on its behalf, has engaged in any form of general solicitation or general advertising
(within the meaning of Regulation D) in connection with the offer or sale of the Securities. The Company shall be responsible
for the payment of any Placement Agent’s fees, financial advisory fees, or brokers’ commissions (other than for Persons
engaged by any Buyer or its investment advisor) relating to or arising out of the transactions contemplated hereby. Other than
the Placement Agent, the Company has not engaged any placement agent or other broker or dealer in connection with the offer or
sale of the Securities.


 


(h)
No Integrated Offering. None of the Company or, to the Company’s knowledge, any of its affiliates, nor any Person
acting on its behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any
security, under circumstances that would require registration of the issuance of any of the Securities under the 1933 Act, whether
through integration with prior offerings or otherwise, or cause this offering of the Securities to require approval of stockholders
of the Company (other than the Series A Approval or any required approval of holders of a majority of the outstanding common stock
of the Company received before the Initial Closing) under any applicable stockholder approval provisions. None of the Company,
nor its affiliates nor any Person acting on their behalf will take any action or steps that would require registration of the
issuance of any of the Securities under the 1933 Act or cause the offering of any of the Securities to be integrated with other
offerings of securities of the Company.


 






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


 


(j)
Application of Takeover Protections; Rights Agreement. The Company and its board of directors have taken all necessary
action, if any, in order to render inapplicable any control share acquisition, interested stockholder, business combination, poison
pill (including, without limitation, any distribution under a rights agreement) or other similar anti-takeover provision under
the Certificate of Incorporation, Bylaws or other organizational documents or the laws of the jurisdiction of its incorporation
or otherwise which is or could become applicable to any Buyer as a result of the consummation of the transactions contemplated
by this Agreement, including, without limitation, the Company’s issuance of the Securities and any Buyer’s ownership
of the Securities. The Company and its board of directors have taken all necessary action, if any, in order to render inapplicable
any stockholder rights plan or similar arrangement relating to accumulations of beneficial ownership of shares of Common Stock
or a change in control of the Company.


 


(k)
Placement Documents. The Private Placement Memorandum provided to the Buyers in connection with the sale of the Shares,
at the time of the date thereon, as it may be amended from time to time, did not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading. No other information provided by or on behalf of the Company
to any of the Buyers taken together with such Private Placement Memorandum contains any untrue statement of a material fact or
omits to state any material fact necessary in order to make the statements therein not misleading, in the light of the circumstance
under which they are or were made.


 


(l)
Absence of Certain Changes. Since the date of the Company’s Private Placement Memorandum, there has been no material
adverse change and no material adverse development in the business, assets, liabilities, properties, operations (including results
thereof), condition (financial or otherwise) or prospects of the Company. Since the date of the Company’s Private Placement
Memorandum, the Company has not (i) declared or paid any dividends (whether by cash, property or securities), (ii) sold any assets,
individually or in the aggregate, outside of the ordinary course of business or (iii) made any capital expenditures, individually
or in the aggregate, outside of the ordinary course of business. The Company has not taken any steps to seek protection pursuant
to any law or statute relating to bankruptcy, insolvency, reorganization, receivership, liquidation or winding up, nor does the
Company have any knowledge or reason to believe that any of their respective creditors intend to initiate involuntary bankruptcy
proceedings or any actual knowledge of any fact which would reasonably lead a creditor to do so. The Company is not as of the
date hereof, and after giving effect to the transactions contemplated hereby to occur at each Closing, will not be Insolvent (as
defined below). “Insolvent” means (i) the present fair saleable value of the Company’s assets
is less than the amount required to pay the Company’s total Indebtedness (as defined below), (ii) the Company is unable
to pay its debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured
or (iii) the Company intends to incur or believe that it will incur debts that would be beyond its ability to pay as such debts
mature.


 






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(m)
No Undisclosed Events, Liabilities, Developments or Circumstances. The Company has no knowledge of any event, liability,
development or circumstance that has occurred or exists, or that is reasonably expected to occur or exist with respect to the
Company or any of its business, properties, liabilities, operations (including results thereof) or condition (financial or otherwise),
that (i) could have a material adverse effect on any Buyer’s investment hereunder or (ii) could have a Material Adverse
Effect.


 


(n)
Conduct of Business; Regulatory Permits. The Company is not in violation of any term of or in default under its Certificate
of Incorporation or Bylaws. The Company is not in violation of any judgment, decree or order or any statute, ordinance, rule or
regulation applicable to the Company, and the Company will not 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, have a Material Adverse Effect. The Company
possess all certificates, authorizations and permits issued by the appropriate 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 the Company has not received any notice of proceedings relating to the revocation
or modification of any such certificate, authorization or permit.


 


(o)
Foreign Corrupt Practices. The Company and, to its knowledge, none of its directors, officers, agents, employees or other
Persons acting on behalf of the Company has, in the course of its actions for, or on behalf of, the Company (i) used any corporate
funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; (ii) made
any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; (iii)
violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any unlawful
bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or domestic government official or
employee.


 


(p)
Sarbanes-Oxley Act. The Company is in compliance with all applicable requirements of the Sarbanes-Oxley Act of 2002 and
all applicable rules and regulations promulgated by the SEC thereunder.


 


(q)
Transactions With Affiliates. Except as set forth on Schedule 3(q) attached to the Disclosure Letter and in the
Private Placement Memorandum, none of the officers, directors, employees, consultants or affiliates of the Company is presently
a party to any transaction with the Company (other than for ordinary course services as employees, officers, consultants or directors
and immaterial transactions), including any contract, agreement or other arrangement providing for the furnishing of services
to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any such officer,
director, employee or affiliate or, to the knowledge of the Company, any corporation, partnership, trust or other Person in which
any such officer, director, employee or affiliate has a substantial interest or is an employee, officer, director, trustee or
partner.


 






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(r)
Equity Capitalization. As of the date hereof, the authorized capital stock of the Company consists solely of 45,000,000
shares of Common Stock, 4,000,000 of which are issued and outstanding, and 10,000,000 shares of Series A Preferred Stock, 5,662,000
of which are issued or outstanding as of the date of this Agreement. Except as disclosed on Schedule 3(r), there are no
Convertible Securities issued and outstanding. No approval of the shareholders is required for the issuance of the Shares or the
Conversion Shares or any of the Convertible Securities. No shares of Common Stock are held in treasury. (i) None of the Company’s
capital stock is subject to preemptive rights or any other similar rights or any liens or encumbrances suffered or permitted by
the Company; (ii) there are no outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any capital stock of the
Company, or contracts, commitments, understandings or arrangements by which the Company is or may become bound to issue additional
capital stock of the Company or options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, or exercisable or exchangeable for, any capital stock of the Company (except
pursuant to the Plan, agreements to issue common stock to the Placement Agent described in Section 3(g) and an agreement to issue
common stock in connection with certain patent and intellectual property services); (iii) there are no outstanding debt securities,
notes, credit agreements, credit facilities or other agreements, documents or instruments evidencing Indebtedness of the Company
or by which the Company is or may become bound; (iv) there are no financing statements securing obligations in any amounts filed
in connection with the Company; (v) there are no agreements or arrangements under which the Company is obligated to register the
sale of any of their securities under the 1933 Act (except pursuant to the Registration Rights Agreement and a warrant issued
to the Placement Agent); (vi) except for the Series A Preferred Stock, there are no outstanding securities or instruments of the
Company which contain any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements
by which the Company is or may become bound to redeem a security of the Company; (vii) there are no securities or instruments
containing anti-dilution or similar provisions that will be triggered by the issuance of the Securities; and (viii) the Company
has not issued any stock appreciation rights or “phantom stock” plans or agreements or any similar plan or agreement.
The Company has furnished to the Buyers true, correct and complete copies of the Certificate and the Company’s bylaws, as
amended and as in effect on the date hereof (the “Bylaws”), and the terms of all securities convertible
into, or exercisable or exchangeable for, shares of Common Stock and the material rights of the holders thereof in respect thereto.
“Convertible Securities” means preferred stock, options, warrants or other securities directly or indirectly
convertible into, exchangeable for or exercisable for Common Stock of the Company.


 


(s)
Indebtedness and Other Contracts. The Company, except as disclosed on Schedule 3(s) attached to the Disclosure Letter
or in the Private Placement Memorandum, (i) has no outstanding Indebtedness (as defined below), (ii) is not a party to any contract,
agreement or instrument, the violation of which, or default under which, by the other party(ies) to such contract, agreement or
instrument could reasonably be expected to result in a Material Adverse Effect, (iii) is not in violation of any term of, or in
default under, any contract, agreement or instrument relating to any Indebtedness, except where such violations and defaults would
not result, individually or in the aggregate, in a Material Adverse Effect, or (iv) is not a party to any contract, agreement
or instrument relating to any Indebtedness, the performance of which, in the judgment of the Company’s officers, has or
is expected to have a Material Adverse Effect. “Indebtedness” of any Person means, without duplication
(A) all indebtedness for borrowed money, (B) all obligations issued, undertaken or assumed as the deferred purchase price of property
or services (including, without limitation, “capital leases” in accordance with generally accepted accounting principles)
(other than trade payables entered into in the ordinary course of business), (C) all reimbursement or payment obligations with
respect to letters of credit, surety bonds and other similar instruments, (D) all obligations evidenced by notes, bonds, debentures
or similar instruments, including obligations so evidenced incurred in connection with the acquisition of property, assets or
businesses, (E) all indebtedness created or arising under any conditional sale or other title retention agreement, or incurred
as financing, in either case with respect to any property or assets acquired with the proceeds of such indebtedness (even though
the rights and remedies of the seller or bank under such agreement in the event of default are limited to repossession or sale
of such property), (F) all monetary obligations under any leasing or similar arrangement which, in connection with generally accepted
accounting principles, consistently applied for the periods covered thereby, is classified as a capital lease, (G) all indebtedness
referred to in clauses (A) through (F) above secured by (or for which the holder of such Indebtedness has an existing right, contingent
or otherwise, to be secured by) any mortgage, lien, pledge, charge, security interest or other encumbrance upon or in any property
or assets (including accounts and contract rights) owned by any Person, even though the Person which owns such assets or property
has not assumed or become liable for the payment of such indebtedness, and (H) all Contingent Obligations in respect of indebtedness
or obligations of others of the kinds referred to in clauses (A) through (G) above. “Contingent Obligation”
means, as to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to any indebtedness,
lease, dividend or other obligation of another Person if the primary purpose or intent of the Person incurring such liability,
or the primary effect thereof, is to provide assurance to the obligee of such liability that such liability will be paid or discharged,
or that any agreements relating thereto will be complied with, or that the holders of such liability will be protected (in whole
or in part) against loss with respect thereto. “Person” means an individual, a limited liability company,
a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity and a government or any
department or agency thereof.


 






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(t)
Absence of Litigation. Except as set forth on Schedule 3(t) attached to the Disclosure Letter, there is no action,
suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization
or body pending or, to the knowledge of the Company, threatened against or affecting the Company, the Common Stock or any of the
Company’s officers or directors which is outside of the ordinary course of business or individually or in the aggregate
material to the Company. There has not been, and to the knowledge of the Company, there is not pending or contemplated, any investigation
by the SEC or other United States governmental agency involving the Company or any current or former director or officer of the
Company.


 


(u)
Employee Relations. The Company is not a party to any collective bargaining agreement or employs any member of a union.
The Company believes that its relations with their respective employees are good. No executive officer (as defined in Rule 501(f)
promulgated under the 1933 Act) or other key employee of the Company has notified the Company that such officer intends to leave
the Company or otherwise terminate such officer’s employment with the Company. To the Company’s knowledge, no executive
officer or other key employee of the Company 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 or other key employee (as the
case may be) does not subject the Company to any liability with respect to any of the foregoing matters. The Company is 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.


 


(v)
Title. The Company has good and marketable title to all personal property owned by it which is material to the business
of the Company, in each case, free and clear of all liens, encumbrances and defects except such as do not materially affect the
value of such property and do not interfere with the use made and proposed to be made of such property by the Company.


 


(w)
Intellectual Property Rights. To the Company’s knowledge, the Company owns or possesses adequate rights or licenses
to use all trademarks, trade names, service marks, service mark registrations, service names, patents, patent rights, copyrights,
original works, inventions, licenses, approvals, governmental authorizations, trade secrets and other intellectual property rights
and all applications and registrations therefor (“Intellectual Property Rights”) necessary to conduct
is business as now conducted and as presently proposed to be conducted. None of the Company’s Intellectual Property Rights
have expired, terminated or been abandoned, or are expected to expire, terminate or be abandoned, within three years from the
date of this Agreement. The Company has no knowledge of any infringement by the Company of Intellectual Property Rights of others.
There is no claim, action or proceeding being made or brought, or to the knowledge of the Company, being threatened, against the
Company regarding their Intellectual Property Rights. The Company is not aware of any facts or circumstances which might give
rise to any of the foregoing infringements or claims, actions or proceedings. The Company has taken reasonable security measures
to protect the secrecy, confidentiality and value of all of its Intellectual Property Rights.


 






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(x)
Environmental Laws. The Company (i) is in compliance with all Environmental Laws (as defined below), (ii) has received
all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct its business, and (iii)
is in compliance with all terms and conditions of any such permit, license or approval where, in each of the foregoing clauses
(i), (ii) and (iii), the failure to so comply could be reasonably expected to have, individually or in the aggregate, a Material
Adverse Effect. “Environmental Laws” means all federal, state, local or foreign laws relating to pollution
or protection of human health or the environment (including, without limitation, ambient air, surface water, groundwater, land
surface or subsurface strata), including, without limitation, laws relating to emissions, discharges, releases or threatened releases
of chemicals, pollutants, contaminants, or toxic or hazardous substances or wastes (collectively, “Hazardous Materials”)
into the environment, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport
or handling of Hazardous Materials, as well as all authorizations, codes, decrees, demands or demand letters, injunctions, judgments,
licenses, notices or notice letters, orders, permits, plans or regulations issued, entered, promulgated or approved thereunder.


 


(y)
Tax Status. The Company (i) has timely made or filed all foreign, federal and state income and all other tax returns, reports
and declarations required by any jurisdiction to which it is subject, (ii) has timely paid all taxes and other governmental assessments
and charges that are material in amount, shown or determined to be due on such returns, reports and declarations, except those
being contested in good faith and (iii) has set aside on its books provision reasonably adequate for the payment of all taxes
for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material
amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company know of no basis for any
such claim. The Company is not operated in such a manner as to qualify as a passive foreign investment company, as defined in
Section 1297 of the U.S. Internal Revenue Code of 1986, as amended.


 


(z)
Off Balance Sheet Arrangements. There is no transaction, arrangement, or other relationship involving the Company in respect
of an off-balance sheet entity that would be required to be disclosed by the Company in a 1934 Act filing or that otherwise could
be reasonably likely to have a Material Adverse Effect.


 


(aa)
Investment Company Status. The Company is not, and upon consummation of the sale of the Securities will not be, an “investment
company,” or, to the knowledge of the Company, an affiliate of an “investment company,” a company controlled
by an “investment company” or an “affiliated person” of, or “promoter” or “principal
underwriter” for, an “investment company” as such terms are defined in the Investment Company Act of 1940, as
amended.


 


(bb)
U.S. Real Property Holding Corporation. The Company is not, and has never been a U.S. real property holding corporation
within the meaning of Section 897 of the Internal Revenue Code of 1986, as amended, and the Company shall so certify upon any
Buyer’s request.


 


(cc)
Transfer Taxes. On each Closing Date, all stock transfer or other taxes (other than income or similar taxes) which are
required to be paid in connection with the issuance, 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.


 


(dd)
Bank Holding Company Act. The Company is not 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, to its knowledge, any of its affiliates owns or controls, directly or indirectly, five percent (5%) or more of
the outstanding shares of any class of voting securities or twenty-five percent (25%) or more of the total equity of a bank or
any equity that is subject to the BHCA and to regulation by the Federal Reserve. Neither the Company nor, to its knowledge, any
of its affiliates exercises a controlling influence over the management or policies of a bank or any entity that is subject to
the BHCA and to regulation by the Federal Reserve.


 






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(ee)
Shell Company Status. The Company is not, and has never been, an issuer identified in, or subject to, Rule 144(i).


 


(ff)
Public Utility Holding Act. The Company is not a “holding company,” or an “affiliate” of a “holding
company,” as such terms are defined in the Public Utility Holding Act of 2005.


 


(gg)
Federal Power Act. The Company is not subject to regulation as a “public utility” under the Federal Power Act,
as amended.


 


(hh)
No Additional Agreements. The Company does not have any agreement or understanding with any Buyer with respect to the transactions
contemplated by the Transaction Documents other than as specified in the Transaction Documents.


 


(ii)
Real Property. The Company holds good title to all real property, leases in real property, or other interests in real property
stated as owned or held by the Company (the “Real Property”). The Real Property is free and clear of
all mortgages, defects, claims, liens, pledges, charges, taxes, rights of first refusal, encumbrances, security interests and
other encumbrances (collectively “Encumbrances”) and is not subject to any rights of way, building use
restrictions, exceptions, variances, reservations, or limitations of any nature except for (i) liens for current taxes not yet
due, and (ii) zoning laws and other land use restrictions that do not impair the present or anticipated use of the property subject
thereto. Any Real Property held under lease by the Company is held under valid, subsisting and enforceable leases with such exceptions
as are not material and do not interfere with the use made and proposed to be made of such property and buildings by the Company.


 


(jj)
Fixtures and Equipment. The Company has good title to, or a valid leasehold interest in, the tangible personal property,
equipment, improvements, fixtures, and other personal property and appurtenances that are used by the Company in connection with
the conduct of its business (the “Fixtures and Equipment”). The Fixtures and Equipment are structurally
sound, are in good operating condition and repair, are adequate for the uses to which they are being put, are not in need of maintenance
or repairs except for ordinary, routine maintenance and repairs and are sufficient for the conduct of the Company’s business
in the manner as conducted prior to each Closing. The Company owns all of its Fixtures and Equipment free and clear of all Encumbrances
except for (i) liens for current taxes not yet due, and (ii) zoning laws and other land use restrictions that do not impair the
present or anticipated use of the property subject thereto.


 


(kk)
Illegal or Unauthorized Payments; Political Contributions. The Company nor, to the best of the Company’s knowledge
(after reasonable inquiry of its officers and directors), any of the officers, directors, employees, agents or other representatives
of the Company or any other business entity or enterprise with which the Company is or has been affiliated or associated, has,
directly or indirectly, made or authorized any payment, contribution or gift of money, property, or services, whether or not in
contravention of applicable law, (i) as a kickback or bribe to any Person or (ii) to any political organization, or the holder
of or any aspirant to any elective or appointive public office except for personal political contributions not involving the direct
or indirect use of funds of the Company.


 






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(ll)
Money Laundering. The Company is in compliance with, and has not previously violated, the USA Patriot Act of 2001 and all
other applicable U.S. and non-U.S. anti-money laundering laws and regulations, including, without limitation, the laws, regulations
and Executive Orders and sanctions programs administered by the U.S. Office of Foreign Assets Control, including, without limitation,
(i) Executive Order 13224 of September 23, 2001 entitled, “Blocking Property and Prohibiting Transactions With Persons Who
Commit, Threaten to Commit, or Support Terrorism” (66 Fed. Reg. 49079 (2001)); and (ii) any regulations contained in 31
CFR, Subtitle B, Chapter V.


 


(mm)
Qualified Small Business Stock. As of and immediately following the Closing: (i) the Company will be an eligible corporation
as defined in Section 1202(e)(4) of the Code, (ii) the Company will not have made purchases of its own stock described in Code
Section 1202(c)(3)(B) during the one (1) year period preceding the Closing, except for purchases that are disregarded for
such purposes under Treasury Regulation Section 1.1202-2, and (iii) the Company’s aggregate gross assets, as defined by
Code Section 1202(d)(2), at no time between its incorporation and through the Closing have exceeded $50 million, taking into account
the assets of any corporations required to be aggregated with the Company in accordance with Code Section 1202(d)(3); provided,
however, that in no event shall the Company be liable to the Buyers or any other party for any damages arising from any subsequently
proven or identified error in the Company’s determination with respect to the applicability or interpretation of Code Section
1202, unless such determination shall have been given by the Company in a manner either grossly negligent or fraudulent.


 


(nn)
Disclosure. The Company understands and confirms that each of the Buyers will rely on the foregoing representations in
effecting the transactions consummated hereunder. All disclosure provided to the Buyers regarding the Company, its business and
the transactions contemplated hereby, including the Private Placement Memorandum, the Disclosure Letter and 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. The Company acknowledges and agrees that no Buyer makes or has made any representations or warranties with
respect to the transactions contemplated hereby other than those specifically set forth in Section 2.


 


4.
COVENANTS.


 


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


 


(b)
Form D and Blue Sky. The Company shall file a Form D with respect to the Securities as required under Regulation D and
to provide a copy thereof to the Placement Agent promptly after such filing. The Company shall, on or before the Initial Closing
Date, take such action as the Company shall reasonably determine is necessary in order to obtain an exemption for, or to, qualify
the Securities for sale to the Placement Agent at each 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 each Closing Date. Without limiting any other obligation of the Company
under this Agreement, the Company shall timely make all filings and reports relating to the offer and sale of the Securities required
in connection with the consummation of the transactions consummated hereunder under all applicable securities laws (including,
without limitation, all applicable federal securities laws and all applicable “Blue Sky” laws), and the Company shall
comply with all applicable federal, foreign, state and local laws, statutes, rules, regulations and the like relating to the offering
and sale of the Securities to the Buyers.


 






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(c)
Reporting Status. After the date the Company becomes subject to the periodic reporting requirements under Sections 13 or
15(d) of the 1934 Act, as amended from time to time, together with the regulations promulgated thereunder (a “Reporting
Company”), and until the date on which the Buyers shall have sold all of the Registrable Securities (such period,
to end in any event, whether or not such securities have been sold, not later than five years after such date, the “Reporting
Period”), the Company shall use commercially reasonable efforts to timely file all reports required to be filed
with the SEC pursuant to the 1934 Act, and the Company shall not terminate its status as an issuer required to file reports under
the 1934 Act even if the 1934 Act or the rules and regulations thereunder would no longer require or otherwise permit such termination
unless such termination is approved by the holders of a majority stockholders of the voting power of the Company, or unless no
Buyer has demand registration rights under the Registration Rights Agreement or unless no Buyer is a holder of record of Conversion
Shares (collectively, the “Termination Conditions”).


 


(d)
Use of Proceeds. The Company shall use the proceeds from the sale of the Shares for general corporate purposes, as set
forth in the Private Placement Memorandum; provided, however, that the Company shall not use any of the proceeds to make or repay
loans to any officer or director of the Company.


 


(e)
Listing. In connection with the Company becoming a Reporting Company, the Company shall in connection with any proper demand
for registration of Registrable Securities under the Registration Rights Agreement (if the same has not previously occurred) promptly
secure the listing or designation for quotation (as the case may be) of all of the Registrable Securities upon each national securities
exchange and automated quotation system, if any, upon which the Common Stock is then listed or designated for quotation (as the
case may be) (subject to official notice of issuance) and shall thereafter maintain such listing or designation for quotation
(as the case may be) of all Registrable Securities from time to time issuable under the terms of the Transaction Documents on
such national securities exchange or automated quotation system unless one of the Termination Conditions has occurred. During
any period that the Common Stock is listed or designated, the Company shall use commercially reasonable efforts to maintain the
Common Stock’s listing or designation for quotation (as the case may be) on The New York Stock Exchange, the NYSE MKT, the
Nasdaq Global Select Market, the Nasdaq Global Market or the Nasdaq Capital Market (each, an “Eligible Market”).
During the Reporting Period, the Company shall use commercially reasonable efforts not to take any action which could be reasonably
expected to prevent a listing or result in the delisting or suspension of the Common Stock from an Eligible 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 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 and resulting from the retention by the Company of any placement agent, financial advisor or broker (including, without
limitation, any fees payable to the Placement Agent, who is the Company’s sole placement agent in connection with the transactions
contemplated by this Agreement). Except when such Buyer has breached Section 2(k) hereof, the Company shall pay, and hold each
Buyer harmless against, any liability, loss or expense (including, without limitation, reasonable attorneys’ fees and out-of-pocket
expenses) arising in connection with any claim relating to any such payment. Except as otherwise set forth in the Transaction
Documents, each party to this Agreement shall bear its own expenses in connection with the sale of the Securities to the Buyers.


 


(g)
Pledge of Securities. Notwithstanding anything to the contrary contained in this Agreement, the Company acknowledges and
agrees that the Securities may be pledged by a Buyer in connection with a bona fide margin agreement or other bona fide 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 Buyer making 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 to execute and deliver such documentation as a holder of the Securities may reasonably request in connection
with a pledge of the Securities to such pledgee by a Buyer.


 






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(h)
Reservation of Shares. The Company shall take all action necessary to at all times have authorized, and reserved for the
purpose of issuance, no less than one hundred ten percent (110%) of the maximum number of Conversion Shares issuable upon conversion
of the Shares.


 


(i)
Conduct of Business. So long as any of the Securities are held by the Buyers and their successors in interest and assigns,
the business of the Company 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.


 


(j)
Subsequent Placements. So long as the Shares are outstanding, the Company shall, without the prior written consent (the
“Required Buyers Consent”) of the Required Buyers (as defined below), be prohibited from effecting or
entering into an agreement to effect any offering or placement of equity or equity linked securities of the Company, including
without limitation any shares of Series A Preferred Stock that remain authorized and unissued following the termination of the
offering pursuant to this Agreement (“Subsequent Placement”). The Required Buyers Consent may include
the Required Buyers requiring the Company to provide additional rights to the Holders in connection with any Subsequent Placement
including, without limitation, right of participation, increase in the amount of the Stated Value (as defined in the Certificate)
and additional redemption rights. Notwithstanding anything to the contrary herein, the term “Subsequent Placement”
shall not include (i) a firm commitment underwritten initial public offering through a registered broker-dealer (an “IPO”),
(ii) with the prior written consent of Liquid Venture Partners, LLC, an affiliate of the Placement Agent (“LVP”),
a placement (or series of placements), based on a pre-issuance valuation of the Company of at least the product of: (A) the total
number of issued and outstanding Common Stock and Common Stock Equivalents (on a converted basis) immediately prior to the Subsequent
Placement issuance, multiplied by (B) the product of: (x) the Per Share Purchase Price, multiplied by (y) two, and in which in
the aggregate gross proceeds to the Company do not exceed $2 million, or (iii) the issuance of equity or equity linked securities,
other than Series A Preferred Stock, based on a pre-issuance valuation of the Company of at least the product of: (A) the total
number of issued and outstanding Common Stock and Common Stock Equivalents (on a converted basis) immediately prior to the Subsequent
Placement issuance, multiplied by (B) the product of: (x) the Per Share Purchase Price, multiplied by (y) two, to one or more
of the Company’s strategic partners and/or licensors in consideration of non-cash assets or license rights from the strategic
partner or licensor, which issuances in the aggregate shall not exceed securities worth $5 million. All shares of Common Stock
issued or issuable pursuant to the securities of the Company issued under this Section 4(j) shall be subject to the 12 month lock-up
set forth in Section 4(t). "Common Stock Equivalents" means any securities of the Company which
would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock,
rights, options, warrants or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise
entitles the holder thereof to receive, Common Stock.


 


(k)
Change of Control. Prior to an IPO, the Company may not effect a Change of Control without the prior written consent of
the Required Buyers. “Change of Control” means (x) the acquisition of the Company by another entity
by means of any transaction (including, without limitation, any stock acquisition, reorganization, merger or consolidation) that
contemplates an enterprise value of the Company of less than the product of: (A) the total number of issued and outstanding Common
Stock and Common Stock Equivalents (on a converted basis) immediately prior to the effective date of the Change of Control, multiplied
by (B) the product of: (i) the Per Share Purchase Price, multiplied by (ii) two, or (y) a sale of all or substantially all of
the assets of the Company (including, for purposes of this section, the sale or exclusive license of intellectual property rights
which, in the aggregate, constitutes substantially all of the corporation’s material intellectual property assets for an
aggregate purchase price of less than the product of: (A) the total number of issued and outstanding Common Stock and Common Stock
Equivalents (on a converted basis) immediately prior to the effective date of the Change of Control, multiplied by (B) the product
of: (i) the Per Share Purchase Price, multiplied by (ii) two.). In the event of a Change of Control, each Buyer shall have the
right but not the obligation, by providing a written request to the Company prior to the effective date of the Change of Control
event, to require the Company to purchase some or all of such Buyer’s Shares outstanding at a purchase price per Share equal
to the product of: (A) two, multiplied by (B) the Per Share Purchase Price (the “Put Option Right”).
The Company shall not enter into any Change of Control transaction pursuant to which it would be unable to purchase back all of
the issued and outstanding Shares then held by the Buyers (including their assignees) at the time of proposed Change of Control
event pursuant to a full exercise by all of the Buyers (including their assignees) of their Put Option Right.


 






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(l)
Variable Rate Transaction. Notwithstanding anything in this Agreement to the contrary, until the later of none of the Shares
not having been converted to Conversion Shares or three years after the Company becomes a Reporting Company, the Company shall
be prohibited from effecting or entering into any Subsequent Placement involving a Variable Rate Transaction. “Variable
Rate Transaction” means a transaction in which the Company (i) issues or sells any Convertible Securities either
(A) at a conversion, exercise or exchange rate or other price that is based upon and/or varies with the trading prices of, or
quotations for, the shares of Common Stock at any time after the initial issuance of such Convertible Securities, or (B) with
a conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of such
Convertible Securities or upon the occurrence of specified or contingent events directly or indirectly related to the business
of the Company or the market for the Common Stock, other than pursuant to a customary “weighted average” anti-dilution
provision or (ii) enters into any agreement (including, without limitation, an “equity line of credit” or an “at
the market offering”) whereby the Company may sell securities at a future determined price (other than standard and customary
“preemptive” or “participation” rights). Each Buyer shall be entitled to obtain injunctive relief against
the Company to preclude any such issuance, which remedy shall be in addition to any right to collect damages. Notwithstanding
the foregoing, the offer or sale of the Series A Preferred Stock shall not be deemed to be a Variable Rate Transaction.


 


(m)
Passive Foreign Investment Company. For the period ending on the third year anniversary after the Company becomes a Reporting
Company, the Company shall conduct its business in such a manner as will ensure that the Company will not be deemed to constitute
a passive foreign investment company within the meaning of Section 1297 of the U.S. Internal Revenue Code of 1986, as amended.


 


(n)
Restriction on Redemption and Cash Dividends. So long as any Shares are outstanding and have not been converted to Conversion
Shares, the Company shall not, directly or indirectly, redeem, or declare or pay any cash dividend or distribution on, any securities
of the Company without the prior express written consent of the Required Buyers.


 


(o)
Corporate Existence. So long as any Shares are outstanding and have not been converted to Conversion Shares, the Company
shall maintain its corporate existence and shall not sell, assign or transfer all or substantially all of the Company’s
assets.


 


(p)
Board of Directors; Size. So long as any Shares are outstanding and have not been converted to Conversion Shares, the Company
will, within one hundred twenty (120) days of the Effective Date, have a board of directors and committees thereof that conform
to the requirements of Nasdaq Listing Rule 5605 applicable to smaller reporting companies. So long as the Shares are outstanding,
LVP shall have the right to advise and require its written consent on all board of director nominees, provided however, such consent
shall not be unreasonably withheld. Subject to any legal rights under Delaware law of the stockholders, the board of directors
of the Company and committees thereof shall conform to Nasdaq Listing Rule 5605 and the foregoing sentence for so long as any
Shares are outstanding and have not been converted to Conversion Shares, except as approved by LVP, which approval may be withheld
in its discretion and subject to reasonable conditions, including the requirement of additional independent directors.


 



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(q)
Incentive Equity. The Company has adopted an incentive stock or equity award plan (the “Plan”)
that is attached hereto as Exhibit E and which provides for awards of up to 1,630,000 shares of Common Stock. As of the
Effective Date, 1,630,000 shares of Common Stock remain eligible for issuance under the Plan for future issuance (the “Reserved
Shares”). The Company hereby agrees that prior to the closing of the IPO, the Company shall only issue “Options”
(as defined in the Plan) under the Plan and that the exercise price per share for any Options issued prior to the final Closing
shall not be less than the Per Share Purchase Price. Following the completion of the Offering, up to and including the date of
an IPO, the Reserved Shares shall not represent in excess of fifteen percent (15%) of the number of fully diluted shares of Common
Stock. The Plan will not be amended to increase the number of shares subject thereto until the Company becomes a Reporting Company
or with the approval of the Required Buyers. By each Buyer’s execution and delivery of this Agreement, each Buyer hereby
consents to the adoption by the Company of the Plan attached hereto as Exhibit E as of the date each Buyer acquires the
Shares purchased by each such Buyer.


 


(r)
Independent Accountants. Within three months after the date of initial issuance of the Shares, the Company will engage
independent certified public accountants, which firm is actively registered with the PCAOB, to perform an audit of the financial
statements that would be necessary and sufficient to meet the filing requirements of a registration statement for the registration
of securities of the Company either for issuance by the Company or resale of the Conversion Shares, which audit will be completed
no later than nine (9) months after the date of the initial issuance of the Shares.


 


(s)
Lock Up. In connection with the IPO, the Company will obtain lock-up agreements from all officers, directors and employees
of the Company and Parent, any direct or beneficial owner of five percent (5%) or more of the Common Stock (excluding any Conversion
Shares for purposes of calculating the five percent (5%)), and National Securities Corporation (“NSC”)
and any beneficial holders of shares of Common Stock who are affiliates of NSC in respect of shares of Common Stock issued upon
exercise of any warrants issued in connection with the offering by the Company of the Shares (the “Financing Shares”)
(for clarity, the lock up for NSC and its affiliates will not apply to any other shares of Common Stock, including any shares
of Common Stock acquired in the public markets); the foregoing lock up to extend for a period of 12 months after the effective
date of the registration statement for the IPO.


 


(t)
Investor Market Stand-Off. In connection with the IPO, if any, each Buyer hereby agrees that, for one hundred eighty (180)
days from the effective date of such registration (the “Restricted Period”), it will not (i) offer,
pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase, lend or otherwise transfer or dispose of any shares of Common Stock or any securities convertible
into or exercisable or exchangeable for Common Stock, whether now owned or hereafter acquired or with respect to which such Buyer
has or hereafter acquires the power of disposition; or (ii) enter into any swap or other agreement, arrangement or transaction
that transfers to another, in whole or in part, directly or indirectly, any of the economic consequence of ownership of any Common
Stock or any securities convertible into or exercisable or exchangeable for any Common Stock, whether any transaction described
in clause (i) or (ii) is to be settled by delivery of Common Stock, other securities, in cash or otherwise, without the prior
written consent of the managing or lead underwriter of such offering. In order to enforce the restrictions agreed to by Buyer
in this Section 4(u), the Company may impose stop-transfer instructions with respect to any security acquired under or subject
to this Agreement until the end of the Restricted Period. The Company’s underwriters shall be third-party beneficiaries
of the restrictions set forth in this Section 4(u).


 



    17


     


    

 


(u)
IPO Commitment. The Company shall complete an IPO no later than June 30, 2020, subject to extension upon the prior written
approval of the Required Holders.


 


5.
REGISTER; TRANSFER AGENT INSTRUCTIONS; LEGEND.


 


(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 Shares and, if issued, the Conversion Shares in
which the Company shall record the name and address of the Person in whose name the Shares and/or Conversion Shares have been
issued (including the name and address of each transferee), the aggregate number of Shares or Conversion Shares held by such Person,
and any tax related information required to be maintained. 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. If a Buyer effects a sale, assignment or transfer of the Conversion Shares, the Company shall
permit the transfer and shall promptly instruct its transfer agent to issue one or more certificates or credit shares to the applicable
balance accounts at the Depository Trust Company (“DTC”) in such name and in such denominations as specified
by such Buyer to effect such sale, transfer or assignment. In the event that such sale, assignment or transfer involves Conversion
Shares sold, assigned or transferred pursuant to an effective registration statement or in compliance with Rule 144, the transfer
agent shall issue such shares to such Buyer, assignee or transferee (as the case may be) without any restrictive legend in accordance
with Section 5(d) below. The Company acknowledges that a breach by it of its obligations under this Section 5(b) will cause irreparable
harm to each Buyer. Accordingly, the Company acknowledges that the remedy at law for a breach of its obligations under this Section
5(b) will be inadequate and agrees, in the event of a breach or threatened breach by the Company of the provisions of this Section
5(b), that each Buyer shall be entitled, in addition to all other available remedies, to an order and/or injunction restraining
any breach and requiring immediate issuance and transfer, without the necessity of showing economic loss and without any bond
or other security being required. The Company shall cause its counsel to issue the legal opinion referred to in the Irrevocable
Transfer Agent Instructions to the Company’s transfer agent on each Effective Date (as defined and provided in the Registration
Rights Agreement), provided that the applicable Buyer(s) or its or their representatives and/or brokers have provided the documentation
to counsel reasonably necessary or required for the basis of such legal opinion. Any fees (with respect to the transfer agent,
counsel to the Company or otherwise) associated with the issuance of such opinion or the removal of any legends on any of the
Securities shall be borne by the Company.


 


(c)
Legends. Each Buyer understands that the Securities have been issued (or will be issued in the case of the Conversion Shares)
pursuant to an exemption from registration or qualification under the 1933 Act and applicable state securities laws, and except
as set forth below, the Securities shall bear any legend as required by the “Blue Sky” laws of any state and a restrictive
legend in substantially the following form (and a stop-transfer order may be placed against transfer of such stock certificates):


 


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


 






    18


     


    

 


(d)
Removal of Legends. Certificates evidencing Securities shall not be required to contain the legend set forth in Section
5(c) above or any other legend (i) while a registration statement (including a Registration Statement) covering the resale of
such Securities is effective under the 1933 Act, (ii) following any sale of such Securities pursuant to Rule 144 (assuming the
transferor is not an affiliate of the Company), (iii) if such Securities are eligible to be sold, assigned or transferred under
Rule 144 (provided that a Buyer provides the Company with reasonable assurances that such Securities are eligible and will remain
for sale, assignment or transfer under Rule 144 which shall not include an opinion of counsel), (iv) in connection with a sale,
assignment or other transfer (other than under Rule 144), provided that such Buyer provides the Company with an opinion of counsel
to such Buyer, in a generally acceptable form, to the effect that such sale, assignment or transfer of the Securities may be made
and thereafter made without registration under the applicable requirements of the 1933 Act, or (v) if such legend is not required
under applicable requirements of the 1933 Act (including, without limitation, controlling judicial interpretations and pronouncements
issued by the SEC, provided that Buyer provides the Company with a reasonable description of the authority Buyer is relying upon).
If the Company is a Reporting Company and a legend is not required pursuant to the foregoing, the Company, at its expense, shall
no later than two (2) Business Days following the delivery by a Buyer to the Company or the transfer agent (with notice to the
Company) of a legended certificate representing such Securities (endorsed or with stock powers attached, signatures guaranteed,
and otherwise in form necessary to affect the reissuance and/or transfer, if applicable), together with any other deliveries from
such Buyer as may be required above in this Section 5(d), as directed by such Buyer, either: (A) provided that the Company’s
transfer agent is participating in the DTC Fast Automated Securities Transfer Program and such Securities are Conversion Shares,
credit the aggregate number of shares of Common Stock to which such Buyer shall be entitled to such Buyer’s or its designee’s
balance account with the DTC through its Deposit/Withdrawal at Custodian system or (B) if the Company’s transfer agent is
not participating in the DTC Fast Automated Securities Transfer Program, issue and dispatch for delivery (via reputable overnight
courier) to such Buyer, a certificate representing such Securities that is free from all restrictive and other legends, registered
in the name of such Buyer or its designee (the date by which such credit is so required to be made to the balance account of such
Buyer’s or such Buyer’s nominee with DTC or such certificate is required to be delivered to such Buyer pursuant to
the foregoing is referred to herein as the “Required Delivery Date”).


 


(e)
Failure to Timely Deliver; Buy-In. If the Company is a Reporting Company and the Company improperly fails to (i) issue
and dispatch for delivery (or cause to be so dispatched) to a Buyer by the Required Delivery Date a certificate representing the
Securities so delivered to the Company by such Buyer that is free from all restrictive and other legends or (ii) credit the balance
account of such Buyer’s or such Buyer’s nominee with DTC for such number of Conversion Shares so delivered to the
Company, and if on or after the business day immediately following the Required Delivery Date such Buyer (or any other Person
in respect, or on behalf, of such Buyer) purchases (in an open market transaction or otherwise) shares of Common Stock to deliver
in satisfaction of a sale by such Buyer of all or any portion of the number of shares of Common Stock, or a sale of a number of
shares of Common Stock equal to all or any portion of the number of shares of Common Stock, that such Buyer so anticipated receiving
from the Company without any restrictive legend, then, in addition to all other remedies available to such Buyer, the Company
shall, within five (5) Business Days after such Buyer’s request and in such Buyer’s sole discretion, either (x) pay
cash to such Buyer in an amount equal to such Buyer’s total purchase price (including brokerage commissions and other out-of-pocket
expenses, if any) for the shares of Common Stock so purchased (including brokerage commissions and other out-of-pocket expenses,
if any) (the “Buy-In Price”), at which point the Company’s obligation to so deliver such certificate
or credit such Buyer’s balance account shall terminate and such shares shall be cancelled, or (y) promptly honor its obligation
to so deliver to such Buyer a certificate or certificates or credit such Buyer’s DTC account representing such number of
shares of Common Stock that would have been so delivered if the Company timely complied with its obligations hereunder and pay
cash to such Buyer in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of shares
of Conversion Shares that the Company was required to deliver to such Buyer by the Required Delivery Date multiplied by (B) the
lowest closing sale price of the Common Stock on any Business Day during the period commencing on the date of the delivery by
such Buyer to the Company of the applicable Conversion Shares and ending on the date of such delivery and payment under this clause
(y).


 






    19


     


    

 


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


 


(a)
The obligation of the Company hereunder to issue and sell the Shares to each Buyer at a Closing is subject to the satisfaction,
at or before the applicable 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 other Transaction Documents to which it is a party and a Rule 506 “Bad Actor”
Questionnaire, and delivered the same to the Company.


 


(ii)
Such Buyer and each other Buyer shall have delivered to the Escrow Agent on behalf of the Company the Purchase Price for the Shares
being purchased by such Buyer at such Closing by check in collected funds through the Escrow Agent or 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 material respects as of the date when made and
as of such Closing Date as though originally 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 date), and such Buyer shall have performed, satisfied and complied in all material
respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with
by such Buyer at or prior to such Closing Date.


 


(iv)
A minimum of 2,400,000 Shares, for the minimum gross proceeds of $6,000,000, are purchased by the Buyers at the Initial Closing.


 


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


 


(a)
The obligation of each Buyer hereunder to purchase its Shares at a Closing is subject to the satisfaction, at or before the applicable
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 each of the Transaction Documents to which it is a party and
the Company shall have duly executed and delivered to such Buyer either (A) a certificate registered in such Buyer’s name
(representing the number of Shares as is set forth opposite such Buyer’s name in column (3) on the Schedule of Buyers) or
(B) an irrevocable instruction letter to the Company’s transfer agent to issue a certificate registered in such Buyer’s
name (representing the number of Shares as is set forth opposite such Buyer’s name in column (3) on the Schedule of Buyers)
and deliver such certificate to the Buyer as soon thereafter as possible.


 






    20


     


    

 


(ii)
The Buyers shall have received an opinion of Greenberg Traurig, LLP, the Company’s counsel, dated the date of the Initial
Closing, stating that the Company is duly incorporated, the Transaction Documents have been duly authorized, that the Shares are
be duly authorized, fully paid and non-assessable and that the Conversion Shares, if and when issued will be duly authorized,
fully paid and non-assessable, which opinion may be subject to such assumptions and conditions are normally set forth in opinions
of legal counsel in respect of such matters.


 


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


 


(iv)
The Company shall have delivered to such Buyer a certificate or other reasonably acceptable evidence 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 such Closing Date.


 


(v)
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 Company’s jurisdiction of incorporation within ten (10) days of such Closing Date.


 


(vi)
The Company shall have delivered to such Buyer a certificate, in the form acceptable to such Buyer, executed by the Secretary
of the Company dated as of the Initial Closing Date, as to (i) the resolutions consistent with Section 3(b) as adopted by the
Company’s board of directors in a form reasonably acceptable to such Buyer, (ii) the Certificate of Incorporation of the
Company and (iii) the Bylaws of the Company as in effect at the Closing.


 


(vii)
Each and every representation and warranty of the Company shall be true and correct as of the applicable Closing Date in all material
respects (except for representations and warranties that include an express materiality qualification, which shall be true and
correct in all respects and, except further, representations and warranties that speak as of a specific date, which shall be true
and correct as of such date) and the Company shall have performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required to be performed, satisfied or complied with by the Company at or prior to the Closing Date
(except for covenants, agreements and conditions that include an express materiality qualification, which shall performed, satisfied
or complied in all respects. Such Buyer shall have received a certificate, executed by the President of the Company, dated as
of the applicable Closing Date, to the foregoing effect and as to such other matters as may be reasonably requested by such Buyer
in the form reasonably acceptable to such Buyer.


 


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


 






    21


     


    

 


(ix)
No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed
by any court or governmental authority of competent jurisdiction that prohibits the consummation of any of the transactions contemplated
by the Transaction Documents.


 


(x)
Since the date of execution of this Agreement, no event or series of events shall have occurred that reasonably would have or
result in a Material Adverse Effect.


 


(xi)
The Company shall not have amended, modified, waived compliance with or terminated, revoked or rescinded in any manner or respect
(and the Company shall not have taken any action, or permitted any action to be taken (whether through the Company’s inaction
or otherwise), that has a similar effect to any of the foregoing) any provision of any of material agreements and all of such
agreements shall be in full force and effect.


 


(xii)
The Company shall have delivered to such Buyer a letter dated as of the Initial Closing Date, in a form reasonably acceptable
to such Buyer, executed by the Company (the “Disclosure Letter”).


 


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


 


(xiv)
A minimum of 2,400,000 Shares, for the minimum gross proceeds of $6,000,000, are purchased by the Buyers at the Initial Closing.


 


8.
TERMINATION.


 


(a)
This Agreement may be terminated prior to the Initial Closing:


 


(i)
by written agreement of the Buyers and the Company; or


 


(ii)
by either the Company or a Buyer (as to itself but no other Buyer) upon written notice to the other, if the Initial Closing shall
not have taken place by 4:30 p.m. Eastern time on May 31, 2019, subject to extension to June 30, 2019 pursuant to the mutual agreement
of the Company and the Placement Agent; provided, that the right to terminate this Agreement under this Section 8(a)(ii) shall
not be available to any party whose failure to comply with its obligations under this Agreement has been the cause of or resulted
in the failure of the Closing to occur on or before such time.


 


(b)
No termination of this Agreement shall affect any obligation of the Company under this Agreement to reimburse such Buyer for the
expenses described in Section 4(f) above. Nothing contained in this Section 8 shall be deemed to release any party from any liability
for any breach by such party of the terms and provisions of this Agreement or the other Transaction Documents or to impair the
right of any party to compel specific performance by any other party of its obligations under this Agreement or the other Transaction
Documents.


 






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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. Nothing contained herein
shall be deemed or operate to preclude any Buyer from bringing suit or taking other legal action against the Company in any other
jurisdiction to collect on the Company’s obligations to such Buyer or to enforce a judgment or other court ruling in favor
of such Buyer. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.



 


(b)
Counterparts. This Agreement may be executed in two or more identical counterparts, all of which shall be considered one
and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other
party. In the event that any signature is delivered by facsimile transmission or by an e-mail which contains a portable document
format (.pdf) file of an executed signature page, such signature page shall create a valid and binding obligation of the party
executing (or on whose behalf such signature is executed) with the same force and effect as if such signature page were an original
thereof.


 


(c)
Headings; Gender. The headings of this Agreement are for convenience of reference and shall not form part of, or affect
the interpretation of, this Agreement. Unless the context clearly indicates otherwise, each pronoun herein shall be deemed to
include the masculine, feminine, neuter, singular and plural forms thereof. The terms “including,” “includes,”
“include” and words of like import shall be construed broadly as if followed by the words “without limitation.”
The terms “herein,” “hereunder,” “hereof” and words of like import refer to this entire Agreement
instead of just the provision in which they are found.


 


(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). Notwithstanding anything to the contrary contained in this Agreement or any other Transaction Document (and without
implication that the following is required or applicable), it is the intention of the parties that in no event shall amounts and
value paid by the Company, or payable to or received by any of the Buyers, under the Transaction Documents (including without
limitation, any amounts that would be characterized as “interest” under applicable law) exceed amounts permitted under
any applicable law. Accordingly, if any obligation to pay, payment made to any Buyer, or collection by any Buyer pursuant the
Transaction Documents is finally judicially determined to be contrary to any such applicable law, such obligation to pay, payment
or collection shall be deemed to have been made by mutual mistake of such Buyer, and the Company and such amount shall be deemed
to have been adjusted with retroactive effect to the maximum amount or rate of interest, as the case may be, as would not be so
prohibited by the applicable law. Such adjustment shall be effected, to the extent necessary, by reducing or refunding, at the
option of such Buyer, the amount of interest or any other amounts which would constitute unlawful amounts required to be paid
or actually paid to such Buyer under the Transaction Documents. For greater certainty, to the extent that any interest, charges,
fees, expenses or other amounts required to be paid to or received by such Buyer under any of the Transaction Documents or related
thereto are held to be within the meaning of “interest” or another applicable term to otherwise be violative of applicable
law, such amounts shall be pro-rated over the period of time to which they relate.


 






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(e)
Entire Agreement; Amendments. This Agreement, the other Transaction Documents and the schedules and exhibits attached hereto
and thereto and the instruments referenced herein and therein supersede all other prior oral or written agreements between the
Buyers, the Company, their affiliates and Persons acting on their behalf solely with respect to the matters contained herein and
therein, and this Agreement, the other Transaction Documents, the schedules and exhibits attached hereto and thereto and the instruments
referenced herein and therein contain the entire understanding of the parties solely with respect to the matters covered herein
and therein; provided, however, nothing contained in this Agreement or any other Transaction Document shall (or shall be deemed
to) (i) have any effect on any agreements any Buyer has entered into with, or any instruments any Buyer has received from, the
Company prior to the date hereof with respect to any prior investment made by such Buyer in the Company or (ii) waive, alter,
modify or amend in any respect any obligations of the Company, or any rights of or benefits to any Buyer or any other Person,
in any agreement entered into prior to the date hereof between or among the Company and any Buyer, or any instruments any Buyer
received from the Company prior to the date hereof, and all such agreements and instruments shall continue in full force and effect.
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. For clarification purposes, the Recitals are part of this Agreement. No provision
of this Agreement may be amended other than by an instrument in writing signed by the Company and the Required Buyers, and any
amendment to any provision of 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, provided that no such amendment shall be effective to the extent that it (1)
applies to less than all of the holders of the Securities then outstanding or (2) imposes any obligation or liability on any Buyer
without such Buyer’s prior written consent (which may be granted or withheld in such Buyer’s sole discretion). No
waiver shall be effective unless it is in writing and signed by an authorized representative of the waiving party, provided that
the Required Buyers may waive any provision of this Agreement, and any waiver of any provision of 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, provided that
no such waiver shall be effective to the extent that it (1) applies to less than all of the holders of the Securities then outstanding
(unless a party gives a waiver as to itself only) or (2) imposes any obligation or liability on any Buyer without such Buyer’s
prior written consent (which may be granted or withheld in such Buyer’s sole discretion). 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 who are holders of Shares. 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. As a material inducement for each Buyer to enter into this Agreement, the Company expressly
acknowledges and agrees that no due diligence or other investigation or inquiry conducted by a Buyer, any of its advisors or any
of its representatives shall affect such Buyer’s right to rely on, or shall modify or qualify in any manner or be an exception
to any of, the Company’s representations and warranties contained in this Agreement or any other Transaction Document. “Required
Buyers” means Buyers having Purchase Prices in the aggregate that are at least equal to a majority of the aggregate
Purchase Price for all Buyers.


 






    24


     


    

 


(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, if delivered personally; (ii) when sent,
if sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the
sending party); (iii) when sent, if sent by e-mail (provided that such sent e-mail is kept on file (whether electronically or
otherwise) by the sending party and the sending party does not receive an automatically generated message from the recipient’s
e-mail server that such e-mail could not be delivered to such recipient) and (iv) if sent by overnight courier service, one (1)
Business Day after deposit with an overnight courier service with next day delivery specified, in each case, properly addressed
to the party to receive the same. The addresses, facsimile numbers and e-mail addresses for such communications shall be:


 


If
to the Company:


 


TFF
Pharmaceuticals, Inc.


2801
Via Fortuna


Suite
425


Austin,
Texas 78746


E-mail:
kcoleman@tffpharma.com

Attention: Kirk Coleman


 


with
a copy (for informational purposes only) to:


 


Greenberg
Traurig, LLP


3161
Michelson Drive, Suite 1000


Irvine,
CA 92612


Facsimile:
(949) 732-6501


E-mail:
DonahueD@gtlaw.com

Attention: Daniel K. Donahue, Esq.


 


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


 


with
a copy (for informational purposes only) to:


 


LKP
Global Law, LLP


1901
Avenue of the Stars


Suite
480


Los
Angeles, CA 90067


Facsimile:
(424) 239-1882


E-mail:
kleung@lkpgl.com

Attention: Kevin K. Leung, Esq.


 


or
to such other address, facsimile number or e-mail address and/or to the attention of such other Person as the recipient party
has specified by written notice given to each other party five (5) days prior to the effectiveness of such change. Written confirmation
of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically
generated by the sender’s facsimile machine containing the time, date and recipient facsimile number 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 (iv) above, respectively. A copy of the e-mail transmission containing
the time, date and recipient e-mail address shall be rebuttable evidence of receipt by e-mail in accordance with clause (iii)
above.


 






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(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, as contemplated below, any assignee of any of the Securities. The Company shall not assign
this Agreement or any rights or obligations hereunder without the prior written consent of the Required Buyers, except in the
event of a Change of Control. A Buyer may assign some or all of its rights hereunder in connection with any transfer of any of
its Securities 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, other than
the Indemnitees referred to in Section 9(k).


 


(i)
Survival. The representations, warranties, agreements and covenants shall survive the Closing and shall expire on the conversion
of the Shares into Conversion Shares. Each Buyer shall be responsible only for its own representations, warranties, agreements
and covenants hereunder.


 


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


 


(k)
Indemnification. In consideration of each Buyer’s execution and delivery of the Transaction Documents and acquiring
the Securities thereunder and in addition to all of the Company’s other obligations under the Transaction Documents, the
Company shall defend, protect, indemnify and hold harmless each Buyer and each holder of any 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 for one (1) counsel to all the Buyers (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 any of the Transaction Documents, (b) any breach of any covenant, agreement or obligation of
the Company contained in any of the Transaction Documents or (c) any cause of action, suit, proceeding or claim brought or made
against such Indemnitee by a third party (including for these purposes a derivative action brought on behalf of the Company) or
which otherwise involves such Indemnitee that arises out of or results from (i) the execution, delivery, performance or successful
enforcement of any of the Transaction Documents, (ii) any transaction financed or to be financed in whole or in part, directly
or indirectly, with the proceeds of the issuance of the Securities, or (iii) the status of such Buyer or holder of the Securities
either as an investor in the Company pursuant to the transactions contemplated by the Transaction Documents or as a party to this
Agreement (including, without limitation, as a party in interest or otherwise in any action or proceeding for injunctive or other
equitable relief). 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. Except as otherwise set forth herein, the mechanics and procedures with respect to the rights and obligations
under this Section 9(k) shall be the same as those set forth in Section 6 of the Registration Rights Agreement. No Indemnitee
shall be entitled to indemnification under this Section 9(k) to the extent an Indemnified Liability arises out of the gross negligence
or willful misconduct of such Indemnitee.


 






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(l)
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. No specific representation or warranty shall
limit the generality or applicability of a more general representation or warranty. Each and every reference to share prices,
shares of Common Stock and any other numbers in this Agreement that relate to the Common Stock shall be automatically adjusted
for stock dividends, stock splits, stock combinations and other similar transactions that occur with respect to the Common Stock
after the date of this Agreement.


 


(m)
Remedies. Each Person having any rights under any provision of this Agreement 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 specific performance and/or temporary, preliminary and permanent injunctive or other equitable relief from
any court of competent jurisdiction in any such case without the necessity of proving actual damages and without posting a bond
or other security.


 


(n)
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; Currency. To the extent that the Company makes a payment or payments to any Buyer hereunder or pursuant
to any of the other Transaction Documents or any of 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. Unless otherwise expressly indicated, all dollar amounts referred
to in this Agreement and the other Transaction Documents are in United States Dollars (“U.S. Dollars”),
and all amounts owing under this Agreement and all other Transaction Documents shall be paid in U.S. Dollars. All amounts denominated
in other currencies (if any) shall be converted into the U.S. Dollar equivalent amount in accordance with the Exchange Rate on
the date of calculation. “Exchange Rate” means, in relation to any amount of currency to be converted
into U.S. Dollars pursuant to this Agreement, the U.S. Dollar exchange rate as published in The Wall Street Journal on
the relevant date of calculation.


 






    27


     


    

 


(p)
Independent Nature of Buyers’ Obligations and Rights. The obligations of each Buyer under the Transaction Documents
are several and not joint with the obligations of any other Buyer, and no Buyer shall be responsible in any way for the performance
of the obligations of any other Buyer under any Transaction Document. Nothing contained herein or in any other Transaction Document,
and no action taken by any Buyer pursuant hereto or thereto, shall be deemed to constitute the Buyers as, and the Company acknowledges
that the Buyers do not so constitute, a partnership, an association, a joint venture or any other kind of group or entity, or
create a presumption that the Buyers are in any way acting in concert or as a group or entity with respect to such obligations
or the transactions contemplated by the Transaction Documents or any matters, and the Company acknowledges that the Buyers are
not acting in concert or as a group, and the Company shall not assert any such claim, with respect to such obligations or the
transactions contemplated by the Transaction Documents. The decision of each Buyer to purchase Securities pursuant to the Transaction
Documents has been made by such Buyer independently of any other Buyer. Each Buyer acknowledges that no other Buyer has acted
as agent for such Buyer in connection with such Buyer making its investment hereunder and that no other Buyer will be acting as
agent of such Buyer in connection with monitoring such Buyer’s investment in the Securities or enforcing its rights under
the Transaction Documents. The Company and each Buyer confirms that each Buyer has independently participated with the Company
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. The use of a single agreement to effectuate the purchase and sale of the Securities contemplated
hereby was solely in the control of the Company, not the action or decision of any Buyer, and was done solely for the convenience
of the Company and not because it was required or requested to do so by any Buyer. It is expressly understood and agreed that
each provision contained in this Agreement and in each other Transaction Document is between the Company and a Buyer, solely,
and not between the Company and the Buyers collectively and not between and among the Buyers.


 


[Signature
pages follow]


 




    28


     


    

 


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


 


	 	COMPANY:
	 	 
	 	TFF
    PHARMACEUTICALS, Inc.
	 	 
	 	By: 	/s/ Glenn Mattes
	 	 	Glenn Mattes,
	 	 	Chief Executive Officer


 


[Buyer
Signature Page Follows]


 




     


     


    

 


BUYER
SIGNATURE PAGE FOR SECURITIES PURCHASE AGREEMENT


 


TFF
PHARMACEUTICALS, Inc.


 


[Buyer’s
signature to be provided by way of its execution of the Omnibus Signature Page to the Agent’s “Omnibus Signature Page
and Investor Questionnaire” with respect to this Offering.]


 




     


     


    

 


BUYER
ADDENDUM RE ESCROW


 


(
this information is required )


 


By
signing above the above signed Buyer hereby certifies and confirms that: In the event that the Escrow Agent makes a disbursement
to the above signed Buyer, which may or may not occur, such Buyer hereby confirms that such disbursement is to be made by wire
transfer using the following wire transfer instructions. The Escrow Agent, the Company and the Placement Agent can rely on this
confirmation and I will not revoke this confirmation unless I confirm to the Company on this form replacement wire transfer instructions
at least two Business Days before revoking this confirmation. The Company may instruct the Escrow Agent to, or the Escrow Agent
may on its own, withhold any such disbursement until the Company is reasonably satisfied and the Escrow Agent is satisfied in
its sole discretion with the instructions and procedures for making such disbursement.


 


Bank
Name: ____________________


 


Bank
Address: ____________________


 


ABA
Number: ____________________


 


Account
Number: ____________________


 


Account
Name: ____________________


 


Reference:
____________________


 




     


     


    

 


EXHIBIT
A


 


SCHEDULE
OF BUYERS


 


	(1)	 	(2)	 	(3)	 	(4)
	Buyer
	 	Address,
                                         E-mail and/or Facsimile Number
	 	Number
                                         of Shares
	 	Purchase
                                         Price

	 	 	 	 	 	 	 


 




     


     


    

 


EXHIBIT
B


 


CERTIFICATE


 




     


     


    

 


EXHIBIT
C


 


Registration
Rights Agreement


 




     


     


    

 


EXHIBIT
D


 


ESCROW
AGREEMENT


 






     


     


    

 


EXHIBIT
E


 


2018
stock incentive plan