Document:

ex-10_1.htm

Red Mountain Resources Inc. 8-K

Exhbit 10.1

 

 

 

 

AMENDMENT AND WAIVER

 

BY AND AMONG

 

INDEPENDENT BANK,

 

as Lender

 

AND

 

RED MOUNTAIN RESOURCES, INC.

 

CROSS BORDER RESOURCES, INC.

 

BLACK ROCK CAPITAL, INC.

 

RMR OPERATING, LLC,

 

as Borrowers

 

 

Effective

 

SEPTEMBER 12, 2013

 

  

  

  

AMENDMENT AND WAIVER

 

This AMENDMENT AND WAIVER (this “Agreement”) is made and entered into effective the 12th day of September, 2013 (the “Effective Date”), by and among INDEPENDENT BANK, a Texas banking association, as lender under the Senior First Lien Secured Credit Agreement (the “Lender”), and RED MOUNTAIN RESOURCES, INC., a Florida corporation (“Red Mountain”), CROSS BORDER RESOURCES, INC., a Nevada corporation, BLACK ROCK CAPITAL, INC., an Arkansas corporation, and RMR OPERATING, LLC, a Texas limited liability company (collectively, the “Borrowers”).

 

W I T N E S S E T H:

 

WHEREAS, the Borrowers and the Lender are parties to that certain Senior First Lien Secured Credit Agreement, dated February 5, 2013, among the Borrowers and the Lender (as amended to date, the “Loan Agreement”); and

 

WHEREAS, the Borrowers have requested that the Lender waive any default or right to exercise any remedy as a result of the Borrowers having failed to be in compliance with the requirements of Section 6.18 of the Loan Agreement, and the Lender has agreed to do so as provided in this Agreement; and

 

WHEREAS, Red Mountain has changed its fiscal year end from May 31 to June 30; and

 

WHEREAS, the Borrowers and Lender desire to amend and/or clarify the provisions of the Loan Agreement with respect to the change in fiscal year end; and

 

WHEREAS, the Lender and Borrowers desire to increase the Borrowing Base to $30.0 million effective immediately;

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements herein contained, the parties hereto hereby agree as follows:

 

ARTICLE I

 

DEFINITIONS AND INTERPRETATION

 

1.1    Terms Defined Above.  As used in this Agreement, each of the terms “Agreement,” “Borrowers,” “Lender” and “Loan Agreement” shall have the meaning assigned to such term hereinabove.

 

1.2    Terms Defined in Agreement.  Each term defined in the Loan Agreement and used herein without definition shall have the meaning assigned to such term in the Loan Agreement, unless expressly provided to the contrary.

 

1.3    References.  References in this Agreement to Schedule, Exhibit, Article, or Section numbers shall be to Schedules, Exhibits, Articles, or Sections of this Agreement, unless expressly stated to the contrary.  References in this Agreement to “hereby,” “herein,” “hereinafter,” “hereinabove,” “hereinbelow,” “hereof,” “hereunder” and words of similar import shall be to this Agreement in its entirety and not only to the particular Schedule, Exhibit, Article, or Section in which such reference appears.  Specific enumeration herein shall not exclude the general and, in such regard, the terms “includes” and “including” used herein shall mean “includes, without limitation,” or “including, without limitation,” as the case may be, where appropriate.  Except as otherwise indicated, references in this Agreement to statutes, sections, or regulations are to be construed as including all statutory or regulatory provisions consolidating, amending, replacing, succeeding, or supplementing the statute, section, or regulation referred to.  References in this Agreement to “writing” include printing, typing, lithography, facsimile reproduction, and other means of reproducing words in a tangible visible form.  References in this Agreement to amendments and other contractual instruments shall be deemed to include all exhibits and appendices attached thereto and all subsequent amendments and other modifications to such instruments, but only to the extent such amendments and other modifications are not prohibited by the terms of this Agreement.  References in this Agreement to Persons include their respective successors and permitted assigns.

 

  

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1.4    Articles and Sections.  This Agreement, for convenience only, has been divided into Articles and Sections; and it is understood that the rights and other legal relations of the parties hereto shall be determined from this instrument as an entirety and without regard to the aforesaid division into Articles and Sections and without regard to headings prefixed to such Articles or Sections.

 

1.5    Number and Gender.  Whenever the context requires, reference herein made to the single number shall be understood to include the plural; and likewise, the plural shall be understood to include the singular.  Definitions of terms defined in the singular or plural shall be equally applicable to the plural or singular, as the case may be, unless otherwise indicated.  Words denoting sex shall be construed to include the masculine, feminine and neuter, when such construction is appropriate; and specific enumeration shall not exclude the general but shall be construed as cumulative.

 

ARTICLE II

 

WAIVER

 

2.1    Agreement.  The Lender waives any Default, Event of Default or right to exercise any remedy as a result of the failure by the Borrowers to be in compliance with the requirements of Section 6.18 of the Agreement with respect to the permitted ratio of consolidated current assets to consolidated current liabilities of Borrowers for the fiscal quarter ended May 31, 2013.

 

2.2    Limitation on Agreement.  Except for the waiver set forth above in this Article II, nothing contained herein shall otherwise be deemed a consent to any violation of, or a waiver of compliance with, any term, provision or condition set forth in any of the Loan Documents or a consent to or waiver of any other or future violations, breaches, Defaults or Events of Default.

 

ARTICLE III

CHANGE IN FISCAL YEAR END

3.1           Clarification of Reporting Dates.

(a)           For purposes of Sections 5.06(a) and (c) of the Loan Agreement regarding the delivery of annual financial statements and a proposed annual capital expenditure budget of Red Mountain within a defined period of time after the end of each fiscal year of Red Mountain, the fiscal years of Red Mountain shall be deemed to be (i) the twelve months ended May 31, 2013, (ii) the thirteen months ending June 30, 2014 and (iii) each subsequent twelve month period ending on June 30th, starting June 30, 2015.

(b)           For purposes of Sections 5.06(b), (e) and (q) of the Loan Agreement regarding the delivery of quarterly financial statements of Borrowers, quarterly production reports of Borrowers and quarterly reports on hedging, the quarterly periods of Borrowers shall be deemed to be (i) the three months ended May 31, 2013, (ii) the four months ending September 30, 2013 and (iii) each subsequent three month quarterly period ending after September 30, 2013, starting with the three months ending December 31, 2013.

  

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3.2           Amendments.  The Lender and the Borrowers hereby agree to amend the following provisions of the Loan Agreement:

	
  

	
(a)

	
Section 5.06(d)(i) of the Loan Agreement is amended and restated in its entirety as follows:

“Engineering Reports, as soon as available but in any event on or before each (A) September 30 of each year (starting September 30, 2014), dated effective as of the immediately preceding July 1 for such year and (B) March 31 of each year, dated effective as of the immediately preceding January 1.  Each Engineering Report delivered on or before each such September 30 (starting September 30, 2014) shall be prepared by an Independent Engineer and each Engineering Report delivered on or before each such March 31 may be prepared by Borrower’s staff engineers.”

	
  

	
(b)

	
Section 6.18 of the Loan Agreement shall be amended and restated in its entirety as follows:

	
  

	
“Section 6.18 Current Ratio. Borrowers shall not permit the ratio of, as of the last day of each fiscal quarter of Red Mountain beginning with the fiscal quarter ending May 31, 2013 (but excluding the fiscal quarter ending June 30, 2013), Borrowers’ and their consolidated Subsidiaries’ (a) consolidated current assets to (b) consolidated current liabilities, to be less than 1.00 to 1.00. For purposes of this calculation (i) “current assets” shall include, as of the date of calculation, the Unused Commitment Amount of Lender, and (ii) “current liabilities” shall exclude, as of the date of calculation, the current portion of long–term Debt existing under this Agreement.”

	
  

	
(c)

	
Section 6.19 of the Loan Agreement shall be amended and restated in its entirety as follows:

	
  

	
“Section 6.19 Funded Debt to EBITDAX Ratio. Borrowers shall not permit, as of the last day of each fiscal quarter of Red Mountain commencing with the quarter ending May 31, 2013 (but excluding the fiscal quarter ending June 30, 2013), the ratio of (a) consolidated Funded Debt of the Borrowers and their Subsidiaries, including Debt under this Agreement, as of such day to (b) the consolidated EBITDAX of the Borrowers and their Subsidiaries for the four-fiscal quarter period then ended, to be greater than 3.50 to 1.00; provided, however, for the period from and after the date of this Agreement through March 31, 2014, EBITDAX shall be calculated based upon actual from March 1, 2013, through the current fiscal quarter, annualized.”

	
  

	
(d)

	
Section 6.20 of the Loan Agreement shall be amended and restated in its entirety as follows:

	
  

	
“Section 6.20 Interest Coverage Ratio. Borrowers shall not permit, as of the end of each fiscal quarter of Red Mountain commencing May 31, 2013 (but excluding the fiscal quarter ending June 30, 2013), the ratio of (a) the consolidated EBITDAX of the Borrowers and their Subsidiaries to (b) the Interest Expense of the Borrowers and their Subsidiaries, in each case for the four-fiscal quarter period then ended, to be less than 3.00 to 1.00; provided, for the period from and after the date of this Agreement through March 31, 2014, EBITDAX and Interest Expense shall be calculated based upon actual from March 1, 2013, through the current fiscal quarter, annualized.”

  

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ARTICLE IV

INCREASE TO BORROWING BASE AND COMMITMENT AMOUNT

4.1    Borrowing Base.  Effective immediately, the Borrowing Base shall be $30.0 million until changed by the Lender in accordance with the terms of the Loan Agreement.

 

4.2    Commitment Amount.  Effective upon the payment of an additional facility fee equal to one percent (1.0%) of $10.0 million pursuant to Section 2.08(c) of the Loan Agreement, the Commitment shall be increased to $30.0 million, subject to change in accordance with the terms of the Loan Agreement.

 

ARTICLE V

 

RATIFICATION AND ACKNOWLEDGMENT

 

5.1    Ratifications.  The terms and provisions set forth in this Agreement shall modify and supersede all inconsistent terms and provisions set forth in the Loan Agreement and, except as expressly modified and superseded by this Agreement, the terms and provisions of the Loan Agreement and the other Loan Documents are ratified and confirmed and shall continue in full force and effect.  Borrowers agree that the Loan Agreement, as amended hereby, and the other Loan Documents continue to be legal, valid, binding obligations of Borrowers enforceable against Borrowers in accordance with their respective terms.

 

5.2    Renewal and Extension of Security Interests and Liens.  Borrowers hereby renew and affirm the liens and security interests created and granted in the Loan Documents.  Borrowers agree that this Agreement shall in no manner affect or impair the liens and security interests securing the Obligations, and that such liens and security interests shall not in any manner be waived, the purposes of this Agreement being to modify the Loan Agreement as herein provided, and to carry forward all liens and security interests securing same, which are acknowledged by Borrowers to be valid and subsisting.

 

ARTICLE VI

 

CONDITIONS PRECEDENT

 

6.1    Conditions.  The effectiveness of this Agreement is subject to the satisfaction of the following conditions precedent, unless specifically waived in writing by Lender:

 

    (a) Lender shall have received the following documents, each in form and substance satisfactory to Lender:

 

(i) this Agreement, duly executed by Borrowers; and

 

(ii) Resolutions of the Board of Directors (or other governing body) of each Borrower certified by the Secretary or an Assistant Secretary (or other custodian of records of each Borrower) which authorize the execution, delivery, and performance by each Borrower of this Agreement and the other Loan Documents to be executed in connection herewith.

 

  

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    (b) The representations and warranties contained in the Loan Agreement, as amended hereby, and in each other Loan Document shall be true and correct in all material respects as of the date hereof, as if made on the date hereof, except to the extent such representation and warranties relate to an earlier date;

 

    (c) No Event of Default shall have occurred and be continuing and no Default shall exist, unless such Event of Default or Default has been specifically waived in writing by Lender;

 

    (d) Lender shall have received, in good and immediately available funds, a fee in the amount of $7,500; and

 

    (e) All corporate proceedings taken in connection with the transactions contemplated by this Agreement and all documents, instruments and other legal matters incident thereto, shall be satisfactory to Lender and its legal counsel.

 

ARTICLE VII

 

MISCELLANEOUS

 

7.1   Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted pursuant to the Agreement.

 

7.2   Rights of Third Parties.  Except as provided in Section 5.1, all provisions herein are imposed solely and exclusively for the benefit of the parties hereto.

 

7.3   Counterparts.  This Agreement may be executed by one or more of the parties hereto in any number of separate counterparts, and all of such counterparts taken together shall be deemed to constitute one and the same instrument and shall be enforceable upon the execution of one or more counterparts hereof by each of the parties hereto.  In this regard, each of the parties hereto acknowledges that a counterpart of this Agreement containing a set of counterpart execution pages reflecting the execution of each party hereto shall be sufficient to reflect the execution of this Agreement by each necessary party hereto and shall constitute one instrument.

 

7.4   Integration.  This Agreement constitutes the entire agreement among the parties hereto with respect to the subject hereof.  All prior understandings, statements and agreements, whether written or oral, relating to the subject hereof are superseded by this Agreement.

 

7.5   Invalidity.  In the event that any one or more of the provisions contained in this Agreement shall for any reason be held invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement.

 

7.6   Governing Law.  This Agreement shall be deemed to be a contract made under and shall be governed by and construed in accordance with the laws of the State of Texas, without regard to principles of such laws relating to conflict of laws.

 

  

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7.7 RELEASE.  BORROWERS ACKNOWLEDGE THAT THEY HAVE NO DEFENSE, COUNTERCLAIM, OFFSET, CROSS-COMPLAINT, CLAIM OR DEMAND OF ANY KIND OR NATURE WHATSOEVER THAT CAN BE ASSERTED TO REDUCE OR ELIMINATE ALL OR ANY PART OF THEIR LIABILITY TO REPAY THE OBLIGATIONS OR TO SEEK AFFIRMATIVE RELIEF OR DAMAGES OF ANY KIND OR NATURE FROM THE LENDER.  BORROWERS VOLUNTARILY AND KNOWINGLY RELEASE AND FOREVER DISCHARGE THE LENDER, ITS PREDECESSORS, AGENTS, DIRECTORS, OFFICERS, EMPLOYEES, SUCCESSORS AND ASSIGNS, FROM ALL POSSIBLE CLAIMS, DEMANDS, ACTIONS, CAUSES OF ACTION, DAMAGES, COSTS, EXPENSES, AND LIABILITIES WHATSOEVER, KNOWN OR UNKNOWN, ANTICIPATED OR UNANTICIPATED, SUSPECTED OR UNSUSPECTED, FIXED, CONTINGENT, OR CONDITIONAL, AT LAW OR IN EQUITY, ORIGINATING IN WHOLE OR IN PART ON OR BEFORE THE DATE THIS AMENDMENT IS EXECUTED, WHICH THE BORROWERS MAY NOW OR HEREAFTER HAVE AGAINST THE LENDER, ITS PREDECESSORS, AGENTS, DIRECTORS, OFFICERS, EMPLOYEES, SUCCESSORS AND ASSIGNS, IF ANY, AND IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS ARISE OUT OF CONTRACT, TORT, VIOLATION OF LAW OR REGULATIONS, OR OTHERWISE, AND ARISING FROM ANY OF THE OBLIGATIONS, INCLUDING, WITHOUT LIMITATION, ANY CONTRACTING FOR, CHARGING, TAKING, RESERVING, COLLECTING OR RECEIVING INTEREST IN EXCESS OF THE HIGHEST LAWFUL RATE APPLICABLE, THE EXERCISE OF ANY RIGHTS AND REMEDIES UNDER THE AGREEMENT OR OTHER LOAN DOCUMENTS, AND NEGOTIATION FOR AND EXECUTION OF THIS AMENDMENT.

 

(Signatures appear on following pages)

 

 

 

 

  

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their proper and duly authorized officers effective as of the Effective Date.

 

	  	  	

LENDER:

	  
	  	  	  	  
	  	  	
INDEPENDENT BANK, a Texas banking corporation

	  
	  	  	  	  
	  	  	
By:

	/s/ John Davis	  
	  	  	
 

	John Davis  	  
	  	  	
 

	

Executive Vice President

	  

 

	  	  	

BORROWER:

	  
	  	  	  	  
	  	  	

RED MOUNTAIN RESOURCES, INC.,

	  
	 	 	

a Florida corporation

	 
	  	  	  	  
	 	 	 	 
	  	  	
By:

	 /s/ Alan W. Barksdale        	  
	  	  	
 

	Alan W. Barksdale     	  
	  	  	
 

	

President & Chief Executive Officer 

	  

 

	  	  	

CROSS BORDER RESOURCES, INC.,

	  
	  	  	a Nevada corporation  	  
	  	  	 	  
	  	  	  	  
	  	  	
By:

	/s/ Kenneth Lamb	  
	  	  	 	

Kenneth Lamb 

	  
	  	  	
 

	

Chief Accounting Officer 

	  

 

	  	  	

BLACK ROCK CAPITAL, INC.,

	  
	  	  	an Arkansas corporation  	  
	  	  	
 

	  
	  	  	  	  
	  	  	
By:

	/s/Alan W. Barksdale	  
	  	  	 	Alan W. Barksdale  	  
	  	  	
 

	President & Chief Executive Officer  	  

 

	  	  	

RMR OPERATING, LLC,

	  
	  	  	a Texas limited liability company  	  
	  	  	
 

	  
	  	  	  	  
	  	  	
By:

	/s/Alan W. Barksdale    	  
	  	  	
 

	Alan W. Barksdale  	  
	  	  	
 

	

President 

	  

Signature Page to Amendment and Waiver (September 2013)Emmaus Life Sciences, Inc. 8-K

Exhibit 10.1

 

FORM OF SUBSCRIPTION AGREEMENT

  

Emmaus Life Sciences, Inc.

20725 S Western Ave 

Torrance, CA 90501‎

  

Ladies and Gentlemen:

 

1.           Subscription. The
undersigned (the “Purchaser”), intending to be legally bound, hereby irrevocably agrees to purchase from
Emmaus Life Sciences, Inc., a Delaware corporation (the “Company”), the number of units (the
“Units”) set forth on the signature page hereof at a purchase price of $2.50 per Unit. Each Unit consists
of (i) one share of common stock, par value $0.001 per share (the “Common Stock”), of the Company and (ii)
a warrant to purchase one share of Common Stock (such share, a “Warrant Share” and, collectively, the
“Warrant Shares”) for a five (5) year period from the applicable Closing of the Offering (as defined
below) at an initial exercise price of $3.50 per share of Common Stock (each, a “Warrant” and,
collectively, the “Warrants”).

 

This subscription is submitted
by the Purchaser in accordance with and subject to the terms and conditions described in this subscription agreement (the “Subscription
Agreement”) and the Amended and Restated Confidential Private Placement Memorandum of the Company, dated September 9,
2013, as amended or supplemented from time to time, including all attachments, schedules and exhibits thereto (the “Memorandum”),
relating to the private placement offering (the “Offering”) by the Company of up to $12,000,000 in aggregate
purchase price of Units (the “Maximum Amount”) and not less than $4,000,000 in Units (the “Minimum
Amount”). The Units are being offered by the Company on an exclusive basis through T.R. Winston & Company, LLC (the
“Placement Agent”) pursuant to the terms of an engagement letter (the “Placement Agent Agreement”),
entered into as of June 26, 2013, between the Company and the Placement Agent and such agents as may be engaged by the Placement
Agent as sub-agents on a “reasonable efforts” basis. The minimum purchase amount per Purchaser is twenty thousand (30,000)
Units ($75,000), provided that the Company and the Placement Agent may, in their discretion, accept subscriptions for a lesser
number of Units.

 

The terms of the Offering
are more completely described in the Memorandum and such terms are incorporated by reference herein in their entirety. Upon the
basis of the representations and warranties, and subject to the terms and conditions, set forth herein, the Company agrees to issue
and sell the Units to the Purchaser at the applicable Closing for the aggregate purchase price set forth on the signature page
hereto (the “Subscription Price”).

 

2.           Payment.
The Purchaser encloses herewith a check payable to, or will make a wire transfer payment to, “Signature Bank, as Escrow
Agent for Emmaus Life Sciences, Inc.” in the full amount of the purchase price of the Units being subscribed for. Wire transfer
instructions are set forth on the instruction page accompanying this Subscription Agreement. Such funds will be held for the Purchaser’s
benefit, and will be returned promptly, without interest or offset, if the Purchaser’s subscription is not accepted by the
Company for any reason or no reason or the Offering is terminated pursuant to its terms by the Company or the Placement Agent
prior to the applicable Closing (as hereinafter defined).

 

    	 

    	 

    

 

3.           Deposit
of Funds. All payments made as provided in Section 2 above shall be deposited by the Company or the Placement Agent as soon
as practicable after receipt thereof with Signature Bank (the “Escrow Agent”), in a non-interest-bearing escrow
account (the “Escrow Account”) until the earliest to occur of: (a) the Closing (herein defined) of the sale
of the Units being purchased pursuant to this Subscription Agreement in accordance with the Offering terms, (b) the rejection of
such subscription or (c) the termination of the Offering by the Company or the Placement Agent. The Company and the Placement Agent
may continue to offer and sell the Units and conduct additional closings for the sale of additional Units after the initial closing
of the Offering (“First Closing” and, together with subsequent closings, the “Closings” and
each a “Closing”) and until the termination of the Offering. In the event that the Company does not effect a
closing of the Maximum Amount of the Offering on or before September 11, 2013 (the “Termination Date”), the
Company will refund all subscription funds, without deduction, offset and/or interest accrued thereon, and will return the subscription
documents to each Purchaser. If the Company rejects a subscription, either in whole or in part (which decision is in its sole discretion),
the rejected subscription funds or the rejected portion thereof will be returned promptly to such Purchaser without interest accrued
thereon. The Purchaser understands and agrees that this subscription is made subject to the condition that the Common Stock and
Warrants to be issued and delivered on account of this subscription will be issued only in the name of and delivered only to the
Purchaser.

 

4.           Acceptance
of Subscription. The Purchaser understands and agrees that the Company, in its sole discretion, reserves the right to accept
or reject this or any other subscription for Units, in whole or in part, and for any reason or no reason, notwithstanding prior
receipt by the Purchaser of notice of acceptance of this subscription. The Company shall have no obligation hereunder until the
Company shall execute and deliver to the Purchaser an executed copy of this Subscription Agreement. If this subscription is rejected
in whole or the Offering is terminated, all funds received from the Purchaser will be returned without interest or offset, and
this Subscription Agreement shall thereafter be of no further force or effect. If this subscription is rejected in part, the funds
for the rejected portion of this subscription will be returned without interest or offset, and this Subscription Agreement will
continue in full force and effect to the extent this subscription was accepted.

 

5.           Representations
and Warranties, Acknowledgments, and Agreements.

 

5.1      Of
the Purchaser. The Purchaser hereby acknowledges, represents, warrants and agrees to and with the Company as follows (it being
specifically acknowledged and agreed that the Placement Agent is and shall be a third party beneficiary of the following):

 

(a)       The
Purchaser is aware that an investment in the Units involves a significant degree of risk, and has carefully read and considered
the matters set forth under the caption “Risk Factors” in the Memorandum, as well as the Company’s periodic and
current reports filed with the United States Securities and Exchange Commission (“SEC” or “Commission”)
pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the rules and regulations
promulgated thereunder and, in particular, acknowledges that the Company is a development stage company in a highly competitive
business with limited assets and minimal revenues to date; and, having had access to or having been furnished with all such information
or documents as the Purchaser has considered necessary (including, without limitation, such filings with the SEC), has concluded
that it is able to bear those risks.

 

(b)       None
of the securities included in the Units or the Warrant Shares offered pursuant to the Memorandum are registered under the Securities
Act of 1933, as amended (the “Securities Act”), or any state securities laws. The Purchaser understands that
the offering and sale of the Units is intended to be exempt from registration under the Securities Act, by virtue of Section 4(2)
thereof and the provisions of Regulation D promulgated thereunder (“Regulation D”), based, in part, upon the
representations, warranties and agreements of the Purchaser contained in this Subscription Agreement, including, without limitation,
the investor certification (“Investor Certification”) immediately following the signature page of this Subscription
Agreement.

 

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(c)       The
Purchaser, as set forth in the Investor Certification attached hereto, meets as of the date hereof, and will meet on each date
on which the Purchaser exercises any of the Warrants, the requirements of at least one of the suitability standards for an “accredited
investor” as that term is defined in Regulation D (an “Accredited Investor”).

 

(d)       The
Purchaser acknowledges that it has completed the Investor Certification attached hereto, and that the information contained in
such Investor Certification is complete and accurate as of the date hereof.

 

(e)        Prior
to the execution of this Subscription Agreement, the Purchaser and the Purchaser’s attorney, accountant, purchaser representative
and/or tax adviser, if any (collectively, the “Advisers”), have received the Memorandum and all other documents
requested by the Purchaser, have carefully reviewed them and understand the information contained therein.

 

(f)        Neither
the SEC nor any state securities commission or other regulatory authority has approved the Units, the Common Stock, the Warrants,
or the Warrant Shares, or passed upon or endorsed the merits of the offering of Units, or confirmed the accuracy or determined
the adequacy of the Memorandum. The Memorandum has not been reviewed by any federal, state or other regulatory authority.

 

(g)       Upon
Purchaser’s request, all documents, records, and books pertaining to the investment in the Units (including, without limitation,
the Memorandum) have been made available for inspection by such Purchaser and its Advisers, if any.

 

(h)       The
Purchaser and its Advisers, if any, have had a reasonable opportunity to ask questions of and receive answers from a person or
persons acting on behalf of the Company concerning the offering of the Units, the business and financial condition of the Company,
and all such questions have been answered to the full satisfaction of the Purchaser and its Advisers, if any.

 

(i)         In
evaluating the suitability of an investment in the Company, the Purchaser has not relied upon any representation or information
(oral or written) other than as stated in the Memorandum.

 

(j)         In
connection with the Offering and sale of the Units, Purchaser is unaware of, is in no way relying on, and did not become aware
of the Offering of the Units through or as a result of, any form of general solicitation or general advertising including, without
limitation, any registration statement relating to the offering and sale of securities of the Company filed with the SEC prior
to the date hereof, or any article, notice, advertisement or other communication published in any newspaper, magazine or similar
media or broadcast over television, radio or the internet (including, without limitation, internet “blogs,” bulletin
boards, discussion groups and social networking sites), and is not subscribing for the Units and did not become aware of the Offering
of the Units through or as a result of any seminar or meeting to which the Purchaser was invited by, or any solicitation of a subscription
by, a person not previously known to the Purchaser in connection with investments in securities generally.

 

(k)       The
Purchaser has taken no action that would give rise to any claim by any person for brokerage commissions, finders’ fees or
the like relating to this Subscription Agreement or the transactions contemplated hereby (other than commissions to be paid by
the Company to the Placement Agent or as otherwise described in the Memorandum) and, in turn, to be paid to its selected dealers.

 

(l)       The
Purchaser, together with its Advisers, if any, has such knowledge and experience in financial, tax, and business matters, and,
in particular, investments in securities, so as to enable it to utilize the information made available to it in connection with
the Offering to evaluate the merits and risks of an investment in the Units and the Company and to make an informed investment
decision with respect thereto.

 

    	- 3 -

    	 

    

 

(m)       The
Purchaser is not relying on the Company, the Placement Agent or any of their respective employees or agents with respect to the
legal, tax, economic and related considerations of an investment in the Units, and the Purchaser has relied on the advice of,
or has consulted with, only its own Advisers, if any, whom the Purchaser has deemed necessary or appropriate in connection with
its purchase of the Units.

 

(n)       The
Purchaser is acquiring the Units solely for such Purchaser’s own account for investment purposes only and not with a view
to or intent of resale or distribution thereof, in whole or in part. The Purchaser has no agreement or arrangement, formal or
informal, with any person to sell or transfer all or any part of the Units, the Common Stock, the Warrants, the Warrant Shares,
and the Purchaser has no plans to enter into any such agreement or arrangement. In addition, the Purchaser (i) does not presently
have any agreement, plan or understanding, directly or indirectly, with any person or entity to distribute or effect any distribution
of any of the securities included in the Units (or any securities which are derivatives thereof) or through any person or entity,
(ii) is not a registered broker-dealer under Section 15 of the Exchange Act or an entity engaged in a business that would require
it to be so registered as a broker-dealer; and (iii) during the period of five (5) business days immediately prior to the execution
of this agreement, the Purchaser, did not, and from such date and through the expiration of the 90th day following the date hereof
will not, directly or indirectly, execute or effect or cause to be executed or effected any short sale, option, or equity swap
transaction in or with respect to the Common Stock or any other derivative security transaction the purpose or effect of which
is to hedge or transfer to a third party all or any part of the risk of loss associated with the ownership of the securities included
in the Units by the Purchaser. (For purposes of this Agreement, the term “business day”, whether or not capitalized,
shall mean any day of the year on which national banking institutions in California
are open to the public for conducting business and are not required or authorized to close.)

 

(o)       The
Units and each of the securities included therein may not be pledged or otherwise transferred or assigned to a third party as
security for a margin loan or other loan at any time prior to the earliest of (i) the date the Common Stock of the Company is
listed for trading on a national securities exchange, (ii) the date the Common Stock of the Company is quoted on an automated
quotation system, (iii) the date the Common Stock of the Company listed or quoted for trading on the OTC Bulletin Board, or (iv)
the date prices for the Common Stock are first reported in the “Pink Sheets” published by OTC Link LCC (or a similar
organization or agency succeeding to its functions of reporting prices). Notwithstanding any provision herein to the contrary,
the Company shall not be required to register any of the Units, Common Stock, Warrants or Warrant Shares (in whole or in part)
in the name of any person who acquired such Units, Common Stock, Warrants or Warrant Shares (in whole or in part) directly or
indirectly in a transaction that contravenes the restrictions set forth in this Section 5.1(o).

 

(p)       The
Purchaser understands that because (i) the securities included in the Units are "restricted securities" and have not
been registered under the Securities Act and may not be offered for sale, sold, hypothecated or otherwise disposed of unless registered
under the Securities Act and applicable state securities laws or an exemption from the registration requirements therefrom is available,
and (ii) if any transfer of the securities included in the Units is to be made in reliance on an exemption under the Securities
Act, the Company may require an opinion of counsel satisfactory to it that such transfer may be made pursuant to such exemption,
the Purchaser must bear the substantial economic risks of the investment in the Units indefinitely; and
so long as the Company deems appropriate legends shall be placed on the securities included in the Units to the effect that they
have not been registered under the Securities Act or applicable state securities laws, which legends shall
be in substantially the following form:

 

    	- 4 -

    	 

    

 

“[NEITHER
THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED][THESE SECURITIES HAVE 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, 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 OR BLUE SKY 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."

 

Appropriate notations
will be made in the Company’s stock books to the effect that the securities included in the Units
have not been registered under the Securities Act or applicable state securities laws. Stop transfer instructions
will be placed with the transfer agent, if any, of the Units. There can be no assurance that there will be any market for resale
of the Units, the Common Stock, the Warrants, or the Warrant Shares nor can there be any assurance that such securities will be
freely transferable at any time in the foreseeable future.

 

(q)       No
consent, approval, authorization or order of any court, governmental agency or body or arbitrator having jurisdiction over the
Purchaser or any of the Purchaser's affiliates is required for the execution of this Agreement or the performance of the Purchaser's
obligations hereunder, including, without limitation, the Purchase of the Common Stock and Warrants by the Purchaser.

 

(r)       The
Purchaser has adequate means of providing for such Purchaser’s current financial needs and foreseeable contingencies and
has no need for liquidity of its investment in the Units for an indefinite period of time.

 

(s)       The
Purchaser (i) if a natural person, represents that the Purchaser has reached the age of 21 and has full power and authority to
execute and deliver this Subscription Agreement and all other related agreements or certificates and to carry out the provisions
hereof and thereof; or (ii) if a corporation, partnership, or limited liability company or partnership, or association, joint stock
company, trust, unincorporated organization or other entity, represents that such entity was not formed for the specific purpose
of acquiring the Units, such entity is duly organized, validly existing and in good standing under the laws of the state of its
organization, the consummation of the transactions contemplated hereby is authorized by, and will not result in a violation of
state law or its charter or other organizational documents, such entity has full power and authority to execute and deliver this
Subscription Agreement and all other related agreements or certificates and to carry out the provisions hereof and thereof and
to purchase and hold the securities constituting the Units, the execution and delivery of this Subscription Agreement has been
duly authorized by all necessary action, this Subscription Agreement has been duly executed and delivered on behalf of such entity
and is a legal, valid and binding obligation of such entity; or (iii) if executing this Subscription Agreement in a representative
or fiduciary capacity, represents that it has full power and authority to execute and deliver this Subscription Agreement in such
capacity and on behalf of the subscribing individual, ward, partnership, trust, estate, corporation, or limited liability company
or partnership, or other entity for whom the Purchaser is executing this Subscription Agreement, and such individual, partnership,
ward, trust, estate, corporation, or limited liability company or partnership, or other entity has full right and power to perform
pursuant to this Subscription Agreement and make an investment in the Company, and represents that this Subscription Agreement
constitutes a legal, valid and binding obligation of such entity. The execution and delivery of this Subscription Agreement will
not violate or be in conflict with any order, judgment, injunction, agreement or controlling document to which the Purchaser is
a party or by which it is bound

 

    	- 5 -

    	 

    

 

(t)       If
an entity, the Purchaser has its principal place of business or, if a natural person, the Purchaser has its primary residence,
in the jurisdiction set forth immediately below such Purchaser's name on the signature page hereto.

 

(u)       The
Purchaser and the Advisers, if any, have had the opportunity to obtain any additional information, to the extent the Company had
such information in its possession or could acquire it without unreasonable effort or expense, necessary to verify the accuracy
of the information contained in the Memorandum and all documents received or reviewed in connection with the purchase of the Units
and have had the opportunity to have representatives of the Company provide them with such additional information regarding the
terms and conditions of this particular investment and the financial condition, results of operations, business of the Company
deemed relevant by the Purchaser or the Advisers, if any, and all such requested information, to the extent the Company had such
information in its possession or could acquire it without unreasonable effort or expense, has been provided to the full satisfaction
of the Purchaser and the Advisers, if any.

 

(v)       Any
information which the Purchaser has heretofore furnished or is furnishing herewith to the Company or the Placement Agent is true,
complete and accurate and may be relied upon by the Company and the Placement Agent in determining the availability of an exemption
from registration under federal and state securities laws in connection with the offering of securities as described in the Memorandum.
The Purchaser further represents and warrants that it will notify and supply corrective information to the Company and the Placement
Agent immediately upon the occurrence of any change therein occurring prior to the Company’s issuance of the securities contained
in the Units.

 

(w)       The
Purchaser has significant prior investment experience, including investment in non-registered, high risk securities. The Purchaser
is knowledgeable about investment considerations in development-stage companies. The Purchaser is able to bear all risks of holding
the Units purchased hereunder, and the Common Stock, Warrants, and Warrant Shares included therein. The Purchaser has a sufficient
net worth to sustain a loss of its entire investment in the Company in the event that such a loss should occur. The Purchaser’s
overall commitment to investments which are not readily marketable is not excessive in view of the Purchaser’s net worth
and financial circumstances and the purchase of the Units will not cause such commitment to become excessive. The investment is
a suitable one for the Purchaser.

 

(x)       The
Purchaser is satisfied that the Purchaser has received adequate information with respect to all matters which it or the Advisers,
if any, consider material to its decision to make this investment.

 

(y)       The
Purchaser acknowledges that any estimates or forward-looking statements or projections included in the Memorandum were prepared
by the Company in good faith but that the attainment of any such projections, estimates or forward-looking statements cannot be
guaranteed by the Company and should not be relied upon.

 

    	- 6 -

    	 

    

  

(z)       No
oral or written representations have been made, or oral or written information furnished, to the Purchaser or the Advisers, if
any, in connection with the Offering which are in any way inconsistent with the information contained in the Memorandum.

 

(aa)     Within
five (5) days after receipt of a request from the Company or the Placement Agent, the Purchaser will provide such information and
deliver such documents as may reasonably be necessary to comply with any and all laws and ordinances to which the Company or the
Placement Agent is subject.

 

(bb)    The
Purchaser’s substantive relationship with the Placement Agent or subagent of the Placement Agent through which the Purchaser
is subscribing for Units predates the Placement Agent’s or such subagent’s contact with the Purchaser regarding an
investment in the Units.

 

(cc)     THE
SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS
AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SAID ACT AND SUCH LAWS. THE SECURITIES
ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER SAID
ACT AND SUCH LAWS PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR ANY OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING
AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THE MEMORANDUM OR THIS SUBSCRIPTION
AGREEMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

 

(dd)    The
Purchaser acknowledges that none of the Units, the Common Stock, the Warrants, or the Warrant Shares have been recommended by
any federal or state securities commission or regulatory authority. In making an investment decision investors must rely on their
own examination of the Company and the terms of the Offering, including the merits and risks involved. Furthermore, the foregoing
authorities have not confirmed the accuracy or determined the adequacy of this Subscription Agreement or the Memorandum. Any representation
to the contrary is a criminal offense. The Units, the Common Stock, the Warrants, and the Warrant Shares are subject to restrictions
on transferability and resale and may not be transferred or resold except as permitted under the Securities Act, and the applicable
state securities laws, pursuant to registration or exemption therefrom. The Purchaser should be aware that it will be required
to bear the financial risks of this investment for an indefinite period of time.

 

(ee)     (For
ERISA plans only)      The fiduciary of the ERISA plan (the “Plan”) represents that such fiduciary has been informed
of and understands the Company’s investment objectives, policies and strategies, and that the decision to invest “plan
assets” (as such term is defined in ERISA) in the Company is consistent with the provisions of ERISA that require diversification
of plan assets and impose other fiduciary responsibilities. The Purchaser fiduciary or Plan (a) is responsible for the decision
to invest in the Company; (b) is independent of the Company or any of its affiliates; (c) is qualified to make such investment
decision; and (d) in making such decision, the Purchaser fiduciary or Plan has not relied primarily on any advice or recommendation
of the Company or any of its affiliates.

 

    	- 7 -

    	 

    

  

(ff)      The
Purchaser should check the Office of Foreign Assets Control (“OFAC”) website at <http://www.treas.gov/ofac>
before making the following representations. The Purchaser represents that the amounts invested by it in the Company in the Offering
were not and are not directly or indirectly derived from activities that contravene federal, state or international laws and regulations,
including anti-money laundering laws and regulations. Federal regulations and Executive Orders administered by OFAC prohibit,
among other things, the engagement in transactions with, and the provision of services to, certain foreign countries, territories,
entities and individuals. The lists of OFAC prohibited countries, territories, persons and entities can be found on the OFAC website
at <http://www.treas.gov/ofac>. In addition, the programs administered by OFAC (the “OFAC Programs”)
prohibit dealing with individuals1 or
entities in certain countries regardless of whether such individuals or entities appear on the OFAC lists.

 

(gg)    To
the best of the Purchaser’s knowledge, none of: (1) the Purchaser; (2) any person controlling or controlled by the Purchaser;
(3) if the Purchaser is a privately-held entity, any person having a beneficial interest in the Purchaser; or (4) any person for
whom the Purchaser is acting as agent or nominee in connection with this investment is a country, territory, individual or entity
named on an OFAC list, or a person or entity prohibited under the OFAC Programs. Please be advised that the Company may not accept
any amounts from a prospective investor if such prospective investor cannot make the representation set forth in the preceding
paragraph. The Purchaser agrees to promptly notify the Company and the Placement Agent should the Purchaser become aware of any
change in the information set forth in these representations. The Purchaser understands and acknowledges that, by law, the Company
may be obligated to “freeze the account” of the Purchaser, either by prohibiting additional subscriptions from the
Purchaser, declining any redemption requests and/or segregating the assets in the account in compliance with governmental regulations,
and the Placement Agent may also be required to report such action and to disclose the Purchaser’s identity to OFAC. The
Purchaser further acknowledges that the Company may, by written notice to the Purchaser, suspend the redemption rights, if any,
of the Purchaser if the Company reasonably deems it necessary to do so to comply with anti-money laundering regulations applicable
to the Company and the Placement Agent or any of the Company’s other service providers. These individuals include specially
designated nationals, specially designated narcotics traffickers and other parties subject to OFAC sanctions and embargo programs.

 

(hh)    To
the best of the Purchaser’s knowledge, none of: (1) the Purchaser; (2) any person controlling or controlled by the Purchaser;
(3) if the Purchaser is a privately-held entity, any person having a beneficial interest in the Purchaser; or (4) any person for
whom the Purchaser is acting as agent or nominee in connection with this investment is a senior foreign political figure,2 or any
immediate family3 member or close associate4 of a senior foreign political figure, as such
terms are defined in the footnotes below.

 

1
These individuals include specially designated nationals, specially designated narcotics traffickers and other parties
subject to OFAC sanctions and embargo programs.

 

2A “senior foreign
political figure” is defined as a senior official in the executive, legislative, administrative, military or judicial
branches of a foreign government (whether elected or not), a senior official of a major foreign political party, or a senior executive
of a foreign government-owned corporation. In addition, a “senior foreign political figure” includes any corporation,
business or other entity that has been formed by, or for the benefit of, a senior foreign political figure.

 

3“Immediate family”
of a senior foreign political figure typically includes the figure’s parents, siblings, spouse, children and in-laws.

 

4A “close associate” of a senior
foreign political figure is a person who is widely and publicly known to maintain an unusually close relationship with the senior
foreign political figure, and includes a person who is in a position to conduct substantial domestic and international financial
transactions on behalf of the senior foreign political figure.

 

    	- 8 -

    	 

    

 

(ii)       If
the Purchaser is affiliated with a non-U.S. banking institution (a “Foreign Bank”), or if the Purchaser receives
deposits from, makes payments on behalf of, or handles other financial transactions related to a Foreign Bank, the Purchaser represents
and warrants to the Company that: (1) the Foreign Bank has a fixed address, other than solely an electronic address, in a country
in which the Foreign Bank is authorized to conduct banking activities; (2) the Foreign Bank maintains operating records related
to its banking activities; (3) the Foreign Bank is subject to inspection by the banking authority that licensed the Foreign Bank
to conduct banking activities; and (4) the Foreign Bank does not provide banking services to any other Foreign Bank that does
not have a physical presence in any country and that is not a regulated affiliate.

 

5.2      Of
the Company. The Company hereby represents, warrants and agrees to and with the Purchaser as follows (it being specifically
acknowledged and agreed that the Placement Agent is and shall be a third party beneficiary of the following):

 

(a)       the
Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, and has
all necessary corporate power and authority to own, lease, use and operate its properties and to carry on its business as now being
conducted and presently proposed to be conducted; the Company and each of its subsidiaries is duly qualified to do business as
a foreign corporation and is in good standing in each jurisdiction in which its ownership or leasing of assets, or the conduct
of its business, makes such qualification necessary; the Company has all necessary corporate power and authority to execute and
deliver this Agreement, to issue the Units and the securities included therein and to carry out the provisions of this Agreement;
and, upon execution and delivery, this Agreement and the Warrant will constitute valid and binding obligations of the Company enforceable
in accordance with their respective terms, except as enforcement may be limited by insolvency and similar laws affecting the enforcement
of creditors’ rights generally and the effect of rules of law governing equitable remedies;

 

(b)       no
consent, approval, authorization or order of any court, governmental agency or body or arbitrator having jurisdiction over the
Company or any of the Company's affiliates is required for the execution of this Agreement or the performance of the Company's
obligations hereunder, including, without limitation, the sale of the Units and the Warrant Shares to the Purchaser;

 

(c)       neither
the sale of the securities included in the Units or the Warrant Shares nor the performance of the Company's other obligations
pursuant to this Agreement will violate, conflict with, result in a breach of, or constitute a default (or an event that, with
the giving of notice or the lapse of time or both, would constitute a default) under (i) the certificate of incorporation or bylaws
of the Company, (ii) any decree, judgment, order or determination of any court, governmental agency or body, or arbitrator having
jurisdiction over the Company or any of the Company's properties or assets, (iii) any law, treaty, rule or regulation applicable
to the Company or (iv) the terms of any bond, debenture, note or other evidence of indebtedness, or any agreement, stock option
or other similar plan, indenture, lease, mortgage, deed or trust or other instrument to which the Company is a party or otherwise
bound or to which any property of the Company is subject;

 

(d)       the
Company has or, prior to the Closing, will have taken all corporate action required to authorize the execution and delivery of
this Agreement and the performance of its obligations hereunder;

 

(e)       the
Company has duly authorized the issuance of the securities included in the Units and the Warrant Shares; and the Company has reserved
such number of shares of its common stock necessary for issuance of the Common Stock and the Warrant Shares;

 

    	- 9 -

    	 

    

  

(f)       the
Common Stock when issued and paid for in compliance with the provisions of this Agreement, and the Warrant Shares when issued,
paid for and delivered in accordance with the terms of the Warrant, will be duly authorized and validly issued, fully paid and
non-assessable, will not be subject to preemptive, anti-dilution, “poison-pill” or similar rights, will be free and
clear of any security interest, lien, claim or other encumbrance, and, based in part upon the Purchaser’s representations
and warranties contained in this Subscription Agreement and the representations, warranties and covenants given by the Placement
Agent in the Placement Agent Agreement, will be issued in compliance with applicable federal and state securities laws; provided,
however, that any non-compliance with any such laws shall be deemed to not contravene the representation and warranty set forth
in this Subsection 5.2(f) so long as such non-compliance (i) does not and, after the passage of time, will not adversely affect
the characterization of such issuance as being duly authorized, valid, fully paid, non-assessable, not subject to preemptive, anti-dilution,
“poison-pill” or similar rights, and free and clear of any security interest, lien, claim or other encumbrance, (ii)
can be remedied by the Company, and (iii) is promptly remedied by the Company after the Company becomes so aware of it;

 

(g)       the
sale of the securities included in the Units and any Warrant Shares by the Company is not part of a plan or scheme to evade the
registration requirements of the Securities Act;

 

(h)       neither
the Company nor any person acting on behalf of the Company has offered or sold any of the securities included in the Units by
any form of general solicitation or general advertising;

 

(i)       the
Company has offered the securities included in the Units for sale only to (i) Accredited Investors or (ii) persons who are
not a “U.S. Person” within the meaning of Regulation S under the Securities Act (“Regulation S”) or who
are not resident within the United States or any territory thereof, in each case who by reason of their business and financial
experience have such knowledge, sophistication and experience in business and financial matters as to be capable of evaluating
the merits and risks of the investment in the such securities;

 

(j)       the
Memorandum, as of its date or such later date on which the Memorandum is amended or supplemented, did not contain any untrue statement
of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements made therein,
in light of the circumstances under which they were made, not misleading; as of their respective dates, or to the extent corrected
by a subsequent restatement, amendment or supplement, all reports, schedules, forms, statements and other documents required to
be filed by the Company under the Exchange Act for the two years preceding the date hereof (the "SEC Reports")
complied in all material respects with the requirements of the Exchange Act and the rules and regulations of the Commission promulgated
thereunder; 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 light of the circumstances under which
they were made, not misleading;

 

(k)       the
financial statements of the Company included in the SEC Reports and the Memorandum comply in all material respects with applicable
accounting requirements and the rules and regulations of the SEC with respect thereto as in effect at the time of filing (or to
the extent corrected by a subsequent restatement). Such financial statements have been prepared in accordance with United States
generally accepted accounting principles ("GAAP") applied on a consistent basis during the periods involved, 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 taken as a whole 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, year-end audit adjustments;

 

    	- 10 -

    	 

    

  

(l)       since
the date of the latest audited financial statements included within the SEC Reports and the Memorandum, and except as otherwise
set forth in the SEC Reports or the Memorandum, as amended or supplemented by any SEC filings of the Company subsequent to the
date hereof, (i) the Company has not incurred any material liabilities, direct or contingent, (ii) there has been no material adverse
change in the properties, business, results of operations, or condition (financial or otherwise), affairs or prospects. of the
Company and its subsidiaries, taken as a whole, and (iii) there have been no transactions entered into by the Company, other than
those in the ordinary course of business, which, as of the date of this Subscription Agreement, are material to the Company; and

 

(m)       the
Company agrees to use the net proceeds from the sale of the Units in the manner and for the purposes described in the Memorandum.

 

The Company has not made any representations or warranties to the
Purchaser, and the Purchaser has not relied upon any representations or warranties of the Company, except as expressly set forth
in this Section 5.2.

 

5.3      Representations
and Warranties as of Closing. Each of the representations and warranties of the parties hereto set forth in Sections 5.1 and
5.2, respectively, and made as of the date hereof shall be true and accurate as of the Closing applicable to the subscription
made hereby as if made on and as of the date of such Closing.

 

6.           Registration
Rights.

 

6.1      Registration
Statement.Within twelve (12) months of the date of the First Closing, the Company will use its commercially reasonable
best efforts to have on file, at its sole expense, a then current registration statement (together with any pre- and post-effective
amendments, all exhibits thereto, and all material incorporated by reference or deemed to be incorporated by reference therein,
the “Registration Statement”) for the benefit of the holders (each a “Holder”; collectively, the
“Holders”) of all the Common Stock comprising the Units, the Common Stock underlying the Warrants, and any securities
issued or then issuable upon any stock split, dividend or other distribution, recapitalization or similar event with respect to
the Common Stock (collectively, “Registrable Securities”) to permit the public sale of any of the foregoing
Common Stock and securities by such Holders; provided, however, any such Registrable Securities shall cease to be
Registrable Securities (and the Company shall not be required to file, or maintain the effectiveness of, any Registration Statement
hereunder with respect thereto) for so long as (a) a Registration Statement with respect to the sale of such Registrable Securities
is declared effective by the Commission under the Securities Act and such Registrable Securities have been disposed of by the Holder
in accordance with such effective Registration Statement, (b) such Registrable Securities have been previously sold in accordance
with Rule 144 promulgated by the Commission pursuant to the Securities Act, or (c) such securities become eligible for resale without
volume or manner-of-sale restrictions and without current public information pursuant to Rule 144 as set forth in a written opinion
letter issued by counsel to the Company to such effect, addressed, delivered and acceptable to the Company’s transfer agent
(the “Transfer Agent”) and the affected Holders (assuming that such securities and any securities issuable upon
exercise, conversion or exchange of which, or as a dividend upon which, such securities were issued or are issuable, were at no
time held by any affiliate of the Company), as reasonably determined by the Company, upon the advice of counsel to the Company.
In the event such Registration Statement includes securities of the Company to be offered and sold by the Company in a fully underwritten
primary public offering pursuant to an effective registration under the Securities Act (a “Public Offering”)
and the Company is advised in good faith by any managing underwriter of securities being offered pursuant to such Public Offering
that the number of Registrable Securities proposed to be sold in such Public Offering is greater than the number of such securities
which can be included in such Public Offering without materially adversely affecting such Public Offering, the Company will include
in such registration (i) first,
any securities the Company proposes to sell, and (ii) second, the Registrable Securities, with any reductions in the number of
Registrable Securities actually included in such registration to be allocated on a pro rata basis among the Holders based on the
total number of Registrable Securities proposed to be registered. Additionally, and notwithstanding any other provision of this
Section 6, if the Commission or any SEC Guidance (as hereinafter defined) sets forth a limitation on the number of Registrable
Securities permitted to be registered on a particular Registration Statement as a secondary offering, unless otherwise directed
in writing by a Holder as to its Registrable Securities, the number of Registrable Securities to be registered on such Registration
Statement will be reduced as follows: (i) first, the Company shall reduce Registrable Securities represented by Warrant Shares
(applied, in the case that if some Warrant Shares may be registered, to the Holders on a pro rata basis based on the total number
of unregistered Warrant Shares issuable to such Holders) and (ii) second, the Company shall reduce Registrable Securities represented
by shares of Common Stock issued in the Offering (applied, in the case that if some of such shares of Common Stock may be registered,
to the Holders on a pro rata basis based on the total number of unregistered shares held by such Holders). In the event the Company
files or amends the Registration Statement in accordance with the foregoing, the Holders’ registration rights set forth
in this Section 6 with respect to the Registrable Securities consequently not registered for resale in the Registration Statement,
as amended, shall continue until the expiration of the Registration Period (as defined below), including, without limitation,
the requirement for a filing of the Registration Statement within twelve-months following the First Closing set forth in the first
sentence of this Section 6.1.

 

    	- 11 -

    	 

    

   

As used in this Section
6, “SEC Guidance” means (i) any publicly-available written or oral guidance of the Commission staff, or any
comments, requirements or requests of the Commission staff and (ii) the Securities Act.

 

6.2      Registration
Procedures.In connection with the registration of the Registrable Securities pursuant to this Section 6, the Company
shall:

 

(a)       (i)
Prepare and file a Registration Statement in accordance with the time period set forth in Section 6.1, (ii) promptly prepare and
file with the Commission such amendments, including post effective amendments, to the Registration Statement and supplements to
the prospectus included therein (a “Prospectus”) as may be necessary to keep the Registration Statement continuously
effective and in compliance with the provisions of the Securities Act applicable thereto so as to permit the Prospectus forming
part thereof to be current and useable by Holders for resales of the Registrable Securities until the earlier of (x) the date when
all Registrable Securities covered by such Registration Statement have been sold or (y) the date on which all Registrable Securities
may be sold without any restriction (including volume limitations) pursuant to Rule 144 promulgated under the Securities Act (the
“Registration Period”), (iii) respond as promptly as reasonably possible to any comments received from the Commission
with respect to a Registration Statement or any amendment thereto, and (iv) during the Registration Period, comply in all material
respects with the applicable provisions of the Securities Act and the Exchange Act with respect to the disposition of all Registrable
Securities covered by a Registration Statement during the applicable period in accordance (subject to the terms of this Section
6) with the intended methods of disposition by the holders thereof set forth in such Registration Statement as so amended or in
such Prospectus as so supplemented.

 

(b)       Subject
to the terms of this Section 6, the Company shall use its commercially reasonable best efforts to cause any Registration Statement
filed in respect of the Registrable Securities to be declared effective under the Securities Act as promptly as possible after
the filing thereof, and thereafter the Company shall file a final prospectus with the Commission as required by Rule 424 under
the Securities Act.

 

    	- 12 -

    	 

    

 

(c)       Notify
the Placement Agent as promptly as reasonably possible (i) when the Registration Statement has become effective, (ii) of any request
by the Commission or any other federal or state governmental authority for amendments or supplements to a Registration Statement
or Prospectus or for additional information, (iii) of the issuance by the Commission or any other federal or state governmental
authority of any stop order suspending the effectiveness of a Registration Statement covering any or all of the Registrable Securities
or the initiation of any governmental action, litigation, hearing or other proceeding (“Proceedings”) for that
purpose, and (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any jurisdiction, or the initiation or threatening of any Proceeding
for such purpose.

 

(d)       Use
its commercially reasonable best efforts during the Registration Period to avoid the issuance of, or, if issued, obtain the withdrawal
of (i) any order stopping or suspending the effectiveness of a Registration Statement, or (ii) any suspension of the qualification
(or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction, at the earliest practicable
moment.

 

(e)       During
the Registration Period, subject to the terms of this Section 6 and applicable law, consent to the use of such Prospectus and
each amendment or supplement thereto by each of the selling Holders in connection with the offering and sale of the Registrable
Securities covered by such Prospectus and any amendment or supplement thereto.

 

(f)       Prior
to any resale of Registrable Securities by a Holder, use its commercially reasonable efforts to register or qualify or cooperate
with the selling Holders in connection with the registration or qualification (or exemption from the registration or qualification)
of such Registrable Securities for the resale by the Holder under the securities or Blue Sky laws of such jurisdictions within
the United States as any Holder reasonably requests in writing, to keep each registration or qualification (or exemption therefrom)
effective during the Registration Period and to do any and all other acts or things reasonably necessary to enable the disposition
in such jurisdictions of the Registrable Securities covered by each Registration Statement during the Registration Period; provided,
that, the Company shall not be required to qualify generally to do business in any jurisdiction where it is not then so qualified,
subject the Company to any material tax in any such jurisdiction where it is not then so subject or file a general consent to service
of process in any such jurisdiction.

 

(g)       If
requested by a Holder, cooperate with such Holder to facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be delivered to a transferee pursuant to a Registration Statement, which certificates shall be free,
to the extent permitted by the Subscription Agreement, of all restrictive legends, and to enable such Registrable Securities to
be in such denominations and registered in such names as any such Holder may request.

 

(h)       During
the Registration Period, comply with all applicable rules and regulations of the Commission.

 

6.3      Obligations
of the Holder.In connection with the registration of the Registrable Securities, the Holder shall have the following obligations
and hereby makes the following acknowledgements:

 

    	- 13 -

    	 

    

  

(a)       It
shall be a condition precedent to the obligations of the Company to include the Registrable Securities of the Holder in any Registration
Statement that the Holder shall furnish to the Company such information regarding itself, the Registrable Securities held by it
and the intended method of disposition of the Registrable Securities held by it as shall be reasonably required to effect the
registration of such Registrable Securities. The Holder agrees to furnish to the Company a completed questionnaire in the form
attached to this Subscription Agreement as Annex A (the “Selling Stockholder Questionnaire”) concurrently
with the Holder’s subscription for the Registrable Securities and to furnish such additional documents in connection with
such registration as the Company may reasonably request. At least twenty (20) business days prior to the first anticipated filing
date of a Registration Statement, the Company shall notify the Holder of the information the Company requires from such Holder
(the “Requested Information”) if the Holder elects to have any of its Registrable Securities included in the
Registration Statement. If at least five (5) business days prior to the anticipated filing date the Company has not received the
Requested Information from the Purchaser, then the Company may file the Registration Statement without including any Registrable
Securities of the Purchaser and the Company shall have no further obligations under this Section 6 to the Holder after such Registration
Statement has been declared effective; provided, however, that in the event the Company thereafter files a Registration Statement
for the resale of any Registrable Securities of other Holders not previously registered, then such Holder shall have the right
under this Section 6 to include such Holder’s Registrable Securities in such Registration Statement and the obligations
of the Company under this Section 6 with respect to the registration of such Holder’s Registrable Securities shall apply
thereto. If the Holder notifies the Company and provides the Company the information required hereby prior to the time the Registration
Statement is declared effective, the Company will file an amendment to the Registration Statement that includes the Registrable
Securities of the Holder;

 

(b)       The
Holder agrees to cooperate with the Company in connection with the preparation and filing of a Registration Statement hereunder,
unless the Holder has notified the Company in writing of its election to exclude all of its Registrable Securities from such Registration
Statement;

 

(c)       The
Holder agrees not to take any action with respect to any distribution deemed to be made pursuant to a Registration Statement that
constitutes a violation of Regulation M under the Exchange Act or any other applicable rule, regulation or law;

 

(d)       The
Holder agrees that, upon receipt of any notice from the Company of the occurrence of any event of the kind described in Section
6(b)(ii), (iii) or (iv), or of any event that otherwise makes a Registration Statement outdated, defective or otherwise unavailable,
such Holder will forthwith discontinue disposition of such Registrable Securities under such Registration Statement until it is
advised in writing by the Company or an agent of the Company that the use of the applicable Prospectus (as it may have been supplemented
or amended) may be resumed, and the Company will use its commercially reasonable best efforts to ensure that the use of such Prospectus
(as it may have been supplemented or amended) may be resumed as promptly as is practicable;

 

(e)       The
Holder covenants and agrees that it will comply with the prospectus delivery requirements of the Securities Act as applicable
to it (unless an exemption therefrom is available) in connection with sales of Registrable Securities pursuant to a Registration
Statement; and

 

(f)       The
Holder acknowledges that it may be deemed to be a statutory underwriter within the meaning of the Securities Act with respect
to the Registrable Securities being registered for resale by it, and hereby consents to the inclusion in any applicable Registration
Statement of a disclosure to such effect.

 

6.4      Registration
Expenses. All fees and expenses incident to the performance of or compliance with this Section 6 by the Company shall be borne
by the Company whether or not any Registrable Securities are sold pursuant to a Registration Statement. In no event, however,
shall the Company be responsible for any broker or similar commissions of the Holder or any legal fees or other costs of the Holder.

 

    	- 14 -

    	 

    

  

6.5       Indemnification.

 

(a)       Indemnification
by the Company. The Company shall indemnify and hold harmless each Holder, each Holder’s respective investment advisors,
and each underwriter, if any, which facilitates the disposition of the Registrable Securities, and each of their respective officers,
directors, members, stockholders, partners, agents, and employees and each person who controls such Holder or underwriter (within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and their respective officers, directors, members,
stockholders, partners, agents and 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 each such controlling person, to the fullest extent permitted
by applicable law, from and against any and all losses, claims, damages, liabilities, costs (including, without limitation, reasonable
attorneys’ fees) and expenses (collectively, “Losses”), as incurred, arising out of or relating
to (1) any untrue statement of a material fact contained in a Registration Statement, any Prospectus or any form of prospectus
or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged
omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus
or supplement thereto, in light of the circumstances under which they were made) not misleading or (2) any violation or alleged
violation by the Company of the Securities Act, the Exchange Act or any state securities law, or any rule or regulation thereunder,
in connection with the performance of its obligations under this Section 6, except to the extent, but only to the extent, that
(i) such untrue statements or omissions are based solely upon information regarding such Holder or underwriter furnished in writing
to the Company by such Holder or underwriter expressly for use therein, or to the extent that such information relates to such
Holder or underwriter or such Holder’s or underwriter’s proposed method of distribution of Registrable Securities and
was reviewed and expressly approved in writing by such Holder or underwriter expressly for use in a Registration Statement, such
Prospectus or in any amendment or supplement thereto (it being understood that the Holder has approved the contents of the Selling
Stockholder Questionnaire for this purpose) or (ii) the use by such Holder or underwriter of an outdated, defective or otherwise
unavailable Prospectus after the Company has notified such Holder or underwriter in writing that the Prospectus is outdated, defective
or otherwise unavailable for use by such Holder or underwriter. The Company shall notify the Holders and underwriters, if any,
promptly of the institution, threat or assertion of any governmental action, litigation, hearing or other proceeding arising from
or in connection with the transactions contemplated by this Section 6 of which the Company is aware. Such indemnity shall remain
in full force and effect regardless of any investigation made by or on behalf of such indemnified person and shall survive the
transfer of any Registrable Securities by any of the Holders.

 

(b)      Indemnification
by Holders. Each Holder shall, severally and not jointly, indemnify and hold harmless the Company, its directors, officers,
agents and employees, each person who controls the Company (within the meaning of Section 15 of the Securities Act and Section
20 of the Exchange Act), and the directors, officers, agents or employees of such controlling persons, to the fullest extent permitted
by applicable law, from and against all Losses, as incurred, to the extent arising out of or based solely upon: (x) such Holder’s
failure to comply with any applicable prospectus delivery requirements of the Securities Act through no fault of the Company or
(y) any untrue or alleged untrue statement of a material fact contained in any Registration Statement, any Prospectus, or in any
amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission
of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or
supplement thereto, in light of the circumstances under which they were made) not misleading (i) to the extent, but only to the
extent, that such untrue statement or omission is contained in any information so furnished in writing by such Holder to the Company
expressly for inclusion in such Registration Statement or such Prospectus or (ii) to the extent, but only to the extent, that such
information relates to such Holder’s proposed method of distribution of Registrable Securities and was reviewed and expressly
approved in writing by such Holder expressly for use in a Registration Statement (it being understood that the Holder has approved
the contents of the Selling Stockholder Questionnaire for this purpose), such Prospectus or in any amendment or supplement thereto
or (iii) to the extent, but only to the extent, related to the use by such Holder of an outdated, defective or otherwise unavailable
Prospectus after the Company has notified such Holder in writing that the Prospectus is outdated, defective or otherwise unavailable
for use by such Holder. In no event shall the liability of any selling Holder under this Section 6.5(b) be greater in amount than
the dollar amount of the net proceeds received by such Holder upon the sale of the Registrable Securities giving rise to such indemnification
obligation.

 

    	- 15 -

    	 

    

 

(c)       Conduct
of Indemnification Proceedings.

 

		(i)	If any Proceeding shall be brought or asserted against any person entitled to indemnity hereunder
(an “Indemnified Party”), such Indemnified Party shall promptly notify the person from whom indemnity
is sought (the “Indemnifying Party”) in writing, and the Indemnifying Party shall have the right to assume
the defense thereof, including the employment of counsel reasonably satisfactory to the Indemnified Party and the payment of all
reasonable fees and expenses incurred in connection with defense thereof; provided, that, the failure of any Indemnified Party
to give such notice shall not relieve the Indemnifying Party of its obligations or liabilities pursuant to this Section 6.5, except
(and only) to the extent that it shall be finally determined by a court of competent jurisdiction (which determination is not subject
to appeal or further review) that such failure shall have materially and adversely prejudiced the Indemnifying Party.

 

		(ii)	An Indemnified Party shall have the right to employ separate counsel in any such Proceeding and
to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party
or Parties unless: (1) the Indemnifying Party has agreed in writing to pay such fees and expenses, (2) the Indemnifying Party shall
have failed promptly to assume the defense of such Proceeding and to employ counsel reasonably satisfactory to such Indemnified
Party in any such Proceeding, or (3) the named parties to any such Proceeding (including any impleaded parties) include both such
Indemnified Party and the Indemnifying Party, and counsel to the Indemnified Party shall reasonably believe that a material conflict
of interest is likely to exist if the same counsel were to represent such Indemnified Party and the Indemnifying Party (in which
case, if such Indemnified Party notifies the Indemnifying Party in writing that it elects to employ separate counsel at the expense
of the Indemnifying Party, the Indemnifying Party shall not have the right to assume the defense thereof and the reasonable fees
and expenses of no more than one separate counsel shall be at the expense of the Indemnifying Party). The Indemnifying Party shall
not be liable for any settlement of any such Proceeding effected without its written consent, which consent shall not be unreasonably
withheld or delayed. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement
of any pending Proceeding in respect of which any Indemnified Party is a party, unless such settlement includes an unconditional
release of such Indemnified Party from all liability on claims that are the subject matter of such Proceeding.

 

    	- 16 -

    	 

    

  

		(iii)	Subject to the terms of this Section 6.5, all reasonable fees and expenses of the Indemnified Party
(including reasonable fees and expenses to the extent incurred in connection with investigating or preparing to defend such Proceeding
in a manner not inconsistent with this Section) shall be paid to the Indemnified Party, as incurred, within ten business days of
written notice thereof to the Indemnifying Party, provided that the Indemnified Party shall promptly reimburse the Indemnifying
Party for that portion of such fees and expenses applicable to such actions for which such Indemnified Party is finally determined
by a court of competent jurisdiction (which determination is not subject to appeal or further review) not to be entitled to indemnification
hereunder.

 

(d)       Contribution.

 

		(i)	If the indemnification under Section 6.5(a) or 6.5(b) is unavailable to an Indemnified Party or
insufficient to hold an Indemnified Party harmless for any Losses, then each Indemnifying Party shall contribute to the amount
paid or payable by such Indemnified Party, in such proportion as is appropriate to reflect the relative fault of the Indemnifying
Party and Indemnified Party in connection with the actions, statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations. The relative fault of such Indemnifying Party and Indemnified Party shall be determined
by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material
fact or omission or alleged omission of a material fact, has been taken or made by, or relates to information supplied by, such
Indemnifying Party or Indemnified Party, and the parties’ relative intent, knowledge, access to information and opportunity
to correct or prevent such action, statement or omission. The amount paid or payable by a party as a result of any Losses shall
be deemed to include, subject to the limitations set forth in this Section 6, any reasonable attorneys’ or other fees or
expenses incurred by such party in connection with any Proceeding to the extent such party would have been indemnified for such
fees or expenses if the indemnification provided for in this Section was available to such party in accordance with its terms.

 

		(ii)	The parties hereto agree that it would not be just and equitable if contribution pursuant to this
Section 6.5(d) were determined by pro rata allocation or by any other method of allocation that does not take into account the
equitable considerations referred to in the immediately preceding paragraph. Notwithstanding the provisions of this Section 6.5(d),
no Holder shall be required to contribute pursuant to this Section 6.5(d), in the aggregate, any amount in excess of the amount
by which the net proceeds actually received by such Holder from the sale of the Registrable Securities subject to the Proceeding
exceeds the amount of any damages that such Holder has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission.

 

    	- 17 -

    	 

    

   

		(iii)	The indemnity and contribution agreements contained in this Section are in addition to any liability
that the Indemnifying Parties otherwise may have to the Indemnified Parties.

 

6.6      Remedies.
In the event of a breach by the Company or by a Holder of any of their respective obligations under this Section 6, each Holder
or the Company, as the case may be, in addition to being entitled to exercise all rights granted by law and under this Section
6, including recovery of damages, shall be entitled to specific performance of its rights under this Section 6. Each of the Company
and each Holder agrees that monetary damages would not provide adequate compensation for any losses incurred by reason of a breach
by it of any of the provisions of this Section 6 and not resulting from the failure of the other party to perform its respective
obligations under this Section 6 and, in respect of any such action for specific performance, further agrees that it shall waive
and shall not assert the defense that a remedy at law would be adequate.

 

7.           Opinion
of Counsel. At the Closing applicable to the subscription made hereby, the Placement Agent and the Purchaser shall have each
received the opinion of Nixon Peabody LLP, counsel for the Company, dated as of the Closing, substantially in the form attached
as Annex B attached hereto with such changes as may be mutually agreed upon by the Company and the Placement Agent.

 

8.           Indemnification.
The Purchaser agrees to indemnify and hold harmless the Company, Placement Agent (and selected dealers retained on the Offering,
if any), and their respective officers, directors, employees, agents, members, partners, control persons and affiliates from and
against all losses, liabilities, claims, damages, costs, fees and expenses whatsoever (including, but not limited to, any and
all expenses incurred in investigating, preparing or defending against any litigation commenced or threatened) based upon or arising
out of any actual or alleged false acknowledgment, representation or warranty, or misrepresentation or omission to state a material
fact, or breach by the Purchaser of any covenant or agreement made by the Purchaser herein or in any other document delivered
in connection with this Subscription Agreement.

 

9.           Irrevocability;
Binding Effect. The Purchaser hereby acknowledges and agrees that the subscription hereunder is irrevocable by the Purchaser,
except as required by applicable law, and that this Subscription Agreement shall survive the death or disability of the Purchaser
and shall be binding upon and inure to the benefit of the parties and their heirs, executors, administrators, successors, legal
representatives, and permitted assigns. If the Purchaser is more than one person, the obligations of the Purchaser hereunder shall
be joint and several and the agreements, representations, warranties, and acknowledgments herein shall be deemed to be made by
and be binding upon each such person and such person’s heirs, executors, administrators, successors, legal representatives,
and permitted assigns.

 

10.           Modification.
This Subscription Agreement shall not be modified or waived except by an instrument in writing signed by the party against
whom any such modification or waiver is sought.

 

11.           Immaterial
Modifications to the Transaction Documents. The Company may, at any time prior to the First Closing, modify the Warrant in
the form of Exhibit 2 to the Memorandum (the Warrant and other transaction documents are collectively referred to herein
as the “Transaction Documents”) if necessary to clarify any provision therein, without first providing notice
or obtaining prior consent of the Purchaser, if, and only if, such modification is not material in any respect.

 

    	- 18 -

    	 

    

  

12.           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 address set forth above, or (b) if to the Purchaser, at the
address set forth on the signature page hereof (or, in either case, to such other address as the party shall have furnished in
writing in accordance with the provisions of this Section 12). Any notice or other communication given by certified mail shall
be deemed given at the time of receipt thereof. The Purchaser and any assignee of Purchaser’s rights and obligations under
this Agreement shall provide the Company with updated address information upon any change thereto or any assignment of the shares
of Common Stock, the Warrants or the Warrant Shares, and any notice provided to Purchaser or assignee furnished in writing to the
address or other contact information set forth in the Company’s records in accordance with the provisions of this Section
12 by or on behalf of the Company shall be deemed effective as to such Purchaser or assignee. The Purchaser agrees that notice
may be served upon the Purchaser in accordance with the foregoing procedures by the Placement Agent or other agent that introduced
the Purchaser to the Company.

 

13.           Assignability.
Except as provided in the following sentence, this Subscription Agreement and the rights, interests and obligations hereunder
are not transferable or assignable by the Purchaser. The transfer or assignment of the shares of Common Stock, the Warrants or
the Warrant Shares shall be made only in accordance with all applicable laws and upon any such transfer of the shares of Common
Stock, the rights set forth in Sections 6, 19 and 20 shall be deemed assigned to such new holder. Any assignment contrary to the
terms hereof shall be null and void and of no force or effect.

 

14.           Applicable
Law. This Subscription Agreement 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.

 

15.           Arbitration.
The parties agree to submit all controversies to arbitration in accordance with the provisions set forth below and understand
that:

 

(a)       Arbitration
is final and binding on the parties.

 

(b)       The
parties are waiving their right to seek remedies in court, including the right to a jury trial.

 

(c)       Pre-arbitration
discovery is generally more limited and different from court proceedings.

 

(d)       The
arbitrator’s award is not required to include factual findings or legal reasoning and any party’s right to appeal or
to seek modification of rulings by arbitrators is strictly limited.

 

(e)       The
panel of arbitrators will typically include a minority of arbitrators who were or are affiliated with the securities industry.

 

(f)       All
controversies which may arise between the parties concerning this Subscription Agreement shall be determined by arbitration pursuant
to the rules then pertaining to the American Arbitration Association in the City of New York, New York or the City of Los Angeles,
California, as the party bringing such arbitration shall decide. The arbitration shall be governed by the Federal Arbitration Act,
9 U.S.C. Sec.1-16, and the judgment upon the award rendered by the arbitrators may be entered by any court having jurisdiction
thereof.  Any notice of such arbitration or for the confirmation of any award in any arbitration shall be sufficient if given
in accordance with the provisions of this Subscription Agreement. The parties agree that the determination of the arbitrators shall
be binding and conclusive upon them.

 

16.           Blue
Sky Qualification. The purchase of Units under this Subscription Agreement is expressly conditioned upon the exemption from
qualification of the offer and sale of the Units from applicable federal and state securities laws. The Company shall not be required
to qualify this transaction under the securities laws of any jurisdiction and, should qualification be necessary, the Company
shall be released from any and all obligations to maintain its offer, and may rescind any sale contracted, in the jurisdiction.

 

    	- 19 -

    	 

    

 

17.           Use
of Pronouns. All pronouns and any variations thereof used herein shall be deemed to refer to the masculine, feminine, neuter,
singular or plural as the identity of the person or persons referred to may require.

 

18.           Confidentiality.
The Purchaser acknowledges and agrees that any information or data the Purchaser has acquired from or about the Company, not
otherwise properly in the public domain, was received in confidence, including the fact that the Company is considering the transactions
contemplated by the Memorandum and this Subscription Agreement. The Purchaser agrees not to divulge, communicate or disclose,
except as may be required by law or for the performance of this Subscription Agreement, or use to the detriment of the Company
or for the benefit of any other person or persons, or misuse in any way, any confidential information of the Company, including
any scientific, technical, trade or business secrets of the Company and any scientific, technical, trade or business materials
that are treated by the Company as confidential or proprietary, including, but not limited to, ideas, discoveries, inventions,
developments and improvements belonging to the Company and confidential information obtained by or given to the Company about
or belonging to third parties. The Purchaser further agrees not to trade in the Company’s securities on the basis of any
such nonpublic information.

 

19.           Adjustment
for Diluting Issuances.

 

19.1      Special
Definitions. For purposes of this Section 19 and Section 20, the following definitions shall apply:

 

(a)       “Options”
shall mean rights, options, options authorized for issuance under the Company’s 2011 Stock Incentive Plan, and warrants
to subscribe for, purchase or otherwise acquire Common Stock or Convertible Securities.

 

(b)       “Private
Placement Closing Date” shall mean the date on which the first Units are issued under this Subscription Agreement.

 

(c)       “Convertible
Securities” shall mean any evidences of indebtedness, shares or other securities directly or indirectly convertible
into or exchangeable for Common Stock and any such renewals, but excluding Options.

 

(d)       “Promissory
Notes” shall mean any evidences of indebtedness or other securities not directly or indirectly convertible into or exchangeable
for Common Stock and any such renewals, but potentially could be exchanged into Common Stock.

 

(e)       “Original
PPM Shares” shall mean the total number of shares of Common Stock comprising the Units (and, for the sake of clarity,
excluding any Warrant Shares) originally issued under this Subscription Agreement on the Private Placement Closing Date.

 

(f)       “Additional
Shares of Common Stock” shall mean all shares of Common Stock issued (or, pursuant to Section 19.2 below, deemed to
be issued) by the Company after the Private Placement Closing Date, other than (1) the following shares of Common Stock and (2)
shares of Common Stock deemed issued pursuant to the following Options and Convertible Securities (such shares referenced in clauses
(1) and (2) of this paragraph (f), collectively, “Exempted Securities”):

 

		(i)	all Options, Convertible Securities and Promissory Notes outstanding as of the Private Placement
Closing Date;

 

    	- 20 -

    	 

    

  

		(ii)	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;

 

		(iii)	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”);

 

		(iv)	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);

 

		(v)	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 $225,000 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);

 

		(vi)	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 $225,000 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);

 

		(vii)	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

 

		(viii)	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 $225,000 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).

 

    	- 21 -

    	 

    

  

(g)       “New
Shares” shall mean the additional Shares of Common Stock issued to investors under this Subscription Agreement as calculated
in Section 19.3 below.

 

19.2      Deemed
Issue of Additional Shares of Common Stock. If the Company at any time or from time to time after the Private Placement Closing
Date shall issue any Options or Convertible Securities (excluding Options or Convertible Securities which are themselves Exempted
Securities) 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.

 

19.3      New
Shares for Additional Shares of Common Stock. In the event the Company shall at any time after the Private Placement Closing
Date issue Additional Shares of Common Stock (including Additional Shares of Common Stock deemed to be issued pursuant to Section
19.2), without consideration or for a consideration per share less than $2.50 (the “New Issuance”), then New
Shares shall be issued to Purchaser in an amount determined in accordance with the following formulas:

 

Number of New Shares = ((Original
PPM Shares ÷ Share Adjustment Factor) - Original PPM Shares)

 

Share Adjustment Factor =
(A + B) ÷ (A + C).

 

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

 

(a)       “A”
shall mean the number of shares of Common Stock outstanding immediately prior to such issue of Additional Shares of Common Stock;

 

(b)       “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 $2.50; and

 

(c)       “C”
shall mean the number of such Additional Shares of Common Stock issued in the New Issuance.

 

19.4      Determination
of Consideration. For purposes of this Section 19, 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;

 

    	- 22 -

    	 

    

  

		(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; 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.

 

(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 19.2, 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.

 

19.5       No
Fractional Shares or Warrants. No fractional shares shall be issued under Section 19.3. As to any fraction of a New Share
which the Purchaser would otherwise be entitled to receive upon the issuance of New Shares (after aggregating all the New Shares
then being issuable to the Purchaser in respect of the shares of Common Stock comprising the Units purchased by the Purchaser),
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 price per share at which the Additional Shares giving rise to the issuance of the New Shares were sold
by the Company or round up to the next whole share.

 

19.6       Term
of Adjustment for Diluting Issuances. The requirement to perform adjustments for diluting issuances under this Section 19
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 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”) or (ii) the fifth (5th) anniversary of the Private Placement Closing Date.

 

    	- 23 -

    	 

    

  

20.           Right
of Participation.

 

20.1       Right
of Participation. Subject to the terms and conditions specified in this Section 20, the Company hereby grants to the Purchaser
a right of participation with respect to future sales by the Company or any of its Subsidiaries of its Shares (as hereinafter defined)
or issuance of indebtedness for borrowed money by the Company or any of its Subsidiaries (“Indebtedness”) to third
party investors. Each time the Company or any of its Subsidiaries proposes to offer any shares of, or securities convertible into
or exercisable for any shares of, any class of its capital stock (“Shares”) or any Indebtedness (each, a “Subsequent
Financing”), the Company shall first make an offering of such Shares or Indebtedness to the Purchaser in accordance with
the provisions of this Section 20. For purposes of this Section 20, “Subsidiary” shall mean any
entity that the Company controls directly or indirectly through one
or more intermediaries; where the term “control” shall mean the
possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether
through the ownership of voting securities, by contract, or otherwise.

 

(a)       At
least five (5) business days prior to the closing of a Subsequent Financing, the Company shall deliver to the Purchaser a written
notice of its intention to effect a Subsequent Financing (“Pre-Notice”), which Pre-Notice shall ask such Purchaser
if it wants to review the details of such financing (such additional notice, the “ROP Notice”).  Upon the
request of the Purchaser, and only upon a request by the Purchaser, for the ROP Notice, the Company shall promptly, but no later
than one (1) business day after such request, deliver the ROP Notice to the Purchaser.  The ROP Notice shall describe in reasonable
detail the proposed terms of such Subsequent Financing, the amount of proceeds intended to be raised thereunder and the person
or persons through or with whom such Subsequent Financing is proposed to be effected and shall include a term sheet or similar
document relating thereto as an attachment.

 

(b)       Any
Purchaser desiring to participate in such Subsequent Financing must provide written notice to the Company by not later than 5:30
p.m. (New York City time) on the fifth (5th) business after all of the purchasers of Units have received the Pre-Notice that such
Purchaser is willing to participate in the Subsequent Financing, the amount of such Purchaser’s participation up to the
Pro Rata Percentage (as defined below) and representing and warranting that such Purchaser has such funds ready, willing, and
available for investment on the terms set forth in the ROP Notice. For purposes of this Section 20, the “Pro Rata
Percentage” shall mean that portion which equals the proportion that the number of shares of Common Stock issued and
held, or issuable upon conversion and exercise of all convertible or exercisable securities then held, by the Purchaser bears
to the sum of the total number of shares of Common Stock then outstanding (assuming full conversion and exercise of all convertible
or exercisable securities). Such purchase shall be completed at the same closing as that of any third party purchasers or at an
additional closing. If the Company receives no such notice from the Purchaser as of 5:30 P.M. (New York City time) on such fifth
(5th) business day, such Purchaser shall be deemed to have notified the Company that it does not elect to participate.

 

(c)       The
Company may, during the ninety (90) day period following the expiration of the period provided in subsection 20.1(b) hereof, offer
the remaining unsubscribed portion of the Shares or Indebtedness to any person or persons at a price not less than, and upon terms
no more favorable to the offeree than those specified in the ROP Notice. If the Company does not enter into an agreement for the
sale of the Shares or Indebtedness within such period, the right provided hereunder shall be deemed to be revived and such Shares
and Indebtedness shall not be offered unless first reoffered to the Purchaser in accordance herewith.

 

(d)       If
by 5:30 p.m. (New York City time) on the fifth (5th) business day after all of the purchasers of Units have received the Pre-Notice,
notifications by the purchasers of Units of their willingness to participate in the Subsequent Financing (or to cause their designees
to participate) is, in the aggregate, less than the total amount of the Subsequent Financing, then the Company may effect the
remaining portion of such Subsequent Financing on the terms and with the persons set forth in the ROP Notice.

 

    	- 24 -

    	 

    

  

(e)       The
right of participation in this Section 20 shall not be applicable to any Exempted Securities.

 

20.2       Term
of Right of Participation. The right of participation under this Section 20 shall terminate and be of no further force
or effect on the earliest to occur of the following: (i) immediately prior to a Qualified Initial Public Offering or (ii) the
fifth (5th) anniversary of the Private Placement Closing Date.

 

21.           Miscellaneous.

 

21.1       This
Subscription Agreement, together with the Transaction Documents (which are to be issued or executed at closing), constitute the
entire agreement between the Purchaser and the Company with respect to the subject matter hereof and supersede all prior oral or
written agreements and understandings, if any, relating to the subject matter hereof. The terms and provisions of this Subscription
Agreement may be waived, or consent for the departure therefrom granted, only by a written document executed by the party entitled
to the benefits of such terms or provisions.

 

21.2       The
covenants, agreements, representations and warranties of the Company and the Purchaser made, and the indemnification rights provided
for, in this Subscription Agreement shall survive the execution and delivery hereof and delivery of the securities included in
the Units, regardless of any investigation made by or on behalf of any party, and shall survive delivery of any payment for the
Subscription Price.

 

21.3       Each
of the parties hereto shall pay its own fees and expenses (including the fees of any attorneys, accountants, appraisers or others
engaged by such party) in connection with this Subscription Agreement and the transactions contemplated hereby whether or not the
transactions contemplated hereby are consummated.

 

21.4       This
Subscription Agreement may be executed in one or more counterparts each of which shall be deemed an original (including signatures
sent by facsimile transmission or by email transmission of a PDF scanned document), but all of which shall together constitute
one and the same instrument.

 

21.5       Each
provision of this Subscription Agreement shall be considered separable and, if for any reason any provision or provisions hereof
are determined to be invalid or contrary to applicable law, such invalidity or illegality shall not impair the operation of or
affect the remaining portions of this Subscription Agreement.

 

21.6       Paragraph
titles are for descriptive purposes only and shall not control or alter the meaning of this Subscription Agreement as set forth
in the text.

 

21.7       The
Purchaser understands and acknowledges that there may be multiple closings for this Offering.

 

    	- 25 -

    	 

    

 

Emmaus Life Sciences, Inc.

  

SIGNATURE PAGE TO THE SUBSCRIPTION AGREEMENT

 

Purchaser hereby elects to subscribe under
the Subscription Agreement for a total of ______ Units at a price of $______ per Unit (NOTE: to be completed by Purchaser) and
executes the Subscription Agreement.

 

Date (NOTE: To be completed by Purchaser):
__________________

 

If the Purchaser is an INDIVIDUAL, and if
purchased as JOINT TENANTS, as TENANTS IN COMMON, or as COMMUNITY PROPERTY:

 

			 
	Print Name(s)		Social Security Number(s)
			 
	Signature(s) of Purchaser(s)		Signature
			 
	Date	 	Address
			 
	Fax Number	 	Email Address

 

If the Purchaser is a PARTNERSHIP, CORPORATION,
LIMITED LIABILITY COMPANY or TRUST:

 

	 	 	 
	Name of Entity	 	Federal Taxpayer Identification Number
	 	 	 	 
	By:		 	
		Name:	 	State of Organization
		Title:		 
	 	 	 
	Date		Address
	 	 	
	Fax Number		Email Address

 

Accepted:

 

	EMMAUS LIFE SCIENCES, INC.	 	T.R. WINSTON & COMPANY, LLC
	 	 	 	 	 
	By:		 	By:	
	 	Authorized Officer 	 	 	Authorized Officer

 

    	- 26 -

    	 

    

 

 

Emmaus Life Sciences, Inc.

INVESTOR CERTIFICATION

 

For Individual Investors Only

 (all Individual Investors must INITIAL
where appropriate):

 

	Initial	_______	 	
        I
have a net worth in excess of $1 million, either individually or through aggregating my individual holdings and those in which
I have a joint, community property or other similar shared ownership interest with my spouse. For purposes of the foregoing
net worth calculation, I have excluded the value of my/our primary residence, after deducting any indebtedness
secured by such primary residence). (Total liabilities excludes any indebtedness that is secured by such primary residence
up to such primary residence's estimated fair market value (except that if the amount of such indebtedness outstanding at the
date you purchase the securities included in the Units exceeds the amount outstanding 60 days before such date other than as a
result of the acquisition of such primary residence, the amount of such excess shall be included as a liability.

	 	 	 
	Initial	_______	 	
        I
have had an annual gross income for the past two years of at least $200,000 (or $300,000 jointly with my spouse) and expect my
income (or joint income, as appropriate) to reach the same level in the current year.

	 	 	 
	Initial	_______	 	I am a director or executive officer of Emmaus Life Sciences, Inc.

 

    	- 27 -

    	 

    

 

For Non-Individual
Investors

(all
Non-Individual Investors must INITIAL where appropriate):

 

	Initial	_______	 	The investor certifies that it is a partnership, corporation, limited liability company or business trust that is 100% owned by persons who meet at least one of the criteria for Individual Investors set forth above. 
	 	 	 
	Initial	_______	 	The investor certifies that it is a partnership, corporation, limited liability company or business trust that has total assets of at least $5 million and was not formed for the purpose of investing in the Company.
	 	 	 
	Initial	_______	 	The investor certifies that it is an employee benefit plan whose investment decision is made by a plan fiduciary (as defined in ERISA §3(21)) that is a bank, savings and loan association, insurance company or registered investment adviser.
	 	 	 
	Initial	_______	 	The investor certifies that it is an employee benefit plan whose total assets exceed $5,000,000 as of the date of this Agreement.
	 	 	 
	Initial	_______	 	The undersigned certifies that it is a self-directed employee benefit plan whose investment decisions are made solely by persons who meet either of the criteria for Individual Investors.
	 	 	 
	Initial	_______	 	The investor certifies that it is a U.S. bank, U.S. savings and loan association or other similar U.S. institution acting in its individual or fiduciary capacity.
	 	 	 
	Initial	_______	 	The undersigned certifies that it is a broker-dealer registered pursuant to §15 of the Securities Exchange Act of 1934.
	 	 	 
	Initial	_______	 	The investor certifies that it is an organization described in §501(c)(3) of the Internal Revenue Code with total assets exceeding $5,000,000 and not formed for the specific purpose of investing in the Company.
	 	 	 
	Initial	_______	 	The investor certifies that it is a trust with total assets of at least $5,000,000, not formed for the specific purpose of investing in the Company, and whose purchase is directed by a person with such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of the prospective investment.
	 	 	 
	Initial	_______	 	The investor certifies that it is a plan established and maintained by a state or its political subdivisions, or any agency or instrumentality thereof, for the benefit of its employees, and which has total assets in excess of $5,000,000.
	 	 	 
	Initial	_______	 	The investor certifies that it is an insurance company as defined in §2(13) of the Securities Act, or a registered investment company.

 

    	- 28 -

    	 

    

 

Annex A

 

EMMAUS
LIFE SCIENCES, inc.

 

Selling Stockholder Notice and Questionnaire

 

The undersigned beneficial
owner of common stock (the “Registrable Securities”) of Emmaus Life Sciences, Inc., a Delaware corporation (the
“Company”), understands that the Company has filed or intends to file with the Securities and Exchange Commission
(the “Commission”) a registration statement (the “Registration Statement”) for the registration
and resale under Rule 415 of the Securities Act of 1933, as amended (the “Securities Act”), of the Registrable
Securities, in accordance with the terms of the Subscription Agreement (the “Subscription Agreement”) to which
this document is annexed. A copy of the Subscription Agreement is available from the Company upon request at the address set forth
below. All capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Subscription Agreement.

 

Certain legal consequences
arise from being named as a selling stockholder in the Registration Statement and the related prospectus. Accordingly, holders
and beneficial owners of Registrable Securities are advised to consult their own securities law counsel regarding the consequences
of being named or not being named as a selling stockholder in the Registration Statement and the related prospectus.

 

NOTICE

 

The undersigned beneficial
owner (the “Selling Stockholder”) of Registrable Securities hereby elects to include the Registrable Securities
owned by it in the Registration Statement.

 

The undersigned hereby provides the following
information to the Company and represents and warrants that such information is accurate:

 

QUESTIONNAIRE

 

	1.	Name.
	 	 	 
	 	(a)	Full Legal Name
of Selling Stockholder
	 	 	 
	 	 	 
	 	 
	 	 
	 	(b)	Full
Legal Name of Registered Holder (if not the same as (a) above) through which Registrable Securities are held:
	 	 	 
	 	 	 
	 	 	 
	 	(c)	Full Legal Name of Natural Control Person (which means a natural person who directly or indirectly alone or with others
               has power to
vote or dispose of the securities covered by this Questionnaire):
	 	 	 
	 	 	 
	 	 

 

    	- 1 -

    	 

    

 

2.         Address for Notices to Selling Stockholder:

 

	 
	 
	 
	Telephone:	 
	Fax:	 
	Contact Person:	 

 

3.         Broker-Dealer Status:

 

		(a)	Are you a broker-dealer?

 

Yes £              No £

 

		(b)	If “yes” to Section 3(a), did you receive your Registrable Securities
as compensation for investment banking services to the Company?

 

Yes £              No £

 

		Note:	If “no” to Section 3(b), the Commission’s staff has indicated that
you should be identified as an underwriter in the Registration Statement.

 

		(c)	Are you an affiliate of a broker-dealer?

 

Yes £              No £

 

		(d)	If you are an affiliate of a broker-dealer, do you certify that you purchased the
Registrable Securities in the ordinary course of business, and at the time of the purchase of the Registrable Securities to be
resold, you had no agreements or understandings, directly or indirectly, with any person to distribute the Registrable Securities?

 

Yes £              No £

 

		Note:	If “no” to Section 3(d), the Commission’s staff has indicated that
you should be identified as an underwriter in the Registration Statement.

 

4.         Beneficial Ownership of Securities
of the Company Owned by the Selling Stockholder.

 

Except as set forth below in this
Item 4, the undersigned is not the beneficial or registered owner of any securities of the Company other than the securities issuable
pursuant to the Purchase Agreement.

 

(a)        Type
and Amount of other securities beneficially owned by the Selling Stockholder:

	 	 
	 	 
	 	 

 

    	- 2 -

    	 

    

 

5.         Relationships with the Company:

 

Except as set forth below, neither
the undersigned nor any of its affiliates, officers, directors or principal equity holders (owners of 5% of more of the equity
securities of the undersigned) has held any position or office or has had any other material relationship with the Company (or
its predecessors or affiliates) during the past three years.

 

		State any exceptions here:

	 	 
	 	 
	 	 

 The undersigned agrees to promptly notify the Company of
any inaccuracies or changes in the information provided herein that may occur subsequent to the date hereof at any time while
the Registration Statement remains effective.

 

By signing below, the undersigned
consents to the disclosure of the information contained herein in its answers to Items 1 through 5 and the inclusion of such information
in the Registration Statement and the related prospectus and any amendments or supplements thereto. The undersigned understands
that such information will be relied upon by the Company in connection with the preparation or amendment of the Registration Statement
and the related prospectus and any amendments or supplements thereto.

 

IN WITNESS WHEREOF the undersigned,
by authority duly given, has caused this Notice and Questionnaire to be executed and delivered either in person or by its duly
authorized agent.

 

	Date: ______________________		Beneficial Owner: _______________
	 	 	 	 
	 	 	By:	 
	 	 	 	Name:
	 	 	 	Title:

 

PLEASE FAX A COPY (OR EMAIL A .PDF COPY)
OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE, AND RETURN THE ORIGINAL BY OVERNIGHT MAIL, TO:

 

Emmaus Life Sciences, Inc. 

20725 S Western Ave. 

Torrance, CA 90501‎

 

Attention: Chief Financial Officer

 

    	- 3 -

    	 

    

 

Annex B

 

Form of Opinion of Company
Counsel

 

[OPINION TO BE DELIVERED SUBJECT TO STANDARD
EXCEPTIONS AND QUALIFICATIONS OF NIXON PEABODY LLP]

 

Based upon and subject to the foregoing and the other assumptions
and qualifications contained herein, we are of the opinion that:

 

1.         The Company and each of its Delaware Company Subsidiaries
is a corporation validly existing and in good standing under the laws of the State of Delaware, and has all corporate power and
authority necessary to own its properties and to conduct its business as, to our knowledge, it is presently conducted. The Company
is qualified to do business as a foreign corporation in the State of California, and the Company and each of its Delaware Company
Subsidiaries is duly qualified as a corporation to transact business and is in good standing in each jurisdiction in which the
failure to be so qualified would have a material adverse effect on the operation of the Company and its subsidiaries considered
as one enterprise.

 

2.         The Company has the requisite corporate power and authority
to execute, deliver and perform its obligations under the Transaction Documents.

 

3.         The execution, delivery and performance by the Company of
the Transaction Documents have been duly authorized by all necessary corporate action and the Transaction Documents have been duly
executed and delivered by the Company. Each of the Transaction Documents constitute valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms.

 

4.         The execution and delivery by the Company of the Transaction
Documents, the performance by the Company of its obligations thereunder, and the issuance, sale and delivery of the Shares and
Warrants in accordance therewith, and the issuance of the Warrant Shares upon any exercise of any of the Warrants in accordance
with the terms thereof , will not result in (i) a violation of the Company’s organizational documents, (ii) a violation of
any statute, rule or regulation of United States federal law, Delaware General Company Law or California law applicable to the
Company, or (iii) a violation of any order of any court, governmental agency or arbitrator of which we have knowledge. In rendering
the foregoing opinions, we assume full disclosure by the Company to the Investors of all material facts and, with respect to performance
by the Company of its obligations under the Transaction Documents, assume compliance by the Company with applicable laws.

 

5.         The Shares to be issued on the date hereof, when issued and
paid for in compliance with the provisions of the Subscription Agreements and Placement Agent Agreement, will be validly issued,
fully paid and nonassessable, will not be subject to any preemptive rights, and will be free of any liens or encumbrances granted
by the Company. The Warrant Shares issuable upon exercise of all of the Warrants are duly authorized and have been duly and validly
reserved for issuance and, when and if issued upon exercise of the Warrants in accordance with their terms (including the payment
of the Exercise Price therefor), will be validly issued, fully paid and nonassessable, will not be subject to any preemptive rights,
and will be free of any liens or encumbrances granted by the Company.

 

6.         Assuming the accuracy of the representations and warranties
made by the Investors in the Subscription Agreements and Investor Certifications a part thereof, and in reliance on the Placement
Agent Certificate, the issuance, sale and delivery of the Shares and Warrants to be issued in conformity with the terms of the
Subscription Agreements and the Placement Agent Agreement, and the issuance and sale of the Warrant Shares upon exercise of the
Warrants in accordance with their terms are in each case exempt from the registration requirements of Section 5 the Securities
Act of 1933, as amended.

 

    	 

    	 

    

 

7.         No consent, approval, order or authorization of, or designation,
registration, declaration or filing with, any federal, state, or local governmental authority in the United States on the part
of the Company is required in connection with the valid execution and delivery of the Transaction Documents, or the offer, sale
or issuance of the Shares, the Warrants, or, upon exercise of any of the Warrants, the Warrant Shares, other than, if required,
filings or qualifications under applicable federal or state securities laws.

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