Document:

Exhibit 10.1

 

SECURITIES PURCHASE AGREEMENT

 

This Securities Purchase Agreement (this “Agreement”) is dated as of July 12, 2018, between Avinger, Inc., a Delaware corporation (the “Company”), and each purchaser identified on the signature pages hereto (each, including its successors and assigns, a “Purchaser” and collectively the “Purchasers”).

 

WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to (i) an effective registration statement under the Securities Act of 1933, as amended (the “Securities Act”) as to the Shares and (ii) an exemption from the registration requirements of Section 5 of the Securities Act contained in Section 4(a)(2) thereof and/or Regulation D thereunder as to the Warrants (as defined below), the Company desires to issue and sell to each Purchaser, and each Purchaser, severally and not jointly, desires to purchase from the Company, securities of the Company as more fully described in this Agreement.

 

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

 

ARTICLE I.
 DEFINITIONS

 

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

 

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

 

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

 

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

 

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

 

“Business Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.

 

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

 

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

 

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satisfied or waived, but in no event later than the second (2nd) Trading Day following the date hereof.

 

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

 

“Common Stock” means the common stock of the Company, par value $0.001 per share, and any other class of securities into which such securities may hereafter be reclassified or changed.

 

“Common Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.

 

“Company Counsel” Wilson Sonsini Goodrich & Rosati Professional Corporation, with offices located at 650 Page Mill Road, Palo Alto, CA 94304.

 

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

 

“Disclosure Time” means, (i) if this Agreement is signed prior to midnight on any Trading Day, 9:00 a.m. (New York City time) on the Trading Day immediately following the date hereof, and (ii) if this Agreement is signed after midnight on any Trading Day, 9:00 a.m. (New York City time) on the date hereof.

 

“EGS” means Ellenoff Grossman & Schole LLP, with offices located at 1345 Avenue of the Americas, New York, New York 10105-0302.

 

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

 

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

 

“Exempt Issuance” means the issuance of (a) shares of Common Stock or options to employees, officers or directors of the Company pursuant to any stock or option plan duly adopted for such purpose, by a majority of the non-employee members of the Board of Directors or a majority of the members of a committee of non-employee directors established for such purpose for services rendered to the Company, (b) securities upon the exercise or exchange of or conversion of any Securities issued hereunder and/or other securities exercisable or exchangeable for or convertible into shares of Common Stock issued and outstanding on the date of this Agreement, provided that such securities have not been amended since the date of this Agreement to increase the number of such securities or to decrease the exercise price, exchange price or conversion price of such securities (other than in connection with stock splits or combinations) or to extend the term of such securities, and (c) securities issued pursuant to acquisitions or strategic transactions approved by a majority of the disinterested directors of the Company, provided that such securities are issued as “restricted securities” (as defined in Rule 144)

 

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and carry no registration rights that require or permit the filing of any registration statement in connection therewith during the prohibition period in Section 4.12(a) herein, and provided that any such issuance shall only be to a Person (or to the equityholders of a Person) which  is, itself or through its subsidiaries, an operating company or an owner of an asset in a business synergistic with the business of the Company and shall provide to the Company additional benefits in addition to the investment of funds, but shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Per Share Purchase Price” equals $1.6425, subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after the date of this Agreement.

 

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

 

“Placement Agent” means Ladenburg Thalmann & Co. Inc.

 

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

 

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“Prospectus” means the final prospectus filed for the Registration Statement.

 

“Prospectus Supplement” means the supplement to the Prospectus complying with Rule 424(b) of the Securities Act that is filed with the Commission and delivered by the Company to each Purchaser at the Closing.

 

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

 

“Registration Statement” means the effective registration statement with Commission file No. 333-209368 which registers the sale of the Shares to the Purchasers.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Transfer Agent” means American Stock Transfer & Trust Company, LLC, with offices located at 6201 15th Avenue, Brooklyn, New York 11219, and any successor transfer agent of the Company.

 

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

 

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

 

“Warrants” means, collectively, the Common Stock purchase warrants delivered to the Purchasers at the Closing in accordance with Section 2.2(a) hereof, which Warrants shall be exercisable six months and one day following the date of issuance and have a term of exercise equal to three (3) years following the date of issuance, in the form of Exhibit A attached hereto.

 

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

 

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ARTICLE II.
 PURCHASE AND SALE

 

2.1                               Closing.  On the Closing Date, upon the terms and subject to the conditions set forth herein, substantially concurrent with the execution and delivery of this Agreement by the parties hereto, the Company agrees to sell, and the Purchasers, severally and not jointly,  agree to  purchase, up to an aggregate of $3,557,950.65 of Shares and Warrants.  Each Purchaser’s Subscription Amount as set forth on the signature page hereto executed by such Purchaser shall be made available for “Delivery Versus Payment” settlement with the Company or its designee. The Company shall deliver to each Purchaser its respective Shares and a Warrant as determined pursuant to Section 2.2(a), and the Company and each Purchaser shall deliver the other items set forth in Section 2.2 deliverable at the Closing.  Upon satisfaction of the covenants and conditions set forth in Sections 2.2 and 2.3, the Closing shall occur at the offices of EGS or such other location as the parties shall mutually agree.  Unless otherwise directed by the Placement Agent, settlement of the Shares shall occur via “Delivery Versus Payment” (“DVP”) (i.e., on the Closing Date, the Company shall issue the Shares registered in the Purchasers’ names and addresses and released by the Transfer Agent directly to the account(s) at the Placement Agent identified by each Purchaser; upon receipt of such Shares, the Placement Agent shall promptly electronically deliver such Shares to the applicable Purchaser, and payment therefor shall be made by the Placement Agent (or its clearing firm) by wire transfer to the Company).

 

2.2                               Deliveries.

 

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

 

(i)                                     this Agreement duly executed by the Company;

 

(ii)                                  a legal opinion of Company Counsel, substantially in the form of Exhibit B attached hereto;

 

(iii)                               subject to the last sentence of Section 2.1, the Company shall have provided each Purchaser with the Company’s wire instructions, on Company letterhead and executed by the Chief Executive Officer or Chief Financial Officer;

 

(iv)                              subject to the last sentence of Section 2.1, a copy of the irrevocable instructions to the Transfer Agent instructing the Transfer Agent to deliver on an expedited basis via The Depository Trust Company Deposit or Withdrawal at Custodian system (“DWAC”) Shares equal to such Purchaser’s Subscription Amount divided by the Per Share Purchase Price, registered in the name of such Purchaser;

 

(v)                                 a Warrant registered in the name of such Purchaser to purchase up to a number of shares of Common Stock equal to 50% of such Purchaser’s Shares, with an exercise price equal to $1.58, subject to adjustment therein; and

 

(vi)                              the Prospectus and Prospectus Supplement (which may be delivered in accordance with Rule 172 under the Securities Act).

 

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

 

(i)                                     this Agreement duly executed by such Purchaser; and

 

(ii)                                  such Purchaser’s Subscription Amount, which shall be made available for “Delivery Versus Payment” settlement with the Company or its designee.

 

2.3                               Closing Conditions.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(v)                                 from the date hereof to the Closing Date, trading in the Common Stock shall not have been suspended by the Commission or the Company’s principal Trading Market, and, at any time prior to the Closing Date, trading in

 

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

 

ARTICLE III.
 REPRESENTATIONS AND WARRANTIES

 

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

 

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

 

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

 

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

 

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

 

(e)                                  Filings, Consents and Approvals.  The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than: (i) the filings required pursuant to Section 4.4 of this Agreement, (ii) the filing with the Commission of the Prospectus Supplement, (iii) application(s) to each applicable Trading Market for the listing of the

 

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Shares and Warrant Shares for trading thereon in the time and manner required thereby, and (iv) the filing of Form D with the Commission and such filings as are required to be made under applicable state securities laws (collectively, the “Required Approvals”).

 

(f)                                   Issuance of the Securities; Registration.  The Securities are duly authorized and, when issued and paid for in accordance with the applicable Transaction Documents,  will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company.  The Warrant Shares, when issued in accordance with the terms of the Warrants, will be validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company.  The Company has reserved from its duly authorized capital stock the maximum number of shares of Common Stock issuable pursuant to this Agreement and the Warrants. The Company has prepared and filed the Registration Statement in conformity with the requirements of the Securities Act, which became effective on March 8, 2016 (the “Effective Date”), including the Prospectus, and such amendments and supplements thereto as may have been required to the date of this Agreement.  The Registration Statement is effective under the Securities Act and no stop order preventing or suspending the effectiveness of the Registration Statement or suspending or preventing the use of the Prospectus has been issued by the Commission and no proceedings for that purpose have been instituted or, to the knowledge of the Company, are threatened by the Commission.  The Company, if required by the rules and regulations of the Commission, shall file the Prospectus with the Commission pursuant to Rule 424(b).  At the time the Registration Statement and any amendments thereto became effective, at the date of this Agreement and at the Closing Date, the Registration Statement and any amendments thereto conformed and will conform in all material respects to the requirements of the Securities Act and did not and will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading; and the Prospectus and any amendments or supplements thereto, at the time the Prospectus or any amendment or supplement thereto was issued and at the Closing Date, conformed and will conform in all material respects to the requirements of the Securities Act and did not and will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.  The Company is eligible to use Form S-3 under the Securities Act and it meets the transaction requirements with respect to the aggregate market value of securities being sold pursuant to this offering and during the twelve (12) months prior to this offering, as set forth in General Instruction I.B.6 of Form S-3.

 

(g)                                  Capitalization.  The capitalization of the Company as of the date hereof is as set forth on Schedule 3.1(g), which Schedule 3.1(g) shall also include the number of shares of Common Stock owned beneficially, and of record, by Affiliates of the Company as of the date hereof..  The Company has not issued any capital stock since its most recently filed periodic report under the Exchange Act, other than pursuant to the exercise of employee stock options under the Company’s stock option plans and the vesting of restricted stock units under the Company’s equity compensation plans, the issuance of shares of Common Stock to employees pursuant to the Company’s employee stock purchase plans and pursuant to the conversion and/or exercise of Common Stock Equivalents outstanding as of the date of the most recently filed periodic report under the

 

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

 

(h)                                 SEC Reports; Financial Statements.  The Company has filed all reports, schedules, forms, statements and other documents required to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (or such shorter period as the Company was required by law or regulation to file such material) (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, together with the Prospectus and the Prospectus Supplement, being collectively referred to herein as the “SEC Reports”) on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension.  As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The Company has never been an issuer subject to Rule 144(i) under the Securities Act. The financial statements of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and

 

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regulations of the Commission with respect thereto as in effect at the time of filing.  Such financial statements have been prepared in all material respects in accordance with United States generally accepted accounting principles applied on a consistent basis during the periods involved (“GAAP”), except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the  financial position of the Company and its consolidated Subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments.

 

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

 

(j)                                    Litigation.  There is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of the Company, threatened against or affecting the Company, any Subsidiary or any of their respective properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an “Action”) which (i) adversely affects or challenges the legality, validity or enforceability of any of the Transaction Documents or the Securities or (ii) could have or reasonably be expected to result in a Material Adverse Effect.  Except as set forth on Schedule 3.1(j), neither the Company nor any Subsidiary, nor any director or officer thereof, is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty.  There has not been, and to the knowledge of the Company, there is not pending or contemplated, any investigation by the Commission

 

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involving the Company or any current or former director or officer of the Company.  The Commission has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities Act.

 

(k)                                 Labor Relations.  No labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees of the Company, which could reasonably be expected to result in a Material Adverse Effect.  None of the Company’s or  its Subsidiaries’ employees is a member of a union that relates to such employee’s relationship with the Company or such Subsidiary, and neither the Company nor any of its Subsidiaries is a party to a collective bargaining agreement, and the Company and its Subsidiaries believe that their relationships with their employees are good.  To the knowledge of the Company, no executive officer of the Company or any Subsidiary, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement or non-competition agreement, or any other contract or agreement or any restrictive covenant in favor of any third party, and the continued employment of each such executive officer does not subject the Company or any of its Subsidiaries to any liability with respect to any of the foregoing matters.  The Company and its Subsidiaries are in compliance with all U.S. federal, state, local and foreign laws and regulations relating to employment and employment practices, terms and conditions of employment and wages and hours, except where the failure to be in compliance could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

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

 

(m)                             Environmental Laws.                            The Company and its Subsidiaries (i) are in compliance with all federal, state, local and foreign laws relating to pollution or protection of human health or the environment (including ambient air, surface water, groundwater, land surface or subsurface strata), including laws relating to emissions, discharges, releases or threatened releases of chemicals, pollutants, contaminants, or toxic or hazardous substances or wastes (collectively, “Hazardous Materials”) into the environment, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials, as well as all authorizations, codes, decrees, demands, or demand letters, injunctions, judgments,

 

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licenses, notices or notice letters, orders, permits, plans or regulations, issued, entered, promulgated or approved thereunder (“Environmental Laws”); (ii) have received all permits licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses; and (iii) are in compliance with all terms and conditions of any such permit, license or approval where in each clause (i), (ii) and (iii), the failure to so comply could be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect.

 

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

 

(o)                                 Title to Assets.  The Company and the Subsidiaries have good and marketable title in fee simple to all real property owned by them and good and marketable title in all personal property (excluding the Intellectual Property Rights, which are covered by Section 3.1(p)) owned by them that is material to the business of the Company and the Subsidiaries, in each case free and clear of all Liens, except for (i) Liens as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries and (ii) Liens for the payment of federal, state or other taxes, for which appropriate reserves have been made therefor in accordance with GAAP and, the payment of which is neither delinquent nor subject to penalties.  Any real property and facilities held under lease by the Company and the Subsidiaries are held by them under valid, subsisting and enforceable leases with which the Company and the Subsidiaries are in compliance.

 

(p)                                 Intellectual Property.  The Company and the Subsidiaries have, or have rights to use, or can obtain on commercially reasonable terms the right to use, all patents, patent applications, trademarks, trademark applications, service marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual property rights and similar rights necessary or required for use in connection with their respective businesses as described in the SEC Reports and which the failure to so have could have a Material Adverse Effect (collectively, the “Intellectual Property Rights”).  None of, and neither the Company nor any Subsidiary has received a notice (written or otherwise) that any of, the Intellectual Property Rights has expired, terminated or been abandoned, or is expected to expire or terminate or be abandoned, within two (2) years from the date of this Agreement.  Neither the Company nor any Subsidiary has received a written notice of a claim or otherwise has any knowledge that the Intellectual Property Rights violate or infringe upon the rights of any Person, except as could not have or reasonably be expected to not have a Material Adverse Effect.  To the knowledge of the Company, all such Intellectual Property Rights are enforceable and there is no existing infringement by another Person of any of the Intellectual Property Rights.  The Company and its Subsidiaries have taken reasonable security measures to protect the secrecy,

 

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confidentiality and value of all of their intellectual properties, except where failure to do so could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

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

 

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

 

(s)                                   Sarbanes-Oxley; Internal Accounting Controls.  The Company and the Subsidiaries are in compliance in all material respects with the applicable requirements of the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and any and all applicable rules and regulations promulgated by the Commission thereunder that are effective as of the date hereof and as of the Closing Date.  The Company and the Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that: (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. The Company and the Subsidiaries have established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and the Subsidiaries and designed such disclosure controls and procedures to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized

 

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and reported, within the time periods specified in the Commission’s rules and forms.  The Company’s certifying officers have evaluated the effectiveness of the disclosure controls and procedures of the Company and the Subsidiaries as of the end of the period covered by the most recently filed Annual Report on form 10-K (such date, the “Evaluation Date”).  The Company presented in its most recently filed periodic report under the Exchange Act the conclusions of its certifying officers about the effectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation Date.  Since the Evaluation Date, there have been no changes in the internal control over financial reporting (as such term is defined in the Exchange Act) of the Company and its Subsidiaries that have materially affected, or is reasonably likely to materially affect, the internal control over financial reporting of the Company and its Subsidiaries.

 

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

 

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

 

(v)                                 Registration Rights.  No Person has any right to cause the Company or any Subsidiary to effect the registration under the Securities Act of any securities of the Company or any Subsidiary.

 

(w)                               Listing and Maintenance Requirements.  The Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and the Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act nor has the Company received any notification that the Commission is contemplating terminating such registration.  Except as set forth on Schedule 3.1(w), the Company has not, in the 12 months preceding the date hereof, received notice from any Trading Market on which the Common Stock is or has been listed or quoted to the effect that the Company is not in compliance with the listing or maintenance requirements of such Trading Market. The Company is, and has no reason to believe that it will not in the foreseeable future continue to be, in material compliance with all such listing and maintenance requirements. The Common Stock is currently eligible for electronic transfer through the Depository Trust Company or another established clearing corporation and the Company is current in payment of the fees to the Depository Trust Company (or such other established clearing corporation) in connection with such electronic transfer.

 

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

 

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

 

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

 

(aa)                          Solvency.  Based on the consolidated financial condition of the Company as of the Closing Date, after giving effect to the receipt by the Company of the proceeds from the sale of the Securities hereunder, (i) the fair saleable value of the Company’s assets exceeds the amount that will be required to be paid on or in respect of the Company’s existing debts and other liabilities (including known contingent liabilities) as

 

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

 

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

 

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

 

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Company is aware) which is in violation of law, or (iv) violated in any material respect any provision of FCPA.

 

(dd)                          Accountants.  The Company’s accounting firm is set forth on Schedule 3.1(dd) of the Disclosure Schedules.  To the knowledge and belief of the Company, such accounting firm (i) is a registered public accounting firm as required by the Exchange Act and (ii) shall express its opinion with respect to the financial statements to be included in the Company’s Annual Report for the fiscal year ending December 31, 2018.

 

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

 

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

 

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

 

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

 

(ii)                                  Stock Option Plans. Each stock option granted by the Company under the Company’s stock option plan was granted (i) in accordance with the terms of the

 

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

 

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

 

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

 

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

 

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

 

(nn)                          Private Placement.  Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2, no registration under the Securities Act is required for the offer and sale of the Warrants or the Warrant Shares by the Company to the Purchasers as contemplated hereby.

 

(oo)                          No General Solicitation.  Neither the Company nor any Person acting on behalf of the Company has offered or sold any of the Warrant or Warrant Shares by any form of general solicitation or general advertising.  The Company has offered the Warrants 

 

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and  Warrant Shares for sale only to the Purchasers and certain other “accredited investors” within the meaning of Rule 501 under the Securities Act.

 

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

 

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

 

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

 

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

 

(a)                                 Organization; Authority.  Such Purchaser is either an individual or an entity duly incorporated or formed, validly existing and in good standing under the laws of the jurisdiction of its incorporation or formation with full right, corporate, partnership, limited liability company or similar power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of the Transaction Documents and performance by such Purchaser of the transactions contemplated by the Transaction Documents have been duly authorized by all necessary corporate, partnership, limited liability company or similar action, as applicable, on the part of such Purchaser.  Each Transaction Document to which it is a party has been duly executed by such Purchaser, and when delivered by such Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of such Purchaser, enforceable against it in accordance with its terms, except: (i) as limited by general equitable principles and 

 

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applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

 

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

 

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

 

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

 

(e)                                  Access to Information. Such Purchaser acknowledges that it has had the opportunity to review the Transaction Documents (including all exhibits and schedules thereto) and the SEC Reports and has been afforded, (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions of the offering of the Securities and the merits and risks of investing in the Securities; (ii) access to information about the Company and its financial condition, results of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment; and (iii) the opportunity to obtain such additional information that the Company possesses or can acquire without unreasonable 

 

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effort or expense that is necessary to make an informed investment decision with respect to the investment.  Such Purchaser acknowledges and agrees that neither the Placement Agent nor any Affiliate of the Placement Agent has provided such Purchaser with any information or advice with respect to the Securities nor is such information or advice necessary or desired.  Neither the Placement Agent nor any Affiliate has made or makes any representation as to the Company or the quality of the Securities and the Placement Agent and any Affiliate may have acquired non-public information with respect to the Company which such Purchaser agrees need not be provided to it.  In connection with the issuance of the Securities to such Purchaser, neither the Placement Agent nor any of its Affiliates has acted as a financial advisor or fiduciary to such Purchaser.

 

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

 

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

 

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

 

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respect to locating or borrowing shares in order to effect Short Sales or similar transactions in the future.

 

ARTICLE IV.
 OTHER AGREEMENTS OF THE PARTIES

 

4.1                               Removal of Legends.

 

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

 

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

 

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

 

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

 

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Purchaser’s expense, the Company will execute and deliver such reasonable documentation as a pledgee or secured party of Warrants and Warrant Shares may reasonably request in connection with a pledge or transfer of the Warrants or Warrant Shares.

 

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

 

(d)                                 In addition to such Purchaser’s other available remedies, the Company shall pay to a Purchaser, in cash, (i) as partial liquidated damages and not as a penalty, for each $1,000 of Warrant Shares (based on the VWAP of the Common Stock on the date such Securities are submitted to the Transfer Agent) delivered for removal of the restrictive legend and subject to Section 4.1(c), $10 per Trading Day (increasing to $20 per Trading Day five (5) Trading Days after such damages have begun to accrue) for each Trading Day after the Legend Removal Date until such certificate is delivered without a legend and (ii) if the Company fails to (a) issue and deliver (or cause to be delivered) to a Purchaser by the Legend Removal Date a certificate representing the 

 

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Securities so delivered to the Company by such Purchaser that is free from all restrictive and other legends and (b) if after the Legend Removal Date such Purchaser purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by such Purchaser of all or any portion of the number of shares of Common Stock, or a sale of a number of shares of Common Stock equal to all or any portion of the number of shares of Common Stock, that such Purchaser anticipated receiving from the Company without any restrictive legend, then an amount equal to the excess of such Purchaser’s total purchase price (including brokerage commissions and other out-of-pocket expenses, if any) for the shares of Common Stock so purchased (including brokerage commissions and other out-of-pocket expenses, if any) (the “Buy-In Price”) over the product of (A) such number of Warrant Shares that the Company was required to deliver to such Purchaser by the Legend Removal Date multiplied by (B) the lowest closing sale price of the Common Stock on any Trading Day during the period commencing on the date of the delivery by such Purchaser to the Company of the applicable Warrant Shares (as the case may be) and ending on the date of such delivery and payment under this Section 4.1(d).

 

(e)                                  The Shares shall be issued free of legends.

 

4.2                               Furnishing of Information.

 

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

 

(b)                                 At any time during the period commencing from the six (6) month anniversary of the date hereof and ending at such time that all of the Warrant Shares (assuming cashless exercise) may be sold without the requirement for the Company to be in compliance with Rule 144(c)(1) and otherwise without restriction or limitation pursuant to Rule 144, if the Company (i) shall fail for any reason to satisfy the current public information requirement under Rule 144(c) or (ii) has ever been an issuer described in Rule 144(i)(1)(i) or becomes an issuer in the future, and the Company shall fail to satisfy any condition set forth in Rule 144(i)(2) (a “Public Information Failure”) then, in addition to such Purchaser’s other available remedies, the Company shall pay to a Purchaser, in cash, as partial liquidated damages and not as a penalty, by reason of any such delay in or reduction of its ability to sell the Warrant Shares, an amount in cash equal to two percent (2.0%) of the aggregate Exercise Price of such Purchaser’s Warrants on the day of a Public Information Failure and on every thirtieth (30th) day (pro rated for periods totaling less than thirty days) thereafter until the earlier of (a) the date such Public Information Failure is cured and (b) such time that such public information is no longer required  for the Purchasers to transfer the Warrant Shares pursuant to Rule 144.  The payments to which a Purchaser shall be entitled pursuant to this Section 4.2(b) are referred to herein as “Public Information Failure Payments.”  Public Information Failure Payments shall be paid on the earlier of (i) the last day of the calendar month during which such Public Information Failure Payments are incurred and (ii) the third (3rd) 

 

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Business Day after the event or failure giving rise to the Public Information Failure Payments is cured.  In the event the Company fails to make Public Information Failure Payments in a timely manner, such Public Information Failure Payments shall bear interest at the rate of 1.5% per month (prorated for partial months) until paid in full. Nothing herein shall limit such Purchaser’s right to pursue actual damages for the Public Information Failure, and such Purchaser shall have the right to pursue all remedies available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief.

 

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

 

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

 

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

 

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

 

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

 

4.8                               Indemnification of Purchasers.   Subject to the provisions of this Section 4.8, the Company will indemnify and hold each Purchaser and its directors, officers, shareholders, members, partners, employees and agents (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls such Purchaser (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders, agents, members, partners or employees (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title) of such controlling persons (each, a “Purchaser Party”) harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in 

 

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settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such Purchaser Party may suffer or incur as a result of or relating to (a) any breach of any of the representations, warranties, covenants or agreements made by the Company in this Agreement or in the other Transaction Documents or (b) any action instituted against the Purchaser Parties in any capacity, or any of them or their respective Affiliates, by any stockholder of the Company who is not an Affiliate of such Purchaser Party, with respect to any of the transactions contemplated by the Transaction Documents (unless such action is solely based upon a material breach of such Purchaser Party’s representations, warranties or covenants under the Transaction Documents or any agreements or understandings such Purchaser Party may have with any such stockholder or any violations by such Purchaser Party of state or federal securities laws or any conduct by such Purchaser Party which is finally judicially determined to constitute fraud, gross negligence or willful misconduct) or (c) in connection with any registration statement of the Company providing for the resale by the Purchasers of the Warrant Shares issued and issuable upon exercise of the Warrants, the Company will indemnify each Purchaser Party, 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, as incurred, arising out of or relating to (i) any untrue or alleged untrue statement of a material fact contained in such 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 the light of the circumstances under which they were made) not misleading, except to the extent, but only to the extent, that such untrue statements or omissions are based solely upon information regarding such Purchaser Party furnished in writing to the Company by such Purchaser Party expressly for use therein, or (ii) 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 therewith.  If any action shall be brought  against any Purchaser Party in respect of which indemnity may be sought pursuant to this Agreement, such Purchaser Party shall promptly notify the Company in writing, and the Company shall have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to the Purchaser Party.  Any Purchaser Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Purchaser Party except to the extent that (x) the employment thereof has been specifically authorized by the Company in writing, (y) the Company has failed after a reasonable period of time to assume such defense and to employ counsel or (z) in such action there is, in the reasonable opinion of counsel, a material conflict on any material issue between the position of the Company and the position of such Purchaser Party, in which case the Company shall be responsible for the reasonable fees and expenses of no more than one such separate counsel.  The Company will not be liable to any Purchaser Party under this Agreement (1) for any settlement by a Purchaser Party effected without the Company’s prior written consent, which shall not be unreasonably withheld or delayed; or (2) to the extent, but only to the extent that a loss, claim, damage or liability is attributable to any Purchaser Party’s breach of any of the representations, warranties, covenants or agreements made by such Purchaser Party in this Agreement or in the other Transaction Documents. The indemnification required by this Section 4.8 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or are incurred. The indemnity agreements contained herein shall be in

 

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addition to any cause of action or similar right of any Purchaser Party against the Company or others and any liabilities the Company may be subject to pursuant to law.

 

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

 

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

 

4.11                        [RESERVED]

 

4.12                        Subsequent Equity Sales.

 

(a)                                 From the date hereof until thirty (30) days after the Closing Date, neither the Company nor any Subsidiary shall issue, enter into any agreement to issue or announce the issuance or proposed issuance of any shares of Common Stock or Common Stock Equivalents.

 

(b)                                 From the date hereof until the six (6) month anniversary of the Closing Date, the Company shall be prohibited from effecting or entering into an agreement to effect any issuance by the Company or any of its Subsidiaries of Common Stock or Common Stock Equivalents (or a combination of units thereof) involving a Variable Rate Transaction; provided, however, that issuances of Common Stock pursuant to that certain Purchase Agreement, dated as of November 3, 2017, between the Company and Lincoln Park Capital Fund, L.P. (provided that such Purchase Agreement is not amended following the date hereof) shall not be subject to this Section 4.12(b) following the date that is the three (3) month anniversary of the Closing Date.  “Variable Rate Transaction” means a transaction in which the Company (i) issues or sells any debt or equity securities that are convertible into, exchangeable or exercisable for, or include the right to receive additional shares of Common Stock either (A) at a conversion price, exercise price or 

 

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exchange rate or other price that is based upon and/or varies with the trading prices of or quotations for the shares of Common Stock at any time after the initial issuance of such debt or equity securities, or (B) with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of such debt or equity security or upon the occurrence of specified or contingent events directly or indirectly related to the business of the Company or the market for the Common Stock or (ii) enters into, or effects a transaction under, any agreement, including, but not limited to, an equity line of credit, whereby the Company may issue securities at a future determined price.  Any Purchaser shall be entitled to obtain injunctive relief against the Company to preclude any such issuance, which remedy shall be in addition to any right to collect damages.

 

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

 

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

 

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

 

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investment vehicle whereby separate portfolio managers manage separate portions of such Purchaser’s assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers managing other portions of such Purchaser’s assets, the covenant set forth above shall only apply with respect to the portion of assets managed by the portfolio manager that made the investment decision to purchase the Securities covered by this Agreement.

 

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

 

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

 

4.17                        Registration Statement.  On or prior to the sixtieth (60th) day following the date hereof, the Company shall file a registration statement on Form S-1 providing for the resale by the Purchasers of the Warrant Shares issued and issuable upon exercise of the Warrants.  The Company shall use commercially reasonable best efforts to cause such registration statement to become effective as soon as possible, but in no event later than one hundred eighty (180) days following  the date hereof, and to keep such registration statement effective at all times until no Purchaser owns any Warrants or Warrant Shares issuable upon exercise thereof.

 

ARTICLE V.
 MISCELLANEOUS

 

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

 

5.2                               Fees and Expenses.  Except as expressly set forth in the Transaction Documents to the contrary, each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement.  The Company shall pay all Transfer Agent fees (including, without limitation, any fees required for same-day 

 

33

 

processing of any instruction letter delivered by the Company and any exercise notice delivered by a Purchaser), stamp taxes and other taxes and duties levied in connection with the delivery of any Securities to the Purchasers.

 

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

 

5.4                               Notices.  Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of: (a) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number or email attachment at the email address as set forth on the signature pages attached hereto at or prior to 5:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number or email attachment at the email address as set forth on the signature pages attached hereto on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the second (2nd) Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (d) upon actual receipt by the party to whom such notice is required to be given.  The address for such notices and communications shall be as set forth on the signature pages attached hereto. To the extent that any notice provided pursuant to any Transaction Document constitutes, or contains, material, non-public information regarding the Company or any Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K.

 

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

 

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

 

34

 

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

 

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

 

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

 

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

 

5.11                        Execution.  This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become 

 

35

 

effective when counterparts have been signed by each party and delivered to each other party, it being understood that the parties need not sign the same counterpart.  In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.

 

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

 

5.13                        Rescission and Withdrawal Right.  Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) any of the other Transaction Documents, whenever any Purchaser exercises a right, election, demand or option under a Transaction Document and the Company does not timely perform its related obligations within the periods therein provided, then such Purchaser may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand or election in whole or in part without prejudice to its future actions and rights; provided, however, that, in the case of a rescission of an exercise of a Warrant, the applicable Purchaser shall be required to return any shares of Common Stock subject to any such rescinded exercise notice concurrently with the return to such Purchaser of the aggregate exercise price paid to the Company for such shares and the restoration of such Purchaser’s right to acquire such shares pursuant to such Purchaser’s Warrant (including, issuance of a replacement warrant certificate evidencing such restored right).

 

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

 

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

 

36

 

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

 

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

 

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

 

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

 

37

 

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

 

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

 

(Signature Pages Follow)

 

38

 

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

 

	
AVINGER, INC.
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
By:
    	
/s/   Mark Weinswig
    	
 
    	
 
    
	
 
    	
Name:   Mark Weinswig
    	
 
    	
 
    
	
 
    	
Title:   Chief Financial Officer
    	
 
    	
 
    

 

Address for Notice:

 

Avinger, Inc.

Attn: Chief Financial Officer

400 Chesapeake Drive

Redwood City, CA 94063

E-Mail: mweinswig@avinger.com

Fax: (650) 241-7901

 

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

 

Wilson Sonsini Goodrich & Rosati, P.C.

Attn: Philip Oettinger

650 Page Mill Road

Palo Alto, CA 94304

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGE FOR PURCHASER FOLLOWS]

 

39

 

[PURCHASER SIGNATURE PAGES TO AVGR SECURITIES PURCHASE AGREEMENT]

 

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

 

	
Name of Purchaser:
    	
 
    	
###
    
	
 
    	
 
    	
 
    
	
Signature of Authorized Signatory of Purchaser:
    	
 
    	
###
    
	
 
    	
 
    	
 
    
	
Name of Authorized Signatory:
    	
 
    	
###
    
	
 
    	
 
    	
 
    
	
Title of Authorized Signatory:
    	
 
    	
###
    
	
 
    	
 
    	
 
    
	
Email Address of Authorized Signatory:
    	
 
    	
###
    
	
 
    	
 
    	
 
    
	
Facsimile Number of Authorized Signatory:
    	
 
    	
###
    
	
 
    	
 
    	
 
    
	
Address for Notice to Purchaser: ###
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Address for Delivery of Warrants to Purchaser (if   not same as address for notice): 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
DWAC for Shares: ###
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Subscription Amount: $###
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Shares: ###
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Warrant Shares: ###
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
EIN Number: ###
    	
 
    	
 
    

 

o  Notwithstanding anything contained in this Agreement to the contrary, by checking this box (i) the obligations of the above-signed to purchase the securities set forth in this Agreement to be purchased from the Company by the above-signed, and the obligations of the Company to sell such securities to the above-signed, shall be unconditional and all conditions to Closing shall be disregarded, (ii) the Closing shall occur on the second (2nd) Trading Day following the date of this Agreement and (iii) any condition to Closing contemplated by this Agreement (but prior to being disregarded by clause (i) above) that required delivery by the Company or the above-signed of any agreement, instrument, certificate or the like or purchase price (as applicable) shall no longer be a condition and shall instead be an unconditional obligation of the Company or the above-signed (as applicable) to deliver such agreement, instrument, certificate or the like or purchase price (as applicable) to such other party on the Closing Date.

 

[SIGNATURE PAGES CONTINUE]

 

40Exhibit
10.1

 

COMMON
STOCK PURCHASE AGREEMENT

  

COMMON
STOCK PURCHASE AGREEMENT (the “Agreement”), dated as of July 11, 2018 by and between IFRESH INC.,
a Delaware corporation (the “Company”), and TRITON FUNDS LP, a Delaware limited partnership (the “Buyer”). Capitalized
terms used herein and not otherwise defined herein are defined in Section 10 hereof.

 

WHEREAS:

 

Subject
to the terms and conditions set forth in this Agreement, the Company wishes to sell to the Buyer, and the Buyer wishes to buy
from the Company, 89,285 shares of the Company’s voting common stock (the “Purchase Shares”), par value
$0.0001 per share (the “Common Stock”).

 

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

 

1.  PURCHASE
OF COMMON STOCK.

 

Subject
to the terms and conditions set forth in this Agreement, the Company has the right to sell to the Buyer, and the Buyer has the
obligation to purchase from the Company, Purchase Shares as follows:

 

(a)
Commencement of Purchases of Common Stock. After Commencement (as defined below), the Buyer may purchase the Purchase Shares,
pursuant to the terms of this Agreement. The sale of the Purchase Shares hereunder shall occur upon delivery of the Purchase Notice
by the Company to the Buyer on the terms and conditions as set forth herein following the satisfaction of the conditions (the
“Commencement”) as set forth in Sections 6 and 7 below (the date of satisfaction of such conditions, the “Commencement
Date”). Upon issuance of the Purchase Shares as provided herein, such Purchase Shares shall be validly issued and fully
paid and non-assessable. Buyer shall pay to the Company the respective purchase price on the Closing Date, as long as the Purchase
Shares are reflected in the Buyer’s brokerage account, via wire transfer according to the wiring instructions attached hereto
as Exhibit C.

 

(b)  The
Company’s Right to Require Purchase. Subject to the terms and conditions of this Agreement, on any given Business Day
after the Commencement Date, the Company shall have the right but not the obligation to direct the Buyer by its delivery to the
Buyer of the Purchase Notice, and subject to acceptance by the Buyer in Buyer’s sole discretion, to buy Purchase Shares
at the Purchase Price on the Closing Date; provided, however, the lowest daily volume weighted average price of the Common Stock
the five (5) Business Days immediately preceding the Closing Date must be greater than the Purchase Price (“Minimum
Price”). The Buyer may decrease the number of Purchase Shares that may be sold under the Purchase Notice if the
Minimum Price is below the Purchase Price. Additionally, and except with respect to the Buyer, the Company shall not sell any
shares of Common Stock registered under the Shelf Registration Statement or any other registration statement of the Company for
ninety (90) calendar days after the Closing Date. The share amounts in this Section 1(b) shall be appropriately
adjusted for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction.

 

(c)  [Intentionally
Omitted]

 

     

     

    

 

(d)  Payment
for Purchase Shares. With respect to the Purchase Shares that are the subject of the Purchase Notice, the Buyer shall,
unless decreased by Buyer, pay to the Company an amount equal to the product of (x) the Purchase Price and (y) the number
of Purchase Shares set forth on such Purchase Notice (minus the deposit and clearing fees associated with such purchase)
as full payment of the Purchase Shares via wire transfer of immediately available funds on the respective Closing Date. All payments
made under this Agreement shall be made in lawful money of the United States of America via wire transfer of immediately available
funds to the Company according to the wiring instructions attached hereto as Exhibit C.

 

(e) [Intentionally
Omitted]

 

(f)  Records
of Purchases. The Buyer and the Company shall each maintain records showing the remaining Purchase Shares at any given
time and the dates and Purchase Amounts for each purchase, or shall use such other method reasonably satisfactory to the Buyer
and the Company to reconcile the remaining Purchase Shares.

 

(g)  Taxes. The
Company shall pay any and all transfer, stamp or similar taxes that may be payable with respect to the issuance and delivery of
any shares of Common Stock to the Buyer made under this Agreement.

 

(h)  Compliance
with Principal Market Rules. Notwithstanding anything in this Agreement to the contrary, and in addition to the limitations
set forth in Section 1(e), the total number of shares of Common Stock that may be issued under this Agreement, shall be limited
to 19.99% of the Company’s outstanding shares of Common Stock as of the date hereof (the “Exchange Cap”),
unless stockholder approval is obtained to issue more than such 19.99%. The Exchange Cap shall be appropriately adjusted
for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction. Notwithstanding
anything to the contrary in this Agreement or otherwise, the Company shall not be required or permitted to issue, and the Buyer
shall not be required to purchase, any shares of Common Stock under this Agreement if such issuance would breach the Company’s
obligations under the rules or regulations of the Principal Market. The Company may, in its sole discretion, determine
whether to obtain stockholder approval to issue more than 19.99% of its outstanding shares of Common Stock hereunder if such issuance
would require stockholder approval under the rules or regulations of the Principal Market.

 

(i)  Beneficial
Ownership Limitation. The Company shall not issue, and the Buyer shall not purchase any shares of Common Stock under this
Agreement, if such shares proposed to be issued and sold, when aggregated with all other shares of Common Stock then owned beneficially
(as calculated pursuant to Section 13(d) of the Securities Exchange Act of 1934, as amended (the “1934 Act”)
and Rule 13d-3 promulgated thereunder) by the Buyer and its affiliates would result in the beneficial ownership by the Buyer
and its affiliates of more than 4.99% of the then issued and outstanding shares of Common Stock of the Company.

 

(j)  Donation.
Upon execution of this Agreement, the Company shall issue 5,000 shares of Common Stock (the “Donation”) to
Buyer.  The Donation shall be earned in full upon the execution of this Agreement, and the Donation is not contingent upon
any other event or condition, including but not limited to the Company’s submission of the Purchase Notice to the Buyer.

 

2.  BUYER’S
REPRESENTATIONS AND WARRANTIES.

 

The
Buyer represents and warrants to the Company that as of the date hereof and as of the Commencement Date:

 

(a)  Investment
Purpose. The Buyer is entering into this Agreement and acquiring the Purchase Shares (the Purchase Shares are also referred
to herein as the “Securities”), for its own account for investment only and not with a view towards, or for
resale in connection with, the public sale or distribution thereof; provided however, by making the representations herein, the
Buyer does not agree to hold any of the Securities for any minimum or other specific term.

 

    2

     

    

 

(b)  Accredited
Investor Status. The Buyer is an “accredited investor” as that term is defined in Rule 501(a)(3) of
Regulation D under the 1933 Act.

 

(c) [Intentionally
Omitted]

 

(d)  Information. The
Buyer has been furnished with all materials relating to the business, finances and operations of the Company and materials relating
to the offer and sale of the Securities that have been reasonably requested by the Buyer, including, without limitation, the SEC
Documents (as defined in Section 3(f) hereof). The Buyer understands that its investment in the Securities involves
a high degree of risk. The Buyer (i) is able to bear the economic risk of an investment in the Securities including
a total loss, (ii) has such knowledge and experience in financial and business matters that it is capable of evaluating the
merits and risks of the proposed investment in the Securities and (iii) has had an opportunity to ask questions of and receive
answers from the officers of the Company concerning the financial condition and business of the Company and other matters related
to an investment in the Securities. Neither such inquiries nor any other due diligence investigations conducted by the Buyer
or its representatives shall modify, amend or affect the Buyer’s right to rely on the Company’s representations and
warranties contained in Section 3 below. The Buyer has sought such accounting, legal and tax advice as it has considered
necessary to make an informed investment decision with respect to its acquisition of the Securities.

 

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

 

(f) [Intentionally
Omitted]

 

(g)  Organization.
The Buyer is a limited liability company duly organized and validly existing in good standing under the laws of the jurisdiction
in which it is organized, and has the requisite organizational power and authority to own its properties and to carry on its business
as now being conducted.

 

(h)  Validity;
Enforcement. This Agreement has been duly and validly authorized, executed and delivered on behalf of the Buyer and is
a valid and binding agreement of the Buyer enforceable against the Buyer in accordance with its terms, subject as to enforceability
to (i) general principles of equity and to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and
other similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies and
(ii) public policy underlying any law, rule or regulation (including any federal or state securities law, rule or regulation)
with regards to indemnification, contribution or exculpation. The execution and delivery of the Transaction Documents (as defined
in Section 3(b) hereof) by the Buyer and the consummation by it of the transactions contemplated hereby and thereby
do not conflict with the Buyer’s certificate of organization or operating agreement or similar documents, and do not require
further consent or authorization by the Buyer, its managers or its members.

 

(i)  Residency. The
Buyer is a resident of the State of California.

 

(j)  [Intentionally
Omitted]

 

3.  REPRESENTATIONS
AND WARRANTIES OF THE COMPANY.

 

The
Company represents and warrants to the Buyer that as of the date hereof and as of the Commencement Date:

 

(a)  Organization
and Qualification. The Company and its “Subsidiaries” (which for purposes of this Agreement
means any entity that is a “significant subsidiary” as defined in Rule 1-02 of Regulation S-X under the 1933
Act in which the Company, directly or indirectly, owns more than 50% of the voting stock or capital stock or other similar equity
interests) are corporations or limited liability companies duly organized and validly existing in good standing under the laws
of the jurisdiction in which they are incorporated or organized, and have the requisite corporate or organizational power and
authority to own their properties and to carry on their business as now being conducted. Each of the Company and its Subsidiaries
is duly qualified as a foreign corporation or limited liability company to do business and is in good standing in every jurisdiction
in which its ownership of property or the nature of the business conducted by it makes such qualification necessary, except to
the extent that the failure to be so qualified or be in good standing would not reasonably be expected to have a Material Adverse
Effect. As used in this Agreement, “Material Adverse Effect” means any material adverse effect on any
of: (i) the business, properties, assets, operations, results of operations or financial condition of the Company and its
Subsidiaries, if any, taken as a whole, or (ii) the authority or ability of the Company to perform its obligations under
the Transaction Documents. The Company has no material Subsidiaries except as set forth on Schedule 3(a).

 

    3

     

    

 

(b)  Authorization;
Enforcement; Validity. (i) The Company has the requisite corporate power and authority to enter into and perform
its obligations under this Agreement, and each of the other agreements entered into by the parties on the Commencement Date and
attached hereto as exhibits to this Agreement (collectively, the “Transaction Documents”), and to issue the
Securities in accordance with the terms hereof and thereof, (ii) the execution and delivery of the Transaction Documents
by the Company and the consummation by it of the transactions contemplated hereby and thereby, have been duly authorized by the
Company’s Board of Directors or duly authorized committee thereof, do not conflict with the Company’s Certificate
of Incorporation or Bylaws (as defined below), and do not require further consent or authorization by the Company, its Board of
Directors, except as set forth in this Agreement, or its stockholders, (iii) this Agreement has been, and each other Transaction
Document shall be on the Commencement Date, duly executed and delivered by the Company and (iv) this Agreement constitutes,
and each other Transaction Document upon its execution on behalf of the Company, shall constitute, the valid and binding obligations
of the Company enforceable against the Company in accordance with their terms, except as such enforceability may be limited by
(y) general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar
laws relating to, or affecting generally, the enforcement of creditors’ rights and remedies and (z) public policy underlying
any law, rule or regulation (including any federal or state securities law, rule or regulation) with regards to indemnification,
contribution or exculpation. The Board of Directors of the Company or a duly authorized committee thereof has approved the
resolutions (the “Signing Resolutions”) substantially in the form as set forth as Exhibit B attached hereto
to authorize this Agreement and the transactions contemplated hereby. The Signing Resolutions are valid, in full force and
effect and have not been modified or supplemented in any material respect. The Company has delivered to the Buyer a true
and correct copy of the Signing Resolutions as approved by the Pricing Committee of the Company.

 

(c)  Capitalization. 
Except as disclosed in Schedule 3(c) or the SEC Documents, (i) no shares of the Company’s capital stock are subject
to preemptive rights or any other similar rights or any liens or encumbrances suffered or permitted by the Company, (ii) there
are no outstanding debt securities of the Company or any of its Subsidiaries, (iii) there are no outstanding options, warrants,
scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible
into, any shares of capital stock of the Company or any of its Subsidiaries, or contracts, commitments, understandings or arrangements
by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company
or any of its Subsidiaries or options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, any shares of capital stock of the Company or any of its Subsidiaries,
(iv) there are no material agreements or arrangements under which the Company or any of its Subsidiaries is obligated to
register the sale of any of their securities under the 1933 Act (except the Agreement), (v) there are no outstanding securities
or instruments of the Company or any of its Subsidiaries which contain any redemption or similar provisions, and there are no
contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound
to redeem a security of the Company or any of its Subsidiaries, (vi) there are no securities or instruments containing anti-dilution
or similar provisions that will be triggered by the issuance of the Securities as described in this Agreement and (vii) the
Company does not have any stock appreciation rights or “phantom stock” plans or agreements or any similar plan or
agreement. The Company has furnished or made available to the Buyer true and correct copies of the Company’s Certificate
of Incorporation, as amended and as in effect on the date hereof (the “Certificate of Incorporation”),
and the Company’s Bylaws, as amended and as in effect on the date hereof (the “Bylaws”).

 

(d)  Issuance
of Securities. The Purchase Shares have been duly authorized and, upon issuance in accordance with the terms hereof,
the Purchase Shares shall be (i) validly issued, fully paid and non-assessable and (ii) free from all taxes, liens and
charges with respect to the issuance thereof. Upon issuance and payment therefore in accordance with the terms and conditions
of this Agreement, the Purchase Shares shall be validly issued, fully paid and non-assessable and free from all taxes, liens and
charges with respect to the issue thereof, with the holders being entitled to all rights accorded to a holder of Common Stock.

 

    4

     

    

 

(e)  No
Conflicts. Except as disclosed in Schedule 3(e), the execution, delivery and performance of the Transaction Documents
by the Company and the consummation by the Company of the transactions contemplated hereby and thereby (including, without limitation,
the reservation for issuance and issuance of the Purchase Shares) will not (i) result in a violation of the Certificate of
Incorporation, any Certificate of Designations, Preferences and Rights of any outstanding series of preferred stock of the Company
or the Bylaws or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would
become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which the Company or any of its Subsidiaries is a party, or result, to the Company’s knowledge,
in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations
and the rules and regulations of the Principal Market applicable to the Company or any of its Subsidiaries) or by which any
property or asset of the Company or any of its Subsidiaries is bound or affected, except in the case of conflicts, defaults, terminations,
amendments, accelerations, cancellations and violations under clause (ii), which would not reasonably be expected to result in
a Material Adverse Effect. Except as disclosed in Schedule 3(e), neither the Company nor its Subsidiaries is in violation
of any term of or in default under its Certificate of Incorporation, any Certificate of Designation, Preferences and Rights of
any outstanding series of preferred stock of the Company or the Bylaws or their organizational charter or bylaws, respectively. Except
as disclosed in Schedule 3(e), neither the Company nor any of its Subsidiaries is in violation of any term of or is in default
under any material contract, agreement, mortgage, indebtedness, indenture, instrument, judgment, decree or order or any statute,
rule or regulation applicable to the Company or its Subsidiaries, except for possible violations, defaults, terminations
or amendments that would not reasonably be expected to have a Material Adverse Effect. The business of the Company and its
Subsidiaries is not being conducted, and shall not be conducted, in violation of any law, ordinance, or regulation of any governmental
entity, except for possible violations, the sanctions for which either individually or in the aggregate would not reasonably be
expected to have a Material Adverse Effect. Except as specifically contemplated by this Agreement, reporting obligations
under the 1934 Act, or as required under the 1933 Act or applicable state securities laws or the filing of a Listing of Additional
Shares Notification Form with the Principal Market, the Company is not required to obtain any consent, authorization or order
of, or make any filing or registration with, any court or governmental agency or any regulatory or self-regulatory agency in order
for it to execute, deliver or perform any of its obligations under or contemplated by the Transaction Documents in accordance
with the terms hereof or thereof. Except as disclosed in Schedule 3(e) and for reporting obligations under the 1934
Act, all consents, authorizations, orders, filings and registrations which the Company is required to obtain pursuant to the preceding
sentence shall be obtained or effected on or prior to the Commencement Date. Except as disclosed in Schedule 3(e), the Company
is not subject to any notices or actions from or to the Principal Market other than routine matters incident to listing on the
Principal Market and not involving a violation of the rules of the Principal Market. Except as disclosed in Schedule
3(e), to the Company’s knowledge, the Principal Market has not commenced any delisting proceedings against the Company.

 

(f)  SEC
Documents; Financial Statements. Except as disclosed in Schedule 3(f), the Company has filed all reports, schedules, forms,
statements and other documents required to be filed by it with the SEC pursuant to the reporting requirements of the 1933 Act
or 1934 Act (all of the foregoing filed prior to the date hereof and all exhibits included therein and financial statements and
schedules thereto and documents incorporated by reference therein being hereinafter referred to as the “SEC Documents”). As
of their respective dates (except as they have been correctly amended), the SEC Documents complied in all material respects with
the requirements of the 1933 Act and 1934 Act and the rules and regulations of the SEC promulgated thereunder applicable
to the SEC Documents, and none of the SEC Documents, at the time they were filed with the SEC (except as they may have been properly
amended), 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. As
of their respective dates (except as they have been properly amended), the financial statements of the Company included in the
SEC Documents complied as to form in all material respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto. Such financial statements have been prepared in accordance with generally accepted
accounting principles, consistently applied, during the periods involved (except (i) as may be otherwise indicated in such
financial statements or the notes thereto or (ii) in the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements) and fairly present in all material respects the financial position of the
Company as of the dates thereof and the results of its operations and cash flows for the periods then ended (subject, in the case
of unaudited statements, to normal year-end audit adjustments). Except as disclosed in Schedule 3(f) or routine correspondence,
such as comment letters and notices of effectiveness in connection with previously filed registration statements or periodic reports
publicly available on EDGAR, to the Company’s knowledge, the Company or any of its Subsidiaries are not presently the subject
of any inquiry, investigation or action by the SEC.

 

(g)  Absence
of Certain Changes. Except as disclosed in Schedule 3(g), since June 30, 2018, there has been no material adverse change
in the business, properties, operations, financial condition or results of operations of the Company or its Subsidiaries taken
as a whole. For purposes of this Agreement, neither a decrease in cash or cash equivalents or in the market price of the
Common Stock nor losses incurred in the ordinary course of the Company’s business shall be deemed or considered a material
adverse change. The Company has not taken any steps, and does not currently expect to take any steps, to seek protection
pursuant to any Bankruptcy Law nor does the Company or any of its Subsidiaries have any knowledge or reason to believe that its
creditors intend to initiate involuntary bankruptcy or insolvency proceedings. The Company is financially solvent and is
generally able to pay its debts as they become due.

 

    5

     

    

 

(h)  Absence
of Litigation. Except as disclosed in Schedule 3(h), to the Company’s knowledge, there is no action, suit, proceeding,
inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending
or, to the knowledge of the Company or any of its Subsidiaries, threatened against the Company, the Common Stock or any of the
Company’s Subsidiaries or any of the Company’s or the Company’s Subsidiaries’ officers or directors in
their capacities as such, which would reasonably be expected to have a Material Adverse Effect (each, an “Action”). A
description of each such Action, if any, is set forth in Schedule 3(h).

 

(i)  Acknowledgment
Regarding Buyer’s Status . The Company acknowledges and agrees that the Buyer is acting solely in the capacity
of arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated hereby and thereby. The
Company further acknowledges that the Buyer is not acting as a financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to the Transaction Documents and the transactions contemplated hereby and thereby and any advice given
by the Buyer or any of its representatives or agents in connection with the Transaction Documents and the transactions contemplated
hereby and thereby is merely incidental to the Buyer’s purchase of the Securities. The Company further represents to
the Buyer that the Company’s decision to enter into the Transaction Documents has been based solely on the independent evaluation
by the Company and its representatives and advisors.

 

(j)  Intellectual
Property Rights. To the Company’s knowledge, the Company and its Subsidiaries own or possess adequate rights or
licenses to use all material trademarks, trade names, service marks, service mark registrations, service names, patents, patent
rights, copyrights, inventions, licenses, approvals, governmental authorizations, trade secrets and other intellectual property
rights (collectively, “Intellectual Property”) necessary to conduct their respective businesses as now conducted,
except as set forth in Schedule 3(j) or to the extent that the failure to own, possess, license or otherwise hold adequate
rights to use Intellectual Property would not, individually or in the aggregate, have a Material Adverse Effect. Except as
disclosed in Schedule 3(j), to the Company’s knowledge, none of the Company’s active and registered Intellectual Property
have expired or terminated, or, by the terms and conditions thereof, will expire or terminate within two years from the date of
this Agreement, except as would not reasonably be expected to have a Material Adverse Effect. The Company and its Subsidiaries
do not have any knowledge of any infringement by the Company or its Subsidiaries of any Intellectual Property of others and, except
as set forth on Schedule 3(j), there is no claim, action or proceeding being made or brought against, or to the Company’s
knowledge, being threatened against, the Company or its Subsidiaries regarding Intellectual Property, which could reasonably be
expected to have a Material Adverse Effect.

 

(k)  Environmental
Laws. To the Company’s knowledge, the Company and its Subsidiaries (i) are in material compliance with any
and all applicable foreign, federal, state and local laws and regulations relating to the protection of human health and safety
or the environment and with respect to hazardous or toxic substances or wastes, pollutants or contaminants (“Environmental
Laws”), (ii) have received all material permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (iii) are in material compliance with all terms and conditions
of any such permit, license or approval, except where, in each of the three foregoing clauses, the failure to so comply or receive
such approvals would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

 

(l)  Title. The
Company and its Subsidiaries have good and marketable title to all personal property owned by them that is material to the business
of the Company and its Subsidiaries, in each case free and clear of all liens, encumbrances and defects except such as are described
in Schedule 3(l) or such as do not materially affect the value of such property and do not interfere with the use made and
proposed to be made of such property by the Company and any of its Subsidiaries or would not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect. Any real property and facilities held under lease by the Company and any
of its Subsidiaries, to the Company’s knowledge, are held by them under valid, subsisting and enforceable leases with such
exceptions as are not material and do not interfere with the use made and proposed to be made of such property and buildings by
the Company and its Subsidiaries.

 

    6

     

    

 

(m)  Insurance. The
Company and each of its Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks
and in such amounts as management of the Company believes to be reasonable and customary in the businesses in which the Company
and its Subsidiaries are engaged. To the Company’s knowledge, neither the Company nor any such Subsidiary has been
refused any insurance coverage sought or applied for and neither the Company nor any such Subsidiary, to the Company’s knowledge,
will be unable to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar
insurers as may be necessary to continue its business at a cost that would not reasonably be expected to have a Material Adverse
Effect.

 

(n)  Regulatory
Permits. The Company and its Subsidiaries possess all material certificates, authorizations and permits issued by the
appropriate federal, state or foreign regulatory authorities necessary to conduct their respective businesses as currently conducted,
and neither the Company nor any such Subsidiary has received any written notice of proceedings relating to the revocation or modification
of any such material certificate, authorization or permit.

 

(o)  Tax
Status. The Company and each of its Subsidiaries has made or filed all federal and state income and all other material
tax returns, reports and declarations required by any jurisdiction to which it is subject (unless and only to the extent that
the Company and each of its Subsidiaries has set aside on its books reserves reasonably adequate for the payment of all unpaid
and unreported taxes or filed valid extensions) and has paid all taxes and other governmental assessments and charges that are
material in amount, shown or determined to be due on such returns, reports and declarations, except those being contested in good
faith and has set aside on its books reserves reasonably adequate for the payment of all taxes for periods subsequent to the periods
to which such returns, reports or declarations apply. To the Company’s knowledge, there are no unpaid taxes in any
material amount claimed to be due by the taxing authority of any jurisdiction.

 

(p)  Transactions
with Affiliates. Except as set forth on Schedule 3(p) and other than the grant or exercise of stock options or any
other equity securities offered pursuant to duly adopted stock or incentive compensation plans as disclosed on Schedule 3(c) or
in the SEC Documents, none of the officers, directors or employees of the Company is presently a party to any transaction with
the Company or any of its Subsidiaries (other than for services as employees, officers and directors and reimbursement for expenses
incurred on behalf of the Company), including any contract, agreement or other arrangement providing for the furnishing of services
to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Company, any corporation, partnership, trust or other entity in which any
officer, director, or any such employee has a material interest or is an officer, director, trustee or general partner.

 

(q)  Application
of Takeover Protections. The Company and its board of directors have taken or will take prior to the Commencement Date
all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or other similar anti-takeover provision under the Certificate of Incorporation
or the laws of the state of its incorporation, other than Section 203 of the Delaware General Corporation Law, which is or
could become applicable to the Buyer as a result of the transactions contemplated by this Agreement, including, without limitation,
the Company’s issuance of the Securities and the Buyer’s ownership of the Securities.

 

(r)  Registration
Statement. The Shelf Registration Statement (as defined in Section 4(a) hereof) has been declared effective
by the SEC, and no stop order has been issued or is pending or, to the knowledge of the Company, threatened by the SEC with respect
thereto. As of the date hereof, the Company has an amount of securities registered and unsold under the Shelf Registration
Statement, which is not less than the sum of the Purchase Shares.

 

4. COVENANTS.

 

(a)  Filing
of Form 8-K and Prospectus Supplement. The Company agrees that it shall, within the time required under the 1934
Act, file a Current Report on Form 8-K disclosing this Agreement and the transaction contemplated hereby if required under
federal securities law. The Company shall file within two (2) Business Days from the date hereof a prospectus supplement
to the Company’s existing shelf registration statement on Form S-3 (File No. 333-224141, the “Shelf Registration
Statement”) covering the sale of the Purchase Shares and the Donation (beginning with the Donation) (the “Prospectus
Supplement”) in accordance with the terms of the Agreement. The Company shall keep the Shelf Registration Statement
effective pursuant to Rule 415 promulgated under the 1933 Act and available for sales of all Securities to the Buyer until such
time as (i) it no longer qualifies to make sales under the Shelf Registration Statement (which shall be understood to include
the inability of the Company to immediately register sales of Securities to the Buyer under the Shelf Registration Statement or
any new registration statement pursuant to General Instruction I.B.6 of Form S-3), or (ii) the date on which all the
Securities have been sold under this Agreement. The Shelf Registration Statement (including any amendments or supplements
thereto and prospectuses or prospectus supplements, including the Prospectus Supplement, contained therein) shall 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 therein, in light of the circumstances in which they were made, not misleading.

 

    7

     

    

 

(b)  Blue
Sky. The Company shall take such action, if any, as is reasonably necessary in order to obtain an exemption for or to qualify
(i) the initial sale of the Securities to the Buyer under this Agreement and (ii) any subsequent sale of the Securities
by the Buyer, in each case, under applicable securities or “Blue Sky” laws of the states of the United States in such
states as is reasonably requested by the Buyer from time to time, and shall provide evidence of any such action so taken to the
Buyer.

 

(c)  Listing. The
Company shall promptly secure the listing of all of the Securities upon each national securities exchange and automated quotation
system that requires an application by the Company for listing, if any, upon which shares of Common Stock are then listed (subject
to official notice of issuance) and shall maintain such listing, so long as any other shares of Common Stock shall be so listed. The
Company shall use its commercially reasonable efforts to maintain the Common Stock’s listing on the Principal Market. Neither
the Company nor any of its Subsidiaries shall take any action that would be reasonably expected to result in the delisting or
suspension of the Common Stock on the Principal Market, unless the Common Stock is immediately thereafter traded on the New York
Stock Exchange, the NYSE American, the NASDAQ Global Select Market, the NASDAQ Capital Market, or the OTCQB or OTCQX market places
of the OTC Markets. The Company shall pay all fees and expenses in connection with satisfying its obligations under this
Section.

 

(d) [Intentionally
Omitted]

 

(e) [Intentionally
Omitted]

 

(f)  Due
Diligence. The Buyer shall have the right, from time to time as the Buyer may reasonably deem appropriate, to perform
reasonable due diligence on the Company during normal business hours and subject to reasonable prior notice to the Company. The
Company and its officers and employees shall provide information and reasonably cooperate with the Buyer in connection with any
reasonable request by the Buyer related to the Buyer’s due diligence of the Company, including, but not limited to, any
such request made by the Buyer in connection with (i) the filing of the prospectus supplement described in Section 4(a) hereof
and (ii) the Commencement; provided, however, that at no time is the Company required to disclose material nonpublic information
to the Buyer or breach any obligation of confidentiality or non-disclosure to a third party or make any disclosure that could
cause a waiver of attorney-client privilege. Each party hereto agrees not to disclose any Confidential Information of the
other party to any third party and shall not use the Confidential Information of such other party for any purpose other than in
connection with, or in furtherance of, the transactions contemplated hereby. Each party hereto acknowledges that the Confidential
Information shall remain the property of the disclosing party and agrees that it shall take all reasonable measures to protect
the secrecy of any Confidential Information disclosed by the other party.

 

(g)  [Intentionally
Omitted]

 

5.  TRANSFER
AGENT INSTRUCTIONS.

 

All
of the Purchase Shares to be issued under this Agreement shall be issued without any restrictive legend unless the Buyer expressly
consents otherwise.

 

    8

     

    

 

6.  CONDITIONS
TO THE COMPANY’S RIGHT TO COMMENCE SALES OF SHARES OF COMMON STOCK UNDER THIS AGREEMENT.

 

The
right of the Company hereunder to commence sales of the Purchase Shares is subject to the satisfaction of each of the following
conditions on or before the Commencement Date (the date that the Company may begin sales of Purchase Shares):

 

(a) The
Buyer shall have executed each of the Transaction Documents and delivered the same to the Company;

 

(b) The
representations and warranties of the Buyer shall be true and correct as of the Commencement Date as though made at that time
(except for representations and warranties that speak as of a specific date, which shall be true and correct in all material respects
as of such specific date) and the Buyer shall have performed, satisfied and complied in all material respects with the covenants
and agreements required by this Agreement to be performed, satisfied or complied with by the Buyer at or prior to the Commencement
Date, and the Company shall have received a certificate, executed by a duly authorized officer of the Buyer, dated as of the Commencement
Date, to the foregoing effect; and

 

(c) The
Prospectus Supplement shall have been delivered to the Buyer and no stop order with respect to the registration statement covering
the sale of shares to the Buyer shall be pending or threatened by the SEC.

 

7.  CONDITIONS
TO THE BUYER’S OBLIGATION TO MAKE PURCHASES OF SHARES OF COMMON STOCK.

 

The
obligation of the Buyer to buy Purchase Shares under this Agreement is subject to the satisfaction of each of the following conditions
on or before the Commencement Date (the date that the Company may begin sales of Purchase Shares) and once such conditions have
been initially satisfied:

 

(a)
The Company shall have executed each of the Transaction Documents and delivered the same to the Buyer;

 

(b) [Intentionally
Omitted]

 

(c) The
Common Stock shall be authorized for quotation on the Principal Market, trading in the Common Stock shall not have been within
the last 365 days suspended by the SEC or the Principal Market, other than a general halt in trading in the Common Stock by the
Principal Market under halt codes indicating pending or released material news, and the Securities shall be approved for listing
upon the Principal Market;

 

(d) [Intentionally
Omitted]

 

(e) The
representations and warranties of the Company shall be true and correct in all material respects (except to the extent that any
of such representations and warranties is already qualified as to materiality in Section 3 above, in which case, such representations
and warranties shall be true and correct without further qualification) as of the date of this Agreement and as of the Commencement
Date as though made at that time (except for representations and warranties that speak as of a specific date, which shall be true
and correct in all material respects as of such specific date) and the Company shall have performed, satisfied and complied in
all material respects with the covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied
or complied with by the Company at or prior to the Commencement Date. The Buyer shall have received a certificate, executed
by the CEO of the Company, dated as of the Commencement Date, to the foregoing effect in the form attached hereto as Exhibit A;

 

(f) The
Board of Directors of the Company or a duly authorized committee thereof shall have adopted resolutions substantially in the form
attached hereto as Exhibit B which shall be in full force and effect without any amendment or supplement
thereto as of the Commencement Date;

 

(g) [Intentionally
Omitted]

 

(h) [Intentionally
Omitted]

 

    9

     

    

 

(i) The
Company shall have delivered to the Buyer a certificate evidencing the incorporation and good standing of the Company in the State
of Delaware issued by the Secretary of State of the State of Delaware as of a date within one (1) Business Days of the Commencement
Date;

 

(j) [Intentionally
Omitted]

 

(k) [Intentionally
Omitted]

 

(l) The
Shelf Registration Statement shall have been declared effective under the 1933 Act by the SEC and no stop order with respect thereto
shall be pending or threatened by the SEC. The Company shall have prepared and delivered to the Buyer a final and complete
form of prospectus supplement, dated and current as of the Commencement Date, to be used in connection with any issuances of the
Purchase Shares to the Buyer, and to be filed by the Company within two (2) Business Days after the Commencement Date pursuant
to Rule 424(b). The Company shall have made all filings under all applicable federal and state securities laws necessary
to consummate the issuance of the Purchase Shares pursuant to this Agreement in compliance with such laws;

 

(m) No
Event of Default has occurred and is continuing, or any event which, after notice and/or lapse of time, would become an Event
of Default has occurred;

 

(n) On
or prior to the Commencement Date, the Company shall take all necessary action, if any, and such actions as reasonably requested
by the Buyer, in order to render inapplicable any control share acquisition, business combination, stockholder rights plan or
poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Certificate
of Incorporation or the laws of the state of its incorporation, other than Section 203 of the Delaware General Corporation
Law, that is or could become applicable to the Buyer as a result of the transactions contemplated by this Agreement, including,
without limitation, the Company’s issuance of the Securities and the Buyer’s ownership of the Securities; and

 

(o) The
Company shall have provided the Buyer with the information reasonably requested by the Buyer in connection with its due diligence
requests made prior to, or in connection with, the Commencement, in accordance with the terms of Section 4(f) hereof.

 

8. INDEMNIFICATION.

 

In
consideration of the Buyer’s execution and delivery of the Transaction Documents and acquiring the Securities hereunder
and in addition to all of the Company’s other obligations under the Transaction Documents, the Company shall defend, protect,
indemnify and hold harmless the Buyer and all of its affiliates, members, officers, directors, and employees, and any of the foregoing
person’s agents or other representatives (including, without limitation, those retained in connection with the transactions
contemplated by this Agreement) (collectively, the “Indemnitees”) from and against any and all actions, causes
of action, suits, claims, losses, costs, penalties, fees, liabilities and damages, and expenses in connection therewith (irrespective
of whether any such Indemnitee is a party to the action for which indemnification hereunder is sought), and including reasonable
attorneys’ fees and disbursements (the “Indemnified Liabilities”), incurred by any Indemnitee as a result
of, or arising out of, or relating to (a) any misrepresentation or breach of any representation or warranty made by the Company
in the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby, (b) any breach
of any covenant, agreement or obligation of the Company contained in the Transaction Documents or any other certificate, instrument
or document contemplated hereby or thereby, or (c) any cause of action, suit or claim brought or made against such Indemnitee
and arising out of or resulting from the execution, delivery, performance or enforcement of the Transaction Documents or any other
certificate, instrument or document contemplated hereby or thereby, other than with respect to Indemnified Liabilities which
directly and primarily result from (A) a breach of any of the Buyer’s representations and warranties, covenants or
agreements contained in this Agreement, or (B) the gross negligence, bad faith or willful misconduct of the Buyer or any
other Indemnitee. To the extent that the foregoing undertaking by the Company may be unenforceable for any reason, the Company
shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible
under applicable law.

 

    10

     

    

 

9. EVENTS
OF DEFAULT.

 

An
“Event of Default” shall be deemed to have occurred at any time as any of the following events occurs:

 

(a) during
any period in which the effectiveness of any registration statement is required to be maintained pursuant to the terms of the
Agreement, the effectiveness of such registration statement lapses for any reason (including, without limitation, the issuance
of a stop order) or is unavailable to the Company for sale of all of the Securities to the Buyer in accordance with the terms
of the Agreement, and such lapse or unavailability continues for a period of ten (10) consecutive Business Days or for more
than an aggregate of thirty (30) Business Days in any 365-day period, which is not in connection with a post-effective amendment
to any such registration statement or the filing of a new registration statement; provided, however, that in connection with any
post-effective amendment to such registration statement or filing of a new registration statement that is required to be declared
effective by the SEC, such lapse or unavailability may continue for a period of no more than thirty (30) consecutive Business
Days, which such period shall be extended for an additional thirty (30) Business Days if the Company receives a comment letter
from the SEC in connection therewith;

 

(b) the
suspension from trading or failure of the Common Stock to be listed on a Principal Market for a period of three (3) consecutive
Business Days;

 

(c) the
delisting of the Common Stock from the Principal Market, and the Common Stock is not immediately thereafter trading on the New
York Stock Exchange, the NYSE American, the NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ Capital Market,
the OTC Bulletin Board or the OTCQB marketplace or OTCQX marketplace of the OTC Markets Group;

 

(d) the
failure for any reason by the Transfer Agent to issue Purchase Shares to the Buyer within one (1) Business Day after the
Purchase Notice is given to Buyer;

 

(e) the
Company’s breach of any representation or warranty (as of the dates made), covenant or other term or condition under any
Transaction Document if such breach would reasonably be expected to have a Material Adverse Effect and except, in the case of
a breach of a covenant which is reasonably curable, only if such breach continues uncured for a period of at least five (5) Business
Days;

 

(f) if
any Person commences a proceeding against the Company pursuant to or within the meaning of any Bankruptcy Law;

 

(g) if
the Company pursuant to or within the meaning of any Bankruptcy Law; (A) commences a voluntary case, (B) consents to
the entry of an order for relief against it in an involuntary case, (C) consents to the appointment of a Custodian of it
or for all or substantially all of its property, (D) makes a general assignment for the benefit of its creditors or (E) becomes
insolvent;

 

(h) a
court of competent jurisdiction enters an order or decree under any Bankruptcy Law that (A) is for relief against the Company
in an involuntary case, (B) appoints a Custodian of the Company or for all or substantially all of its property, or (C) orders
the liquidation of the Company or any Subsidiary; or

 

(i) if
at any time after the Commencement Date, the Exchange Cap is reached unless and until stockholder approval is obtained pursuant
to Section 1(h) hereof. The Exchange Cap shall be deemed to be reached at such time if, upon submission of the
Purchase Notice under this Agreement, the issuance of such shares of Common Stock would exceed the number of shares of Common
Stock which the Company may issue under this Agreement without breaching the Company’s obligations under the rules or
regulations of the Principal Market.

 

    11

     

    

 

(j) if
the Closing Date has not occurred by July 20, 2018 (“Expiration Date”).

 

In
addition to any other rights and remedies under applicable law and this Agreement, including the Buyer termination rights under
Section 11(k) hereof, so long as an Event of Default has occurred and is continuing, or if any event which, after notice
and/or lapse of time, would become an Event of Default, has occurred and is continuing, the Company may not request the Buyer
to purchase any shares of Common Stock under this Agreement. If pursuant to or within the meaning of any Bankruptcy Law,
the Company commences a voluntary case or any Person commences a proceeding against the Company, a Custodian is appointed for
the Company or for all or substantially all of its property, or the Company makes a general assignment for the benefit of its
creditors, (any of which would be an Event of Default as described in Sections 9(f), 9(g) and 9(h) hereof) this Agreement shall
automatically terminate without any liability or payment to the Company without further action or notice by any Person. No
such termination of this Agreement under Section 11(k)(i) shall affect the Company’s or the Buyer’s obligations
under this Agreement with respect to pending purchases and, the Company and the Buyer shall complete their respective obligations
with respect to any pending purchases under this Agreement.

 

10. CERTAIN
DEFINED TERMS.

 

For
purposes of this Agreement, the following terms shall have the following meanings:

 

(a) “1933
Act” means the Securities Act of 1933, as amended.

 

(b) [Intentionally
Omitted]

 

(c) “Bankruptcy
Law” means Title 11, U.S. Code, or any similar federal or state law for the relief of debtors.

 

(d) “Business
Day” means any day on which the Principal Market is open for trading during normal trading hours (i.e., 9:30 a.m. to
4:00 p.m. Eastern Time), including any day on which the Principal Market is open for trading for a period of time less than
the customary time.

 

(e) “Closing
Date” means six Business Days after the Purchase Notice Date.

 

(f) “Confidential
Information” means any information disclosed by either party to the other party, either directly or indirectly, in writing,
orally or by inspection of tangible objects (including, without limitation, documents, prototypes, samples, protocols, development
plans, commercialization plans, compounds, formulations, preclinical study and clinical trial results, plant and equipment), which
is designated as “Confidential,” “Proprietary” or some similar designation. Information communicated orally
shall be considered Confidential Information if such information is expressly identified as Confidential Information at the time
of such initial disclosure and confirmed in writing as being Confidential Information within ten (10) Business Days after
the initial disclosure. Confidential Information may also include information disclosed to a disclosing party by third parties.
Confidential Information shall not, however, include any information which (i) was publicly known and made generally available
in the public domain prior to the time of disclosure by the disclosing party; (ii) becomes publicly known and made generally
available after disclosure by the disclosing party to the receiving party through no action or inaction of the receiving party;
(iii) is already in the possession of the receiving party at the time of disclosure by the disclosing party as shown by the
receiving party’s files and records immediately prior to the time of disclosure; (iv) is obtained by the receiving
party from a third party without a breach of such third party’s obligations of confidentiality; (v) is independently
developed by the receiving party without use of or reference to the disclosing party’s Confidential Information, as shown
by documents and other competent evidence in the receiving party’s possession; or (vi) is required by law to be disclosed
by the receiving party, provided that the receiving party gives the disclosing party prompt written notice of such requirement
prior to such disclosure and assistance in obtaining an order protecting the information from public disclosure.

 

(g) “Custodian”
means any receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law.

 

(h) [Intentionally
Omitted]

 

(i) “Person”
means an individual or entity including any limited liability company, a partnership, a joint venture, a corporation, a trust,
an unincorporated organization and a government or any department or agency thereof.

 

(j) “Principal
Market” means the Nasdaq Capital Market; provided however, that in the event the Company’s Common Stock is ever
listed or traded on the New York Stock Exchange, the NYSE American, the NASDAQ Global Select Market, the Nasdaq Global Market,
the NASDAQ Capital Market, the OTC Bulletin Board or either of the OTCQB Marketplace or the OTCQX marketplace of the OTC Markets
Group, then the “Principal Market” shall mean such other market or exchange on which the Company’s Common Stock
is then listed or traded.

 

    12

     

    

 

(k) [Intentionally
Omitted]

 

(l) “Purchase
Notice Date” means the Business Day that the Purchase Notice is received by the Buyer.

 

(m) “Purchase
Notice” shall mean an irrevocable written email notice from the Company to the Buyer requesting the Buyer to buy Purchase
Shares pursuant to Section 1(b) hereof as specified by the Company therein at the Purchase Price on the Closing Date.

 

(n) “Purchase
Price” means $5.60 per share of Common Stock, subject to the terms of this Agreement and subject to appropriate adjustment
for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction.

 

(o) [Intentionally
Omitted]

 

(p) “SEC”
means the United States Securities and Exchange Commission.

 

(q) “Transfer
Agent” means the transfer agent of the Company as set forth in Section 11(f) hereof or such other person who
is then serving as the transfer agent for the Company in respect of the Common Stock.

 

11. MISCELLANEOUS.

 

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

 

(b)  Counterparts. This
Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and delivered to the other party; provided that a facsimile
or pdf (or other electronic reproduction) signature shall be considered due execution and shall be binding upon the signatory
thereto with the same force and effect as if the signature were an original, not a facsimile or pdf (or other electronic reproduction)
signature.

 

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

 

(d)  Severability. If
any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall
not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability
of any provision of this Agreement in any other jurisdiction.

 

    13

     

    

 

(e)  Entire
Agreement. This Agreement shall supersede all other prior oral or written agreements between the Buyer, the Company,
their affiliates and persons acting on their behalf with respect to the matters discussed herein, and this Agreement, the other
Transaction Documents and the instruments referenced herein contain the entire understanding of the parties with respect to the
matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor the Buyer
makes any representation, warranty, covenant or undertaking with respect to such matters. The Company acknowledges and agrees
that is has not relied on, in any manner whatsoever, any representations or statements, written or oral, other than as expressly
set forth in this Agreement.

 

(f)  Notices. Any
notices, consents or other communications required or permitted to be given under the terms of this Agreement must be in writing
and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent
by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending
party); (iii) upon receipt, when sent by electronic message (provided the recipient responds to the message and confirmation
of both electronic messages are kept on file by the sending party); or (iv) one (1) Business Day after timely deposit
with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. The
addresses and facsimile numbers for such communications shall be:

 

If
to the Company:

  

If
to the Buyer:

 

TRITON
FUNDS LLC

1262
Prospect Street

La
Jolla, CA 92037

Email: 
tritonfunds@tritonfunds.com

  

or
at such other address and/or facsimile number and/or to the attention of such other person as the recipient party has specified
by written notice given to each other party at least one (1) Business Day prior to the effectiveness of such change. Written
confirmation of receipt (A) given by the recipient of such notice, consent or other communication, (B) mechanically
or electronically generated by the sender’s facsimile machine containing the time, date, and recipient facsimile number,
(C) electronically generated by the sender’s electronic mail containing the time, date and recipient email address
or (D) provided by a nationally recognized overnight delivery service, shall be rebuttable evidence of receipt in accordance
with clause (i), (ii), (iii) or (iv) above, respectively.

 

(g)  Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors
and assigns. The Company shall not assign this Agreement or any rights or obligations hereunder without the prior written
consent of the Buyer, including by merger or consolidation; provided, however, that any transaction, whether by merger, reorganization,
restructuring, consolidation, financing or otherwise, whereby the Company remains the surviving entity immediately after such
transaction, shall not be deemed a succession or assignment. The Buyer may not assign its rights or obligations under this
Agreement.

 

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

 

(i)  Publicity. The
Buyer shall have the right to approve before issuance any press release, SEC filing or any other public disclosure made by or
on behalf of the Company whatsoever with respect to, in any manner, the Buyer, its purchases hereunder or any aspect of this Agreement
or the transactions contemplated hereby; provided, however, that the Company shall be entitled, without the prior approval of
the Buyer, to make any press release or other public disclosure (including any filings with the SEC) with respect to such transactions
as is required by applicable law and regulations so long as the Company and its counsel consult with the Buyer in connection with
any such press release or other public disclosure at least one (1) Business Day prior to its release. The Buyer must
be provided with a copy thereof at least one (1) Business Day prior to any release or use by the Company thereof.

 

    14

     

    

 

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

 

(k)  Termination. This
Agreement may be terminated only as follows:

 

(i) By
the Buyer any time an Event of Default exists, without any liability or payment to the Company. However, if pursuant to or
within the meaning of any Bankruptcy Law, the Company commences a voluntary case or any Person commences a proceeding against
the Company, a Custodian is appointed for the Company or for all or substantially all of its property, or the Company makes a
general assignment for the benefit of its creditors, (any of which would be an Event of Default as described in Sections 9(f),
9(g) and 9(h) hereof) this Agreement shall automatically terminate without any liability or payment to the Company without
further action or notice by any Person. No such termination of this Agreement under this Section 11(k)(i) shall
affect the Company’s or the Buyer’s obligations under this Agreement with respect to pending purchases and the Company
and the Buyer shall complete their respective obligations with respect to any pending purchases under this Agreement.

 

(ii) In
the event that the Commencement shall not have occurred the Company shall have the option to terminate this Agreement for any
reason or for no reason without any liability whatsoever of either party to the other party under this Agreement.

 

(iii) In
the event that the Commencement shall not have occurred within five (5) Business Days of the date of this Agreement, due
to the failure to satisfy any of the conditions set forth in Sections 6 and 7 above with respect to the Commencement, either party
shall have the option to terminate this Agreement at the close of business on such date or thereafter without liability of either
party to any other party; provided, however, that the right to terminate this Agreement under this Section 11(k)(iii) shall
not be available to either party if such failure to satisfy any of the conditions set forth in Sections 6 and 7 is the result
of a breach of this Agreement by such party or the failure of any representation or warranty of such party included in this Agreement
to be true and correct in all material respects.

 

(iv) At
any time after the Commencement Date, so long as the purchase of the Purchase Shares is not in the process of being consummated
and the date of the proposed termination is not within ninety (90) calendar days after the date of the Purchase Notice, the Company
shall have the option to terminate this Agreement for any reason or for no reason by delivering notice (a “Termination
Notice”) to the Buyer electing to terminate this Agreement without any liability whatsoever of either party to the other
party under this Agreement.

  

Except
as set forth in Sections 11(k)(i) (in respect of an Event of Default under Sections 9(f), 9(g) and 9(h)), any termination
of this Agreement pursuant to this Section 11(k) shall be effected by written notice from the Company to the Buyer,
or the Buyer to the Company, as the case may be, setting forth the basis for the termination hereof. The representations
and warranties of the Company and the Buyer contained in Sections 2, 3 and 5 hereof, the indemnification provisions set forth
in Section 8 hereof and the agreements and covenants set forth in Sections 4(e) and 11, shall survive the Commencement
and any termination of this Agreement. No termination of this Agreement shall affect the Company’s or the Buyer’s
rights or obligations under the Agreement which shall survive any such termination in accordance with its terms or with respect
to pending purchases and the Company and the Buyer shall complete their respective obligations with respect to any pending purchases
under this Agreement.

 

(l)  No
Financial Advisor, Placement Agent, Broker or Finder. The Company represents and warrants to the Buyer that it has not
engaged any financial advisor, placement agent, broker or finder in connection with the transactions contemplated hereby. The
Buyer represents and warrants to the Company that it has not engaged any financial advisor, placement agent, broker or finder
in connection with the transactions contemplated hereby. Each party shall be responsible for the payment of any fees or commissions,
if any, of any financial advisor, placement agent, broker or finder engaged by such party relating to or arising out of the transactions
contemplated hereby. Each party shall pay, and hold the other party harmless against, any liability, loss or expense (including,
without limitation, attorneys’ fees and out of pocket expenses) arising in connection with any such claim.

 

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

 

(n)  Failure
or Indulgence Not Waiver. No failure or delay in the exercise of any power, right or privilege hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other right, power or privilege.

 

    15

     

    

 

IN
WITNESS WHEREOF,  the Buyer and the Company have caused this Common Stock Purchase Agreement to be duly executed
as of the date first written above.

 

 

	 	THE COMPANY:
	 	 
	 	IFRESH INC.
	 	 	 
	 	By:
	        
	 	Name:
	 	Title:
	 	 
	 	BUYER:
	 	 
	 	TRITON FUNDS LP
	 	 
	 	By:	 
	 	Name:
	 	Title:

  

    16

     

    

  

SCHEDULES

 

	Schedule 3(a)	 	Subsidiaries
	Schedule 3(c)	 	Capitalization
	Schedule 3(e)	 	Conflicts
	Schedule 3(f)	 	1934 Act Filings
	Schedule 3(g)	 	Material Changes
	Schedule 3(h)	 	Litigation
	Schedule 3(j)	 	Intellectual Property
	Schedule 3(l)	 	Title
	Schedule 3(p)	 	Transactions with Affiliates

 

    17

     

    

 

EXHIBIT A

 

OFFICER’S
CERTIFICATE

 

This
Officer’s Certificate (“Certificate”) is being delivered pursuant to Section 7(e) of that certain
Common Stock Purchase Agreement dated as of July 11, 2018 (the “Common Stock Purchase Agreement”), by and between  IFRESH
INC., a Delaware corporation (the “Company”), and TRITON FUNDS LP, a Delaware limited partnership (the
“Buyer”). Terms used herein and not otherwise defined shall have the meanings ascribed to them in the
Common Stock Purchase Agreement.

 

The
undersigned of the Company, hereby certifies as follows:

 

1.
I am the Chief Executive Officer of the Company and make the statements contained in this Certificate in my capacity as such;

 

2.
The representations and warranties of the Company are true and correct in all material respects (except to the extent that any
of such representations and warranties is already qualified as to materiality in Section 3 of the Common Stock Purchase Agreement,
in which case, such representations and warranties are true and correct without further qualification) as of the date when made
and as of the Commencement Date as though made at that time (except for representations and warranties that speak as of a specific
date);

 

3.
The Company has performed, satisfied and complied in all material respects with covenants, agreements and conditions required
by the Transaction Documents to be performed, satisfied or complied with by the Company at or prior to the Commencement Date.

 

4.
The Company has not taken any steps, and does not currently expect to take any steps, to seek protection pursuant to any Bankruptcy
Law nor does the Company or any of its Subsidiaries have any knowledge or reason to believe that its creditors intend to initiate
involuntary bankruptcy or insolvency proceedings. The Company is financially solvent and is generally able to pay its debts as
they become due.

 

IN
WITNESS WHEREOF, I have hereunder signed my name on this day of July 11, 2018.

 

	 	 
	 	Name:
	 	Title:

 

The
undersigned as Secretary of  IFRESH INC., a Delaware corporation, hereby certifies that is the duly elected,
appointed, qualified and acting of the Company and that the signature appearing above is his/her genuine signature.

 

	 	 
	 	Secretary

   

    18

     

    

 

EXHIBIT B

 

PRICING
COMMITTEE RESOLUTION

FOR
SIGNING PURCHASE AGREEMENT

 

WHEREAS,
management has reviewed with the Board of Directors the background, terms and conditions of the transactions subject to the Common
Stock Purchase Agreement (the “Purchase Agreement”) by and between the Company and TRITON FUNDS LP (“Buyer”),
including all material terms and conditions of the transactions subject thereto, providing for the purchase by Buyer of up to
89,285 shares of the Company’s common stock (the “Purchase Shares”), par value $0.0001 per share (the
“Common Stock”) and issuance of 5,000 shares of Common Stock (the “Donation” and, together
with the Purchase Shares, the “Shares”) to Buyer;

 

WHEREAS,
after careful consideration of the term sheet, dated June 29, 2018, between the Company and Buyer (the “Term Sheet”)
and other factors deemed relevant by the Board of Directors, the Board of Directors determined that it is advisable and in the
best interests of the Company to engage in the transactions contemplated by the Term Sheet, including, but not limited to, the
issuance and the sale of the Shares to Buyer pursuant to the terms set forth in the Term Sheet);

 

WHEREAS,
the Board has authorized the Company to offer, issue and sell the Shares in pursuant to terms set forth in the Term Sheet (the
“Offering”);

 

WHEREAS,
the Board has established this Pricing Committee; and

 

WHEREAS,
the Board has authorized, empowered and directed this Pricing Committee to take all actions in connection with the Offering, including,
in its discretion, determining, authorizing and approving any additional terms relating to the offering, issuance, sale and delivery
of the Shares, in each case, as the Board could itself take, consistent with these resolutions and subject to any restrictions
imposed by applicable law.

 

Transaction
Documents

 

NOW,
THEREFORE, BE IT RESOLVED, that the transactions described in the Purchase Agreement are hereby approved and the Chief Executive
Officer and the Chief Financial Officer of the Company (the “Authorized Officers”) are severally authorized
to execute and deliver the Purchase Agreement in substantially the form attached as Exhibit A hereto, and any
other agreements or documents contemplated thereby, in substantially the form attached as Exhibit B hereto providing
for the registration of the issuance and/or sale of shares of Common Stock to Buyer under the Purchase Agreement, with such amendments,
changes, additions and deletions as the Authorized Officers may deem to be appropriate and approve on behalf of the Company, such
approval to be conclusively evidenced by the signature of an Authorized Officer thereon; and

 

Issuance
of Common Stock

 

FURTHER
RESOLVED, that the Company is hereby authorized to issue the Shares under the Purchase Agreement, at a price per share in accordance
with the terms of the Purchase Agreement, provided that the number of shares of Common Stock issued pursuant to the Purchase
Agreement (including all Purchase Shares) shall not exceed 19.99% of the Company’s outstanding shares of Common Stock as
of the date hereof without the affirmative consent of the stockholders; and that, upon issuance of the Shares pursuant to the
Purchase Agreement, including payment therefor, the Shares will be duly authorized, validly issued, fully paid and non-assessable;
and

 

Prospectus
Supplement

 

FURTHER
RESOLVED, that the Authorized Officers are hereby authorized, in the name and on behalf of the Company:

 

	 	1.  	to prepare, execute and file with
    the Securities and Exchange Commission (the “SEC”) such prospectus supplements, including any preliminary
    or final prospectus supplement, to the Company’s Registration Statement on Form S-3 on file with the SEC (File
    No. 333-224141) (the “Shelf S-3 Registration Statement”) and the prospectus included therein and such
    additional documents, including any free writing prospectuses, as the Authorized Officer so acting may determine, in his or
    her sole discretion, to be necessary, appropriate or desirable in connection with the transactions pursuant to the Purchase
    Agreement, such determination to be conclusively evidenced by the execution and filing of such prospectus supplements, prospectuses
    or additional documents; and

 

    19

     

    

 

		2.	to
prepare, execute and file with the SEC one or more additional registration statements on Form S-3 relating to the registration
under the Securities Act of the Purchase Shares and Donation that were not registered pursuant to the Shelf S-3 Registration Statement,
if required; and

 

Proceeds

 

FURTHER
RESOLVED, that following the sale of the Purchase Shares, it is the intention of the Company (a) to continue
to be primarily engaged in its principal line of business (the “Company Business”); (b) to employ
the proceeds of the sale of the Purchase Shares in the Company Business; and (c) as soon as is reasonably possible, but in
any event within one year from the closing of the sale of Purchase Shares, to have invested the proceeds of such sale not theretofore
expended in the Company Business in a manner consistent with their preservation for future use in the Company Business and with
the Company not being an “investment company” as defined in the Investment Company Act of 1940, as amended; and

 

Transfer
Agent and Registrar

 

FURTHER
RESOLVED, that for the purpose of the original issuance of the Shares in accordance with the foregoing resolutions, the Company’s
transfer agent (the “Transfer Agent”) is hereby authorized to issue, countersign and register such certificates
as may be required for such issuance and to deliver such stock certificates in accordance with the instructions of an Authorized
Officer, or to cause any such Shares to be delivered through electronic book entry; and that if the Transfer Agent requires a
prescribed form of preambles or resolutions relating to the foregoing, each such preamble or resolution is hereby adopted by this
Pricing Committee, and the Secretary or any Assistant Secretary of the Company is hereby authorized to certify the adoption of
any such preamble or resolution and to insert all such preambles and resolutions in the minute book of the Company immediately
following this resolution; and

 

Listing
of Shares on the Nasdaq

 

FURTHER
RESOLVED, that the Authorized Officers, with the assistance of counsel be, and each of them hereby is, authorized and directed
to take all necessary steps and do all other things necessary and appropriate to effect the listing of the Shares on the Nasdaq
including, if applicable, the filing of a Notification Form for Listing of Additional Shares and the payment of any required
fees; and

 

State
Securities Laws

 

FURTHER
RESOLVED, that it is desirable and in the best interests of the Company that its Common Stock be qualified or registered for sale,
to the extent required by law, in various states and other jurisdictions, and that the Authorized Officers are each hereby authorized
and directed to determine the states and other jurisdictions in which appropriate action shall be taken to (i) qualify or
register for sale all or such part of such Common Stock and (ii) register the Company as a dealer or broker; that the Authorized
Officers be, and hereby are, authorized to perform on behalf of the Company any and all such acts as the officer so acting may
deem necessary or advisable in order to comply with the applicable laws of any such states and other jurisdictions, and in connection
therewith to execute, affix the Company’s seal to and file all requisite papers and documents, including, without limitation,
applications, resolutions, reports, surety bonds, irrevocable consents and appointments of attorneys for service of process; and
that execution by any of the Authorized Officers of any such paper or document or the doing by any of the Authorized Officers
of any act in connection with the foregoing matters shall conclusively establish the authority of the officers so acting therefor
from the Company and the approval and ratification by the Company of the papers and documents so executed and the action so taken;
and

 

    20

     

    

 

FURTHER
RESOLVED, that if the securities or “blue sky” laws of any of the states or other jurisdictions in which any of the
Authorized Officers deem it necessary or advisable to qualify or register for sale all or part of the Common Stock or to register
the Company as a dealer or broker, or any authority administering such laws, requires a prescribed form of preambles or resolutions
relating to such sale or to any application, statement, instrument or other document connected therewith, each such preamble or
resolution is hereby adopted by this Pricing Committee, and the Secretary or any Assistant Secretary of the Company is hereby
authorized to certify the adoption of any such preamble or resolution to any party who may so request and to insert all such preambles
and resolutions in the minute book of the Company immediately following these resolutions; and

 

Approval
of Actions

 

FURTHER
RESOLVED, that the Company be and hereby is authorized to enter into any and all amendments to its agreements with, or obtain
any and all waivers from, (i) the holders of any outstanding securities of the Company and (ii) any other entity, as
may be necessary or desirable to effectuate the events and transactions contemplated by these resolutions; and

 

FURTHER
RESOLVED, that, without limiting the foregoing, the Authorized Officers are, and each of them hereby is, authorized and directed
to proceed on behalf of the Company and to take all such steps as deemed necessary or appropriate, with the advice and assistance
of counsel, to cause the Company to consummate the agreements referred to herein and to perform its obligations under such agreements;
and

 

FURTHER
RESOLVED, that the Authorized Officers be, and each of them hereby is, authorized, empowered and directed on behalf of and in
the name of the Company, to take or cause to be taken all such further actions and to execute and deliver or cause to be executed
and delivered all such further agreements, amendments, documents, certificates, reports, schedules, applications, notices, letters
and undertakings and to incur and pay all such fees and expenses as in their judgment shall be necessary, proper or desirable
to carry into effect the purpose and intent of any and all of the foregoing resolutions, and that all actions heretofore taken
by any officer or director of the Company in connection with the transactions contemplated by the agreements described herein
are hereby approved, ratified and confirmed in all respects.

  

Dated:
June 30, 2018

 

	 	 
	 	 
	 	 
	 	 
	 	 

  

    21

     

    

  

EXHIBIT C

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

22

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