tenx_ex102





 



Exhibit 10.2






 


SECURITIES
PURCHASE AGREEMENT FOR CLASS E AND CLASS F UNITS

 


This
Securities Purchase Agreement for Class E and Class F Units (this
“Agreement”) is dated as
of July 6, 2020, between Tenax Therapeutics, Inc., a Delaware
corporation (the “Company”), and each
purchaser identified on the signature pages hereto (each, including
its successors and assigns, a “Purchaser” and
collectively, the “Purchasers”).

 


WHEREAS, subject to
the terms and conditions set forth in this Agreement and pursuant
to Section 4(a)(2) of the Securities Act of 1933, as amended (the
“Securities
Act”), and Rule 506 promulgated thereunder, the
Company desires to issue and sell to each Purchaser, and each
Purchaser, severally and not jointly, desires to purchase from the
Company, securities of the Company as more fully described in this
Agreement.

 


NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in
this Agreement, and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the Company
and each Purchaser agree as follows:

 



ARTICLE I.



DEFINITIONS

 


1.1           Definitions.
In addition to the terms defined elsewhere in this Agreement, for
all purposes of this Agreement, the following terms have the
meanings set forth in this Section 1.1:

 


“Acquiring
Person” shall have the
meaning ascribed to such term in Section 4.5.

 


“Action” shall have the
meaning ascribed to such term in Section 3.1(j).

 


“Affiliate” means any
Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common
control with a Person, as such terms are used in and construed
under Rule 405 under the Securities Act.

 


“Board of Directors” means
the board of directors of the Company.

 


“Business Day” means any
day other than Saturday, Sunday or other day on which commercial
banks in The City of New York are authorized or required by law to
remain closed; provided,
however,
for clarification, commercial banks shall not be deemed to be
authorized or required by law to remain closed due to “stay
at home”, “shelter-in-place”,
“non-essential employee”  or any other similar
orders or restrictions or the closure of any physical branch
locations at the direction of any governmental authority so long as
the electronic funds transfer systems (including for wire
transfers) of commercial banks in The City of New York are
generally are open for use by customers on such
day.

 


“Class E Units” means each
Class E unit consisting of (a) one Share, and (b) one Series C
Warrant to purchase one (1) Series C Warrant Share(s).

 


“Class E Unit Purchase
Price” equals $1.02780 per each Class E Unit, subject
to adjustment for reverse and forward stock splits, stock
dividends, stock combinations and other similar transactions of the
Common Stock that occur
after the date of this Agreement and prior to the Closing
Date.

 


 




 








 





 


“Class F Units” means each
Class F unit consisting of (a) one Pre-Funded Warrant to initially
purchase one Pre-Funded Warrant Share, and (b) one Series C Warrant
to purchase one (1) Series C Warrant Share(s).

 


“Class F Unit Purchase
Price” equals $1.02780 per each Class F Unit, subject
to adjustment for reverse and forward stock splits, stock
dividends, stock combinations and other similar transactions of the
Common Stock that occur after the date of this Agreement and prior
to the Closing Date.

 


“Closing” means the
closing of the purchase and sale of the Securities pursuant to
Section 2.1.

 


“Closing Date” means the
Trading Day on which all of the Transaction Documents have been
executed and delivered by the applicable parties thereto, and all
conditions precedent to (i) the Purchasers’ obligations to
pay the Subscription Amount and (ii) the Company’s
obligations to deliver the Securities, in each case, have been
satisfied or waived.

 


“Commission” means the
United States Securities and Exchange Commission.

 


“Common Stock” means the
common stock of the Company, par value $0.0001 per share, and any
other class of securities into which such securities may hereafter
be reclassified or changed.

 


“Common Stock Equivalents”
means any securities of the Company or the Subsidiaries which would
entitle the holder thereof to acquire at any time Common Stock,
including, without limitation, any debt, preferred stock, right,
option, warrant 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.

 


“Company Counsel” means
K&L Gates LLP, with offices located at 4350 Lassiter at North
Hills Avenue, Suite 300, Raleigh, North Carolina
27609.

 


“Disclosure Schedules”
means the Disclosure Schedules of the Company delivered
concurrently herewith.

 


“Disclosure Time” means,
(i) if this Agreement is signed on a day that is not a Trading Day
or after 9:00 a.m. (New York City time) and before midnight (New
York City time) on any Trading Day, 9:01 a.m. (New York City time)
on the Trading Day immediately following the date hereof, unless
otherwise instructed as to an earlier time by the Placement Agent,
and (ii) if this Agreement is signed between midnight (New York
City time) and 9:00 a.m. (New York City time) on any Trading Day,
no later than 9:01 a.m. (New York City time) on the date hereof,
unless otherwise instructed as to an earlier time by the Placement
Agent.

 


 




 

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“Effective Date” means the
earliest of the date that (a) the initial Registration Statement
has been declared effective by the Commission, (b) all of the
Shares and Warrant Shares have been sold pursuant to Rule 144 or
may be sold pursuant to Rule 144 without the requirement for the
Company to be in compliance with the current public information
required under Rule 144 and without volume or manner-of-sale
restrictions, (c) following the one year anniversary of the Closing
Date provided that a holder of Shares or Warrant Shares is not an
Affiliate of the Company, or (d) all of the Shares and Warrant
Shares may be sold pursuant to an exemption from registration under
Section 4(a)(1) of the Securities Act without volume or
manner-of-sale restrictions and Company Counsel has delivered to
such holders a standing written unqualified opinion that resales
may then be made by such holders of the Shares and Warrant Shares
pursuant to such exemption which opinion shall be in form and
substance reasonably acceptable to such holders.

 


 “Evaluation
Date” shall have the meaning ascribed to such term in
Section 3.1(s).

 


“Exchange Act” means the
Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.


 


“Exempt Issuance” means
the issuance of (a) shares of Common Stock or options to employees,
officers or directors of the Company pursuant to any stock or
option plan duly adopted for such purpose, by a majority of the
non-employee members of the Board of Directors or a majority of the
members of a committee of non-employee directors established for
such purpose for services rendered to the Company, (b) securities
upon the exercise or exchange of or conversion of any Securities
issued hereunder and/or other securities exercisable or
exchangeable for or convertible into shares of Common Stock issued
and outstanding on the date of this Agreement, provided that such
securities have not been amended since the date of this Agreement
to increase the number of such securities or to decrease the
exercise price, exchange price or conversion price of such
securities (other than in connection with stock splits or
combinations) or to extend the term of such securities, (c)
securities issued pursuant to acquisitions or strategic
transactions approved by a majority of the disinterested directors
of the Company, provided that such securities are issued as
“restricted securities” (as defined in Rule 144) and
carry no registration rights that require or permit the filing of
any registration statement in connection therewith during the
prohibition period in Section 4.12(a) herein, and provided that any
such issuance shall only be to a Person (or to the equityholders of
a Person) which is, itself or through its subsidiaries, an
operating company or an owner of an asset in a business synergistic
with the business of the Company and shall provide to the Company
additional benefits in addition to the investment of funds, but
shall not include a transaction in which the Company is issuing
securities primarily for the purpose of raising capital or to an
entity whose primary business is investing in securities and (d) a
concurrent registered direct offering of the Company’s
securities to the Purchaser.

 


“FCPA” means the Foreign
Corrupt Practices Act of 1977, as amended.

 


“FDA” shall have the
meaning ascribed to such term in Section 3.1(kk).

 


 




 

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“FDCA” shall have the
meaning ascribed to such term in Section 3.1(kk).

 


“GAAP” shall have the
meaning ascribed to such term in Section 3.1(h).

 


“Indebtedness” shall have
the meaning ascribed to such term in Section 3.1(bb).

 


“Intellectual Property
Rights” shall have the meaning ascribed to such term
in Section 3.1(p).

 


“Legend Removal Date”
shall have the meaning ascribed to such term in Section
4.1(c).

 


“Liens” means a lien,
charge pledge, security interest, encumbrance, right of first
refusal, preemptive right or other restriction.

 


“Material Adverse Effect”
shall have the meaning assigned to such term in Section
3.1(b).

 


“Material Permits” shall
have the meaning ascribed to such term in Section
3.1(n).

 


“Person” means an
individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or
subdivision thereof) or other entity of any kind.

 


“Pharmaceutical Product”
shall have the meaning ascribed to such term in Section
3.1(jj).

 


“Placement Agent” means
H.C. Wainwright & Co., LLC.

 


“Pre-Funded Warrants”
means, collectively, the Pre-Funded Common Stock purchase warrants
delivered to the Purchasers at the Closing in accordance with
Section 2.2(a) hereof, which Pre-Funded Warrants shall be
exercisable immediately and shall expire when exercised in full, in
the form of Exhibit
A-2 attached hereto.

 


“Pre-Funded Warrant
Shares” means the shares of Common Stock issuable upon
exercise of the Pre-Funded Warrants.

 


“Proceeding” means an
action, claim, suit, investigation or proceeding (including,
without limitation, an informal investigation or partial
proceeding, such as a deposition), whether commenced or
threatened.

 


“Public Information
Failure” shall have the meaning ascribed to such term
in Section 4.2(b).

 


“Public Information Failure
Payments” shall have the meaning ascribed to such term
in Section 4.2(b).

 


 “Purchaser
Party” shall have the meaning ascribed to such term in
Section 4.8.

 


 




 

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“Registration Rights
Agreement” means the Registration Rights Agreement,
dated on or about the date hereof, among the Company and the
Purchasers, in the form of Exhibit A attached
hereto.

 


“Registration Statement”
means a registration statement meeting the requirements set forth
in the Registration Rights Agreement and covering the resale by the
Purchasers of the Shares and the Warrant Shares.

 


“Required Approvals” shall
have the meaning ascribed to such term in Section
3.1(e).

 


“Rule 144” means Rule 144
promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended or interpreted from time to time, or any
similar rule or regulation hereafter adopted by the Commission
having substantially the same purpose and effect as such
Rule.

 


“Rule 424” means Rule 424
promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended or interpreted from time to time, or any
similar rule or regulation hereafter adopted by the Commission
having substantially the same purpose and effect as such
Rule.


 


“SEC Reports” shall have
the meaning ascribed to such term in Section 3.1(h).

 


“Securities” means the
Shares, the Units, the Warrants and the Warrant
Shares.

 


“Securities Act” means the
Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.

 


“Series C Warrants” means,
collectively, the Series C Common Stock purchase warrants delivered
to the Purchasers at the Closing in accordance with Section 2.2(a)
hereof, which Series C Warrants shall be exercisable immediately
upon issuance and have a term of exercise equal to five and
one-half (5.5) years following the initial exercise date, in the
form of Exhibit A-1 attached hereto.

 


“Series C Warrant Shares”
means the shares of Common Stock issuable upon exercise of the
Series C Warrants.

 


 “Shares”
means the shares of Common Stock issued or issuable to each
Purchaser pursuant to this Agreement.

 


“Short Sales” means all
“short sales” as defined in Rule 200 of Regulation SHO
under the Exchange Act (but shall not
be deemed to include locating and/or borrowing shares of Common Stock). 

 


“Subscription Amount”
means, as to each Purchaser, the aggregate amount to be paid for
the Class E Units and/or Class F Units purchased hereunder as
specified below such Purchaser’s name on the signature page
of this Agreement and next to the heading “Subscription
Amount,” in United States dollars and in immediately
available funds.

 


 




 

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“Subsidiary” means any
subsidiary of the Company as set forth on Schedule 3.1(a) and shall,
where applicable, also include any direct or indirect subsidiary of
the Company formed or acquired after the date hereof.

 


“Trading Day” means a day
on which the principal Trading Market is open for
trading.

 


“Trading Market” means any
of the following markets or exchanges on which the Common Stock is
listed or quoted for trading on the date in question: the NYSE
American, the Nasdaq Capital Market, the Nasdaq Global Market, the
Nasdaq Global Select Market, the New York Stock Exchange, OTCQB or
OTCQX (or any successors to any of the foregoing).

 


“Transaction Documents”
means this Agreement, the Warrants, the Registration Rights
Agreement, all exhibits and schedules thereto and hereto and any
other documents or agreements executed in connection with the
transactions contemplated hereunder.

 


“Transfer Agent” means
Issuer Direct Corporation, with offices located at 500 Perimeter
Park Drive, Suite D, Morrisville, North Carolina 27560, and any
successor transfer agent of the Company.

 


“Units” means,
collectively, the Class E Units and the Class F Units.

 


“Variable Rate
Transaction” shall have the meaning ascribed to such
term in Section 4.12(b).

 


“VWAP” means, for any
date, the price determined by the first of the following clauses
that applies: (a) if the Common Stock is then listed or quoted on a
Trading Market, the daily volume weighted average price of the
Common Stock for such date (or the nearest preceding date) on the
Trading Market on which the Common Stock is then listed or quoted
as reported by Bloomberg L.P. (based on a Trading Day from 9:30
a.m. (New York City time) to 4:02 p.m. (New York City time)),
(b)  if OTCQB or OTCQX is not a Trading Market, the volume
weighted average price of the Common Stock for such date (or the
nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the
Common Stock is not then listed or quoted for trading on OTCQB or
OTCQX and if prices for the Common Stock are then reported on the
Pink Open Market (or a similar organization or agency succeeding to
its functions of reporting prices), the most recent bid price per
share of the Common Stock so reported, or (d) in all other
cases, the fair market value of a share of Common Stock as
determined by an independent appraiser selected in good faith by
the Purchasers of a majority in interest of the Securities then
outstanding and reasonably acceptable to the Company, the fees and
expenses of which shall be paid by the Company.

 


“Warrants” means,
collectively, the Series C Warrants and the Pre-Funded
Warrants.

 


 




 

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“Warrant Shares” means,
collectively, the Series C Warrant Shares and the Pre-Funded
Warrant Shares.

 



ARTICLE II.



PURCHASE AND SALE

 


2.1           Closing.
On the Closing Date, upon the terms and subject to the conditions
set forth herein, the Company agrees to sell, and the Purchasers,
severally and not jointly, agree to purchase, up to an aggregate of
$4,735,785.84 of Class E Units as determined pursuant to Section
2.2(a); provided, however, that, to the extent that a Purchaser
determines, in its sole discretion, that such Purchaser (together
with such Purchaser’s Affiliates, and any Person acting as a
group together with such purchaser or any of such Holder’s
Affiliates) would beneficially own in excess of the Beneficial
Ownership Limitation, or as such Purchaser may otherwise choose, in
lieu of purchasing Class E Units such Purchaser may elect to
purchase Class F Units at the Class F Unit Purchase Price in lieu
of Class E Units in such manner to result in the same aggregate
purchase price being paid by such Purchaser to the Company. The
“Beneficial Ownership Limitation” shall be 19.99% of
the number of shares of the Common Stock outstanding immediately
after giving effect to the issuance of the Securities on the
Closing Date. Each Purchaser shall deliver to the Company, via wire
transfer or a certified check, immediately available funds equal to
such Purchaser’s Subscription Amount as set forth on the
signature page hereto executed by such Purchaser, and the Company
shall deliver to each Purchaser its respective Shares or Pre-Funded
Warrants (as applicable to such Purchaser) and Series C Warrants,
as determined pursuant to Section 2.2(a), and the Company and each
Purchaser shall deliver the other items set forth in Section 2.2
deliverable at the Closing. Upon satisfaction of the covenants and
conditions set forth in Sections 2.2 and 2.3, the Closing shall
occur at the offices of the Placement Agent or such other location
as the parties shall mutually agree.

 


2.2           Deliveries.

 


(a)           On
or prior to the Closing Date, the Company shall deliver or cause to
be delivered to each Purchaser the following:

 


(i)           this
Agreement duly executed by the Company;

 


(ii)           a
legal opinion of Company Counsel, in a form reasonably acceptable
to the Placement Agent and the Purchasers;

 


(iii)           a
copy of the irrevocable instructions to the Transfer Agent
instructing the Transfer Agent to deliver, on an expedited basis, a
certificate evidencing a number of Shares equal to the portion of
such Purchaser’s Subscription Amount applicable to Class E
Units divided by the Class E Unit Purchase Price, registered in the
name of such Purchaser;

 


(iv)           for
each Purchaser of Class F Units, a Pre-Funded Warrant registered in
the name of such Purchaser to purchase up to a number of shares of
Common Stock equal to the portion of such Purchaser’s
Subscription Amount applicable to Class F Units divided by the
Class F Unit Purchase Price, with an exercise price equal to
$0.0001, subject to adjustment therein;

 


 




 

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(v)           a
Series C Warrant registered in the name of each such Purchaser to
purchase up to a number of shares of Common Stock equal to 100% of
the aggregate number of Shares and the Pre-Funded Warrant Shares
underlying the Pre-Funded Warrants initially issuable on the date
hereof, if any, purchased by such Purchaser with an exercise price
equal to $0.903, subject to adjustment therein

 


(vi)           the
Company shall have provided each Purchaser with the Company’s
wire instructions, on Company letterhead and executed by the Chief
Executive Officer or Chief Financial Officer; and

 


(vii)           the
Registration Rights Agreement duly executed by the
Company.

 


(b)           On
or prior to the Closing Date, each Purchaser shall deliver or cause
to be delivered to the Company the following:

 


(i)           this
Agreement duly executed by such Purchaser;

 


(ii)           such
Purchaser’s Subscription Amount with regard to the Pre-Funded
Warrants purchased by such Purchaser by wire transfer to the
account specified in writing by the Company;

 


(iii)           such
Purchaser’s Subscription Amount with regard to the Shares
purchased by such Purchaser by wire transfer to the account
specified in writing by the Company; and

 


(iv)           the
Registration Rights Agreement duly executed by such
Purchaser.

 


2.3           Closing
Conditions.

 


(a)           The
obligations of the Company hereunder in connection with the Closing
are subject to the following conditions being
met:

 


(i)           the
accuracy in all material respects (or, to the extent
representations or warranties are qualified by materiality or
Material Adverse Effect, in all respects) when made and on the
Closing Date of the representations and warranties of the
Purchasers contained herein (unless as of a specific date therein
in which case they shall be accurate as of such date);

 


(ii)           all
obligations, covenants and agreements of each Purchaser required to
be performed at or prior to the Closing Date shall have been
performed; and

 


(iii)           the
delivery by each Purchaser of the items set forth in Section 2.2(b)
of this Agreement.

 


 




 

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(b)           The
respective obligations of the Purchasers hereunder in connection
with the Closing are subject to the following conditions being
met:

 


(i)           the
accuracy in all material respects (or, to the extent
representations or warranties are qualified by materiality or
Material Adverse Effect, in all respects) when made and on the
Closing Date of the representations and warranties of the Company
contained herein (unless as of a specific date therein in which
case they shall be accurate as of such date);

 


(ii)           all
obligations, covenants and agreements of the Company required to be
performed at or prior to the Closing Date shall have been
performed;

 


(iii)           the
delivery by the Company of the items set forth in Section 2.2(a) of
this Agreement;

 


(iv)           there
shall have been no Material Adverse Effect with respect to the
Company since the date hereof; and

 


(v)           from
the date hereof to the Closing Date, trading in the Common Stock
shall not have been suspended by the Commission or the
Company’s principal Trading Market, and, at any time prior to
the Closing Date, trading in securities generally as reported by
Bloomberg L.P. shall not have been suspended or limited, or minimum
prices shall not have been established on securities whose trades
are reported by such service, or on any Trading Market, nor shall a
banking moratorium have been declared either by the United States
or New York State authorities nor shall there have occurred any
material outbreak or escalation of hostilities or other national or
international calamity of such magnitude in its effect on, or any
material adverse change in, any financial market which, in each
case, in the reasonable judgment of such Purchaser, makes it
impracticable or inadvisable to purchase the Securities at the
Closing.

 



ARTICLE III.



REPRESENTATIONS AND WARRANTIES

 


3.1           Representations
and Warranties of the Company.
Except as set forth in the Disclosure Schedules, which Disclosure
Schedules shall be deemed a part hereof and shall qualify any
representation or otherwise made herein to the extent of the
disclosure contained in the corresponding section of the Disclosure
Schedules, the Company hereby makes the following representations
and warranties to each Purchaser:

 


(a)           Subsidiaries.
All of the direct and indirect subsidiaries of the Company are set
forth on Schedule
3.1(a). The Company owns, directly or indirectly, all of the
capital stock or other equity interests of each Subsidiary free and
clear of any Liens, and all of the issued and outstanding shares of
capital stock of each Subsidiary are validly issued and are fully
paid, non-assessable and free of preemptive and similar rights to
subscribe for or purchase securities. If the Company has no
subsidiaries, all other references to the Subsidiaries or any of
them in the Transaction Documents shall be
disregarded.

 


 




 

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(b)           Organization
and Qualification. The Company and each of the Subsidiaries
is an entity duly incorporated or otherwise organized, validly
existing and in good standing under the laws of the jurisdiction of
its incorporation or organization, with the requisite power and
authority to own and use its properties and assets and to carry on
its business as currently conducted. Neither the Company nor any
Subsidiary is in violation nor default of any of the provisions of
its respective certificate or articles of incorporation, bylaws or
other organizational or charter documents. Each of the Company and
the Subsidiaries is duly qualified to conduct business and is in
good standing as a foreign corporation or other entity in each
jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary, except
where the failure to be so qualified or in good standing, as the
case may be, would not have or reasonably be expected to result in:
(i) a material adverse effect on the legality, validity or
enforceability of any Transaction Document, (ii) a material adverse
effect on the results of operations, assets, business, prospects or
condition (financial or otherwise) of the Company and the
Subsidiaries, taken as a whole, or (iii) a material adverse effect
on the Company’s ability to perform in any material respect
on a timely basis its obligations under any Transaction Document
(any of (i), (ii) or (iii), a “Material Adverse Effect”)
and no Proceeding has been instituted in any such jurisdiction
revoking, limiting or curtailing or seeking to revoke, limit or
curtail such power and authority or qualification.

 


(c)           Authorization;
Enforcement. The Company has the requisite corporate power
and authority to enter into and to consummate the transactions
contemplated by this Agreement and each of the other Transaction
Documents to which it is a party and otherwise to carry out its
obligations hereunder and thereunder. The execution and delivery of
this Agreement and each of the other Transaction Documents by the
Company and the consummation by it of the transactions contemplated
hereby and thereby have been duly authorized by all necessary
action on the part of the Company and no further action is required
by the Company, the Board of Directors or the Company’s
stockholders in connection herewith or therewith other than in
connection with the Required Approvals. This Agreement and each
other Transaction Document to which it is a party has been (or upon
delivery will have been) duly executed by the Company and, when
delivered in accordance with the terms hereof and thereof, will
constitute the valid and binding obligation of the Company
enforceable against the Company in accordance with its terms,
except (i) as limited by general equitable principles and
applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting enforcement of
creditors’ rights generally, (ii) as limited by laws relating
to the availability of specific performance, injunctive relief or
other equitable remedies and (iii) insofar as indemnification and
contribution provisions may be limited by applicable
law.

 


 




 

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(d)           No
Conflicts. The execution, delivery and performance by the
Company of this Agreement and the other Transaction Documents to
which it is a party, the issuance and sale of the Securities and
the consummation by it of the transactions contemplated hereby and
thereby do not and will not (i) conflict with or violate any
provision of the Company’s or any Subsidiary’s
certificate or articles of incorporation, bylaws or other
organizational or charter documents, or (ii) conflict with, or
constitute a default (or an event that with notice or lapse of time
or both would become a default) under, result in the creation of
any Lien upon any of the properties or assets of the Company or any
Subsidiary, or give to others any rights of termination, amendment,
anti-dilution or similar adjustments, acceleration or cancellation
(with or without notice, lapse of time or both) of, any agreement,
credit facility, debt or other instrument (evidencing a Company or
Subsidiary debt or otherwise) or other understanding to which the
Company or any Subsidiary is a party or by which any property or
asset of the Company or any Subsidiary is bound or affected, or
(iii) subject to the Required Approvals, conflict with or result in
a violation of any law, rule, regulation, order, judgment,
injunction, decree or other restriction of any court or
governmental authority to which the Company or a Subsidiary is
subject (including federal and state securities laws and
regulations), or by which any property or asset of the Company or a
Subsidiary is bound or affected; except in the case of each of
clauses (ii) and (iii), such as would not have or reasonably be
expected to result in a Material Adverse Effect.

 


(e)           Filings,
Consents and Approvals. The Company is not required to
obtain any consent, waiver, authorization or order of, give any
notice to, or make any filing or registration with, any court or
other federal, state, local or other governmental authority or
other Person in connection with the execution, delivery and
performance by the Company of the Transaction Documents, other
than: (i) the filings required pursuant to Section 4.4 of this
Agreement, (ii) the filings with the Commission pursuant to the
Registration Rights Agreement, (iii) the notice and/or
application(s) to each applicable Trading Market for the issuance
and sale of the Securities and the listing of the Shares and
Warrant Shares for trading thereon in the time and manner required
thereby, and (iv) the filing of Form D with the Commission and such
filings as are required to be made under applicable state
securities laws (collectively, the “Required
Approvals”).

 


(f)           Issuance
of the Securities. The Securities are duly authorized and,
when issued and paid for in accordance with the applicable
Transaction Documents, will be duly and validly issued, fully paid
and nonassessable, free and clear of all Liens imposed by the
Company. The Warrant Shares, when issued in accordance with the
terms of the Transaction Documents, will be validly issued, fully
paid and nonassessable, free and clear of all Liens imposed by the
Company. The Company has reserved from its duly authorized capital
stock the maximum number of shares of Common Stock issuable
pursuant to this Agreement and the Warrants.

 


 




 

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(g)           Capitalization.
The capitalization of the Company as of the date hereof is as set
forth on Schedule
3.1(g), which Schedule 3.1(g) shall also
include the number of shares of Common Stock owned beneficially,
and of record, by Affiliates of the Company as of the date hereof.
The Company has not issued any capital stock since its most recently filed periodic report under the
Exchange Act, other than pursuant to the exercise of
employee stock options under the Company’s stock option
plans, the issuance of shares of Common Stock to employees pursuant
to the Company’s employee stock purchase plans and pursuant
to the conversion and/or exercise of Common Stock Equivalents
outstanding as of the date of the most recently filed periodic
report under the Exchange Act. No Person has any right of first
refusal, preemptive right, right of participation, or any similar
right to participate in the transactions contemplated by the
Transaction Documents. Except as a result of the purchase and sale
of the Securities or as set forth on Schedule 3.1(g), there are no
outstanding options, warrants, scrip rights to subscribe to, calls
or commitments of any character whatsoever relating to, or
securities, rights or obligations convertible into or exercisable
or exchangeable for, or giving any Person any right to subscribe
for or acquire, any shares of Common Stock or the capital stock of
any Subsidiary, or contracts, commitments, understandings or
arrangements by which the Company or any Subsidiary is or may
become bound to issue additional shares of Common Stock or Common
Stock Equivalents or capital stock of any Subsidiary. The issuance
and sale of the Securities will not obligate the Company or any
Subsidiary to issue shares of Common Stock or other securities to
any Person (other than the Purchasers and the Placement Agent.
Except as set forth on Schedule 3.1(g), there are no
outstanding securities or instruments of the Company or any
Subsidiary with any provision that adjusts the exercise,
conversion, exchange or reset price of such security or instrument
upon an issuance of securities by the Company or any Subsidiary.
There are no outstanding securities or instruments of the Company
or any Subsidiary that contain any redemption or similar
provisions, and there are no contracts, commitments, understandings
or arrangements by which the Company or any Subsidiary is or may
become bound to redeem a security of the Company or such
Subsidiary. The Company does not have any stock appreciation rights
or “phantom stock” plans or agreements or any similar
plan or agreement. All of the outstanding shares of capital stock
of the Company are duly authorized, validly issued, fully paid and
nonassessable, have been issued in compliance with all federal and
state securities laws, and none of such outstanding shares was
issued in violation of any preemptive rights or similar rights to
subscribe for or purchase securities. No further approval or
authorization of any stockholder, the Board of Directors or others
is required for the issuance and sale of the Securities. There are
no stockholders agreements, voting agreements or other similar
agreements with respect to the Company’s capital stock to
which the Company is a party or, to the knowledge of the Company,
between or among any of the Company’s
stockholders.

 


(h)          SEC
Reports; Financial Statements. The Company has filed all
reports, schedules, forms, statements and other documents required
to be filed by the Company under the Securities Act and the
Exchange Act, including pursuant to Section 13(a) or 15(d) thereof,
for the two years preceding the date hereof (or such shorter period
as the Company was required by law or regulation to file such
material) (the foregoing materials, including the exhibits thereto
and documents incorporated by reference therein, being collectively
referred to herein as the “SEC Reports”) on a timely
basis or has received a valid extension of such time of filing and
has filed any such SEC Reports prior to the expiration of any such
extension. As of their respective dates, the SEC Reports complied
in all material respects with the requirements of the Securities
Act and the Exchange Act, as applicable, and none of the SEC
Reports, when filed, contained any untrue statement of a material
fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading. The Company has never been an issuer subject to Rule
144(i) under the Securities Act. The financial statements of the
Company included in the SEC Reports comply in all material respects
with applicable accounting requirements and the rules and
regulations of the Commission with respect thereto as in effect at
the time of filing. Such financial statements have been prepared in
accordance with United States generally accepted accounting
principles applied on a consistent basis during the periods
involved (“GAAP”), except as may be
otherwise specified in such financial statements or the notes
thereto and except that unaudited financial statements may not
contain all footnotes required by GAAP, and fairly present in all
material respects the financial position of the Company and its
consolidated Subsidiaries as of and for the dates thereof and the
results of operations and cash flows for the periods then ended,
subject, in the case of unaudited statements, to normal,
immaterial, year-end audit adjustments.

 


 




 

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(i)           Material
Changes; Undisclosed Events, Liabilities or Developments.
Since the date of the latest audited financial statements included
within the SEC Reports, except as set forth on Schedule 3.1(i), (i) there has
been no event, occurrence or development that has had or that would
reasonably be expected to result in a Material Adverse Effect, (ii)
the Company has not incurred any liabilities (contingent or
otherwise) other than (A) trade payables and accrued expenses
incurred in the ordinary course of business consistent with past
practice and (B) liabilities not required to be reflected in the
Company’s financial statements pursuant to GAAP or disclosed
in filings made with the Commission, (iii) the Company has not
altered its method of accounting, (iv) the Company has not declared
or made any dividend or distribution of cash or other property to
its stockholders or purchased, redeemed or made any agreements to
purchase or redeem any shares of its capital stock and (v) the
Company has not issued any equity securities to any officer,
director or Affiliate, except pursuant to existing Company stock
option plans. The Company does not have pending before the
Commission any request for confidential treatment of information.
Except for the issuance of the Securities contemplated by this
Agreement or as set forth on Schedule 3.1(i), no event,
liability, fact, circumstance, occurrence or development has
occurred or exists or is reasonably expected to occur or exist with
respect to the Company or its Subsidiaries or their respective
businesses, prospects, properties, operations, assets or financial
condition that would be required to be disclosed by the Company
under applicable securities laws at the time this representation is
made or deemed made that has not been publicly disclosed at least
one (1) Trading Day prior to the date that this representation is
made.

 


(j)           Litigation.
There is no action, suit, inquiry, notice of violation, proceeding
or investigation pending or, to the knowledge of the Company,
threatened against or affecting the Company, any Subsidiary or any
of their respective properties before or by any court, arbitrator,
governmental or administrative agency or regulatory authority
(federal, state, county, local or foreign) (collectively, an
“Action”) which (i)
adversely affects or challenges the legality, validity or
enforceability of any of the Transaction Documents or the
Securities or (ii) would, if there were an unfavorable decision,
have or reasonably be expected to result in a Material Adverse
Effect. Neither the Company nor any Subsidiary, nor any director or
officer thereof, is or has been the subject of any Action involving
a claim of violation of or liability under federal or state
securities laws or a claim of breach of fiduciary duty. There has
not been, and to the knowledge of the Company, there is not pending
or contemplated, any investigation by the Commission involving the
Company or any current or former director or officer of the
Company. The Commission has not issued any stop order or other
order suspending the effectiveness of any registration statement
filed by the Company or any Subsidiary under the Exchange Act or
the Securities Act.

 


 




 

13








 






 

 


(k)           Labor
Relations. No labor dispute exists or, to the knowledge of
the Company, is imminent with respect to any of the employees of
the Company, which U.S. federal, state, local and foreign laws and
regulations relating to employment and employment practices, terms
and conditions of employment and wages and hours, except where the
failure to be in compliance would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse
Effect.

 


(l)           Compliance.
Neither the Company nor any Subsidiary: (i) is in default under or
in violation of (and no event has occurred that has not been waived
that, with notice or lapse of time or both, would result in a
default by the Company or any Subsidiary under), nor has the
Company or any Subsidiary received notice of a claim that it is in
default under or that it is in violation of, any indenture, loan or
credit agreement or any other agreement or instrument to which it
is a party or by which it or any of its properties is bound
(whether or not such default or violation has been waived), (ii) is
in violation of any judgment, decree, or order of any court,
arbitrator or other governmental authority or (iii) is or has been
in violation of any statute, rule, ordinance or regulation of any
governmental authority, including without limitation all foreign,
federal, state and local laws relating to taxes, environmental
protection, occupational health and safety, product quality and
safety and employment and labor matters, except in each case as
would not have or reasonably be expected to result in a Material
Adverse Effect.

 


(m)           
Environmental Laws.
The Company and its Subsidiaries (i) are in compliance with all
federal, state, local and foreign laws relating to pollution or
protection of human health or the environment (including ambient
air, surface water, groundwater, land surface or subsurface
strata), including 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 (“Environmental Laws”);
(ii) have received all permits licenses or other approvals required
of them under applicable Environmental Laws to conduct their
respective businesses; and (iii) are in compliance with all terms
and conditions of any such permit, license or approval where in
each clause (i), (ii) and (iii), the failure to so comply would be
reasonably expected to have, individually or in the aggregate, a
Material Adverse Effect.

 


(n)           Regulatory
Permits. The Company and the Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate
federal, state, local or foreign regulatory authorities necessary
to conduct their respective businesses as described in the SEC
Reports, except where the failure to possess such permits would not
reasonably be expected to result in a Material Adverse Effect
(“Material
Permits”), and neither the Company nor any Subsidiary
has received any notice of proceedings relating to the revocation
or modification of any Material Permit.

 


 




 

14








 






 

 


(o)           Title
to Assets. The Company and the Subsidiaries have good and
marketable title in fee simple to all real property owned by them
and good and marketable title in all personal property owned by
them that is material to the business of the Company and the
Subsidiaries, in each case free and clear of all Liens, except for
(i) Liens as do not materially affect the value of such property
and do not materially interfere with the use made and proposed to
be made of such property by the Company and the Subsidiaries and
(ii) Liens for the payment of federal, state or other taxes, for
which appropriate reserves have been made therefor in accordance
with GAAP and the payment of which is neither delinquent nor
subject to penalties. Any real property and facilities held under
lease by the Company and the Subsidiaries are held by them under
valid, subsisting and enforceable leases with which the Company and
the Subsidiaries are in material compliance.

 


(p)           Intellectual
Property. The Company and the Subsidiaries have, or have
rights to use, all patents, patent applications, trademarks,
trademark applications, service marks, trade names, trade secrets,
inventions, copyrights, licenses and other intellectual property
rights and similar rights necessary or required for use in
connection with their respective businesses as described in the SEC
Reports and which the failure to so have would have a Material
Adverse Effect (collectively, the “Intellectual Property
Rights”). None of, and neither the Company nor any
Subsidiary has received a notice (written or otherwise) that any
of, the Intellectual Property Rights has expired, terminated or
been abandoned, or is expected to expire or terminate or be
abandoned, within two (2) years from the date of this Agreement.
Neither the Company nor any Subsidiary has received, since the date
of the latest audited financial statements included within the SEC
Reports, a written notice of a claim or otherwise has any knowledge
that the Intellectual Property Rights violate or infringe upon the
rights of any Person, except as would not have or reasonably be
expected to not have a Material Adverse Effect. To the knowledge of
the Company, all such Intellectual Property Rights are enforceable
and there is no existing infringement by another Person of any of
the Intellectual Property Rights. The Company and its Subsidiaries
have taken reasonable security measures to protect the secrecy,
confidentiality and value of all of their intellectual properties,
except where failure to do so would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse
Effect. The Company has no knowledge of any facts that would
preclude it from having valid license rights or clear title to the
Intellectual Property Rights. The Company has no knowledge that it
lacks or will be unable to obtain any rights or licenses to use all
Intellectual Property Rights that are necessary to conduct its
business.

 


(q)           Insurance.
The Company and the Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses
in which the Company and the Subsidiaries are engaged, including,
but not limited to, directors and officers insurance coverage at
least equal to the aggregate Subscription Amount. Neither the
Company nor any Subsidiary has any reason to believe that it will
not be able to renew its existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar
insurers as may be necessary to continue its business without a
significant increase in cost.

 


 




 

15








 






 

 


(r)           Transactions
with Affiliates and Employees. Except as set forth on
Schedule 3.1(r),
none of the officers or directors of the Company or any Subsidiary
and, to the knowledge of the Company, none of the employees of the
Company or any Subsidiary is presently a party to any transaction
with the Company or any Subsidiary (other than for services as
employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of
services to or by, providing for rental of real or personal
property to or from, providing for the borrowing of money from or
lending of money to or otherwise requiring payments to or from any
officer, director or such employee or, to the knowledge of the
Company, any entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director,
trustee, stockholder, member or partner, in each case in excess of
$120,000 other than for (i) payment of salary or consulting fees
for services rendered, (ii) reimbursement for expenses incurred on
behalf of the Company and (iii) other employee benefits, including
stock option agreements under any stock option plan of the
Company.

 


(s)           Sarbanes-Oxley;
Internal Accounting Controls. The Company and the
Subsidiaries are in compliance in all material respects with any
and all applicable requirements of the Sarbanes-Oxley Act of 2002
that are effective as of the date hereof, and any and all
applicable rules and regulations promulgated by the Commission
thereunder that are effective as of the date hereof and as of the
Closing Date. The Company and the
Subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurance that: (i) transactions
are executed in accordance with management’s general or
specific authorizations, (ii) transactions are recorded as
necessary to permit preparation of financial statements in
conformity with GAAP and to maintain asset accountability, (iii)
access to assets is permitted only in accordance with
management’s general or specific authorization, and (iv) the
recorded accountability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences. The Company and the Subsidiaries have
established disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and the
Subsidiaries and designed such disclosure controls and procedures
to ensure that information required to be disclosed by the Company
in the reports it files or submits under the Exchange Act is
recorded, processed, summarized and reported, within the time
periods specified in the Commission’s rules and forms. The
Company’s certifying officers have evaluated the
effectiveness of the disclosure controls and procedures of the
Company and the Subsidiaries as of the end of the period covered by
the most recently filed periodic report under the Exchange Act
(such date, the “Evaluation
Date”). The Company
presented in its most recently filed periodic report under the
Exchange Act the conclusions of the certifying officers about the
effectiveness of the disclosure controls and procedures based on
their evaluations as of the Evaluation Date. Since the Evaluation
Date, there have been no changes in the internal control over
financial reporting (as such term is defined in the Exchange Act)
of the Company and its Subsidiaries that have materially affected,
or is reasonably likely to materially affect, the internal control
over financial reporting of the Company and its
Subsidiaries.

 


 




 

16








 






 

 


(t)           Certain
Fees. Except for the fees and expenses of the Placement
Agent, no brokerage or finder’s fees or commissions are or
will be payable by the Company or any Subsidiary to any broker,
financial advisor or consultant, finder, placement agent,
investment banker, bank or other Person with respect to the
transactions contemplated by the Transaction Documents. The
Purchasers shall have no obligation with respect to any fees or
with respect to any claims made by or on behalf of other Persons
for fees of a type contemplated in this Section that may be due in
connection with the transactions contemplated by the Transaction
Documents.

 


(u)           Private
Placement. Assuming the accuracy of the Purchasers’
representations and warranties set forth in Section 3.2, no
registration under the Securities Act is required for the offer and
sale of the Securities by the Company to the Purchasers as
contemplated hereby. The issuance and sale of the Securities
hereunder does not contravene the rules and regulations of the
Trading Market.

 


(v)           Investment
Company. The Company is not, and is not an Affiliate of, and
immediately after receipt of payment for the Securities, will not
be or be an Affiliate of, an “investment company”
within the meaning of the Investment Company Act of 1940, as
amended. The Company shall conduct its business in a manner so that
it will not become an “investment company” subject to
registration under the Investment Company Act of 1940, as
amended.

 


(w)           Registration
Rights. Other than each of the Purchasers, no Person has any
right to cause the Company or any Subsidiary to effect the
registration under the Securities Act of any securities of the
Company or any Subsidiary.

 


(x)           Listing
and Maintenance Requirements. The Common Stock is registered
pursuant to Section 12(b) or 12(g) of the Exchange Act, and the
Company has taken no action designed to, or which to its knowledge
is likely to have the effect of, terminating the registration of
the Common Stock under the Exchange Act nor has the Company
received any notification that the Commission is contemplating
terminating such registration. The Company has not, in the 12
months preceding the date hereof, received notice from any Trading
Market on which the Common Stock is or has been listed or quoted to
the effect that the Company is not in compliance with the listing
or maintenance requirements of such Trading Market. The Company is,
and has no reason to believe that it will not in the foreseeable
future continue to be, in compliance with all such listing and
maintenance requirements. The Common Stock is currently eligible
for electronic transfer through the Depository Trust Company or
another established clearing corporation and the Company is current
in payment of the fees to the Depository Trust Company (or such
other established clearing corporation) in connection with such
electronic transfer.

 


 




 

17








 






 

 


(y)           Application
of Takeover Protections. Other than with respect to Section
203 of the General Corporation Law of Delaware, the Company and the
Board of Directors have taken all necessary action, if any, in
order to render inapplicable any control share acquisition,
business combination, poison pill (including any distribution under
a rights agreement) or other similar anti-takeover provision under
the Company’s certificate of incorporation (or similar
charter documents) or the laws of its state of incorporation that
is or could become applicable to the Purchasers as a result of the
Purchasers and the Company fulfilling their obligations or
exercising their rights under the Transaction Documents, including
without limitation as a result of the Company’s issuance of
the Securities and the Purchasers’ ownership of the
Securities.

 


(z)           Disclosure.
Except with respect to the material terms and conditions of the
transactions contemplated by the Transaction Documents, the Company
confirms that neither it nor any other Person acting on its behalf
has provided any of the Purchasers or their agents or counsel with
any information that the Company believes constitutes or would
reasonably be expected to constitute material, non-public
information. The Company understands and confirms that the
Purchasers will rely on the foregoing representation in effecting
transactions in securities of the Company. All of the disclosure
furnished by or on behalf of the Company to the Purchasers
regarding the Company and its Subsidiaries, their respective
businesses and the transactions contemplated hereby, including the
Disclosure Schedules to this Agreement, is true and correct and
does not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements
made therein, in the light of the circumstances under which they
were made, not misleading. The press releases disseminated by the
Company during the twelve months preceding the date of this
Agreement taken as a whole do 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 and when made, not misleading. The Company acknowledges and
agrees that no Purchaser makes or has made any representations or
warranties with respect to the transactions contemplated hereby
other than those specifically set forth in Section 3.2
hereof.

 



(aa)           No
Integrated Offering. Assuming the accuracy of the
Purchasers’ representations and warranties set forth in
Section 3.2, neither the Company, nor any of its Affiliates, nor
any Person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited
any offers to buy any security, under circumstances that would
cause this offering of the Securities to be integrated with prior
offerings by the Company for purposes of (i) the Securities Act
which would require the registration of any such securities under
the Securities Act, or (ii) any applicable shareholder approval
provisions of any Trading Market on which any of the securities of
the Company are listed or designated.

 


 




 

18








 






 

 


(bb)           Solvency.
Based on the consolidated financial condition of the Company as of
the Closing Date, after giving effect to the receipt by the Company
of the proceeds from the sale of the Securities hereunder, (i) the
fair saleable value of the Company’s assets exceeds the
amount that will be required to be paid on or in respect of the
Company’s existing debts and other liabilities (including
known contingent liabilities) as they mature, (ii) the
Company’s assets do not constitute unreasonably small capital
to carry on its business as now conducted and as proposed to be
conducted including its capital needs taking into account the
particular capital requirements of the business conducted by the
Company, consolidated and projected capital requirements and
capital availability thereof, and (iii) the current cash flow of
the Company, together with the proceeds the Company would receive,
were it to liquidate all of its assets, after taking into account
all anticipated uses of the cash, would be sufficient to pay all
amounts on or in respect of its liabilities when such amounts are
required to be paid. The Company does not intend to incur debts
beyond its ability to pay such debts as they mature (taking into
account the timing and amounts of cash to be payable on or in
respect of its debt). The Company has no knowledge of any facts or
circumstances which lead it to believe that it will file for
reorganization or liquidation under the bankruptcy or
reorganization laws of any jurisdiction within one year from the
Closing Date. Schedule
3.1(bb) sets forth as of the date hereof all outstanding
secured and unsecured Indebtedness of the Company or any
Subsidiary, or for which the Company or any Subsidiary has
commitments. For the purposes of this Agreement,
“Indebtedness”
means (x) any liabilities for borrowed money or amounts owed in
excess of $50,000 (other than trade accounts payable incurred in
the ordinary course of business), (y) all guaranties, endorsements
and other contingent obligations in respect of indebtedness of
others, whether or not the same are or should be reflected in the
Company’s consolidated balance sheet (or the notes thereto),
except guaranties by endorsement of negotiable instruments for
deposit or collection or similar transactions in the ordinary
course of business; and (z) the present value of any lease payments
in excess of $50,000 due under leases required to be capitalized in
accordance with GAAP. Neither the Company nor any Subsidiary is in
default with respect to any Indebtedness.

 


(cc)           Tax
Status. Except for matters that would not, individually or
in the aggregate, have or reasonably be expected to result in a
Material Adverse Effect, the Company and its Subsidiaries each (i)
has made or filed all United States federal, state and local income
and all foreign income and franchise tax returns, reports and
declarations required by any jurisdiction to which it is subject,
(ii) has paid all taxes and other governmental assessments and
charges that are material in amount, shown or determined to be due
on such returns, reports and declarations and (iii) has set aside
on its books provision reasonably adequate for the payment of all
material 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 or of any
Subsidiary know of no basis for any such claim.

 


(dd)           No
General Solicitation. Neither the Company nor any Person
acting on behalf of the Company has offered or sold any of the
Securities by any form of general solicitation or general
advertising. The Company has offered the Securities for sale only
to the Purchasers and certain other “accredited
investors” within the meaning of Rule 501 under the
Securities Act.

 


(ee)           Foreign
Corrupt Practices. Neither the Company nor any Subsidiary,
nor to the knowledge of the Company or any Subsidiary, any agent or
other person acting on behalf of the Company or any Subsidiary, has
(i) directly or indirectly, used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses
related to foreign or domestic political activity, (ii) made any
unlawful payment to foreign or domestic government officials or
employees or to any foreign or domestic political parties or
campaigns from corporate funds, (iii) failed to disclose fully any
contribution made by the Company or any Subsidiary (or made by any
person acting on its behalf of which the Company is aware) which is
in violation of law or (iv) violated in any material respect any
provision of FCPA.

 


 




 

19








 






 

 


(ff)           Accountants.
The Company’s independent registered public accounting firm
is CHERRY BEKAERT LLP. To the knowledge and belief of the Company,
such accounting firm (i) is a registered public accounting firm as
required by the Exchange Act and (ii) shall express its opinion
with respect to the financial statements to be included in the
Company’s Annual Report for the fiscal year ending December
31, 2020.

 


(gg)           
Acknowledgment Regarding
Purchasers’ Purchase of Securities. The Company
acknowledges and agrees that each of the Purchasers is acting
solely in the capacity of an arm’s length purchaser with
respect to the Transaction Documents and the transactions
contemplated thereby. The Company further acknowledges that no
Purchaser 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 thereby and
any advice given by any Purchaser or any of their respective
representatives or agents in connection with the Transaction
Documents and the transactions contemplated thereby is merely
incidental to the Purchasers’ purchase of the Securities. The
Company further represents to each Purchaser that the
Company’s decision to enter into this Agreement and the other
Transaction Documents has been based solely on the independent
evaluation of the transactions contemplated hereby by the Company
and its representatives.

 


(hh)           Acknowledgment
Regarding Purchaser’s Trading Activity. Anything in this Agreement or elsewhere herein to
the contrary notwithstanding (except for Sections 3.2(g) and 4.14
hereof), it is understood and acknowledged by the Company that: (i)
none of the Purchasers has been asked by the Company to agree, nor
has any Purchaser agreed, to desist from purchasing or selling,
long and/or short, securities of the Company, or
“derivative” securities based on securities issued by
the Company or to hold the Securities for any specified term, (ii)
past or future open market or other transactions by any Purchaser,
specifically including, without limitation, Short Sales or
“derivative” transactions, before or after the closing
of this or future private placement transactions, may negatively
impact the market price of the Company’s publicly-traded
securities, (iii) any Purchaser, and counter-parties in
“derivative” transactions to which any such Purchaser
is a party, directly or indirectly, presently may have a
“short” position in the Common Stock and (iv) each
Purchaser shall not be deemed to have any affiliation with or
control over any arm’s length counter-party in any
“derivative” transaction. The Company further
understands and acknowledges that (y) one or more Purchasers may
engage in hedging activities at various times during the period
that the Securities are outstanding, including, without limitation,
during the periods that the value of the Warrant Shares deliverable
with respect to Securities are being determined, and (z) such
hedging activities (if any) could reduce the value of the existing
stockholders' equity interests in the Company at and after the time
that the hedging activities are being conducted.  Subject to
compliance with Section 3.2(e) and 4.14 hereof, the Company
acknowledges that such aforementioned hedging activities do not
constitute a breach of any of the Transaction
Documents.

 


 




 

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(ii)           Regulation
M Compliance.  The Company has not, and to its
knowledge no one acting on its behalf has, (i) taken, directly or
indirectly, any action designed to cause or to result in the
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of any of the Securities,
(ii) sold, bid for, purchased, or paid any compensation for
soliciting purchases of, any of the Securities, or (iii) paid or
agreed to pay to any Person any compensation for soliciting another
to purchase any other securities of the Company during the 180 days
prior to the date hereof, other than, in the case of clauses (ii)
and (iii), compensation paid to the Placement Agent in connection
with the placement of the Securities.

 


(jj)           FDA.
As to each product subject to the jurisdiction of the U.S. Food and
Drug Administration (“FDA”) under the Federal
Food, Drug and Cosmetic Act, as amended, and the regulations
thereunder (“FDCA”) that is
manufactured, packaged, labeled, tested, distributed, sold, and/or
marketed by the Company or any of its Subsidiaries (each such
product, a “Pharmaceutical Product”),
such Pharmaceutical Product is being manufactured, packaged,
labeled, tested, distributed, sold and/or marketed by the Company
in compliance with all applicable requirements under FDCA and
similar laws, rules and regulations relating to registration,
investigational use, premarket clearance, licensure, or application
approval, good manufacturing practices, good laboratory practices,
good clinical practices, product listing, quotas, labeling,
advertising, record keeping and filing of reports, except where the
failure to be in compliance would not have a Material Adverse
Effect. There is no pending, completed or, to the Company's
knowledge, threatened, action (including any lawsuit, arbitration,
or legal or administrative or regulatory proceeding, charge,
complaint, or investigation) against the Company or any of its
Subsidiaries, and none of the Company or any of its Subsidiaries
has received any notice, warning letter or other communication from
the FDA or any other governmental entity, which (i) contests the
premarket clearance, licensure, registration, or approval of, the
uses of, the distribution of, the manufacturing or packaging of,
the testing of, the sale of, or the labeling and promotion of any
Pharmaceutical Product, (ii) withdraws its approval of, requests
the recall, suspension, or seizure of, or withdraws or orders the
withdrawal of advertising or sales promotional materials relating
to, any Pharmaceutical Product, (iii) imposes a clinical hold on
any clinical investigation by the Company or any of its
Subsidiaries, (iv) enjoins production at any facility of the
Company or any of its Subsidiaries, (v) enters or proposes to enter
into a consent decree of permanent injunction with the Company or
any of its Subsidiaries, or (vi) otherwise alleges any violation of
any laws, rules or regulations by the Company or any of its
Subsidiaries, and which, either individually or in the aggregate,
would have a Material Adverse Effect. The properties, business and
operations of the Company have been and are being conducted in all
material respects in accordance with all applicable laws, rules and
regulations of the FDA.  The Company has not been informed by
the FDA that the FDA will prohibit the marketing, sale, license or
use in the United States of any product proposed to be developed,
produced or marketed by the Company nor has the FDA expressed any
concern as to approving or clearing for marketing any product being
developed or proposed to be developed by the Company.

 


 




 

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(kk)           Stock
Option Plans. Each stock option granted by the Company under
the Company’s 2016 Stock Incentive Plan was granted (i) in
accordance with the terms of the Company’s 2016 Stock
Incentive Plan and (ii) with an exercise price at least equal to
the fair market value of the Common Stock on the date such stock
option would be considered granted under GAAP and applicable law.
No stock option granted under the Company’s 2016 Stock
Incentive Plan has been backdated. The Company has not knowingly
granted, and there is no and has been no Company policy or practice
to knowingly grant, stock options prior to, or otherwise knowingly
coordinate the grant of stock options with, the release or other
public announcement of material information regarding the Company
or its Subsidiaries or their financial results or
prospects.

 


(ll)           Office
of Foreign Assets Control. Neither the Company nor any
Subsidiary nor, to the Company's knowledge, any director, officer,
agent, employee or affiliate of the Company or any Subsidiary is
currently subject to any U.S. sanctions administered by the Office
of Foreign Assets Control of the U.S. Treasury Department
(“OFAC”).

 


(mm)       
U.S. Real Property Holding
Corporation. The Company is not and, to the Company’s
knowledge, 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
Purchaser’s reasonable request.

 


(nn)           Bank
Holding Company Act. Neither the Company nor any of its
Subsidiaries or Affiliates is subject to the Bank Holding Company
Act of 1956, as amended (the “BHCA”) and to regulation
by the Board of Governors of the Federal Reserve System (the
“Federal
Reserve”). Neither the Company nor any of its
Subsidiaries or Affiliates owns or controls, directly or
indirectly, five percent (5%) or more of the outstanding shares of
any class of voting securities or twenty-five percent or more of
the total equity of a bank or any entity that is subject to the
BHCA and to regulation by the Federal Reserve. Neither the Company
nor any of its Subsidiaries or Affiliates exercises a controlling
influence over the management or policies of a bank or any entity
that is subject to the BHCA and to regulation by the Federal
Reserve.

 


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

 


 




 

22








 






 

 


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

 


(qq)           Other
Covered Persons. Except as set forth on Schedule 3.2(qq), other than
the Placement Agent, the Company is not aware of any person (other
than any Issuer Covered Person) that has been or will be paid
(directly or indirectly) remuneration for solicitation of
purchasers in connection with the sale of any
Securities.

 


(rr)           Notice
of Disqualification Events. The Company will notify the
Purchasers in writing, prior to the Closing Date of (i) any
Disqualification Event relating to any Issuer Covered Person and
(ii) any event that would, with the passage of time, reasonably be
expected to become a Disqualification Event relating to any Issuer
Covered Person, in each case of which it is aware.

 


3.2           Representations
and Warranties of the Purchasers. Each Purchaser, for itself and for no other
Purchaser, hereby represents and warrants as of the date hereof and
as of the Closing Date to the Company as follows (unless as of a
specific date therein, in which case they shall be accurate as of
such date):

 


(a)           Organization;
Authority. Such Purchaser is either an individual or an
entity duly incorporated or formed, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or
formation with full right, corporate, partnership, limited
liability company or similar power and authority to enter into and
to consummate the transactions contemplated by the Transaction
Documents and otherwise to carry out its obligations hereunder and
thereunder. The execution and delivery of the Transaction Documents
and performance by such Purchaser of the transactions contemplated
by the Transaction Documents have been duly authorized by all
necessary corporate, partnership, limited liability company or
similar action, as applicable, on the part of such Purchaser. Each
Transaction Document to which it is a party has been duly executed
by such Purchaser, and when delivered by such Purchaser in
accordance with the terms hereof, will constitute the valid and
legally binding obligation of such Purchaser, enforceable against
it in accordance with its terms, except (i) as limited by general
equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application
affecting enforcement of creditors’ rights generally, (ii) as
limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies and
(iii) insofar as indemnification and contribution provisions may be
limited by applicable law.

 


 




 

23








 






 

 


(b)           Own
Account. Such Purchaser understands that the Securities are
“restricted securities” and have not been registered
under the Securities Act or any applicable state securities law and
is acquiring the Securities as principal for its own account and
not with a view to or for distributing or reselling such Securities
or any part thereof in violation of the Securities Act or any
applicable state securities law, has no present intention of
distributing any of such Securities in violation of the Securities
Act or any applicable state securities law and has no direct or
indirect arrangement or understandings with any other persons to
distribute or regarding the distribution of such Securities in
violation of the Securities Act or any applicable state securities
law (this representation and warranty not limiting such
Purchaser’s right to sell the Securities pursuant to the
Registration Statement or otherwise in compliance with applicable
federal and state securities laws). Such Purchaser is acquiring the
Securities hereunder in the ordinary course of its
business.

 


(c)           Purchaser
Status. At the time such Purchaser was offered the
Securities, it was, and as of the date hereof it is, and on each
date on which it exercises any Warrants, it will be either: (i) an
“accredited investor” as defined in Rule 501(a)(1),
(a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act or (ii) a
“qualified institutional buyer” as defined in Rule
144A(a) under the Securities Act.

 


(d)           Experience
of Such Purchaser. Such Purchaser, either alone or together
with its representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of
evaluating the merits and risks of the prospective investment in
the Securities, and has so evaluated the merits and risks of such
investment. Such Purchaser is able to bear the economic risk of an
investment in the Securities and, at the present time, is able to
afford a complete loss of such investment.

 


(e)           General
Solicitation. Such Purchaser is not, to such
Purchaser’s knowledge, purchasing the Securities as a result
of any advertisement, article, notice or other communication
regarding the Securities published in any newspaper, magazine or
similar media or broadcast over television or radio or presented at
any seminar or, to the knowledge of such Purchaser, any other
general solicitation or general advertisement.

 


 




 

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(f)           Access
to Information. Such Purchaser acknowledges that it has had
the opportunity to review the Transaction Documents (including all
exhibits and schedules thereto) and the SEC Reports and has been
afforded (i) the opportunity to ask such questions as it has deemed
necessary of, and to receive answers from, representatives of the
Company concerning the terms and conditions of the offering of the
Securities and the merits and risks of investing in the Securities;
(ii) access to information about the Company and its financial
condition, results of operations, business, properties, management
and prospects sufficient to enable it to evaluate its investment;
and (iii) the opportunity to obtain such additional information
that the Company possesses or can acquire without unreasonable
effort or expense that is necessary to make an informed investment
decision with respect to the investment.  Such Purchaser
acknowledges and agrees that neither the Placement Agent nor any
Affiliate of the Placement Agent has provided such Purchaser with
any information or advice with respect to the Securities nor is
such information or advice necessary or desired.  Neither the
Placement Agent nor any Affiliate has made or makes any
representation as to the Company or the quality of the Securities
and the Placement Agent and any Affiliate may have acquired
non-public information with respect to the Company which such
Purchaser agrees need not be provided to it.  In connection
with the issuance of the Securities to such Purchaser, neither the
Placement Agent nor any of its Affiliates has acted as a financial
advisor or fiduciary to such Purchaser.

 


(g)           Certain
Transactions and Confidentiality. Other than consummating the transactions
contemplated hereunder, such Purchaser has not, nor has any Person
acting on behalf of or pursuant to any understanding with such
Purchaser, directly or indirectly executed any purchases or sales,
including Short Sales, of the securities of the Company during
the period commencing as of the time that such Purchaser
first received a term sheet (written or oral) from the Company or
any other Person representing the Company setting forth the
material terms of the transactions contemplated hereunder and
ending immediately prior to the execution hereof. Notwithstanding
the foregoing, in the case of a Purchaser that is a multi-managed
investment vehicle whereby separate portfolio managers manage
separate portions of such Purchaser’s assets and the
portfolio managers have no direct knowledge of the investment
decisions made by the portfolio managers managing other portions of
such Purchaser’s assets, the representation set forth above
shall only apply with respect to the portion of assets managed by
the portfolio manager that made the investment decision to purchase
the Securities covered by this Agreement. Other than to other
Persons party to this Agreement or to such Purchaser’s
representatives, including, without limitation, its officers,
directors, partners, legal and other advisors, employees, agents
and Affiliates who have needed to know such information in
connection with this transaction, such Purchaser has maintained the
confidentiality of all disclosures made to it in connection with
this transaction (including the existence and terms of this
transaction). Notwithstanding the foregoing, for the avoidance of
doubt, nothing contained herein shall constitute a representation
or warranty, or preclude any actions, with respect to locating or
borrowing shares in order to effect Short Sales or similar
transactions in the future.

 


The
Company acknowledges and agrees that the representations contained
in this Section 3.2 shall not modify, amend or affect such
Purchaser’s right to rely on the Company’s
representations and warranties contained in this Agreement or any
representations and warranties contained in any other Transaction
Document or any other document or instrument executed and/or
delivered in connection with this Agreement or the consummation of
the transactions contemplated hereby. Notwithstanding the
foregoing, for the avoidance of doubt, nothing contained herein
shall constitute a representation or warranty, or preclude any
actions, with respect to locating or borrowing shares in order to
effect Short Sales or similar transactions in the
future.

 


 




 

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ARTICLE IV.



OTHER AGREEMENTS OF THE PARTIES

 


4.1           Transfer
Restrictions.

 


(a)           The
Securities may only be disposed of in compliance with state and
federal securities laws. In connection with any transfer of
Securities other than pursuant to an effective registration
statement or Rule 144, to the Company or to an Affiliate of a
Purchaser or in connection with a pledge as contemplated in Section
4.1(b), the Company may require the transferor thereof to provide
to the Company an opinion of counsel selected by the transferor and
reasonably acceptable to the Company, the form and substance of
which opinion shall be reasonably satisfactory to the Company, to
the effect that such transfer does not require registration of such
transferred Securities under the Securities Act. As a condition of
transfer, any such transferee shall agree in writing to be bound by
the terms of this Agreement and the Registration Rights Agreement
and shall have the rights and obligations of a Purchaser under this
Agreement and the Registration Rights Agreement.

 


(b)           The
Purchasers agree to the imprinting, so long as is required by this
Section 4.1, of a legend on any of the Securities in the following
form:

 


NEITHER
THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS
EXERCISABLE HAS NOT BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN
RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. THIS SECURITY
AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE
PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A
REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION
THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE
501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH
SECURITIES.

 


(c)           The
Company acknowledges and agrees that a Purchaser may from time to
time pledge pursuant to a bona fide margin agreement with a
registered broker-dealer or grant a security interest in some or
all of the Securities to a financial institution that is an
“accredited investor” as defined in Rule 501(a) under
the Securities Act and, if required under the terms of such
arrangement, such Purchaser may transfer pledged or secured
Securities to the pledgees or secured parties. Such a pledge or
transfer would not be subject to approval of the Company and no
legal opinion of legal counsel of the pledgee, secured party or
pledgor shall be required in connection therewith. Further, no
notice shall be required of such pledge. At the appropriate
Purchaser’s expense, the Company will execute and deliver
such reasonable documentation as a pledgee or secured party of
Securities may reasonably request in connection with a pledge or
transfer of the Securities.


 




 

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(d)           Certificates
evidencing the Shares and Warrant Shares shall not contain any
legend (including the legend set forth in Section 4.1(b) hereof),
(i) while a registration statement (including the Registration
Statement) covering the resale of such security is effective under
the Securities Act, (ii) following any sale of such Shares or
Warrant Shares pursuant to Rule 144 (assuming cashless exercise of
the Warrants), (iii) if such Shares or Warrant Shares are eligible
for sale under Rule 144 (assuming cashless exercise of the
Warrants), or (iv) if such legend is not required under applicable
requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the staff of the
Commission). The Company shall use reasonable best efforts to cause
its counsel to issue a legal opinion to the Transfer Agent promptly
after the Effective Date if required by the Transfer Agent to
effect the removal of the legend hereunder. Upon reasonable request
by the Company or its counsel with a form letter of
representations, the Purchaser shall deliver a customary
representation letter to the Company or its counsel in connection
with an opinion related to Rule 144 hereunder. If all or any
portion of a Warrant is exercised at a time when there is an
effective registration statement to cover the resale of the Warrant
Shares, or if such Shares or Warrant Shares may be sold under Rule
144 (assuming cashless exercise of the Warrants), or if such legend
is not otherwise required under applicable requirements of the
Securities Act (including judicial interpretations and
pronouncements issued by the staff of the Commission) then such
Warrant Shares shall be issued free of all legends. The Company
agrees that following the Effective Date or at such time as such
legend is no longer required under this Section 4.1(c), the Company
will, no later than the earlier of (i) two (2) Trading Days and
(ii) the number of Trading Days comprising the Standard Settlement
Period (as defined below) following the delivery by a Purchaser to
the Company or the Transfer Agent of a certificate representing
Shares or Warrant Shares, as the case may be, issued with a
restrictive legend, together with any representation letter
required to issue an opinion to remove such legend in form and
substance satisfactory to the Company’s counsel (such date,
the “Legend Removal
Date”), deliver or cause to be delivered to such
Purchaser a certificate representing such shares that is free from
all restrictive and other legends. The Company may not make any
notation on its records or give instructions to the Transfer Agent
that enlarge the restrictions on transfer set forth in this Section
4. Certificates for Securities subject to legend removal hereunder
shall be transmitted by the Transfer Agent to the Purchaser by
crediting the account of the Purchaser’s prime broker with
the Depository Trust Company System as directed by such Purchaser.
As used herein, “Standard Settlement
Period” means the standard settlement period,
expressed in a number of Trading Days, on the Company’s
primary Trading Market with respect to the Common Stock as in
effect on the date of delivery of a certificate representing Shares
or Warrants Shares, as the case may be, issued with a restrictive
legend.


 




 

27








 






 


(e)           In
addition to such Purchaser’s other available remedies, the
Company shall pay to a Purchaser, in cash, (i) as partial
liquidated damages and not as a penalty, for each $1,000 of Shares
or Warrant Shares (based on the VWAP of the Common Stock on the
date such Securities are submitted to the Transfer Agent) delivered
for removal of the restrictive legend and subject to Section
4.1(c), $10 per Trading Day (increasing to $20 per Trading Day five
(5) Trading Days after such damages have begun to accrue) for each
Trading Day after the Legend Removal Date until such certificate is
delivered without a legend and (ii) if the Company fails to (a)
issue and deliver (or cause to be delivered) to a Purchaser by the
Legend Removal Date a certificate representing the Securities so
delivered to the Company by such Purchaser that is free from all
restrictive and other legends and (b) if after the Legend Removal
Date such Purchaser purchases (in an open market transaction or
otherwise) shares of Common Stock to deliver in satisfaction of a
sale by such Purchaser 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 Purchaser anticipated receiving from the Company
without any restrictive legend, then, an amount equal to the excess
of such Purchaser’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”) over the product of (A) such number of Shares
or Warrant Shares that the Company was required to deliver to such
Purchaser by the Legend Removal Date multiplied by (B) the lowest
closing sale price of the Common Stock on any Trading Day during
the period commencing on the date of the delivery by such Purchaser
to the Company of the applicable Shares or Warrant Shares (as the
case may be) and ending on the date of such delivery and payment
under this clause (ii).

 


(f)           Each
Purchaser, severally and not jointly with the other Purchasers,
agrees with the Company that such Purchaser will sell any
Securities pursuant to either the registration requirements of the
Securities Act, including any applicable prospectus delivery
requirements, or an exemption therefrom, and that if Securities are
sold pursuant to a Registration Statement, they will be sold in
compliance with the plan of distribution set forth therein, and
acknowledges that the removal of the restrictive legend from
certificates representing Securities as set forth in this Section
4.1 is predicated upon the Company’s reliance upon this
understanding.

 


4.2           Furnishing
of Information; Public Information.

 


(a)           Until
the earlier of the time that (i) no Purchaser owns Securities or
(ii) the Warrants have expired, the Company covenants to maintain
the registration of the Common Stock under Section 12(b) or 12(g)
of the Exchange Act and to timely file (or obtain extensions in
respect thereof and file within the applicable grace period) all
reports required to be filed by the Company after the date hereof
pursuant to the Exchange Act even if the Company is not then
subject to the reporting requirements of the Exchange
Act.

 


 




 

28








 






 

 


(b)           At
any time during the period commencing from the six (6) month
anniversary of the date hereof and ending at such time that all of
the Shares and Warrant Shares (assuming cashless exercise) may be
sold without the requirement for the Company to be in compliance
with Rule 144(c)(1) (including, without limitation, the
availability of an effective registration statement relating to the
Shares and Warrant Shares) and otherwise without restriction or
limitation pursuant to Rule 144, if the Company shall fail for any
reason to satisfy the current public information requirement under
Rule 144(c) for a period of more than thirty (30) consecutive days
(a “Public
Information Failure”) then, in addition to such
Purchaser’s other available remedies, the Company shall pay
to a Purchaser, in cash, as partial liquidated damages and not as a
penalty, by reason of any such delay in or reduction of its ability
to sell the Shares and Warrant Shares, an amount in cash equal to
one percent (1.0%) of the aggregate Subscription Amount paid by
such Purchaser and on every thirtieth (30th) day (pro-rated for
periods totaling less than thirty days) thereafter until the
earlier of (a) the date such Public Information Failure is cured
and (b) such time that such public information is no longer
required for the Purchasers to transfer the Shares and Warrant
Shares pursuant to Rule 144. The payments to which a Purchaser
shall be entitled pursuant to this Section 4.2(b) are referred to
herein as “Public
Information Failure Payments.” Public Information
Failure Payments shall be paid on the earlier of (i) the last day
of the calendar month during which such Public Information Failure
Payments are incurred and (ii) the third (3rd) Business Day after
the event or failure giving rise to the Public Information Failure
Payments is cured. In the event the Company fails to make Public
Information Failure Payments in a timely manner, such Public
Information Failure Payments shall bear interest at the rate of
1.5% per month (prorated for partial months) until paid in full.
Nothing herein shall limit such Purchaser’s right to pursue
actual damages for the Public Information Failure, and such
Purchaser shall have the right to pursue all remedies available to
it at law or in equity including, without limitation, a decree of
specific performance and/or injunctive relief.

 


4.3           Integration.
The Company shall not sell, offer for sale or solicit offers to buy
or otherwise negotiate in respect of any security (as defined in
Section 2 of the Securities Act) that would be integrated with the
offer or sale of the Securities in a manner that would require the
registration under the Securities Act of the sale of the Securities
or that would be integrated with the offer or sale of the
Securities for purposes of the rules and regulations of any Trading
Market such that it would require shareholder approval prior to the
closing of such other transaction unless shareholder approval is
obtained before the closing of such subsequent
transaction.

 


4.4           Securities
Laws Disclosure; Publicity. The
Company shall (a) by the Disclosure Time, issue a press release
disclosing the material terms of the transactions contemplated
hereby, and (b) file a Current Report on Form 8-K, including the
Transaction Documents as exhibits thereto, with the Commission
within the time required by the Exchange Act. From and after the
issuance of such press release, the Company represents to the
Purchasers that it shall have publicly disclosed all material,
non-public information delivered to any of the Purchasers by the
Company or any of its Subsidiaries, or any of their respective
officers, directors, employees or agents in connection with the
transactions contemplated by the Transaction Documents. In
addition, effective upon the issuance of such press release, the
Company acknowledges and agrees that any and all confidentiality or
similar obligations under any agreement, whether written or oral,
between the Company, any of its Subsidiaries or any of their
respective officers, directors, agents, employees or Affiliates on
the one hand, and any of the Purchasers or any of their Affiliates
on the other hand, shall terminate. The Company and each Purchaser
shall consult with each other in issuing any other press releases
with respect to the transactions contemplated hereby, and neither
the Company nor any Purchaser shall issue any such press release
nor otherwise make any such public statement without the prior
consent of the Company, with respect to any press release of any
Purchaser, or without the prior consent of each Purchaser, with
respect to any press release of the Company, which consent shall
not unreasonably be withheld or delayed, except if such disclosure
is required by law, in which case the disclosing party shall
promptly provide the other party with prior notice of such public
statement or communication. Notwithstanding the foregoing, the
Company shall not publicly disclose the name of any Purchaser, or
include the name of any Purchaser in any filing with the Commission
or any regulatory agency or Trading Market, without the prior
written consent of such Purchaser, except (a) as required by
federal securities law in connection with (i) any registration
statement contemplated by the Registration Rights Agreement and
(ii) the filing of final Transaction Documents with the Commission
and (b) to the extent such disclosure is required by law or Trading
Market regulations, in which case the Company shall use
commercially reasonable efforts to provide the Purchasers with
prior notice of such disclosure permitted under this clause (b) in
compliance with applicable law.

 


 




 

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4.5           Shareholder
Rights Plan. No claim will be
made or enforced by the Company or, with the consent of the
Company, any other Person, that any Purchaser is an
“Acquiring
Person” under any control
share acquisition, business combination, poison pill (including any
distribution under a rights agreement) or similar anti-takeover
plan or arrangement in effect or hereafter adopted by the Company,
or that any Purchaser could be deemed to trigger the provisions of
any such plan or arrangement, by virtue of receiving Securities
under the Transaction Documents or under any other agreement
between the Company and the Purchasers.

 


4.6           Non-Public
Information. Except with
respect to the material terms and conditions of the transactions
contemplated by the Transaction Documents, which shall be disclosed
pursuant to Section 4.4, the Company covenants and agrees that
neither it, nor any other Person acting on its behalf will provide
any Purchaser or its agents or counsel with any information that
constitutes, or the Company reasonably believes constitutes,
material non-public information, unless prior thereto such
Purchaser shall have consented to the receipt of such information
and agreed with the Company to keep such information confidential.
The Company understands and confirms that each Purchaser shall be
relying on the foregoing covenant in effecting transactions in
securities of the Company. To the extent that the Company delivers
any material, non-public information to a Purchaser without such
Purchaser’s consent, the Company hereby covenants and agrees
that such Purchaser shall not have any duty of confidentiality to
the Company, any of its Subsidiaries, or any of their respective
officers, directors, agents, employees or Affiliates, or a duty to
the Company, any of its Subsidiaries or any of their respective
officers, directors, agents, employees or Affiliates not to trade
on the basis of, such material, non-public information, provided
that the Purchaser shall remain subject to applicable law. To the
extent that any notice provided pursuant to any Transaction
Document constitutes, or contains, material, non-public information
regarding the Company or any Subsidiaries, the Company shall
simultaneously file such notice with the Commission pursuant to a
Current Report on Form 8-K. The Company understands and confirms
that each Purchaser shall be relying on the foregoing covenant in
effecting transactions in securities of the
Company.

 


4.7           Use
of Proceeds. Except as set
forth on Schedule 4.7
attached hereto, the Company shall use
the net proceeds from the sale of the Securities hereunder for
working capital purposes and shall not use such proceeds: (a) for
the satisfaction of any portion of the Company’s debt (other
than payment of trade payables in the ordinary course of the
Company’s business and prior practices), (b) for the
redemption of any Common Stock or Common Stock Equivalents, (c) for
the settlement of any outstanding litigation or (d) in violation of
FCPA or OFAC regulations.

 


 




 

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4.8           Indemnification
of Purchasers. Subject to the
provisions of this Section 4.8, the Company will indemnify and hold
each Purchaser and its directors, officers, shareholders, members,
partners, employees and agents (and any other Persons with a
functionally equivalent role of a Person holding such titles
notwithstanding a lack of such title or any other title), each
Person who controls such Purchaser (within the meaning of Section
15 of the Securities Act and Section 20 of the Exchange Act), and
the directors, officers, shareholders, agents, members, partners or
employees (and any other Persons with a functionally equivalent
role of a Person holding such titles notwithstanding a lack of such
title or any other title) of such controlling persons (each, a
“Purchaser
Party”) harmless from any
and all losses, liabilities, obligations, claims, contingencies,
damages, costs and expenses, including all judgments, amounts paid
in settlements, court costs and reasonable attorneys’ fees
and costs of investigation that any such Purchaser Party may suffer
or incur as a result of or relating to (a) any breach of any of the
representations, warranties, covenants or agreements made by the
Company in this Agreement or in the other Transaction Documents or
(b) any action instituted against the Purchaser Parties in any
capacity, or any of them or their respective Affiliates, by any
stockholder of the Company who is not an Affiliate of such
Purchaser Party, with respect to any of the transactions
contemplated by the Transaction Documents (unless such action is
based upon a breach of such Purchaser Party’s
representations, warranties or covenants under the Transaction
Documents or any agreements or understandings such Purchaser Party
may have with any such stockholder or any violations by such
Purchaser Party of state or federal securities laws or any conduct
by such Purchaser Party which is judicially determined to
constitute fraud, gross negligence or willful misconduct). If any
action shall be brought against any Purchaser Party in respect of
which indemnity may be sought pursuant to this Agreement, such
Purchaser Party shall promptly notify the Company in writing, and
the Company shall have the right to assume the defense thereof with
counsel of its own choosing reasonably acceptable to the Purchaser
Party. Any Purchaser Party shall have the right to employ separate
counsel in any such action and participate in the defense thereof,
but the fees and expenses of such counsel shall be at the expense
of such Purchaser Party except to the extent that (i) the
employment thereof has been specifically authorized by the Company
in writing, (ii) the Company has failed after a reasonable period
of time to assume such defense and to employ counsel or (iii) in
such action there is, in the reasonable opinion of counsel, a
material conflict on any material issue between the position of the
Company and the position of such Purchaser Party, in which case the
Company shall be responsible for the reasonable and documented fees
and expenses of no more than one such separate counsel. The Company
will not be liable to any Purchaser Party under this Agreement (1)
for any settlement by a Purchaser Party effected without the
Company’s prior written consent, which shall not be
unreasonably withheld or delayed; or (2) to the extent, but only to
the extent that a loss, claim, damage or liability is attributable
to any Purchaser Party’s breach of any of the
representations, warranties, covenants or agreements made by such
Purchaser Party in this Agreement or in the other Transaction
Documents. The indemnification
required by this Section 4.8 shall be made by periodic payments of
the amount thereof during the course of the investigation or
defense, as and when bills are received or are incurred. The
indemnity agreements contained herein shall be in addition to any
cause of action or similar right of any Purchaser Party against the
Company or others and any liabilities the Company may be subject to
pursuant to law.

 


4.9           Reservation
of Common Stock. As of the date
hereof, the Company has reserved and the Company shall continue to
reserve and keep available at all times, free of preemptive rights,
a sufficient number of shares of Common Stock for the purpose of
enabling the Company to issue Shares pursuant to this Agreement and
Warrant Shares pursuant to any exercise of the
Warrants.

 


 




 

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4.10        
  Listing of Common
Stock. The Company hereby
agrees to use reasonable best efforts to maintain the listing or
quotation of the Common Stock on the Trading Market on which it is
currently listed, and concurrently with the Closing, the Company
shall apply to list or quote all of the Shares and Warrant Shares
on such Trading Market and promptly secure the listing of all of
the Shares and Warrant Shares on such Trading Market. The Company
further agrees, if the Company applies to have the Common Stock
traded on any other Trading Market, it will then include in such
application all of the Shares and Warrant Shares, and will take
such other action as is reasonably necessary to cause all of the
Shares and Warrant Shares to be listed or quoted on such other
Trading Market as promptly as possible. The Company will then take
all action reasonably necessary to continue the listing and trading
of its Common Stock on a Trading Market and will comply in all
material respects with the Company’s reporting, filing and
other obligations under the bylaws or rules of the Trading Market.
The Company agrees to use its reasonable best efforts to maintain
the eligibility of the Common Stock for electronic transfer through
the Depository Trust Company or another established clearing
corporation, including, without limitation, by timely payment of
fees to the Depository Trust Company or such other established
clearing corporation in connection with such electronic
transfer.

 


4.11           [RESERVED]

 


4.12           Subsequent
Equity Sales.

 


(a)           From
the date hereof until 90 days after the Effective Date (the
“Lock-Up
Period”), neither the Company nor any Subsidiary shall
(i) issue, enter into any agreement to issue or announce the
issuance or proposed issuance of any shares of Common Stock or
Common Stock Equivalents or (ii) file any registration statement or
any amendment or supplement thereto, in each case other than as
contemplated pursuant to the Registration Rights
Agreement.

 


(b)           From
the date hereof until the first year anniversary of the Closing
Date, the Company shall be prohibited from effecting or entering
into an agreement to effect any issuance by the Company or any of
its Subsidiaries of Common Stock or Common Stock Equivalents (or a
combination of units thereof) involving a Variable Rate
Transaction. “Variable Rate
Transaction” means a transaction in which the Company
(i) issues or sells any debt or equity securities that are
convertible into, exchangeable or exercisable for, or include the
right to receive, additional shares of Common Stock either (A) at a
conversion price, exercise price or exchange rate or other price
that is based upon, and/or varies with, the trading prices of or
quotations for the shares of Common Stock at any time after the
initial issuance of such debt or equity securities or (B) with a
conversion, exercise or exchange price that is subject to being
reset at some future date after the initial issuance of such debt
or equity security or upon the occurrence of specified or
contingent events directly or indirectly related to the business of
the Company or the market for the Common Stock or (ii) enters into,
or effects a transaction under, any agreement, including, but not
limited to, an equity line of credit, whereby the Company may issue
securities at a future determined price. Notwithstanding the
foregoing, the Company may enter into and effect sales pursuant to
an at-the-market offering facility following the Lock-Up Period.
Any Purchaser shall be entitled to obtain injunctive relief against
the Company to preclude any such issuance, which remedy shall be in
addition to any right to collect damages.

 


 




 

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(c)           Notwithstanding
the foregoing, this Section 4.12 shall not apply in respect of an
Exempt Issuance, except that no Variable Rate Transaction shall be
an Exempt Issuance.

 


4.13       
Equal
Treatment of Purchasers. No
consideration (including any modification of any Transaction
Document) shall be offered or paid to any Person to amend or
consent to a waiver or modification of any provision of the
Transaction Documents unless the same consideration is also offered
to all of the parties to the Transaction Documents. For
clarification purposes, this provision constitutes a separate right
granted to each Purchaser by the Company and negotiated separately
by each Purchaser, and is intended for the Company to treat the
Purchasers as a class and shall not in any way be construed as the
Purchasers acting in concert or as a group with respect to the
purchase, disposition or voting of Securities or
otherwise.

 


4.14       
Certain
Transactions and Confidentiality. Each Purchaser, severally and not jointly with
the other Purchasers, covenants that neither it, nor any Affiliate
acting on its behalf or pursuant to any understanding with it will
execute any purchases or sales, including Short Sales, of any of
the Company’s securities during the period commencing with
the execution of this Agreement and ending at such time that the
transactions contemplated by this Agreement are first publicly
announced pursuant to the initial press release as described in
Section 4.4.  Each Purchaser, severally and not jointly with
the other Purchasers, covenants that until such time as the
transactions contemplated by this Agreement are publicly disclosed
by the Company pursuant to the initial press release as described
in Section 4.4, such Purchaser will maintain the confidentiality of
the existence and terms of this transaction and the information
included in the Disclosure Schedules.  Notwithstanding the
foregoing and notwithstanding anything contained in this Agreement
to the contrary, the Company expressly acknowledges and agrees that
(i) no Purchaser makes any representation, warranty or covenant
hereby that it will not engage in effecting transactions in any
securities of the Company after the time that the transactions
contemplated by this Agreement are first publicly announced
pursuant to the initial press release as described in Section 4.4,
(ii) no Purchaser shall be restricted or prohibited from effecting
any transactions in any securities of the Company in accordance
with applicable securities laws from and after the time that the
transactions contemplated by this Agreement are first publicly
announced pursuant to the initial press release as described in
Section 4.4 and (iii) no Purchaser shall have any duty of
confidentiality or duty not to trade in the securities of the
Company to the Company or its Subsidiaries after the issuance of
the initial press release as described in Section 4.4. 
Notwithstanding the foregoing, in the case of a Purchaser that is a
multi-managed investment vehicle whereby separate portfolio
managers manage separate portions of such Purchaser’s assets
and the portfolio managers have no direct knowledge of the
investment decisions made by the portfolio managers managing other
portions of such Purchaser’s assets, the covenant set forth
above shall only apply with respect to the portion of assets
managed by the portfolio manager that made the investment decision
to purchase the Securities covered by this
Agreement.

 


 




 

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4.15          
Exercise
Procedures. The form of Notice
of Exercise included in the Warrants set forth the totality of the
procedures required of the Purchasers in order to exercise the
Warrants. No additional legal opinion, other information or
instructions shall be required of the Purchasers to exercise their
Warrants. Without limiting the preceding sentences, no ink-original
Notice of Exercise shall be required, nor shall any medallion
guarantee (or other type of guarantee or notarization) of any
Notice of Exercise form be required in order to exercise the
Warrants. The Company shall honor exercises of the Warrants and
shall deliver Warrant Shares in accordance with the terms,
conditions and time periods set forth in the Transaction
Documents.

 


4.16           Form
D; Blue Sky Filings. The
Company agrees to timely file a Form D with respect to the
Securities as required under Regulation D. The Company shall take
such action as the Company shall reasonably determine is necessary
in order to obtain an exemption for, or to qualify the Securities
for, sale to the Purchasers at the Closing under applicable
securities or “Blue Sky” laws of the states of the
United States, and shall provide evidence of such actions promptly
upon request of any Purchaser.

 


4.17           Board
Designees. After the Closing
Date, the Company agrees that it will appoint to its Board of
Directors two (2) directors designated in writing by a majority in
interest of the Purchasers ((“Designor”)
such designees and as such designees may be replaced as provided
herein, the “Designees”)
within five days of such designation.  Further, subject to the
paragraph below, for so long as Designor beneficially owns (on a
fully converted basis ignoring for such purposes any conversion or
exercise limitations that may be applicable) at least 19.90% of the
Company issued and outstanding Common Stock, then the Company shall
continue to recommend to its stockholders that it elect both
Designees to serve as a directors on the Company’s
Board. In the event that the Designor beneficially owns (on a
fully converted basis ignoring for such purposes any conversion or
exercise limitations that may be applicable) less than 19.90% but
more than 9.99% of the Company issued and outstanding Common Stock,
then Designor shall have the right to designate only one (1)
Designee to the Board, and the Company shall continue to recommend
to its stockholders that it elect such Designee to serve as a
director on the Company’s Board. The Company further agrees
that it will not take action to remove, or recommend the removal
of, either Designee (or the single Designee, if applicable) without
cause therefore, unless the Designor has lost the right to appoint
such Designee as described above. Upon any removal or resignation
of a Designee that the Designor has a right to appoint, the Company
shall, within five days of the receipt of written notice from
Designor of the identification of a replacement designee, appoint
to fill the vacancy so created with such replacement designee
subject to the paragraph below. Each Designee, once a Director of
the Company, shall be entitled to all of the rights enjoyed by
other non-employee Directors of the Company, including receipt of
information, reimbursement of expenses and coverage under
applicable director and officer insurance policies. Further,
Designator agrees that it will not propose any individual as a
Designee to be a member of the Company’s Board of Directors
whose background does not comply with or would disqualify the
Company from complying with (i) applicable securities laws, (ii)
contractual obligations to and rules of Trading Market and (iii)
the criteria for directors set forth in the then current charter of
the Company’s Nominating Committee, and will not disqualify
the Company from being able to conduct any public offering or
private placement pursuant to either Rule 506 (b) or (c) and any
”bad boy” provisions of any state securities
laws.  To the extent that any Designee who becomes a director
and does not satisfy the conditions of the preceding sentence, that
person will immediately resign, and Designor will have the right to
propose a replacement person to fill such vacancy otherwise in
accordance with the terms of this Agreement. The foregoing
provisions of this Section 4.17 are subject in all respects to the
Company receiving confirmation from the Trading Market (which
confirmation the Company will use reasonable efforts to obtain)
that such provisions shall not cause the transactions contemplated
hereby and by that certain Securities Purchase Agreement for Class
C and Class D Units, of even date herewith, to require approval of
the Company’s stockholders pursuant to the rules and
regulations of the Trading Market.

 


 




 

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ARTICLE V.



MISCELLANEOUS

 


5.1           Termination. 
This Agreement may be terminated by any Purchaser, as to such
Purchaser’s obligations hereunder only and without any effect
whatsoever on the obligations between the Company and the other
Purchasers, by written notice to the other parties, if the Closing
has not been consummated on or before the fifth
(5th)
Trading Day following the date hereof; provided,
however,
that no such termination will affect the right of any party to sue
for any breach by any other party (or parties).

 


5.2           Fees
and Expenses. Except as
expressly set forth in the Transaction Documents to the contrary,
each party shall pay the fees and expenses of its advisers,
counsel, accountants and other experts, if any, and all other
expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this Agreement.
The Company shall pay all Transfer Agent fees (including, without
limitation, any fees required for same-day processing of any
instruction letter delivered by the Company and any exercise notice
delivered by a Purchaser), stamp taxes and other taxes and duties
levied in connection with the delivery of any Securities to the
Purchasers.

 


5.3           Entire
Agreement. The Transaction
Documents, together with the exhibits and schedules thereto,
contain the entire understanding of the parties with respect to the
subject matter hereof and thereof and supersede all prior
agreements and understandings, oral or written, with respect to
such matters, which the parties acknowledge have been merged into
such documents, exhibits and schedules.

 


5.4           Notices.
Any and all notices or other communications or deliveries required
or permitted to be provided hereunder shall be in writing and shall
be deemed given and effective on the earliest of: (a) the time of
transmission, if such notice or communication is delivered via
facsimile at the facsimile number or email attachment at the email
address as set forth on the signature pages attached hereto at or
prior to 5:30 p.m. (New York City time) on a Trading Day, (b) the
next Trading Day after the time of transmission, if such notice or
communication is delivered via facsimile at the facsimile number or
email attachment at the email address as set forth on the signature
pages attached hereto on a day that is not a Trading Day or later
than 5:30 p.m. (New York City time) on any Trading Day, (c) the
second (2nd)
Trading Day following the date of mailing, if sent by U.S.
nationally recognized overnight courier service or (d) upon actual
receipt by the party to whom such notice is required to be given.
The address for such notices and communications shall be as set
forth on the signature pages attached hereto.

 


 




 

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5.5           Amendments;
Waivers. No provision of this
Agreement may be waived, modified, supplemented or amended except
in a written instrument signed, in the case of an amendment, by the
Company and Purchasers which purchased (or prior to the Closing
Date, agreed to purchase) at least 50.1% in interest of the Shares
and Pre-Funded Warrants based on the initial Subscription Amounts
hereunder or, in the case of a waiver, by the party against whom
enforcement of any such waived provision is sought, provided that
if any amendment, modification or waiver disproportionately and
adversely impacts a Purchaser (or group of Purchasers), the consent
of such disproportionately impacted Purchaser (or group of
Purchasers) shall also be required. No waiver of any default with
respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future
or a waiver of any subsequent default or a waiver of any other
provision, condition or requirement hereof, nor shall any delay or
omission of any party to exercise any right hereunder in any manner
impair the exercise of any such right. Any proposed amendment or
waiver that disproportionately, materially and adversely affects
the rights and obligations of any Purchaser relative to the
comparable rights and obligations of the other Purchasers shall
require the prior written consent of such adversely affected
Purchaser. Any amendment effected in accordance with this Section
5.5 shall be binding upon each Purchaser and holder of Securities
and the Company.

 


5.6           Headings.
The headings herein are for convenience only, do not constitute a
part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.

 


5.7           Successors
and Assigns. This Agreement
shall be binding upon and inure to the benefit of the parties and
their successors and permitted assigns. The Company may not assign
this Agreement or any rights or obligations hereunder without the
prior written consent of each Purchaser (other than by merger). Any
Purchaser may assign any or all of its rights under this Agreement
to any Person to whom such Purchaser assigns or transfers any
Securities, provided that such transferee agrees in writing to be
bound, with respect to the transferred Securities, by the
provisions of the Transaction Documents that apply to the
“Purchasers.”

 


5.8           No
Third-Party Beneficiaries. The
Placement Agent shall be the third party beneficiary of the
representations and warranties of the Company in Section 3.1 and
the representations and warranties of the Purchasers in Section
3.2. This Agreement is intended for the benefit of the parties
hereto and their respective successors and permitted assigns and is
not for the benefit of, nor may any provision hereof be enforced
by, any other Person, except as otherwise set forth in Section 4.8
and this Section 5.8.

 


 




 

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5.9           Governing
Law. All questions concerning
the construction, validity, enforcement and interpretation of the
Transaction Documents shall be governed by and construed and
enforced in accordance with the internal laws of the State of New
York, without regard to the principles of conflicts of law thereof.
Each party agrees that all legal Proceedings concerning the
interpretations, enforcement and defense of the transactions
contemplated by this Agreement and any other Transaction Documents
(whether brought against a party hereto or its respective
affiliates, directors, officers, shareholders, partners, members,
employees or agents) shall be commenced exclusively in the state
and federal courts sitting in the City 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 (including with respect to the enforcement of any
of the Transaction Documents), and hereby irrevocably waives, and
agrees not to assert in any Action or Proceeding, any claim that it
is not personally subject to the jurisdiction of any such court,
that such Action or Proceeding is improper or is an inconvenient
venue for such Proceeding. Each party hereby irrevocably waives
personal service of process and consents to process being served in
any such Action or Proceeding by mailing a copy thereof via
registered or certified mail or overnight delivery (with evidence
of delivery) to such party at the address in effect for notices to
it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any
way any right to serve process in any other manner permitted by
law. If any party shall commence an Action or Proceeding to enforce
any provisions of the Transaction Documents, then, in addition to
the obligations of the Company under Section 4.8, the prevailing
party in such Action or Proceeding shall be reimbursed by the
non-prevailing party for its reasonable attorneys’ fees and
other costs and expenses incurred with the investigation,
preparation and prosecution of such Action or
Proceeding.

 


5.10           Survival.
The representations and warranties contained herein shall survive
the Closing and the delivery of the Securities.

 


5.11           Execution.
This Agreement may be executed in two or more counterparts, all of
which when taken together shall be considered one and the same
agreement and shall become effective when counterparts have been
signed by each party and delivered to each other party, it being
understood that the parties need not sign the same counterpart. In
the event that any signature is delivered by facsimile transmission
or by e-mail delivery of a “.pdf” format data file,
such signature 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 facsimile or
“.pdf” signature page were an original
thereof.

 


5.12           Severability.
If any term, provision, covenant or restriction of this Agreement
is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall
remain in full force and effect and shall in no way be affected,
impaired or invalidated, and the parties hereto shall use their
commercially reasonable efforts to find and employ an alternative
means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It
is hereby stipulated and declared to be the intention of the
parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of
such that may be hereafter declared invalid, illegal, void or
unenforceable.

 


5.13           Rescission
and Withdrawal Right.
Notwithstanding anything to the contrary contained in (and without
limiting any similar provisions of) any of the other Transaction
Documents, whenever any Purchaser 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 Purchaser 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;
provided,
however,
that, in the case of a rescission of an exercise of a Warrant, the
applicable Purchaser shall be required to return any shares of
Common Stock subject to any such rescinded exercise notice
concurrently with the return to such Purchaser of the aggregate
exercise price paid to the Company for such shares and the
restoration of such Purchaser’s right to acquire such shares
pursuant to such Purchaser’s Warrant (including, issuance of
a replacement warrant certificate evidencing such restored
right).

 


 




 

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5.14         
Replacement of
Securities. If any certificate
or instrument evidencing any Securities is mutilated, lost, stolen
or destroyed, the Company shall issue or cause to be issued in
exchange and substitution for and upon cancellation thereof (in the
case of mutilation), or in lieu of and substitution therefor, a new
certificate or instrument, but only upon receipt of evidence
reasonably satisfactory to the Company of such loss, theft or
destruction. The applicant for a new certificate or instrument
under such circumstances shall also pay any reasonable third-party
costs (including customary indemnity) associated with the issuance
of such replacement Securities.

 


5.15           Remedies.
In addition to being entitled to exercise all rights provided
herein or granted by law, including recovery of damages, each of
the Purchasers and the Company will be entitled to specific
performance under the Transaction Documents. The parties agree that
monetary damages may not be adequate compensation for any loss
incurred by reason of any breach of obligations contained in the
Transaction Documents and hereby agree to waive and not to assert
in any Action for specific performance of any such obligation the
defense that a remedy at law would be adequate.

 


5.16           Payment
Set Aside. To the extent that
the Company makes a payment or payments to any Purchaser pursuant
to any Transaction Document or a Purchaser enforces or exercises
its rights 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, 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.

 


5.17           Independent
Nature of Purchasers’ Obligations and
Rights. The obligations of each
Purchaser under any Transaction Document are several and not joint
with the obligations of any other Purchaser, and no Purchaser shall
be responsible in any way for the performance or non-performance of
the obligations of any other Purchaser under any Transaction
Document. Nothing contained herein or in any other Transaction
Document, and no action taken by any Purchaser pursuant hereto or
thereto, shall be deemed to constitute the Purchasers as a
partnership, an association, a joint venture or any other kind of
entity, or create a presumption that the Purchasers are in any way
acting in concert or as a group with respect to such obligations or
the transactions contemplated by the Transaction Documents. Each
Purchaser shall be entitled to independently protect and enforce
its rights including, without limitation, the rights arising out of
this Agreement or out of the other Transaction Documents, and it
shall not be necessary for any other Purchaser to be joined as an
additional party in any Proceeding for such purpose. Each Purchaser
has been represented by its own separate legal counsel in its
review and negotiation of the Transaction Documents. For reasons of
administrative convenience only, each Purchaser and its respective
counsel have chosen to communicate with the Company through the
legal counsel of the Placement Agent. The legal counsel of the
Placement Agent does not represent any of the Purchasers and only
represents the Placement Agent. The Company has elected to provide
all Purchasers with the same terms and Transaction Documents for
the convenience of the Company and not because it was required or
requested to do so by any of the Purchasers. 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 Purchaser, solely, and not between the Company and
the Purchasers collectively and not between and among the
Purchasers.

 


 




 

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5.18          
Liquidated
Damages.  The
Company’s obligations to pay any partial liquidated damages
or other amounts owing under the Transaction Documents is a
continuing obligation of the Company and shall not terminate until
all unpaid partial liquidated damages and other amounts have been
paid notwithstanding the fact that the instrument or security
pursuant to which such partial liquidated damages or other amounts
are due and payable shall have been canceled.

 


5.19           Saturdays,
Sundays, Holidays, etc. If the
last or appointed day for the taking of any action or the
expiration of any right required or granted herein shall not be a
Business Day, then such action may be taken or such right may be
exercised on the next succeeding Business Day.

 


5.20           Construction.
The parties agree that each of them and/or their respective counsel
have reviewed and had an opportunity to revise the Transaction
Documents and, therefore, the normal rule of construction to the
effect that any ambiguities are to be resolved against the drafting
party shall not be employed in the interpretation of the
Transaction Documents or any amendments thereto. In addition, each
and every reference to share prices and shares of Common Stock in
any Transaction Document shall be subject to adjustment for reverse
and forward stock splits, stock dividends, stock combinations and
other similar transactions of the Common Stock that occur after the
date of this Agreement.

 


5.21           WAIVER
OF JURY TRIAL. IN
ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY
PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH KNOWINGLY AND
INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW,
HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY
WAIVES FOREVER TRIAL BY JURY.

 


 

 



(Signature Pages Follow)

 


 




 

39








 






IN
WITNESS WHEREOF, the parties hereto have caused this Securities
Purchase Agreement for Class E and Class F Units to be duly
executed by their respective authorized signatories as of the date
first indicated above.

 


 


	


TENAX THERAPEUTICS, INC.


 


 

	

Address for
Notice:


 






	

By:                                              




     
   Name: Michael Jebsen


   
     Title: Chief Financial Officer


 


With a
copy to (which shall not constitute notice):

	






	

 


 


	
 







 


 


 


[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK


SIGNATURE
PAGE FOR PURCHASER FOLLOWS]


 




 

40








 






[PURCHASER
SIGNATURE PAGES TO SECURITIES PURCHASE AGREEMENT FOR CLASS E AND
CLASS F UNITS]


 


IN
WITNESS WHEREOF, the undersigned have caused this Securities
Purchase Agreement for Class E and Class F Units to be duly
executed by their respective authorized signatories as of the date
first indicated above.

 


Name of
Purchaser: ___________________________


Signature of Authorized Signatory of
Purchaser: ______________


Name of
Authorized Signatory: _______________________________


Title
of Authorized Signatory: ____________________


Email
Address of Authorized Signatory: ________________


Address
for Notice to Purchaser:


 




 


Address
for Delivery of Securities to Purchaser (if not same as address for
notice):


 






 


Subscription
Amount: ____________________


 


Class E
Units: _________________


 


Shares:
_________________


 


Series
C Warrant Shares: ______________


 


Class F
Units: _______________


 


Pre-Funded
Warrants:_________________


 


Series
C Warrant Shares: ______________


 


EIN
Number: _______________________


 


[SIGNATURE
PAGES CONTINUE]


 




 

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