Document:

Emmaus Life Sciences, Inc. 8-K 

Exhibit
10.2

 

NEITHER THIS SECURITY NOR
THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE 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, SOLD, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED FOR VALUE EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION
(INCLUDING, WITHOUT LIMITATION, A PLEDGE PERMITTED HEREUNDER IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED
BY SUCH SECURITIES WHERE THE PLEDGEE ACKNOWLEDGES THE RESTRICTIONS ON TRANSFER OF SUCH SECURITIES) NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL
TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.

 

FORM OF COMMON STOCK PURCHASE WARRANT

 

EMMAUS
LIFE SCIENCES, INC.

 

	Warrant Shares:	 	 	Initial Exercise Date:	 
	Warrant
        No.

	 	 	 	 

 

THIS COMMON STOCK PURCHASE
WARRANT (the “Warrant”) certifies that, for value received,__________________(the “Purchaser”)
or its registered assigns (the Purchaser or its registered assigns, the “Holder”) is entitled, upon the terms
and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date hereof (the
“Initial Exercise Date”) and on or prior to the close of business on the five (5) year anniversary of the Initial
Exercise Date (the “Termination Date”) but not thereafter, to subscribe for and purchase from Emmaus Life Sciences,
Inc., a Delaware corporation (the “Company”), up to______________shares (as subject to adjustment hereunder, the “Warrant
Shares”) of Common Stock. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise
Price, as defined in Section 2(b).

 

Except as specifically otherwise
provided herein, the Warrant Shares shall bear the same terms and conditions as such securities described under the caption “Description
of Common Stock” in the Memorandum and as designated in the Company’s Certificate of Incorporation and any amendments
thereto, and the holders shall have such registration rights under the Securities Act for the Warrant Shares as set forth in the
Subscription Agreement.

 

Section 1.        Definitions.
Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Subscription Agreement
(the “Subscription Agreement”), dated September 11, 2013, between the Company and the Purchaser.

  

    	 

    	 	

    

 

Section 2.        Exercise.

 

a)       Exercise
of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times
on or after the Initial Exercise Date and until 5:00 p.m., Los Angeles time, on the Termination Date by delivery to the Company
(or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address
of the Holder appearing on the books of the Company) of a duly executed facsimile copy of the notice of exercise (“Notice
of Exercise”) in the form annexed hereto and, within three (3) Trading Days of the date said Notice of Exercise is delivered
to the Company, payment to the Company of the aggregate Exercise Price of the shares thereby purchased by wire transfer or cashier’s
check drawn on a United States bank or, if available, pursuant to the cashless exercise procedure specified in Section 2(c) below.
As used herein, “Trading Day” means a day on which the NYSE MKT, the NASDAQ Capital Market, the NASDAQ Global
Market, the NASDAQ Global Select Market, the New York Stock Exchange or the OTC Bulletin Board (or any successors to any of the
foregoing) are open for trading. 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. Notwithstanding anything herein to the contrary,
the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the
Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this
Warrant to the Company for cancellation within three (3) Trading Days of the date the final Notice of Exercise is delivered to
the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available
hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal
to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of
Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise within
two (2) Business Days of receipt of such notice. The Holder and any assignee, by acceptance of this Warrant, acknowledge and
agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder,
the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face
hereof. Notwithstanding any provision herein to the contrary, the Company shall not be required to register any Warrant
Shares issued or issuable upon exercise of this Warrant (in whole or in part) in the name of any person who acquired such Warrant
Shares or this Warrant (in whole or in part) in a transaction that contravenes the restrictions on transfer of this Warrant and
the Warrant Shares set forth in this Warrant.

 

b)        Exercise
Price. The exercise price per share of the Common Stock under this Warrant shall be $3.50, subject to adjustment hereunder
(the “Exercise Price”).

 

c)        Cashless
Exercise. If at any time after the twelve (12) month anniversary of the Initial Exercise Date, there is no effective Registration
Statement registering, or no current prospectus available for, the resale of the Warrant Shares by the Holder, then this Warrant
may also be exercised, in whole or in part, at such time by means of a “cashless exercise” in which the Holder shall
be entitled to receive a number of Warrant Shares equal to the quotient obtained by dividing [(A-B) x (X)] by (A), where:

 

	 	(A) =	the VWAP (as defined below) on the Trading Day immediately preceding the date on
which Holder elects to exercise this Warrant by means of a “cashless exercise,” as set forth in the applicable Notice
of Exercise;

 

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		(B) =	 the Exercise Price of this Warrant, as adjusted hereunder; and
	 	 	 
		(X) =	the number
of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise,
in whole or in part, were by means of a cash exercise rather than a cashless exercise.

   

For purposes
of this Warrant, the term “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 the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market,
the Nasdaq Global Select Market, or the New York Stock Exchange (each, 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 the Common Stock is not then listed or quoted on a Trading Market and is then listed or
quoted for trading on the OTC Bulletin Board, the volume weighted average price of the Common Stock for such date (or the nearest
preceding date) on the OTC Bulletin Board, (c) if the Common Stock is not then listed or quoted for trading on the OTC Bulletin
Board and if prices for the Common Stock are then reported in the “Pink Sheets” published by OTC Link LLC (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 in good faith by the
independent members of the Board of Directors of the Company.

 

d)        Mechanics
of Exercise.

 

i.      Delivery
of Warrant Shares Upon Exercise. Warrant Shares purchased hereunder shall be transmitted by the Transfer Agent to the Holder
by crediting the account of the Holder’s prime broker with The Depository Trust Company through its Deposit or Withdrawal
at Custodian system (“DWAC”) if the Company is then a participant in such system and either (A) there is an
effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by the Holder
or (B) the shares are eligible for resale by the Holder without volume or manner-of-sale limitations pursuant to Rule 144, and
otherwise by physical delivery of one or more certificates, as requested by the Holder, representing such Warrant Shares to the
address specified by the Holder in the Notice of Exercise by the date that is three (3) Trading Days after the latest of (A) the
delivery to the Company of the Notice of Exercise, (B) receipt by the Company of the aggregate Exercise Price for the Warrant
Shares (unless exercised on a cashless basis pursuant to Section 2(c), and (C) surrender of this Warrant (if required) (such date,
the “Warrant Share Delivery Date”). The Warrant Shares shall be deemed to have been issued, and Holder or any
other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes,
as of the date the Warrant has been exercised, with payment to the Company of the Exercise Price (or by cashless exercise, if
permitted) and all taxes required to be paid by the Holder, if any, pursuant to Section 2(d)(vi) prior to the issuance of such
shares, having been paid.

 

ii.      Delivery of New Warrants Upon Exercise. If this Warrant shall have
been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant certificate, at the time
of delivery of the Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased
Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

 

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iii.     Rescission
Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section
2(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.

 

iv.     Compensation
for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise. In addition to any other rights available to the Holder,
if (A) the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to an exercise on or
before the second Trading Day following the Warrant Share Delivery Date, (B) as a result of such failure, either the Holder or
the Holder’s broker is required to purchase in an open market transaction or otherwise shares of Common Stock to deliver
in satisfaction of a sale by the Holder of the Warrant Shares that the Holder anticipated receiving upon such exercise (such purchase
of such shares of Common Stock being required for such delivery being a “Buy-In”), and (C) the total purchase
price (including brokerage commissions, if any) payable by the Holder for such Buy-In exceeds the proceeds to the Holder from
such sale of such Warrant Shares (such excess being the “Excess Buy-In Cost”), then the Company shall pay in cash
to the Holder the amount of the Excess Buy-In Cost within five (5) Trading Days of the second Trading Day following the Warrant
Share Delivery Date; provided, however, that the obligation of the Company to make payment of any Excess Buy-in Cost shall
only apply to the Warrant Shares issuable upon exercise of this Warrant in respect of which the Holder satisfied the requirements
hereunder in respect of such exercise, and in respect of any portion of this Warrant in respect of which the Holder did not so
comply with such requirements, the Company shall reinstate to this Warrant the number of Warrant Shares represented by such portion
of this Warrant for which such requirements were not so satisfied; provided further, however, that, in the event the sale
by the Holder giving rise to the Buy-In is executed at less than a then-current market price, the Excess Buy-In Cost shall be
equal to the lesser of (x) the Excess Buy-In Cost as determined in accordance with the foregoing provisions of this Section 2(d)(iv)
and (y) the amount by which (1) the total purchase price (including brokerage commissions, if any) payable by the Holder for such
Buy-In exceeds (2) the product obtained by multiplying the VWAP on the date of such sale transaction (or, if such date is not
a Trading Day, the immediately preceding Trading Day) by the number of Warrant Shares sold in such sale transaction. For example,
if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise
of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under the immediately
preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company prompt written
notice indicating the occurrence of a Buy-in and the amounts payable to the Holder in respect of the Buy-In and, upon request
of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies
available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive
relief with respect to the Company’s failure to timely deliver shares of Common Stock upon exercise of the Warrant as required
pursuant to the terms hereof.

 

v.    No
Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise
of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise (after
aggregating all the Warrant Shares then being purchased by the Holder upon exercise of Warrants held by the Holder), the Company
shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied
by the Exercise Price or round up to the next whole share.

  

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vi.    Charges,
Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or
other incidental expense in respect of the issuance of Warrant Shares, all of which taxes and expenses shall be paid by the Company,
and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided,
however, that in the event that Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant
when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the
Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto.
The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise.

 

vii.    Closing
of Books. The Company will not, except upon dissolution, liquidation, or winding up of the Company, close its stockholder books
or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

 

Section 3.        Certain
Adjustments.

              

a)        Stock
Dividends and Subdivisions; Combinations; Reclassifications. If the Company, at any time and from time to time while this
Warrant is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Common Stock
or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not
include any shares of Common Stock issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding shares of
Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common
Stock into a smaller number of shares or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock
of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number
of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator
shall be the number of shares of Common Stock outstanding immediately after such event, and the number of shares issuable upon
exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain
unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the
determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the
effective date in the case of a subdivision, combination or re-classification.

 

b)        Adjustment
for Diluting Issuances.

 

i.       Deemed
Issue of Additional Shares of Common Stock.

 

A.      If
the Company at any time or from time to time after the date hereof shall issue any Options or Convertible Securities (excluding
Options or Convertible Securities which are themselves Exempted Securities (as defined herein)) or shall fix a record date for
the determination of holders of any class of securities entitled to receive any such Options or Convertible Securities, then the
maximum number of shares of Common Stock (as set forth in the instrument relating thereto, assuming the satisfaction of any conditions
to exercisability, convertibility or exchangeability but without regard to any provision contained therein for a subsequent adjustment
of such number) issuable upon the exercise of such Options or, in the case of Convertible Securities and Options therefor, the
conversion or exchange of such Convertible Securities, shall be deemed to be Additional Shares of Common Stock issued as of the
time of such issue or, in case such a record date shall have been fixed, as of the close of business on such record date.

  

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B.      If the terms
of any Option or Convertible Security, the issuance of which resulted in an adjustment to the Exercise Price pursuant to the terms
of Section 3(b)(ii), are revised as a result of an amendment to such terms or any other adjustment pursuant to the provisions
of such Option or Convertible Security (but excluding automatic adjustments to such terms pursuant to anti-dilution or similar
provisions of such Option or Convertible Security) to provide for either (1) any increase or decrease in the number of shares
of Common Stock issuable upon the exercise, conversion and/or exchange of any such Option or Convertible Security or (2) any increase
or decrease in the consideration payable to the Company upon such exercise, conversion and/or exchange, then, effective upon such
increase or decrease becoming effective, the Exercise Price computed upon the original issue of such Option or Convertible Security
(or upon the occurrence of a record date with respect thereto) shall be readjusted to such Exercise Price as would have obtained
had such revised terms been in effect upon the original date of issuance of such Option or Convertible Security. Notwithstanding
the foregoing, no readjustment pursuant to this Section 3(b)(i)(B) shall have the effect of increasing the Exercise Price to an
amount which exceeds the lower of (i) the Exercise Price in effect immediately prior to the original adjustment made as a result
of the issuance of such Option or Convertible Security, or (ii) the Exercise Price that would have resulted from any issuances
of Additional Shares of Common Stock (other than deemed issuances of Additional Shares of Common Stock as a result of the issuance
of such Option or Convertible Security) between the original adjustment date and such readjustment date.

 

C.      If
the terms of any Option or Convertible Security (excluding Options or Convertible Securities which are themselves Exempted Securities),
the issuance of which did not result in an adjustment to the Exercise Price pursuant to the terms of Section 3(b)(ii) (either
because the consideration per share (determined pursuant to Section 3(b)(iii)) of the Additional Shares of Common Stock subject
thereto was equal to or greater than the Exercise Price then in effect, or because such Option or Convertible Security was issued
before the date hereof), are revised after the date hereof as a result of an amendment to such terms or any other adjustment pursuant
to the provisions of such Option or Convertible Security (but excluding automatic adjustments to such terms pursuant to anti-dilution
or similar provisions of such Option or Convertible Security) to provide for either (1) any increase in the number of shares of
Common Stock issuable upon the exercise, conversion or exchange of any such Option or Convertible Security or (2) any decrease
in the consideration payable to the Company upon such exercise, conversion or exchange, then such Option or Convertible Security,
as so amended or adjusted, and the Additional Shares of Common Stock subject thereto (determined in the manner provided in Section
3(b)(i)) shall be deemed to have been issued effective upon such increase or decrease becoming effective.

 

D.     Upon the
expiration or termination of any unexercised Option or unconverted or unexchanged Convertible Security (or portion thereof) which
resulted (either upon its original issuance or upon a revision of its terms) in an adjustment to the Exercise Price pursuant to
the terms of Section 3(b)(ii), the Exercise Price shall be readjusted to such Exercise Price as would have obtained had such Option
or Convertible Security (or portion thereof) never been issued.

 

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E.    If the
number of shares of Common Stock issuable upon the exercise, conversion and/or exchange of any Option or Convertible Security,
or the consideration payable to the Company upon such exercise, conversion and/or exchange, is calculable at the time such Option
or Convertible Security is issued or amended but is subject to adjustment based upon subsequent events, any adjustment to the
Exercise Price provided for in this Section 3(b)(i)(E) shall be effected at the time of such issuance or amendment based on such
number of shares or amount of consideration without regard to any provisions for subsequent adjustments (and any subsequent adjustments
shall be treated as provided in clauses (B) and (C) of this subsection). If the number of shares of Common Stock issuable upon
the exercise, conversion and/or exchange of any Option or Convertible Security, or the consideration payable to the Company upon
such exercise, conversion and/or exchange, cannot be calculated at all at the time such Option or Convertible Security is issued
or amended, any adjustment to the Exercise Price that would result under the terms of this subsection at the time of such issuance
or amendment shall instead be effected at the time such number of shares and/or amount of consideration is first calculable (even
if subject to subsequent adjustments), assuming for purposes of calculating such adjustment to the Exercise Price that such issuance
or amendment took place at the time such calculation can first be made.

 

ii.           Adjustment
of Exercise Price Upon Issuance of Additional Shares of Common Stock.

 

A.    Adjustment
of Warrant Shares. The Exercise Price shall be subject to adjustment from time to time as set forth in this Section 3(b)(ii).
Upon each adjustment of the Exercise Price pursuant to this Section 3(b)(ii), the registered holder shall (until another such
adjustment) thereafter be entitled to purchase at the Exercise Price the number of shares of Common Stock obtained by dividing
(a) the product of the number of Warrant Shares multiplied by the initial Exercise Price by (b) the adjusted Exercise Price.

 

B.    Adjustment
of the Exercise Price for Common Stock Issuances. In the event the Company shall at any time after the date hereof issue Additional
Shares of Common Stock (excluding Additional Shares of Common Stock deemed to be issued pursuant to Section 3(b)(i)), without consideration
or for a consideration per share less than the lower of (i) the Exercise Price in effect immediately prior to such issue or (ii)
$2.50, then the Exercise Price shall be reduced, concurrently with such issue, to a price (calculated to the nearest one-hundredth
of a cent) determined in accordance with the formula set forth in Section 3(b)(ii)(D).

 

C.    Adjustment
of the Exercise Price for Options or Convertible Securities Issuances. In the event the Company shall at any time after
the date hereof issue Additional Shares of Common Stock deemed to be issued pursuant to Subsection 3(b)(i), without consideration
or for a consideration per share less than the Exercise Price in effect immediately prior to such issue, then the Exercise Price
shall be reduced, concurrently with such issue, to a price (calculated to the nearest one-hundredth of a cent) determined in accordance
with the formula set forth in Section 3(b)(ii)(D).

 

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D.    Exercise
Adjustment Formula. Any reductions in the Exercise Price pursuant to Sections 3(b)(ii)(B) or 3(b)(ii)(C) shall be determined
in accordance with the following formula:

 

EP2 = EP1 * (A + B) ÷
(A + C)

 

For purposes of the foregoing formula,
the following definitions shall apply:

 

“EP2” shall
mean the Exercise Price in effect immediately after such issue of Additional Shares of Common Stock

 

“EP1” shall
mean the Exercise Price in effect immediately prior to such issue of Additional Shares of Common Stock;

 

“A” shall mean the number
of shares of Common Stock outstanding immediately prior to such issue of Additional Shares of Common Stock assuming conversion
of all warrants to purchase Common Stock issued pursuant to the Company’s Amended and Restated Confidential Private Placement
Memorandum dated September 9, 2013, as amended and supplemented, that are outstanding immediately prior to such issue, including,
without limitation, this Warrant;

 

“B” shall mean the number
of shares of Common Stock that would have been issued if such Additional Shares of Common Stock had been issued at a price per
share equal to EP1 (determined by dividing the aggregate consideration received by the Company in respect of such issue
by EP1); and

 

“C” shall mean the number
of such Additional Shares of Common Stock issued in such transaction.

 

iii.         Determination
of Consideration. For purposes of this Section 3(b), the consideration received by the Company for the issue of any Additional
Shares of Common Stock shall be computed as follows:

 

A.    Cash
and Property: Such consideration shall: (i) insofar as it consists of cash, be computed at the aggregate amount of cash
received by the Company, excluding amounts paid or payable for accrued interest; (ii) insofar as it consists of property other
than cash, be computed at the fair market value thereof at the time of such issue, as determined in good faith by the Board of
Directors of the Company; and (iii) in the event Additional Shares of Common Stock are issued together with other shares or securities
or other assets of the Company for consideration which covers both, be the proportion of such consideration so received, computed
as provided in clauses (i) and (ii) above, as determined in good faith by the Board of Directors of the Company.

 

B.    Options
and Convertible Securities. The consideration per share received by the Company for Additional Shares of Common Stock deemed
to have been issued pursuant to Section 3(b)(i), relating to Options and Convertible Securities, shall be determined by dividing:
(i) the total amount, if any, received or receivable by the Company as consideration for the issue of such Options or Convertible
Securities, plus the minimum aggregate amount of additional consideration (as set forth in the instruments relating thereto, without
regard to any provision contained therein for a subsequent adjustment of such consideration) payable to the Company upon the exercise
of such Options or the conversion or exchange of such Convertible Securities, or in the case of Options for Convertible Securities,
the exercise of such Options for Convertible Securities and the conversion or exchange of such Convertible Securities, by (ii)
the maximum number of shares of Common Stock (as set forth in the instruments relating thereto, without regard to any provision
contained therein for a subsequent adjustment of such number) issuable upon the exercise of such Options or the conversion or
exchange of such Convertible Securities, or in the case of Options for Convertible Securities, the exercise of such Options for
Convertible Securities and the conversion or exchange of such Convertible Securities.

 

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iv.         Term
of Adjustment for Diluting Issuances. The requirement to perform adjustments for diluting issuances under this Section 3(b)
shall terminate and be of no further force or effect on the earliest to occur of the following: (i) immediately prior to a firm
commitment underwritten public offering by the Company of shares of its Common Stock which results in aggregate cash proceeds
to the Company of not less than $20,000,000 and in connection therewith the Company lists its Common Stock on a national securities
exchange provided that the price per share of such Common Stock is at least $5.00 at the time of such listing or (ii) the fifth
(5th) anniversary of the date hereof.

 

v.          Exempted
Securities. “Exempted Securities” shall mean (1) the following shares of Common Stock and (2) shares of Common
Stock deemed issued pursuant to the following Options and Convertible Securities:

 

A. all Options,
Convertible Securities and Promissory Notes outstanding as of the Private Placement Closing Date;

 

B. shares of Common
Stock, Options or Convertible Securities issued by reason of a dividend, stock split, split-up or similar transaction or other
distribution on shares of Common Stock;

 

C. shares of Common
Stock or Options issued to employees or directors of, or consultants or advisors to, the Company or any of its subsidiaries or
authorized to be issued pursuant to a plan, agreement or arrangement approved by the board of directors of the Company (the “Board”);

 

D. shares of Common
Stock or Convertible Securities actually issued upon the exercise of Options or shares of Common Stock actually issued upon the
conversion or exchange of Convertible Securities or Promissory Notes, in each case provided such issuance is pursuant to the terms
of such Option or Convertible Security or in the case of Promissory Notes such issuance is not below the fair market value of Common
Stock as determined by the Board, provided that the Company may not issue more than 2.55 million shares of Common Stock at a fair
market value less than $2.50 in exchange of Promissory Notes under this clause (iv);

 

E. shares of Common
Stock, Options or Convertible Securities issued to banks, equipment lessors or other financial institutions, or to real property
lessors, pursuant to a debt financing, equipment leasing or real property leasing transaction approved by the Board that do not
exceed an aggregate of $500,000 of the Company’s shares of Common Stock at the fair market value of Common Stock as determined
by the Board (including shares underlying (directly or indirectly) any such Options or Convertible Securities);

  

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F. shares of Common
Stock, Options or Convertible Securities issued to suppliers or third party service providers in connection with the provision
of goods or services pursuant to transactions approved by the Board that do not exceed an aggregate of $500,000 of the Company’s
shares of Common Stock at the fair market value of Common Stock as determined by the Board (including shares underlying (directly
or indirectly) any such Options or Convertible Securities);

 

G. shares of Common
Stock, Options or Convertible Securities issued pursuant to the acquisition of another corporation by the Company by merger, purchase
of substantially all of the assets or other reorganization or to a joint venture agreement, provided that such issuances are approved
by the Board and do not exceed an aggregate of 10% of the outstanding shares of Common Stock at the time immediately preceding
such transaction (including shares underlying (directly or indirectly) any such Options or Convertible Securities); and

 

H. shares of Common
Stock, Options or Convertible Securities issued in connection with sponsored research, collaboration, technology license, development,
marketing or other similar agreements or strategic partnerships approved by the Board that do not exceed an aggregate of $500,000
of the Company’s shares of Common Stock at the fair market value of Common Stock as determined by the Board (including shares
underlying (directly or indirectly) any such Options or Convertible Securities).

 

c)          [RESERVED]

 

d)          Pro
Rata Distributions. If the Company, at any time while this Warrant is outstanding, shall distribute to all holders of Common
Stock (and not to the Holder) evidences of its indebtedness or assets (including cash and cash dividends) or rights or warrants
to subscribe for or purchase any security other than the Common Stock, then in each such case the Exercise Price shall be adjusted
by multiplying the Exercise Price in effect immediately prior to the record date fixed for determination of stockholders entitled
to receive such distribution by a fraction of which the denominator shall be the VWAP determined as of the record date mentioned
above, and of which the numerator shall be such VWAP on such record date less the then per share fair market value at such record
date of the portion of such assets or evidence of indebtedness or rights or warrants so distributed applicable to one outstanding
share of the Common Stock as determined by the board of directors of the Company in good faith. In either case the adjustments
shall be described in a statement provided to the Holder of the portion of assets or evidences of indebtedness so distributed or
such subscription rights applicable to one share of Common Stock. Such adjustment shall be made whenever any such distribution
is made and shall become effective immediately after the record date mentioned above. At the time of any such distribution, the
Company shall make appropriate reserves to ensure the timely performance of the provisions of this subsection or an adjustment
to the Exercise Price, which shall be effective as of the day following the record date for such distribution.

 

    	10

    	 

    
 

e)          Fundamental
Transaction.

 

i.          For purposes
of this Warrant, the term “Fundamental Transaction” means a transaction whereby (1) the Company, directly or indirectly,
in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (2) the Company,
directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially
all of its assets in one or a series of related transactions, (3) any, direct or indirect, purchase offer, tender offer or exchange
offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell,
tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the
outstanding Common Stock, (4) the Company, directly or indirectly, in one or more related transactions effects any reclassification,
reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively
converted into or exchanged for other securities, cash or property, or (5) the Company, directly or indirectly, in one or more
related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation,
a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person or group of Persons whereby such other
Person or group acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held
by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to,
such stock or share purchase agreement or other business combination).

 

ii.          If at any
time while this Warrant is outstanding the Company or its successor engages in, or is the subject of, one or more Fundamental Transactions,
then, in respect of each such Fundamental Transaction, upon any subsequent exercise of this Warrant, the Holder shall have the
right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of
such Fundamental Transaction, at the option of the Holder, the number of shares of Common Stock of the successor or acquiring corporation
or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”)
receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant
is exercisable (or any successor to this Warrant arising from a prior Fundamental Transaction) immediately prior to such Fundamental
Transaction.

 

iii.          For purposes
of any such exercise described in clause (ii) this Section 3(e), the determination of the Exercise Price shall be appropriately
adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share
of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration
in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of
Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the
Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following
such Fundamental Transaction.

  

    	11

    	 

    
 

iv.          Prior to
the consummation of any Fundamental Transaction, the Company shall cause any successor entity in a Fundamental Transaction in which
the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the
Company under this Warrant and the other Transaction Documents in accordance with the provisions of this Section 3(e) pursuant
to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable
delay) prior to such Fundamental Transaction and shall, at the option of the Holder, deliver to the Holder in exchange for this
Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this
Warrant which is exercisable for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity)
equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant (without regard to any limitations
on the exercise of this Warrant) prior to such Fundamental Transaction, and with an exercise price which applies the exercise price
hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to
such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such exercise
price being for the purpose of protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental
Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental
Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental
Transaction, the provisions of this Warrant and the other Transaction Documents referring to the “Company” shall refer
instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations
of the Company under this Warrant and the other Transaction Documents with the same effect as if such Successor Entity had been
named as the Company herein.

 

f)          Calculations.    All
calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be; provided,
however, that in such case any adjustment that would otherwise be required then to be made shall be carried forward and shall
be made at the time of and together with the next subsequent adjustment which, together with any adjustment so carried forward,
shall amount to at least one cent or 1/100th of a share. For purposes of this Section 3, the number of shares of Common Stock
deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury
shares, if any) issued and outstanding.

 

g)         Notice
to Holder.

 

i.          Adjustment
to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall prepare
and promptly mail to the Holder a certificate, executed by the Chief Financial Officer of the Company, and approved by the independent
members of the Board of Directors of the Company, setting forth the Exercise Price after such adjustment and any resulting adjustment
to the number of Warrant Shares and setting forth, in reasonable detail, the events requiring such adjustment and the method by
which such adjustment was calculated, including, but not limited to, a statement of (i) the Exercise Price at the time in effect,
and (ii) the number of additional or fewer securities and the type and amount, if any, of other property which at the time would
be receivable upon exercise of the Warrants.

 

    	12

    	 

    

  

ii.          Notice
to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the
Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the
Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares
of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection
with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer
of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted
into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation
or winding up of the affairs of the Company, then, in each case, the Company shall cause to be mailed to the Holder at its last
address as it shall appear upon the Warrant Register (as defined in Section 4(c)) of the Company, at least twenty (20) calendar
days prior to the applicable record or effective date hereinafter specified (or such lesser number of calendar days to the extent
such lesser number complies with any law, regulation, or by-law of the Company applicable to the sending of such notice to the
stockholders of the Company), a notice stating (x) the date on which a record is to be taken for the purpose of such dividend,
distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common
Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the
date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares
of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale,
transfer or share exchange; provided that the failure to mail such notice or any defect therein or in the mailing thereof shall
not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided
hereunder constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries, the Company
shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain entitled
to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering
such notice except as may otherwise be expressly set forth herein.

 

iii.          Notice
Deemed Given. Notwithstanding anything contained herein to the contrary, notice shall be deemed given in the event the Company
makes a public disclosure via the SEC EDGAR website within any applicable time period for notice as provided for herein.

 

Section 4.          Transfer
of Warrant.

 

a)          Transferability.
Subject to compliance with any applicable securities laws and the conditions set forth in Sections 4(d) and 4(e) hereof, this
Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part,
upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment
of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient
to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company
shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination
or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion
of this Warrant not so assigned, and this Warrant shall promptly be cancelled. The Warrant, if properly assigned in accordance
herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

 

    	13

    	 

    

 

b)          New
Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the
Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by
the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such
division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants
to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the Initial
Exercise Date and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.

  

c)          Warrant
Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant
Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered
Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and
for all other purposes, absent actual notice to the contrary.

 

d)          Transfer
Restrictions. If, at the time of the surrender of this Warrant in connection with any transfer
of this Warrant, the transfer of this Warrant shall not be either (i) registered pursuant to an effective registration statement
under the Securities Act and under applicable state securities or blue sky laws or (ii) eligible for resale without volume or
manner-of-sale restrictions or current public information requirements pursuant to Rule 144, the Company may require, as a condition
of allowing such transfer, that the Holder or transferee of this Warrant, as the case may be, require the transferee to agree
in writing to be bound by the provisions of the Subscription Agreement that related to the Purchaser. Notwithstanding
any provision herein to the contrary, the Company shall not be required to register this Warrant or the Warrant Shares issuable
upon exercise (in whole or in part) in the name of any person who acquired all or any part of this Warrant or the Warrant Shares
directly or indirectly in a transaction that contravenes the restrictions set forth in Section 4(e) hereof.

 

e)          Representation
by the Holder. The Holder, by the acceptance hereof, represents and warrants that it is acquiring this Warrant and, upon any
exercise hereof, will acquire the Warrant Shares issuable upon such exercise, for its own account and not with a view to or for
distributing or reselling such Warrant Shares or any part thereof in violation of the Securities Act or any applicable state securities
law, except pursuant to sales registered or exempted under the Securities Act. The Holder
covenants that neither it nor any person acting on its behalf or pursuant to any understanding with it will (i) directly or indirectly
pledge or otherwise transfer or assign to a third party this Warrant (in whole or in part) or any of the Warrant Shares issuable
upon exercise as security for a margin loan or other loan at any time prior to the earliest of (A) the date the Common Stock of
the Company is listed for trading on a national securities exchange, (B) the date the Common Stock of the Company is quoted on
an automated quotation system, (C) the date the Common Stock of the Company listed or quoted for trading on the OTC Bulletin Board,
or (D) the date prices for the Common Stock of the Company are first reported in the “Pink Sheets” published
by OTC Link LLC (or a similar organization or agency succeeding to its functions of reporting prices)
or (ii) engage in any transactions in the Common Stock or other securities of the Company (including Short Sales (as defined below))
the intent and purpose of which is to cause a decrease in the price of such Common Stock or other securities on any Trading Market,
the OTC Bulletin Board, or other market on which such Common Stock or other securities is then listed or quoted. For purposes of
this Section 4(e), the term “Short Sales” means, without limitation, all “short sales” as defined in Rule
200 promulgated under Regulation SHO under the Securities Exchange Act of 1934, as amended, and all types of direct and indirect
stock pledges, forward sale contracts, options, puts, calls, swaps and similar arrangements (including on a total return basis),
and sales and other transactions through non-US broker dealers or foreign regulated brokers. 

 

    	14

    	 

    
  

 Section
5.            Miscellaneous.

 

a)          No
Rights as Stockholder Until Exercise. This Warrant does not entitle the Holder to any voting rights, dividends or other rights
as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i); provided, however, if at
any time prior to the expiration of the warrants and their exercise, any of the following events shall occur: (i) the Company
shall take a record of the holders of its shares of Common Stock for the purpose of entitling them to receive a dividend or distribution
payable otherwise than in cash, or a cash dividend or distribution payable otherwise than out of current or retained earnings,
as indicated by the accounting treatment of such dividend or distribution on the books of the Company or (ii) the Company shall
offer to all the holders of its common stock any additional shares of capital stock of the company or securities convertible into
or exchangeable for shares of capital stock of the company, or any option, right or warrant to subscribe therefor, or (iii) a
dissolution, liquidation or winding up of the company (other than in connection with a consolidation or merger) or a sale of all
or substantially all of its property, assets and business as an entirety shall be proposed; then, in any one or more of said events,
then the Company shall give written notice of such event to the Holder no later than the date of prior notice of such event required
to be given to the stockholders of the Company under any applicable law, regulation, rule of any exchange on which the Company’s
shares of Common Stock are then quoted, or by-law of the Company, but in no event later than twenty (20) calendar days prior to
the date fixed as a record date of the date of closing the transfer books for the determination of the stockholders of the Company
entitled to such dividend, distribution, convertible or exchangeable securities or subscription rights, or entitled to vote on
such proposed dissolution, liquidation, winding up or sale. Such notices shall specify such record date or the date of closing
the transfer books, as the case may be. Failure to give such notice or any defect therein shall not affect the validity of any
action taken in connection with the declaration or payment of any such dividend, or the issuance of any convertible or exchangeable
securities, or subscription rights, options or warrants, or any proposed dissolution, liquidation, winding up or sale.

 

b)          Loss,
Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant
Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of
the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate,
if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation,
in lieu of such Warrant or stock certificate.

 

c)          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. For purposes of this Warrant, the term “Business Day” means days other than Saturdays, Sundays, and days
in respect of which banks in the State of California are authorized to be closed.

 

d)          Authorized
Shares.

 

The Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued
Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase
rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to
its officers who are charged with the duty of issuing the necessary Warrant Shares upon the exercise of the purchase rights under
this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued
as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which
the Common Stock may be listed. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase
rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such
Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes,
liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring
contemporaneously with such issue).

 

    	15

    	 

    
  

Except and to the
extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its
certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale
of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant,
but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be
necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the
generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor
upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate
in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant
and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory
body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.

 

Before taking any
action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise
Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any
public regulatory body or bodies having jurisdiction thereof.

 

e)          Jurisdiction.
All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance
with the provisions of the Subscription Agreement.

 

f)          Restrictions.
The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered and the Holder does
not utilize cashless exercise, will have restrictions upon resale imposed by state and federal securities laws.

 

g)          Nonwaiver
and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate
as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies, notwithstanding the fact that
all rights hereunder terminate on the Termination Date. If the Company willfully and knowingly fails to comply with any provision
of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall
be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those
of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of
its rights, powers or remedies hereunder.

 

    	16

    	 

    
  

h)         Notices.
Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered
in accordance with Section 12 of the Subscription Agreement.

 

i)          Limitation
of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase
Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder
for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company
or by creditors of the Company.

 

j)          Remedies.
The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled
to specific performance of its rights under this Warrant in respect of which monetary damages would not be adequate compensation
for any loss incurred by reason of a breach by the Company of the provisions of this Warrant and not resulting from failure of
the Holder to satisfy the requirements of this Warrant applicable to the Holder, and in respect of any such action for specific
performance by the Holder under such circumstances, the Company hereby agrees to waive and not to assert the defense that a remedy
at law would be adequate in respect of such loss.

 

k)         Successors
and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure
to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns
of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and
shall be enforceable by the Holder or holder of Warrant Shares.

 

l)          Applicable
Law. This Warrant shall be governed by and construed in accordance with the laws of the State of California applicable to
contracts to be wholly-performed within said State, and without regard to the conflicts of laws principles thereof.

 

m)  
    Amendment. This Warrant may be modified or amended or the provisions hereof waived with
the written consent of the Company and the Holder.

 

n)        Severability.
Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective
to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions
of this Warrant.

 

o)    
  Headings. The headings used in this Warrant are for the convenience of reference only and shall not,
for any purpose, be deemed a part of this Warrant.

 

********************

 

(Signature Page
Follows)

 

    	17

    	 

    

 

IN WITNESS WHEREOF, the Company
has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.

 

	 	EMMAUS LIFE SCIENCES,
    INC.
	 	 	 
	 	By:	
	 	 	Name:
	 	 	Title:

 

    	18

    	 

    

 

NOTICE OF EXERCISE

 

To:EMMAUS
LIFE SCIENCES, INC.

 

(1)The
undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only
if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes,
if any.

 

(2)Payment
shall take the form of (check applicable box):

 

[  ] in lawful money
of the United States; or

 

[  ] if permitted,
the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c),
to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure
set forth in subsection 2(c).

 

(3)Please
issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:

_______________________________

 

The Warrant Shares shall be delivered to the
following DWAC Account Number:

 

_______________________________

 

_______________________________

 

_______________________________

 

(4)    Investor Status.
The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933,
as amended.

 

[SIGNATURE
OF HOLDER]

 

Name of Investing Entity: ________________________________________________________________________

Signature of Authorized Signatory of Investing
Entity: _________________________________________________

Name of Authorized Signatory: ___________________________________________________________________

Title of Authorized Signatory: ____________________________________________________________________

Date: ________________________________________________________________________________________

 

    	 

    	 

    
 

EXHIBIT B

 

ASSIGNMENT
FORM

 

(To assign the foregoing
Warrant, execute this form and supply required information. Do not use this form to purchase shares.)

 

FOR VALUE RECEIVED, the
foregoing Warrant and all rights evidenced thereby are hereby assigned to

 

	Name:	                                                                                                    
	 	(Please Print)
	 	 
	Address:	                                                                                                    
	 	(Please Print)
	 	 
	Dated: _______________ __, ______	 
	 	 
	Holder’s Signature: _______________	 
		 
	Holder’s Address:_______________Emmaus Life Sciences, Inc. 8-K

Exhibit 10.3

 

AGREEMENT

This Agreement (this “Agreement”)
is entered into as of the 11th day of September 2013 by and among Emmaus Life Sciences, Inc., a Delaware corporation (the “Company”),
Yutaka Niihara, the President and Chief Executive Officer of the Company (“Niihara”), T.R. Winston & Company, LLC,
a Delaware limited liability company (“TRW”), and Sarissa Capital Management L.P. (“Sarissa”). TRW and
Sarissa are sometimes referred to herein collectively as the “Designating Parties”, and each as a “Designating
Party”.

 

Whereas, Sarissa on behalf
of itself or its affiliates, wishes to purchase from the Company, and the Company wishes to sell to Sarissa, certain shares (the
“Shares”) of the Common Stock of the Company (the “Common Stock”) in a private placement of securities
of the Company in accordance with the terms set forth in certain Subscription Agreement (the “Subscription Agreement”)
dated as of the date hereof (the “Offering”); and

 

Whereas, as a condition
to its purchase of the Shares, Sarissa has requested that Niihara and the Company become a party to this Agreement and that representatives
of each of the Designating Parties be elected to the Board of Directors of the Company (the “Board”); and

 

Whereas, the Board has
determined that it is in the best interests of the Company and its stockholders to expand the size of the Board to eight (8) directors
upon the closing of the Offering and, in accordance with applicable corporate governance requirements, to appoint, and/or nominate
for election by the stockholders of the Company at the next meeting of stockholders at which directors of the Company are to be
elected, a total of three representatives of the Designating Parties to serve as a director of the Company.

 

Now, therefore, in consideration
of the mutual covenants herein contained and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:

 

1. Board
of Directors of the Company.

 

(a)   As soon as reasonably
practicable following execution of this Agreement and the closing of the Offering, the Company agrees to expand the size of the
Board to eight (8) directors and to appoint the following individuals to serve as directors of the Company:

 

	i.		a person selected by TRW, as the first designee of TRW (such first designee of TRW and each subsequent designee of TRW being
the “TRW Designee”); and

 

	ii.		and two persons selected by Sarissa, as the designees of Sarissa (such designees of Sarissa and each subsequent designee of
Sarissa being the “Sarissa Designees”).

 

The Company agrees that
from the date hereof to the date such designations first become effective, without the prior approval of the Designating Parties,
the Company will not (and will cause all of its direct and indirect subsidiaries to not) approve, effect, amend or enter into any
agreements or transactions, create or assume any obligations, or take any actions of the type set forth in Sections 1(g), 1(h)
or 1(i) of this Agreement, in each case other than those expressly contemplated herein or undertaken in the ordinary course of
business consistent with past practice.

 

    	 

    	 

    
  

(b)   Each of the
Designating Parties shall furnish written notice of its respective Designee to the Company at least ninety (90) days prior to any
election of directors; provided the Company shall provide each Designating Party with notice of such requirement at least ten (10)
days prior to the expiration of such ninety-day period. In the absence of such notice by any such Designating Party, the director(s)
then serving and previously designated by such Designating Party shall be nominated for reelection if still eligible to serve as
provided herein.

 

(c)   In the event
any Designee of a Designating Party is unable to serve as a nominee for election as a director or to serve as a director, for any
reason, such Designating Party shall have the right to submit to the Company for the Company’s reasonable approval the name
of a replacement (the “Replacement”) for such Designating Party’s Designee and who shall serve as the nominee
for election as director or serve as director. If the proposed Replacement is not so approved by the Company, each Designating
Party shall have the right to submit another proposed Replacement to the Company for the Company’s reasonable approval. Each
Designating Party shall have the right to continue submitting the name of a proposed Replacement to the Company for the Company’s
reasonable approval until the Company approves that such Replacement may serve as a nominee for election as director or to serve
as a director whereupon such person is appointed as the Replacement for such Designating Party’s Designee.

 

(d)   Each
of Niihara and the Designating Parties agree to vote all shares of the Common Stock and any other class of voting security of
the Company now or hereafter owned or controlled by them (collectively, the “Voting Stock”), and otherwise to use
their respective commercially reasonable best efforts as shareholders of the Company, to elect as directors each of the Designees
and every other candidate nominated for election to the Board by the Compensation, Nominating and Corporate Governance Committee
of the Board. The Company shall use its commercially reasonable best efforts to cause the election of the Designees to the Board
(including recommending that the Company’s stockholders vote in favor of the election of the Designees and otherwise supporting
them for election in a manner no less rigorous and favorable than the manner in which the Company supports its other nominees
in the aggregate).

 

(e)   Sarissa’s
right pursuant to Section 1(a) to designate two individuals for election as a member of the Board shall terminate on such date
Sarissa ceases to be the direct or indirect beneficial owner (as defined in Rule 13d-3 promulgated under the Securities Exchange
Act of 1934, as amended) of at least fifty percent (50%) of the Shares purchased by Sarissa pursuant to the Offering. TRW’s
right pursuant to Section 1(a) to designate an individual for election as a member of the Board shall terminate such date as the
rights of Sarissa terminate pursuant to this Section 1(e).

 

(f)  The Company
hereby agrees that it shall (and shall cause all of its direct and indirect subsidiaries to) operate under a detailed annual budget
(including R&D expenditures) approved in advance by: (i) if during the period prior to the pricing of a firm commitment underwritten
public offering by the Company of shares of its Common Stock which results in aggregate cash proceeds to the Company of not less
than $20,000,000 and in connection therewith the Company lists its Common Stock for trading on a national securities exchange,
provided that the price per share of such Common Stock is at least $5.00 at the time of such listing (a “Qualified Initial
Public Offering”), a unanimous vote of the Board, or (ii) if after the closing of a Qualified Initial Public Offering, a
majority of the Board. Within 45 days following the consummation of the Offering, the Company shall present to the Board a detailed
budget for at least the subsequent 12 months, such budget to be subject to the unanimous prior written approval of the Board. Any
changes or amendments to any such budget during the period prior to a Qualified Initial Public Offering shall require the unanimous
prior written approval of the Board.

 

    	2

    	 

    

  

(g)  The Company
hereby agrees that it shall not (and will cause all of its direct and indirect subsidiaries to not) approve, effect, amend or
enter into any agreement or transaction with (including with respect to incurring, repaying, forgiving or guaranteeing any indebtedness),
or make any loan, payment or distribution to or on behalf of, any of its officers, directors or affiliates or any of their respective
affiliates, in each case: (i) if during the period prior to a Qualified Initial Public Offering, without the unanimous prior written
approval of the Board, or (ii) if after the closing of a Qualified Initial Public Offering, without the approval of the Board
or independent committee thereof in accordance with the Company’s policies regarding related persons transactions; provided,
however, that this Section 1(g) shall not apply to: (i) transactions with or loans, payments, or distributions to, the Company’s
direct or indirect wholly-owned subsidiaries; (ii) the performance of any obligations of the Company in existence as of the date
hereof in accordance with the terms effective as of the date hereof; or (iii) transactions entered into in the ordinary course
of business with or for the benefit of the Company’s directors and officers in accordance with the company’s plans
and/or policies regarding compensation and reimbursement .

 

(h)  The Company
hereby agrees that, during the period prior to a Qualified Initial Public Offering, it shall not (and will cause all of its direct
and indirect subsidiaries to not) enter into any transaction in respect of Exempted Securities under clause (iv) of the definition
thereof in the Subscription Agreement or under Section 3(b)(v)(D) under the Warrants (as defined in the Subscription Agreement),
in each case, without the unanimous prior written approval of the Board, except for issuances arising from transactions of the
following types:

 

(i)
responding to existing contractual rights of convertible debt holders seeking to convert to Common Stock at previously contracted
pricing;

 

(ii)
exercises of previously issued and outstanding warrants at the previously contracted exercise price;

 

(iii)
exercises of previously issued and outstanding stock options at the previously contracted exercise price; or 

 

(iv)
exchanges of previously issued and outstanding Promissory Notes for Common Stock at an exchange rate above $2.50 per share, provided
that the Company may not issue more than 2.55 million shares of Common Stock in such exchanges for Promissory Notes.

 

(i) The Company
hereby agrees that, during the period prior to a Qualified Initial Public Offering, it shall not increase or decrease the size
of the Board without the unanimous prior written approval of the Board.

 

(j) The Company
represent and warrants that the options and warrants to purchase common stock of the Company beneficially owned by each of the
directors of the Company, and terms and expiration thereof, are as set forth in the Memorandum.

 

(k) The Company
hereby acknowledges and agrees that notwithstanding any confidentiality obligation contained in the Subscription Agreements, the
Warrants, or the Memorandum (as defined in the Subscription Agreements), (i) Sarissa shall not be subject to any restriction on
the use of confidential information of the Company except (A) for any such restrictions imposed by US securities laws and (B) from
the date hereof through the period ending 12 months following the termination of this Agreement, Sarissa shall not disclose any
such information except to any of its officers, employees or advisors that need to know such information and that shall agree to
maintain the confidentiality of such information in accordance with this Agreement or as otherwise required by any regulatory authority,
law or regulation, or by legal process (in each case, as determined by Sarissa’s legal counsel).

 

    	3

    	 

    
  

2. Representations
and Warranties. Each of the parties hereto represents and warrants to the other party that:

 

(a) Such party has
all requisite company authority and power to execute and deliver this Agreement and to consummate the transactions contemplated
hereby;

 

(b) The execution
and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly authorized
by all required company or other action on the part of such party and no other proceedings on the part of such party are necessary
to authorize the execution and delivery of this Agreement or to consummate the transactions contemplated hereby;

 

(c) This Agreement
has been duly and validly executed and delivered by such party and constitutes the valid and binding obligation of such party enforceable
against such party in accordance with its terms; and

 

(d) This Agreement
will not result in a violation of any terms or provisions of any agreements to which such person is a party or by which such party
may otherwise be bound or of any law, rule, license, regulation, judgment, order or decree governing or affecting such party.

 

3. Notices.
Any notice or other communication required or permitted to be given hereunder shall be in writing and shall be mailed by certified
mail, return receipt requested, or delivered by facsimile transmission or by e-mail transmission, or delivered against receipt
to the party to whom it is to be given

 

(a) if to the Company, at the
following address:

 

Emmaus Life Sciences, Inc.

20725 S. Western Avenue, Suite 136 

Torrance, CA 90501 

Fax: 

e-mail: 

Attention: 

 

(b) if to Niihara, at the following
address:

 

Yutaka Niihara MD, MPH 

Address: 

Fax: 

e-mail:

 

(c) if to Sarissa, at the following
address:

 

Sarissa Capital Management LP

660 Steamboat Road, 3rd Floor 

Greenwich, CT 06839

 

e-mail:mdipaolo@sarissacap.com

splatt@sarissacap.com

Attention: General
Counsel

Chief Operating Officer

 

    	4

    	 

    
 

(d)   (e)If to TRW, at
the following address: 

 

T.R. Winston & Company, LLC

 

Fax: 

e-mail: 

Attention:

 

(or, in any case, to such other address
as the party shall have furnished in writing in accordance with the provisions of this Section 2).

 

4. Assignment; Binding Effect.
No party may assign its rights hereunder. This Agreement (i) shall be binding upon, and shall inure to the benefit of, the parties
hereto and their respective heirs, legal representatives, successors and assigns and (ii) shall inure to the benefit of the directors
elected in accordance with Section 1 hereof and their respective heirs and legal representatives.

 

5.
No Third Party Beneficiaries. This Agreement is solely for the benefit of the parties hereto and is not enforceable by
any other persons.

 

6. Term;
Termination. Subject to the provisions of Section 1(e), this Agreement shall have a term commencing on the date hereof and
terminating on the latest of (a) September 11, 2015 and (b) immediately prior to the pricing of a Qualified Initial Public Offering.

 

7.
Entire Agreement; Amendment and Waiver. This Agreement contains the entire understanding of the parties with respect to
its subject matter and supersedes all prior negotiations, commitments, agreements and understandings heretofore had between them
with respect thereto. Except as otherwise provided herein, this Agreement may be amended only by the written agreement of the
Company, Niihara and each Designating Party, and compliance with any provision of this Agreement may be waived only by the written
agreement of any party adversely effected by such waiver. A waiver on one occasion shall not constitute a waiver or omission on
any further occasion.

 

8.
Counterparts, Facsimiles. This Agreement may be executed in more than one counterpart, each of which shall be deemed to
be an original and all of which, together, shall constitute one and the same agreement. Facsimile transmission of execution copies
or signature pages for this Agreement shall be legal, valid and binding execution and delivery for all purposes.

 

9. Applicable
Law. This Agreement shall be governed by, and construed and enforced in accordance with, the substantive laws of the State
of Delaware without regard to its principles of conflicts of laws.

 

10.
Remedies. The parties agree and acknowledge that money damages are not an adequate remedy for any breach of the provisions
of this Agreement and that, in addition to any other remedy a party may have for a breach of this Agreement, that party may be
entitled to an injunction restraining any such breach or threatened breach, or a decree of specific performance, without posting
any bond or security. The remedy in this Section 10 is in addition to, and not in lieu of, any other rights or remedies a
party may have.

 

11. Nouns
and Pronouns, Sections, Headings. Whenever the context may require, any pronouns used herein shall include the corresponding
masculine, feminine or neuter forms, and the singular form of names and pronouns shall include the plural and vice-versa. Section
references herein refer to sections of this Agreement unless expressly provided to the contrary. The headings of the various sections
of this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of this Agreement.

 

    	5

    	 

    

 

12. Further
Instruments and Actions. Each of the parties hereto agrees to execute all such further instruments and documents, and to take
all such further actions, as any other party may reasonably require in order to effectuate the terms and purposes of this Agreement.

 

13. Severability.
Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition
or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

 

14. Fees
and Expenses. No party will be responsible for any fees or expenses of any other party in connection with this Agreement.

 

15. Public
Announcement. The Company agrees to obtain the written approval of Sarissa prior to any public announcement or press release
including the name of Sarissa or any of its employees, except as required to comply with requirements of applicable law (as determined
by counsel to the Company), including, without limitation, pursuant to the requirements of the U.S. federal securities laws. To
the extent practicable, so long as Sarissa or one or more if its affiliates continues to be a direct or indirect beneficial owner
of any of the Shares purchased by Sarissa pursuant to the Offering, the Company agrees to provide Sarissa the opportunity to review
in advance any such disclosures that are so required by applicable law naming Sarissa or any of its employees, including those
contained in any filing to be made with the Securities and Exchange Commission.

 

Signature page follows

 

    	6

    	 

    

 

IN WITNESS WHEREOF, the parties have executed
this Agreement as of the date first written above.

  

	 	Emmaus Life Sciences, Inc.
	 	 
	 	By:	/s/ Yutaka Niihara
	 	 	Yutaka Niihara, President and CEO
	 	 	 
	 	/s/ Yutaka Niihara
	 	Yutaka Niihara, M.D., MPH, acting in his
	 	individual capacity
	 	 	 
	 	T.R. Winston & Company, LLC
	 	 	 
	 	By:	/s/ Karen Kang Ting
	 	 	Name: Karen Kang Ting, Vice President
	 	 	 
	 	Sarissa Capital Management L.P
	 	 	 
	 	By:	/s/ Seth P. Platt
	 	 	Name: Seth P. Platt
	 	 	         Chief Operating Officer

 

Signature Page to
Agreement

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