Document:

abio-ex101_2015061076.htm

 

Exhibit 10.1

SECURITIES PURCHASE AGREEMENT 

This SECURITIES PURCHASE AGREEMENT (this “Agreement”), dated as of June 10, 2015, is made by and among ARCA biopharma, INC., a Delaware corporation (the “Company”), and the Purchasers, severally and not jointly, listed on Exhibit A hereto, together with their permitted transferees (each, a “Purchaser” and collectively, the “Purchasers”). 

RECITALS: 

A. The Company and the Purchasers are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by Section 4(a)(2) of the Securities Act. 

B. The Purchasers desire to purchase and the Company desires to sell, upon the terms and conditions stated in this Agreement, up to a maximum of $37,000,000 of Common Stock and warrants to purchase Common Stock of the Company. 

C. The capitalized terms used herein and not otherwise defined have the meanings given to them in Article 7. 

AGREEMENT 

In consideration of the premises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Purchasers (severally and not jointly) hereby agree as follows: 

ARTICLE 1 

PURCHASE AND SALE OF SECURITIES 

1.1 Purchase and Sale of Securities. At the Closing, the Company will issue and sell to each Purchaser, and each Purchaser will, severally and not jointly, purchase from the Company the number of shares of Common Stock (the “Shares”) and the number of warrants to purchase shares of Common Stock (the “Warrants”) as set forth opposite such Purchaser’s name on the Schedule of Purchasers set forth on Exhibit A hereto (the Shares and Warrants referred to collectively as the “Securities”). The purchase price for each Security shall be $0.8805 (the “Purchase Price”), which is the sum of (i) $0.8305 (the “Stock Purchase Price”), the consolidated closing bid price of the Common Stock as reported on Nasdaq (symbol “ABIO”) on the date of this Agreement, and (ii) $0.05. For each one Share purchased by a Purchaser, such Purchaser shall receive a Warrant to purchase 0.4 of a share of Common Stock at an exercise price per share equal to $0.8716, which represents 120% of the Stock Purchase Price minus $0.125 (subject to adjustments as provided in the Warrant) pursuant to a warrant substantially in the forms attached as Exhibit B-1 and B-2 hereto. 

1.2 Payment. At the Closing, each Purchaser will pay the aggregate Purchase Price set forth opposite its name on Exhibit A hereto by wire transfer of immediately available funds in accordance with wire instructions provided by the Company to the Purchasers prior to the Closing. 

1.3 Closing Date. The closing of the transaction contemplated by this Agreement will take place on June 16, 2015 (the “Closing Date”) and the closing (the “Closing”) will be held at the offices of Cooley LLP, 380 Interlocken Crescent, Suite 900, Broomfield, CO 80021, or at such other time and place as shall be agreed upon by the Company and the Purchasers holding a majority in interest of the Securities. 

1.4 Issuance of Securities at the Closing. The Company will instruct its transfer agent to credit each Purchaser the number of Shares set forth on the Schedule of Purchasers on Exhibit A (and, upon request, will deliver stock certificates to the Purchasers representing the Shares).  At the Closing, the Company shall issue or deliver to each Purchaser (a) evidence of a book entry position evidencing the Shares purchased by such Purchaser hereunder, registered in the name of such Purchaser, or in such nominee name(s) as designated by such Purchaser, representing the number of Shares to be purchased by such Purchaser at such Closing as set forth in the Schedule of Purchasers on Exhibit A hereto against payment of the purchase price for such Shares and (b) a Warrant registered in the name of such Purchaser, or in such nominee name(s) as designated by such Purchaser, representing the number of Underlying Shares as set forth in the Schedule of Purchasers on Exhibit A hereto.  The name(s) in which the shares and Warrant are to be issued to each Purchaser are set forth in the Schedule of Purchasers.

 

 

ARTICLE 2 

REPRESENTATIONS AND WARRANTIES OF THE COMPANY 

Except as specifically contemplated by this Agreement, the Company hereby represents and warrants to the Purchasers that: 

2.1 Organization and Qualification. The Company is duly incorporated, validly existing and in good standing under the laws of the State of Delaware, with full corporate power and authority to conduct its business as currently conducted as disclosed in the SEC Documents. The Company is duly qualified to do business and is in good standing in every jurisdiction in which the nature of the business conducted by it or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, would not reasonably be expected to have a Material Adverse Effect. 

2.2 Authorization; Enforcement. The Company has all requisite corporate power and authority to enter into and to perform its obligations under this Agreement, to consummate the transactions contemplated hereby and to issue the Securities in accordance with the terms hereof. The execution, delivery and performance of this Agreement by the Company and the consummation by it of the transactions contemplated hereby (including the issuance of the Securities) have been duly authorized by the Company’s board of directors and no further consent or authorization of the Company, its board of directors, or its stockholders is required. This Agreement and the Warrant has been (or upon delivery will have been) duly executed by the Company and constitutes a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, or moratorium or similar laws affecting creditors’ and contracting parties’ rights generally and except as enforceability may be subject to general principles of equity and except as rights to indemnity and contribution may be limited by state or federal securities laws or public policy underlying such laws. 

2.3 Capitalization. The authorized capital stock of the Company, as of June 10, 2015, consisted of 100,000,000 shares of Common Stock, of which 21,198,411 shares were issued and outstanding and 5,000,000 shares of blank check Preferred Stock, none of which are currently designated. All of the issued and outstanding shares of Common Stock have been duly authorized, validly issued, fully paid, and nonassessable. As of June 10, 2015, options to purchase an aggregate of 1,205,295 shares of Common Stock and restricted stock units with respect to an aggregate of 635,424 shares of Common Stock were outstanding. Except as disclosed in or contemplated by the SEC Documents, the Company does not have outstanding any options to purchase, or any preemptive rights or other rights to subscribe for or to purchase, any securities or obligations convertible into, or any contracts or commitments to issue or sell, shares of its capital stock or any such options, rights, convertible securities or obligations other than options and restricted stock units granted under the Company’s stock option plans. There are no bonds, debentures, notes or other indebtedness having general voting rights (or convertible into securities having such rights) (“Voting Debt”) of the Company issued and outstanding. The issuance and sale of the Shares and Warrants will not obligate the Company 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 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 Company’s knowledge, between or among any of the Company’s stockholders except as disclosed in SEC documents. The Company’s Amended and Restated Certificate of Incorporation, as amended (the “Certificate of Incorporation”), as in effect on the date hereof, and the Company’s Second Amended and Restated Bylaws, as amended (the “Bylaws”), as in effect on the date hereof, are each filed as exhibits to the SEC Documents.  

2.4 Issuance of Securities. The Shares and all of the shares of Common Stock issuable upon exercise of the Warrants (the “Exercise Shares”) are duly authorized and, upon issuance in accordance with the terms of this Agreement (and in case of the Exercise Shares, the Warrants), will be validly issued, fully paid and non-assessable and will not be subject to preemptive rights or other similar rights of stockholders of the Company. Assuming the accuracy of the representations and warranties of the Purchasers in this Agreement, the offer and issuance by the Company of the Securities is exempt from registration under the Securities Act and the Securities will be issued in compliance in all material respects with all applicable federal and state securities laws.    

2.5 No Conflicts; Government Consents and Permits.

(a) The execution, delivery and performance of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby (including the issuance of the Securities) will not (i) conflict with or result in a violation of any provision of its Certificate of Incorporation or Bylaws or require the approval of the Company’s stockholders, (ii) violate or conflict with, or result in a breach of any provision of, or constitute a default under, any agreement, credit facility, indenture, or instrument to which the Company is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations and regulations of any self-regulatory organizations to which the Company or its securities are subject) applicable to the Company, except in the case of clauses (ii) and (iii) only, for such conflicts, breaches, defaults, and violations as would not reasonably be expected to have a Material Adverse Effect. 

(b) 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 this Agreement in accordance with the terms hereof, or to issue and sell the Securities in accordance with the terms hereof other 

 

 

than such as have been made or obtained, and except for the registration of the Shares and Exercise Shares under the Securities Act pursuant to Section 6 hereof, any filings required to be made under federal or state securities laws, and any required filings or notifications regarding the issuance or listing of additional shares with Nasdaq. 

(c) The Company has all franchises, permits, licenses, and any similar authority necessary for the conduct of its business as now being conducted by it and as currently proposed to be conducted as disclosed in the SEC Documents, except for such franchise, permit, license or similar authority, the lack of which would not reasonably be expected to have a Material Adverse Effect. The Company has not received any actual notice of any proceeding relating to revocation or modification of any such franchise, permit, license, or similar authority except where such revocation or modification would not reasonably be expected to have a Material Adverse Effect. 

2.6 SEC Documents, Financial Statements. The Company has timely filed all reports, schedules, forms, statements and other documents required to be filed by it with the SEC since March 31, 2014, pursuant to the reporting requirements of the Exchange Act (all of the foregoing filed prior to the date hereof and all exhibits included therein and financial statements and schedules thereto and documents (other than exhibits) incorporated by reference therein, being hereinafter referred to herein as the “SEC Documents”). The Company is eligible to register its Common Stock for resale using Form S-3 promulgated under the Securities Act. The Company has delivered to each Purchaser, or each Purchaser has had access to, true and complete copies of the SEC Documents. As of their respective dates, the SEC Documents complied in all material respects with the requirements of the Exchange Act or the Securities Act, as the case may be, and none of the SEC Documents, at the time they were filed with the SEC, 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, the Financial Statements and the related notes complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto. The Financial Statements and the related notes have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”), consistently applied, during the periods involved (except (i) as may be otherwise indicated in the Financial Statements or the notes thereto, or (ii) in the case of unaudited interim statements, to the extent they may not include footnotes, may be condensed or summary statements or may conform to the SEC’s rules and instructions for Reports on Form 10-Q) and fairly present in all material respects the consolidated financial position of the Company as of the dates thereof and the consolidated results of its operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal and recurring year-end audit adjustments). All material agreements that were required to be filed as exhibits to the SEC Documents under Item 601 of Regulation S-K (collectively, the “Material Agreements”) to which the Company or any Subsidiary of the Company is a party, or the property or assets of the Company or any Subsidiary of the Company are subject, have been filed as exhibits to the SEC Documents. All Material Agreements are valid and enforceable against the Company in accordance with their respective terms, except (i) as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ and contracting parties’ rights generally, and (ii) as enforceability may be subject to general principles of equity and except as rights to indemnity and contribution may be limited by federal or state securities laws or public policy underlying such laws. The Company is not in breach of or default under any of the Material Agreements, and to the Company’s knowledge, no other party to a Material Agreement is in breach of or default under such Material Agreement, except in each case, for such breaches or defaults as would not reasonably be expected to have a Material Adverse Effect. The Company has not received a notice of termination nor is the Company otherwise aware of any threats to terminate any of the Material Agreements. 

2.7 Disclosure Controls and Procedures. Except as disclosed in the SEC Documents, the Company has established and maintains disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) that are effective in all material respects to ensure that material information relating to the Company, including any consolidated Subsidiaries, is made known to its principal executive officer and principal financial officer by others within those entities. The Company’s certifying officers have evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by the most recently filed quarterly or annual periodic report under the Exchange Act (such date, the “Evaluation Date”). The Company presented in its most recently filed quarterly or annual periodic report under the Exchange Act the conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation Date. Since the Evaluation Date, there have been no significant changes in the Company’s internal control over financial reporting (as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) or, to the Company’s knowledge, in other factors that could significantly affect the Company’s internal control over financial reporting. 

2.8 Accounting Controls. Except as disclosed in the SEC Documents, the Company maintains a system of internal accounting controls sufficient to provide reasonable assurances that (i) transactions are executed in accordance with management’s general or specific authorization, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with U.S. GAAP and to maintain accountability for assets, (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 existing assets at reasonable intervals and appropriate action is taken with respect to any differences. The Company’s internal controls over financial reporting are effective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP and the Company is not aware of any material weakness in its internal controls over financial 

 

 

reporting.  The Company maintains “disclosure controls and procedures” (as such term is defined in Rule 13a-15(e) under the Exchange Act); such disclosure controls and procedures are effective.

2.9 Sarbanes-Oxley Act.  There is and has been no failure on the part of the Company and any of the Company’s directors or officers, in their capacities as such, to comply with any applicable provision of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in connection therewith in all material respects, including, without limitation, Section 402 relating to loans.

2.10 Absence of Litigation. As of the date hereof, there is no action, suit, proceeding or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the Company’s knowledge, threatened against the Company that if determined adversely to the Company would reasonably be expected to have a Material Adverse Effect or would reasonably be expected to impair the ability of the Company to perform its obligations under this Agreement. Neither the Company, 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 relating to the Company. There has not been, and to the knowledge of the Company, there is not pending or contemplated, any investigation by the SEC of the Company or any current or former director or officer of the Company. The Company has not received any stop order or other order suspending the effectiveness of any registration statement filed by the Company under the Exchange Act or the Securities Act and, to the Company’s knowledge, the SEC has not issued any such order. 

2.11 Intellectual Property Rights. The Company owns or possesses, or has a reasonable basis on which it believes it can obtain on reasonable terms, licenses or sufficient rights to use all patents, patent applications, patent rights, inventions, know-how, trade secrets, trademarks, trademark applications, service marks, service names, trade names and copyrights necessary to conduct its business as conducted as of the date hereof and, to its knowledge, as proposed to be conducted as described in the SEC Documents (the “Intellectual Property”). To the Company’s knowledge, the Company has not materially infringed the intellectual property rights of third parties and no third party, to the Company’s knowledge, is materially infringing the Intellectual Property. There is no pending or, to the Company’s knowledge, threatened action, suit, proceeding or claim by a third party that the Company’s business as now conducted infringes or otherwise violates any patent, trademark, copyright, trade secret or other proprietary rights of another. Except as disclosed in the SEC Documents, there are no material options, licenses or agreements relating to the Intellectual Property, nor is the Company bound by or a party to any material options, licenses or agreements relating to the patents, patent applications, patent rights, inventions, know-how, trade secrets, trademarks, trademark applications, service marks, service names, trade names or copyrights of any other person or entity. There is no material claim or action or proceeding pending or, to the Company’s knowledge, threatened that challenges any of the rights of the Company in or to, or otherwise with respect to, any Intellectual Property. 

2.12 Placement Agent. The Company has taken no action that would give rise to any claim by any Person for brokerage commissions, placement agent’s fees or similar payments relating to this Agreement or the transactions contemplated hereby, except for dealings with the Placement Agent, whose commissions and fees will be paid by the Company. 

2.13 Investment Company. The Company is not and, after giving effect to the offering and sale of the Securities, will not be an “investment company” as such term is defined in the Investment Company Act of 1940, as amended (the “Investment Company Act”). The Company shall conduct its business in a manner so that it will not become subject to the Investment Company Act. 

2.14 No Material Adverse Change. Since March 31, 2015, except as described or referred to in the SEC Documents and except for cash expenditures in the ordinary course of business, there has not been any change in the assets, business, properties, financial condition or results of operations of the Company that would reasonably be expected to have a Material Adverse Effect. Since March 31, 2015, (i) there has not been any dividend or distribution of any kind declared, set aside for payment, paid or made by the Company on any class of capital stock, (ii) the Company has not sustained any material loss or interference with the Company’s business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor disturbance or dispute or any action, order or decree of any court or arbitrator or governmental or regulatory authority, (iii) the Company has not incurred any material liabilities except in the ordinary course of business, and (vi) the Company has not altered materially its method of accounting or the manner in which it keeps its accounting books and records.

2.15 The Nasdaq Capital Market. The Common Stock is listed on The Nasdaq Capital Market, and, except as disclosed in the SEC Documents, to the Company’s knowledge, there are no proceedings to revoke or suspend such listing or for the listing of the Shares and the Exercise Shares.  Except as disclosed in the SEC Documents, the Company is in compliance with the requirements of Nasdaq for continued listing of the Common Stock thereon and any other Nasdaq listing and maintenance requirements.

2.16 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 this Agreement and the transactions contemplated hereby. 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 Company) with respect to this Agreement and the transactions contemplated hereby and any advice given by any Purchaser or any of their respective representatives or agents to the Company in connection with this Agreement and the transactions contemplated hereby is merely incidental to such Purchaser’s purchase of the Securities. The 

 

 

Company further represents to each Purchaser that the Company’s decision to enter into this Agreement has been based on the independent evaluation of the transactions contemplated hereby by the Company and its representatives. 

2.17 Accountants. The Company’s independent registered public accounting firm is identified in the SEC Reports and such accounting firm is a registered public accounting firm as required by the Exchange Act and are independent public accountants with respect to the Company within the meaning of Sarbanes-Oxley Act of 2002 and the applicable published rules and regulations thereunder. 

2.18 Insurance. The Company is insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as the Company believes are prudent and customary for a company (i) in the businesses and location in which the Company is engaged, (ii) with the resources of the Company, and (iii) at a similar stage of development as the Company. All policies of insurance and fidelity or surety bonds insuring the Company or its businesses, assets, employees, officers and directors are in full force and effect. The Company is in compliance with the terms of such policies and instruments in all material respects; and there are no claims by the Company under any such policy or instrument as to which any insurance company is denying liability or defending under a reservation of rights clause. The Company has not received any written notice that the Company will not be able to renew its existing insurance coverage as and when such coverage expires. The Company believes it will be able to obtain similar coverage at reasonable cost from similar insurers as may be necessary to continue its business.  

2.19 Foreign Corrupt Practices. Since June 1, 2010, neither the Company, nor to the Company’s knowledge, any director, officer, agent, employee or other Person acting on behalf of the Company has, in the course of its actions for, or on behalf of, the Company (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity, (ii) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds, (iii) violated or is in violation of in any material respect any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”), or (iv) made any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or domestic government official or employee. Neither the Company, nor, to the Company’s knowledge, any of its officers, directors, agents, employees or any other person acting on behalf of the Company are the subject of any allegation, voluntary disclosure, investigation, prosecution or other enforcement action related to the FCPA or any other anti-corruption law.

2.20 Private Placement. Neither the Company nor its Subsidiary or any 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 any circumstances that would require (i) registration of the Securities under the Securities Act or (ii) cause the offering of the Securities pursuant to this Agreement to be integrated with prior offerings by the Company for purposes of any applicable law, regulation or stockholder approval provisions, including, without limitation, under the rules and regulations of Nasdaq. Assuming the accuracy of the representations and warranties of the Purchasers contained in Article 3 hereof, the issuance of the Securities and the Exercise Shares are exempt from registration under the Securities Act. Neither the Company nor any Person acting on its behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D promulgated under the Securities Act) in connection with the offer or sale of the Securities.

2.21 No Registration Rights. No Person has the right to (i) prohibit the Company from filing a Registration Statement or (ii) other than as disclosed in the SEC Documents, require the Company to register any securities for sale under the Securities Act by reason of the filing of a Registration Statement except in the case of clause (ii) for rights which have been properly waived. The granting and performance of the registration rights under this Agreement will not violate or conflict with, or result in a breach of any provision of, or constitute a default under, any agreement, indenture, or instrument to which the Company is a party. 

2.22 Taxes. The Company has timely filed (or has obtained an extension of time within which to file) all necessary federal, state and foreign income and franchise tax returns and has paid all taxes shown as due on such tax returns, except where the failure to so file or the failure to so pay would not reasonably be expected to have a Material Adverse Effect. There are no unpaid taxes in any material amount claimed by the taxing authority of any jurisdiction to be due by the Company, and, to the Company’s knowledge, there is no basis for any such claim.

2.23 Real and Personal Property. The Company has good and marketable title to, or has valid rights to lease or otherwise use, all items of real and personal property that are material to the business of the Company free and clear of all liens, encumbrances, claims and defects and imperfections of title except those that (i) do not materially interfere with the use of such property by the Company or (ii) would not reasonably be expected to have a Material Adverse Effect. 

2.24 Application of Takeover Protections. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby will not impose any restriction on any Purchaser, or create in any party (including any current stockholder of the Company) any rights, under any share acquisition, business combination, poison pill (including any distribution under a rights agreement), or other similar anti-takeover provisions under the Company’s Certificate of Incorporation or the laws of its state of incorporation. 

 

 

2.25 No Manipulation of Stock. The Company has not taken, nor will it take, directly or indirectly any action designed to stabilize or manipulate the price of the Common Stock or any security of the Company to facilitate the sale or resale of any of the Shares. 

2.26 Related-Party Transactions. Except with respect to the transactions (i) that are not required to be disclosed and (ii) contemplated hereby to the extent an Affiliate of any director purchases Securities hereunder, all transactions that have occurred between or among the Company, on the one hand, and any of its officers or directors, or any Affiliate or Affiliates of any such officer or director, on the other hand, prior to the date hereof have been disclosed in the SEC Documents. 

2.27 Use of Proceeds. The Company shall use the net proceeds of the sale of the Securities hereunder for research and development of the Company’s product candidates, working capital and general corporate purposes. 

2.28 Compliance.  The Company: (i) is not 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), nor has the Company 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 not in violation of any judgment, decree, or order of any court, arbitrator or other governmental authority; or (iii) is not nor has it been in violation of any statute, rule, ordinance or regulation of any governmental authority, including without limitation all foreign, federal, state and local laws relating to taxes, environmental protection, occupational health and safety, product quality and safety and employment and labor matters, except in each case as would not reasonably be expected to result in a Material Adverse Effect.

2.29 No Change in Control.  The sale of the Securities will not constitute a corporate transaction, as such term is defined in and, for the purposes of any employment agreement between the Company and any of its executive officers.  Further, the sale of the Securities will not (a) constitute a change of control of the Company or any similar transaction under (i) the Company’s certificate of incorporation or  (ii) the Company’s bylaws, (b) constitute a breach or default, or provide the basis for termination, of any Material Agreement, or (c) constitute an event that would accelerate any rights or payment obligations under any Material Agreement.

2.30 FDA Compliance.  Except as would not, individually or in the aggregate, result in a Material Adverse Effect or as disclosed described in or referred to in the SEC Documents:  (i) the Company is and has been in compliance with statutes, laws, ordinances, rules and regulations applicable to the Company for the ownership, testing, development, manufacture, packaging, processing, use, labeling, storage, or disposal of any product manufactured by or on behalf of the Company (a “Company Product”), including without limitation, the Federal Food, Drug, and Cosmetic Act, 21 U.S.C.  § 301, et seq., the Public Health Service Act, 42 U.S.C.  § 262, similar laws of other governmental entities and the regulations promulgated pursuant to such laws (collectively, “Applicable Laws”); (ii) the Company possesses all licenses, certificates, approvals, authorizations, permits and supplements or amendments thereto required by any such Applicable Laws and/or for the ownership of its properties or the conduct of its business as it relates to a Company Product and as described in the SEC Documents (collectively, “Authorizations”) and such Authorizations are valid and in full force and effect and the Company is not in violation of any term of any such Authorizations; (iii) the Company has not received any written notice of adverse finding, warning letter or other written correspondence or notice from the U.S.  Food and Drug Administration (the “FDA”) or any other governmental entity alleging or asserting noncompliance with any Applicable Laws or Authorizations relating to a Company Product; (iv) the Company has not received written notice of any ongoing claim, action, suit, proceeding, hearing, enforcement, investigation, arbitration or other action from any governmental entity or third party alleging that any Company Product, operation or activity related to a Company Product is in violation of any Applicable Laws or Authorizations or has any knowledge that any such governmental entity or third party is considering any such claim, litigation, arbitration, action, suit, investigation or proceeding, nor, to the Company’s knowledge, has there been any noncompliance with or violation of any Applicable Laws by the Company that would reasonably be expected to require the issuance of any such written notice or result in an investigation, corrective action, or enforcement action by the FDA or similar governmental entity with respect to a Company Product; (v) the Company has not received written notice that any governmental entity has taken, is taking or intends to take action to limit, suspend, modify or revoke any Authorizations or has any knowledge that any such governmental entity has threatened or is considering such action with respect to a Company Product; and (vi) the Company has filed, obtained, maintained or submitted all material reports, documents, forms, notices, applications, records, claims, submissions and supplements or amendments as required by any Applicable Laws or Authorizations and that all such reports, documents, forms, notices, applications, records, claims, submissions and supplements or amendments were complete, correct and not misleading on the date filed (or were corrected or supplemented by a subsequent submission) in all material respects.  To the Company’s knowledge, neither the Company nor any of its directors, officers, employees or agents, has made, or caused the making of, any false statements on, or material omissions from, any other records or documentation prepared or maintained to comply with the requirements of the FDA or any other governmental entity related to a Company Product.

2.31 Compliance in Clinical Trials.  The clinical studies and tests conducted by the Company or on behalf of the Company, have been and, if still pending, are being conducted in all material respects pursuant to all Applicable Laws and Authorizations; the descriptions of the results of such clinical studies and tests contained in the SEC Documents are accurate and complete in all material respects and fairly present the data derived from such clinical studies and tests.

 

 

2.32 Environmental Laws.  The Company (i) is 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, the environment or hazardous or toxic substances or wastes, pollutants or contaminants (“Environmental Laws”), (ii) has received and is in material compliance with all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct its business and (iii) has not received notice of any actual or potential liability under any environmental law, except where such non-compliance with Environmental Laws, failure to receive required permits, licenses or other approvals, or liability would not, individually or in the aggregate, have a Material Adverse Effect, whether or not arising from transactions in the ordinary course of business.  The Company has not been named as a “potentially responsible party” under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended.

2.33 Labor.  No labor problem or dispute with the employees of the Company exists or, to the knowledge of the Company, is threatened, and the Company is not aware of any existing or imminent labor disturbance by the employees of any of its principal suppliers or contractors, that could have a Material Adverse Effect, whether or not arising from transactions in the ordinary course of business, except as contemplated in the SEC Documents.

2.34 ERISA.  None of the following events has occurred or exists:  (i) a failure to fulfill the obligations, if any, under the minimum funding standards of Section 302 of the United States Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and the regulations and published interpretations thereunder with respect to a Plan that is required to be funded, determined without regard to any waiver of such obligations or extension of any amortization period; (ii) an audit or investigation by the Internal Revenue Service, the U.S.  Department of Labor, the Pension Benefit Guaranty Corporation or any other federal or state governmental agency or any foreign regulatory agency with respect to the employment or compensation of employees by any of the Company that could have a Material Adverse Effect; (iii) any breach of any contractual obligation, or any violation of law or applicable qualification standards, with respect to the employment or compensation of employees by the Company that would reasonably be expected to have a Material Adverse Effect.  None of the following events has occurred or is reasonably likely to occur:  (i) a material increase in the aggregate amount of contributions required to be made to all Plans in the current fiscal year of the Company compared to the amount of such contributions made in the most recently completed fiscal year of the Company; (ii) a material increase in the “accumulated post-retirement benefit obligations” (within the meaning of Statement of Financial Accounting Standards 106) of the Company compared to the amount of such obligations in the most recently completed fiscal year of the Company; (iii) any event or condition giving rise to a liability under Title IV of ERISA that could have a Material Adverse Effect; or (iv) the filing of a claim by one or more employees or former employees of the Company related to their employment that could have a Material Adverse Effect.  For purposes of this paragraph, the term “Plan” means a plan (within the meaning of Section 3(3) of ERISA) subject to Title IV of ERISA with respect to which the Company may have any liability.

ARTICLE 3 

PURCHASER’S REPRESENTATIONS AND WARRANTIES 

Each Purchaser represents and warrants to the Company, severally and not jointly, with respect to itself and its purchase hereunder, that: 

3.1 Investment Purpose. The Purchaser is purchasing the Securities for its own account and not with a present view toward the public sale or distribution thereof and has no intention of selling or distributing any of such Securities or any arrangement or understanding with any other Persons regarding the sale or distribution of such Securities except in accordance with the provisions of Article 7 and except as would not result in a violation of the Securities Act. The Purchaser will not, directly or indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase or otherwise acquire or take a pledge of) any of the Securities except in accordance with the provisions of Article 7 or pursuant to and in accordance with the Securities Act. 

3.2 Questionnaires. The stock certificate and warrant questionnaire and the registration statement questionnaire submitted by the Purchaser to the Company in connection with its purchase of the Securities were accurate and correct when delivered and are accurate and correct as of the date hereof.

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

3.4 Information. The Purchaser has been furnished with all relevant materials relating to the business, finances and operations of the Company necessary to make an investment decision, and materials relating to the offer and sale of the Securities, that have been requested by the Purchaser, including, without limitation, the Company’s SEC Documents, and the Purchaser has had the opportunity to review the SEC Documents. The Purchaser has been afforded the opportunity to ask questions of the Company. Neither such inquiries nor any other investigation conducted by or on behalf of such Purchaser or its representatives or counsel shall modify, amend 

 

 

or affect such Purchaser’s right to rely on the truth, accuracy and completeness of the SEC Documents and the Company’s representations and warranties contained in the Agreement. 

3.5 Acknowledgement of Risk.

(a) The Purchaser acknowledges and understands that its investment in the Securities involves a significant degree of risk, including, without limitation, that: (i) the Company is a business with limited operating history and requires substantial funds in addition to the proceeds from the sale of the Securities; (ii) an investment in the Company is speculative, and only Purchasers who can afford the loss of their entire investment should consider investing in the Company and the Securities; (iii) the Purchaser may not be able to liquidate its investment; (iv) transferability of the Securities is extremely limited; (v) in the event of a disposition of the Securities, the Purchaser could sustain the loss of its entire investment; and (vi) the Company has not paid any dividends on its Common Stock since inception and does not anticipate the payment of dividends in the foreseeable future. Such risks are more fully set forth in the SEC Documents; 

(b) The Purchaser is able to bear the economic risk of holding the Securities for an indefinite period, and has knowledge and experience in financial and business matters such that it is capable of evaluating the risks of the investment in the Securities; and 

(c) The Purchaser has, in connection with the Purchaser’s decision to purchase Securities, not relied upon any representations or other information (whether oral or written) other than as set forth in the representations and warranties of the Company contained herein and the SEC Documents, and the Purchaser has, with respect to all matters relating to this Agreement and the offer and sale of the Securities, relied solely upon the advice of such Purchaser’s own counsel and has not relied upon or consulted counsel to the Placement Agent or counsel to the Company.

(d) The Purchaser is an accredited investor as defined in Rule 501(a) of Regulation D promulgated under the Securities Act.

3.6 Governmental Review. The Purchaser understands that no United States federal or state agency or any other government or governmental agency has passed upon or made any recommendation or endorsement of the Securities or an investment therein. 

3.7 Transfer or Resale. The Purchaser understands that: 

(a) the Securities have not been and are not being registered under the Securities Act (other than as contemplated in Article 6) or any applicable state securities laws and, consequently, the Purchaser may have to bear the risk of owning the Securities for an indefinite period of time because the Securities may not be transferred unless: (i) the resale of the Securities is registered pursuant to an effective Registration Statement under the Securities Act, as contemplated in Article 6; (ii) the Purchaser has delivered to the Company an opinion of counsel (in form, substance and scope customary for opinions of counsel in comparable transactions) to the effect that the Securities to be sold or transferred may be sold or transferred pursuant to an exemption from such registration; (iii) the Securities are sold or transferred pursuant to Rule 144; or (iv) the Purchaser is a partnership transferring to its partners or former partners in accordance with partnership interests or a limited liability company transferring to its members or former members in accordance with their interest in the limited liability company;

(b) any sale of the Securities made in reliance on Rule 144 may be made only in accordance with the terms of Rule 144 and, if Rule 144 is not applicable, any resale of the Securities under circumstances in which the seller (or the Person through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the Securities Act) may require compliance with some other exemption under the Securities Act or the rules and regulations of the SEC thereunder; and 

(c) except as set forth in Article 7, neither the Company nor any other Person is under any obligation to register the resale of the Shares or the Exercise Shares under the Securities Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder. 

3.8 Legends. 

(a) The Purchaser understands that the certificates representing the Securities will bear a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of the certificates for such Securities): 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THE SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER APPLICABLE SECURITIES LAWS, OR UNLESS OFFERED, SOLD, PLEDGED, HYPOTHECATED OR TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS. THE COMPANY SHALL BE ENTITLED TO REQUIRE AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED TO THE EXTENT THAT SUCH OPINION IS REQUIRED PURSUANT TO THAT CERTAIN SECURITIES PURCHASE AGREEMENT UNDER WHICH THE SECURITIES WERE ISSUED. 

 

 

(b) The Company agrees that at such time as such legend is no longer required under this Section, it will, no later than three business days following the delivery by a Purchaser to the Company or the Company’s transfer agent of a certificate representing Shares or Exercise Shares, as applicable, and if such Shares are certificated, issued with a restrictive legend, together with such representations and covenants of such Purchaser or such Purchaser’s executing broker as the Company may reasonably require in connection therewith, deliver or cause to be delivered to such Purchaser a certificate or book entry position representing such shares that is free from any legend referring to the Securities Act.  The Company shall not make any notation on its records or give instructions to any transfer agent of the Company that enlarge the restrictions on transfer set forth in this Section.  Certificates for Securities subject to legend removal hereunder shall be transmitted by the transfer agent of the Company to the Purchasers by crediting the account of such Purchaser’s prime broker with the Depository Trust Company (the “DTC”).  All costs and expenses related to the removal of the legends and the reissuance of any Securities shall be borne by the Company.

(c) Upon request by a Holder, the Company shall promptly cause the restrictive legend set forth in this section above to be removed and the Company shall issue a certificate or book entry position without such restrictive legend or any other restrictive legend to the holder of the applicable shares upon which it is stamped or issue to such holder by electronic delivery with the applicable balance account at the DTC or in physical certificated shares, if appropriate, if (i) such Shares and Exercise Shares are registered for resale under the Securities Act (provided that, if the Purchaser is selling pursuant to the effective registration statement registering the Securities for resale, the Purchaser agrees to only sell such Shares during such time that such registration statement is effective and such Purchaser is not aware or has not been notified by the Company that such registration statement has been withdrawn or suspended, and only as permitted by such registration statement); (ii) such Shares are sold or transferred pursuant to Rule 144 (if the transferor is not an affiliate of the Company); or (iii) such Shares are eligible for sale without compliance with the 90-day volume restrictions pursuant to Rule 144.  Subject to receipt of such representations, and covenants as are contemplated hereby, following the earlier of (i) the effective date of the Registration Statement or (ii) Rule 144 becoming available for the resale of the Shares and Exercise Shares, without compliance with the volume restrictions pursuant to Rule 144, the Company shall issue to the Company’s transfer agent the instructions with respect to legend removal consistent with this Section.  Following the time a legend is no longer required for the Shares or Exercise Shares under this Section3.8(c), the Company will, no later than three Business Days following the delivery by a Purchaser to the Company or the Company’s transfer agent of a legended certificate representing such securities, (A) deliver or cause to be delivered to such Purchaser a certificate or book entry position representing such securities that is free from all restrictive and other legends or (B) at the request of the Purchaser, cause its transfer agent to issue such Shares and/or Exercise Shares without such legends to the holders thereof by electronic delivery at the applicable balance account at the DTC.  Certificates for the Shares or Exercise Shares subject to legend removal hereunder may be transmitted by the Company’s transfer agent to a Purchaser by crediting the account of the Purchaser’s prime broker with DTC as directed by such Purchaser.  Any fees (with respect to the transfer agent, the Company’s counsel or otherwise) associated with the issuance of such opinion or the removal of such legend shall be borne by the Company.

3.9 Authorization; Enforcement. The Purchaser has the requisite power and authority to enter into this Agreement and to consummate the transactions contemplated hereby. The Purchaser has taken all necessary action to authorize the execution, delivery and performance of this Agreement. Upon the execution and delivery of this Agreement, this Agreement shall constitute a valid and binding obligation of the Purchaser enforceable in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ and contracting parties’ rights generally and except as enforceability may be subject to general principles of equity and except as rights to indemnity and contribution may be limited by federal or state securities laws or public policy underlying such laws. 

3.10 Residency. The Purchaser is a resident of the jurisdiction set forth immediately below such Purchaser’s name on the signature pages hereto. 

3.11 No Short Sales. Between the time the Purchaser learned about the Offering and the public announcement of the Offering, the Purchaser has not engaged in any short sales or similar transactions with respect to the Common Stock, nor has the Purchaser, directly or indirectly, caused any Person to engage in any short sales or similar transactions with respect to the Common Stock. 

3.12 Acknowledgements Regarding Placement Agent. The Purchaser acknowledges that the Placement Agent is acting as the exclusive placement agent on a “best efforts” basis for the Securities being offered hereby and will be compensated by the Company for acting in such capacity. The Purchaser represents that (i) the Purchaser was contacted regarding the sale of the Securities by the Placement Agent (or an authorized agent or representative thereof) with whom the Purchaser entered into a confidentiality agreement and (ii) no Securities were offered or sold to it by means of any form of general solicitation or general advertising. 

3.13 “Bad Actor” Matters.  The Purchaser hereby represents that no Disqualification Events (as defined below) are applicable to Purchaser or any of its Rule 506(d) Related Parties (as defined below), except, if applicable, for a Disqualification Event as to which Rule 506(d)(2)(ii) or (iii) or (d)(3) is applicable.  Purchaser hereby agrees that it shall notify the Company promptly in writing in the event a Disqualification Event becomes applicable to Purchaser or any of its Rule 506(d) Related Parties, except, if applicable, for a Disqualification Event as to which Rule 506(d)(2)(ii) or (iii) or (d)(3) is applicable.  For purposes of this Section 3.13, (a) “Disqualification Event” shall mean any of the “bad actor” disqualifications described in Rule 506(d)(1)(i) through (viii) under the 

 

 

Securities Act and (b) “Rule 506(d) Related Party” shall mean a person or entity that is a beneficial owner of Purchaser’s securities for purposes of Rule 506(d) of the Securities Act. 

ARTICLE 4 

COVENANTS 

4.1 Reporting Status. The Company’s Common Stock is registered under Section 12(g) of the Exchange Act. During the Registration Period, the Company will use commercially reasonable efforts to timely file all documents with the SEC, and the Company will not terminate its status as an issuer required to file reports under the Exchange Act even if the Exchange Act or the rules and regulations thereunder would permit such termination. 

4.2 Expenses. The Company and each Purchaser is liable for, and will pay, its own expenses incurred in connection with the negotiation, preparation, execution and delivery of this Agreement, including, without limitation, attorneys’ and consultants’ fees and expenses; provided that at the Closing the Company will reimburse Venrock Healthcare Capital Partners, L.P. (“Venrock”) and Venrock Healthcare Capital Partners II, L.P. for all documented and reasonable consulting, legal and other out of pocket expenses incurred by them related to the consummation of the transactions contemplated by this Agreement up to a maximum of $50,000.  

4.3 Financial Information. The financial statements of the Company to be included in any documents filed with the SEC will be prepared in accordance with U.S. GAAP, consistently applied (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 not include footnotes, may be condensed or summary statements or may conform to the SEC’s rules and instructions for Reports on Form 10-Q), and will fairly present in all material respects the financial position of the Company and results of its operations and cash flows as of, and for the periods covered by, such financial statements (subject, in the case of unaudited statements, to normal and recurring year-end audit adjustments). 

4.4 Securities Laws Disclosure; Publicity. On or before 9:30 a.m., New York local time, on June 11, 2015, the Company shall issue a press release announcing the signing of this Agreement and describing the terms of the transactions contemplated by this Agreement. On or before June 16, 2015, the Company shall file a Current Report on Form 8-K with the SEC describing the terms of the transactions contemplated by this Agreement and including as an exhibit to such Current Report on Form 8-K this Agreement and the Forms of Warrant in the form required by the Exchange Act. The Company shall not otherwise publicly disclose the name of any Purchaser (other than in the press release described in this Section 4.4), or include the name of any Purchaser in any filing with the SEC (other than in a Registration Statement and any exhibits to filings made in respect of this transaction in accordance with periodic filing requirements under the Exchange Act) or any regulatory agency, without the prior written consent of such Purchaser, except to the extent such disclosure is required by law or regulations, in which case the Company shall provide the Purchasers with prior notice of such disclosure.  

4.5 Sales by Purchasers. Each Purchaser will sell any Securities and Exercise Shares held by it in compliance with applicable prospectus delivery requirements, if any, or otherwise in compliance with the requirements for an exemption from registration under the Securities Act. No Purchaser will make any sale, transfer or other disposition of the Securities in violation of federal or state securities laws. 

4.6 Reservation of Common Stock. As of the Closing Date, the Company shall have reserved and shall keep available at all times during which the Warrants remain exercisable, free of preemptive rights, the number of shares of Common Stock issuable upon exercise of the Warrants (without taking into account any limitations on the exercise of the Warrants set forth in the Warrants).  

4.7 Certain Board Rights.  Effective upon the Closing, for so long as Venrock (with its Affiliates) beneficially owns at least 10% of the outstanding shares of Common Stock (as adjusted for stock splits and combinations)  calculated in accordance with Section 13(d) and Rule 13d-3 of the Exchange Act:

(a) The Company shall allow one representative designated by Venrock to attend all meetings of the Company’s board of directors and its committees in a nonvoting capacity, and in connection therewith, the Company shall give such representative copies of all notices, minutes, consents and other materials, financial or otherwise, which the Company provides to its board of directors; provided, however, that the Company reserves the right to exclude such representative from access to any material or meeting or portion thereof if the Company reasonably determines upon advice of counsel that such exclusion is reasonably necessary to preserve the attorney-client privilege or to protect highly confidential information; 

(b) Venrock shall have the option, upon written notice to the Company, to require the Company’s board of directors to authorize and appoint one additional director to serve on the board of directors, such director to be designated by Venrock and reasonably acceptable to the Company (the “Venrock Director”); and   

(c) If the Venrock Director has been appointed to the Company’s board of directors, the board of directors of the Company shall nominate for approval by the Company’s stockholders, at each subsequent annual meeting of the Company’s stockholders for the 

 

 

election of directors or special meeting for the election of directors, the Venrock Director for re-election to the Company’s board of directors; provided that the term of office of the Venrock Director is expiring at such annual meeting or special meeting.   

4.8 Compliance with Nasdaq Continued Listing Requirements.  The Company will use commercially reasonable efforts to continue the listing and trading of its Common Stock on Nasdaq and, in accordance, therewith, will use commercially reasonable efforts to comply in all respects with the Company’s reporting, filing and other obligations under the bylaws or rules of such market or exchange, as applicable. If the per share bid price of the Common Stock does not meet or exceed the $1.00 minimum bid price requirement imposed by Nasdaq prior to the expiration of the 180-day grace period, the Company shall use commercially reasonable efforts to effect a reverse stock split in order to maintain compliance with the listing requirements for continued listing of the Common Stock on Nasdaq.

4.9 No Integration. The Company shall not, and shall use its commercially reasonable efforts to ensure that no Affiliate of the Company shall, 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 the Company reasonably determines would be integrated with the offer or sale of the Securities in a manner that would require the registration under the Securities Act of the sale of the Securities to the Purchasers, or that the Company reasonably determines would be integrated with the offer or sale of the Securities for purposes of the rules and regulations of Nasdaq such that it would require stockholder approval prior to the closing of such other transaction unless stockholder approval is obtained before the closing of such subsequent transaction.

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

ARTICLE 5 

CONDITIONS TO CLOSING 

5.1 Conditions to Obligations of the Company. The Company’s obligation to complete the purchase and sale of the Securities and deliver such stock certificate(s) and Warrants to each Purchaser is subject to the waiver by the Company or fulfillment as of the Closing Date of the following conditions: 

(a) Receipt of Funds. The Company shall have received immediately available funds in the aggregate amount of the Purchase Price for the Securities being purchased hereunder as set forth opposite such Purchaser’s name on Exhibit A hereto. 

(b) Representations and Warranties. The representations and warranties made by each Purchaser in Article 3 shall be true and correct in all material respects as of the Closing Date. 

(c) Covenants. All covenants, agreements and conditions contained in this Agreement to be performed by the Purchasers on or prior to the Closing Date shall have been performed or complied with in all material respects. 

(d) Absence of Litigation. No proceeding challenging this Agreement or the transactions contemplated hereby, or seeking to prohibit, alter, prevent or materially delay the Closing, shall have been instituted or be pending before any court, arbitrator, governmental body, agency or official. 

(e) No Governmental Prohibition. The sale of the Securities by the Company shall not be prohibited by any law or governmental order or regulation. 

5.2 Conditions to Purchasers’ Obligations at the Closing. Each Purchaser’s obligation to complete the purchase and sale of the Securities is subject to the waiver by such Purchaser or fulfillment as of the Closing Date of the following conditions: 

(a) Representations and Warranties. The representations and warranties made by the Company in Article 2 shall be true and correct in all material respects as of the date when made and as of the Closing Date (except for those representations and warranties which are qualified as to materiality, in which case, for purposes of the Purchasers’ Obligations to Closing, shall be correct as made in Article 2). 

(b) Covenants. All covenants, agreements and conditions contained in this Agreement to be performed by the Company on or prior to the Closing Date shall have been performed or complied with in all material respects. 

(c) Blue Sky. The Company shall have obtained all necessary blue sky law permits and qualifications, or secured exemptions therefrom, required by any state or foreign or other jurisdiction for the offer and sale of the Securities. 

 

 

(d) Legal Opinion. The Company shall have delivered to such Purchaser an opinion, dated as of the Closing Date, from Cooley LLP, counsel to the Company, in substantially the form attached hereto as Exhibit C hereto. 

(e) Transfer Agent Instructions. The Company shall have delivered to its transfer agent irrevocable instructions to issue to such Purchaser or in such nominee name(s) as designated by such Purchaser in writing such number of Shares set forth opposite such Purchaser’s name on Exhibit A hereto or, if requested by the Purchaser, one or more certificates representing such Shares, and Warrants to purchase the Exercise Shares. 

(f) Nasdaq Qualification. The Shares shall be duly authorized for listing by Nasdaq, subject to official notice of issuance, to the extent required by the listing rules of Nasdaq. 

(g) Absence of Litigation. No proceeding challenging this Agreement or the transactions contemplated hereby, or seeking to prohibit, alter, prevent or materially delay the Closing, shall have been instituted or be pending before any court, arbitrator, governmental body, agency or official. 

(h) No Governmental Prohibition. The sale of the Shares by the Company shall not be prohibited by any law or governmental order or regulation. 

(i) Certificate.  Each Purchaser shall have received a certificate signed by the Chief Executive Officer or the Chief Financial Officer to the effect that the representations and warranties of the Company in Article 2 hereof are true and correct in all material respects as of, and as if made on, the date of this Agreement and as of the Closing Date and that the Company has satisfied in all material respects all of the conditions set forth in this Section 5.2.

(j) Good Standing.  The Company is validly existing as a corporation in good standing under the laws of Delaware.

(k) Judgments.  No judgment, writ, order, injunction, award or decree of or by any court, or judge, justice or magistrate, including any bankruptcy court or judge, or any order of or by any governmental authority, shall have been issued, and no action or proceeding shall have been instituted by any governmental authority, enjoining or preventing the consummation of the transactions contemplated hereby.

(l) Stop Orders.  No stop order or suspension of trading shall have been imposed by the NASDAQ Global Market, the SEC or any other governmental regulatory body with respect to public trading in the Common Stock.

ARTICLE 6

TERMINATION OF OBLIGATIONS TO EFFECT CLOSING; EFFECTS

6.1 The obligations of the Company, on the one hand, and the Purchasers, on the other hand, to effect the Closing shall terminate as follows:

(a) upon the mutual written consent of the Company and Purchasers that agreed to purchase a majority of the Securities to be issued and sold pursuant to this Agreement;

(b) by the Company if any of the conditions set forth in Section 5.1 shall have become incapable of fulfillment, and shall not have been waived by the Company; or

(c) by a Purchaser (with respect to itself only) if any of the conditions set forth in Section 5.2 shall have become incapable of fulfillment, and shall not have been waived by the Purchaser;

provided, however, that, except in the case of clauses (b) and (c) above, the party seeking to terminate its obligation to effect the Closing shall not then be in breach of any of its representations, warranties, covenants or agreements contained in this Agreement if such breach has resulted in the circumstances giving rise to such party’s seeking to terminate its obligation to effect the Closing.

6.2 Nothing in this Article 6 shall be deemed to release any party from any liability for any breach by such party of the terms and provisions of this Agreement or to impair the right of any party to compel specific performance by any other party of its obligations under this Agreement.

ARTICLE 7

REGISTRATION RIGHTS 

7.1 As soon as reasonably practicable, but in no event later than 30 days after the Closing Date (the “Filing Date”), the Company shall file a registration statement covering the resale of the Registrable Securities with the SEC for an offering to be made on a 

 

 

continuous basis pursuant to Rule 415, or if Rule 415 is not available for offers and sales of the Registrable Securities, by such other means of distribution of Registrable Securities as the Holders of a majority of the Registrable Securities may reasonably specify (the “Initial Registration Statement”). The Initial Registration Statement shall be on Form S-3 (except if the Company is ineligible to register for resale the Registrable Securities on Form S-3, in which case such registration shall be on another appropriate form) and the Company shall effect the registration, qualifications or compliances (including, without limitation, the execution of any required undertaking to file post-effective amendments, appropriate qualifications or exemptions under applicable blue sky or other state securities laws and appropriate compliance with applicable securities laws, requirements or regulations) as promptly as possible after the filing thereof, but in any event prior to the date which is (x) 90 days after the Closing Date in the event of a “no-review” by the SEC or (z) 135 days after the Closing Date in the event of a full review the SEC (each such date an “Effective Deadline”). For purposes of clarification, any failure by the Company to file the Initial Registration Statement by the Filing Date or to effect such Registration Statement by the Effective Deadline shall not otherwise relieve the Company of its obligations to file or effect the Initial Registration Statement as set forth above in this Section 7.1. In the event the SEC informs the Company that all of the Registrable Securities cannot, as a result of the application of Rule 415, be registered for resale as a secondary offering on a single registration statement, the Company agrees to promptly (i) inform each of the Holders thereof, (ii) use its commercially reasonable efforts to file amendments to the Initial Registration Statement as required by the SEC and/or (iii) withdraw the Initial Registration Statement and file a new registration statement (a “New Registration Statement”), in either case covering the maximum number of Registrable Securities permitted to be registered by the SEC, on Form S-3 or, if the Company is ineligible to register for resale the Registrable Securities on Form S-3, such other form available to register for resale the Registrable Securities as a secondary offering; provided, however, that prior to filing such amendment or New Registration Statement, the Company shall be obligated to use its commercially reasonable efforts to advocate with the SEC for the registration of all of the Registrable Securities. In the event the Company amends the Initial Registration Statement or files a New Registration Statement, as the case may be, under clauses (ii) or (iii) above, the Company will use its commercially reasonable efforts to file with the SEC, as promptly as allowed by the SEC, one or more registration statements on Form S-3 or, if the Company is ineligible to register for resale the Registrable Securities on Form S-3, such other form available to register for resale those Registrable Securities that were not registered for resale on the Initial Registration Statement, as amended, or the New Registration Statement (the “Remainder Registration Statements”). 

7.2 All fees and expenses incident to the Company’s performance of or compliance with its obligations under this Agreement (excluding any underwriting discounts and selling commissions) shall be borne by the Company whether or not any Registrable Securities are sold pursuant to a Registration Statement.  The fees and expenses referred to in the foregoing sentence (“Registration Expenses”) shall include, without limitation, (i) all registration and filing fees (including, without limitation, fees and expenses (A) with respect to filings required to be made with the Nasdaq (or principal market on which the Common Stock is then listed for trading), and (B) in compliance with applicable state securities or Blue Sky laws), (ii) printing expenses (including, without limitation, expenses of printing certificates for Registrable Securities and of printing prospectuses if the printing of prospectuses is reasonably requested by the holders of a majority of the Registrable Securities included in the Registration Statement), (iii) messenger, telephone and delivery expenses, (iv) reasonable fees and disbursements of counsel for the Company, and (v) Securities Act liability insurance, if the Company so desires such insurance.  In addition, the Company shall be responsible for all of its internal expenses incurred in connection with the consummation of the transactions contemplated by this Agreement (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit and the fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange as required hereunder.  In no event shall the Company be responsible for any broker or similar commissions of any Holder or, except as set forth above, any legal fees or other costs of the Holders (“Selling Expenses”). 

7.3 The Company further agrees that, in the event that (i) the Initial Registration Statement has not been filed with the SEC within 30 days after the Closing Date, (ii) the Initial Registration Statement or the New Registration Statement, as applicable, has not been declared effective by the SEC (a) within 90 days after the Closing Date (in the event of a “no-review” by the SEC), or (b) within 135 days after the Closing Date (in the event of a review by the SEC), or (iii) after such Registration Statement is declared effective by the SEC, is suspended by the Company or ceases to remain continuously effective as to all Registrable Securities for which it is required to be effective, other than, in each case, within the time period(s) permitted by Section 7.7(b) (each such event referred to in clauses (i), (ii) and (iii), (a “Registration Default”)), for all or part of any 30-day period (a “Penalty Period”) during which the Registration Default remains uncured (which initial 30-day period shall commence on the fifth Business Day after the date of such Registration Default if such Registration Default has not been cured by such date), the Company shall pay to each Holder one percent (1.0%) of such Holder’s aggregate purchase price of his or her Securities for each Penalty Period during which the Registration Default remains uncured; provided, however, that if a Holder fails to provide the Company with any material information that is reasonably required to be provided in such Registration Statement with respect to such Holder as set forth herein, then the commencement of the Penalty Period described above for such Holder shall be extended until two Business Days following the date of receipt by the Company of such required information; and provided, further, that in no event shall the Company be required hereunder to pay to any Holder pursuant to this Agreement more than one percent (1.0%) of such Holder’s aggregate purchase price of his or her securities in any Penalty Period and in no event shall the Company be required hereunder to pay to any Holder pursuant to this Agreement an aggregate amount that exceeds ten percent (10%) of the aggregate Purchase Price paid by such Holder for such Holder’s Securities. The Company shall deliver said cash payment to the Holder by the fifth Business Day after the end of such Penalty Period. If the Company fails to pay said cash payment to the Holders in full by the fifth Business Day after the end of such Penalty Period, the Company will 

 

 

pay interest thereon at a rate of twelve percent (12%) per annum (or such lesser maximum amount that is permitted to be paid by applicable law) to the Holders, accruing daily from the date such liquidated damages are due until such amounts, plus all such interest thereon, are paid in full.  Notwithstanding the foregoing, in the event a Registration Default occurs pursuant to clause (iii) hereof, the 1% of liquidated damages referred to above for any Penalty Period shall be reduced to equal the percentage determined by multiplying 1% by a fraction, the numerator of which shall be the number of Registrable Securities covered by the Registration Statement that is suspended by the Company or ceases to remain continuously effective as to all Registrable Securities for which it is required to be effective which are still Registrable Securities at such time and for which there is not otherwise an effective Registration Statement at such time and the denominator of which shall be the number of Registrable Securities at such time. Notwithstanding the foregoing, nothing shall preclude any Holder from pursuing or obtaining any available remedies at law, specific performance or other equitable relief with respect to this Section 7.3 in accordance with applicable law.

7.4 In the case of the registration, qualification, exemption or compliance effected by the Company pursuant to this Agreement, the Company shall, upon reasonable request, inform each Holder as to the status of such registration, qualification, exemption and compliance. At its expense the Company shall: 

(a) except for such times as the Company is permitted hereunder to suspend the use of the prospectus forming part of a Registration Statement pursuant to Section 7.4(h) or 7.7, use its commercially reasonable efforts to keep such registration, and any qualification, exemption or compliance under state securities laws which the Company determines to obtain, continuously effective with respect to a Holder, and to keep the applicable Registration Statement free of any material misstatements or omissions, until the earlier of the following: (i) the second anniversary of the Closing Date or (ii) the date all Shares and Exercise Shares held by such Holder may be sold under Rule 144 during any 90 day period. The period of time during which the Company is required hereunder to keep a Registration Statement effective is referred to herein as the “Registration Period.”

(b) advise the Holders within five Business Days: 

(i) when a Registration Statement or any amendment thereto has been filed with the SEC and when such Registration Statement or any post-effective amendment thereto has become effective and shall also advise Holders (A) when a prospectus or any prospectus supplement or post-effective amendment to a Registration Statement is proposed to be filed; (B) when the SEC notifies the Company whether there will be a “review” of such Registration Statement and whenever the SEC comments in writing on such Registration Statement (in which case the Company shall provide true and complete copies thereof and all written responses thereto to each of the Holders that pertain to the Holders as a selling stockholder or to the plan of distribution, but not information which the Company believes would constitute material and non-public information); and (C) with respect to each Registration Statement or any post-effective amendment, when the same has been declared effective; 

(ii) of any request by the SEC for amendments or supplements to any Registration Statement or the prospectus included therein or for additional information; 

(iii) of the issuance by the SEC of any stop order suspending the effectiveness of any Registration Statement or the initiation of any proceedings for such purpose; 

(iv) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Registrable Securities included therein for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; 

(v) as promptly as reasonably possible provide the Holders true and complete copies of all correspondence from and to the SEC relating to such Registration Statement that pertains to the Holders as selling stockholders but not any comments that would result in the disclosure to the Holders of material and non-public information concerning the Company; and

(vi) of the occurrence of any event that requires the making of any changes in any Registration Statement or prospectus so that, as of such date, the statements therein are not misleading and do not omit to state a material fact required to be stated therein or necessary to make the statements therein (in the case of a prospectus, in the light of the circumstances under which they were made) not misleading; 

(c) use its commercially reasonable efforts to obtain the withdrawal of any order suspending the effectiveness of any Registration Statement as soon as reasonably practicable; 

(d) if a Holder so requests in writing, promptly furnish to each such Holder, without charge, at least one copy of each Registration Statement and each post-effective amendment thereto, including financial statements and schedules, and, if explicitly requested, all exhibits in the form filed with the SEC; 

(e) during the Registration Period, promptly deliver to each such Holder, without charge, as many copies of each prospectus included in a Registration Statement and any amendment or supplement thereto as such Holder may reasonably request in writing; and the Company consents to the use, consistent with the provisions hereof, of the prospectus or any amendment or supplement thereto by 

 

 

each of the selling Holders of Registrable Securities in connection with the offering and sale of the Registrable Securities covered by a prospectus or any amendment or supplement thereto; 

(f) during the Registration Period, if a Holder so requests in writing, deliver to each Holder, without charge, (i) one copy of the following documents, other than those documents available via EDGAR: (A) its annual report to its stockholders, if any (which annual report shall contain financial statements audited in accordance with U.S. GAAP by a firm of certified public accountants of recognized standing); (B) if not included in substance in its annual report to stockholders, its annual report on Form 10-K (or similar form); (C) its definitive proxy statement with respect to its annual meeting of stockholders; (D) each of its quarterly reports to its stockholders, and, if not included in substance in its quarterly reports to stockholders, its quarterly report on Form 10-Q (or similar form); and (E) a copy of each full Registration Statement (the foregoing, in each case, excluding exhibits), and (ii) if explicitly requested, all exhibits excluded by the parenthetical to the immediately preceding clause (E); 

(g) prior to any public offering of Registrable Securities pursuant to any Registration Statement, promptly take such actions as may be necessary to register or qualify or obtain an exemption for offer and sale under the securities or blue sky laws of such United States jurisdictions as any such Holders reasonably request in writing, provided that the Company shall not for any such purpose be required to qualify generally to transact business as a foreign corporation in any jurisdiction where it is not so qualified or to consent to general service of process in any such jurisdiction, and do any and all other acts or things reasonably necessary or advisable to enable the offer and sale in such jurisdictions of the Registrable Securities covered by any such Registration Statement; 

(h) upon the occurrence of any event contemplated by Section 7.4(b)(v) above, except for such times as the Company is permitted hereunder to suspend the use of a prospectus forming part of a Registration Statement pursuant to Section 7.7, the Company shall use its commercially reasonable efforts to promptly prepare a post-effective amendment to such Registration Statement or a supplement to the related prospectus, or file any other required document so that, as thereafter delivered to purchasers of the Registrable Securities included therein, such prospectus will not include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; 

(i) otherwise use its commercially reasonable efforts to comply in all material respects with all applicable rules and regulations of the SEC which could affect the sale of the Registrable Securities; 

(j) use its commercially reasonable efforts to cause all Registrable Securities to be listed on each securities exchange or market, if any, on which equity securities issued by the Company have been listed; 

(k) use its commercially reasonable efforts to take all other steps necessary to effect the registration of the Registrable Securities contemplated hereby and to enable the Holders to sell Registrable Securities under Rule 144; 

(l) provide to each Holder and its representatives, if requested, the opportunity to conduct a reasonable inquiry of the Company’s financial and other records during normal business hours and make available its officers, directors and employees for questions regarding information which such Holder may reasonably request in order to fulfill any due diligence obligation on its part; 

(m) permit a single counsel for the Holders to review any Registration Statement and all amendments and supplements thereto, within two Business Days prior to the filing thereof with the SEC; 

provided that, in the case of clauses (l) and (m) above, the Company shall not be required (A) to delay the filing of any Registration Statement or any amendment or supplement thereto as a result of any ongoing diligence inquiry by or on behalf of a Holder or to incorporate any comments to any Registration Statement or any amendment or supplement thereto by or on behalf of a Holder if such inquiry or comments would require a delay in the filing of such Registration Statement, amendment or supplement, as the case may be, or (B) to provide, and shall not provide, any Holder or its representatives with material, non-public information unless such Holder agrees to receive such information and enters into a written confidentiality agreement with the Company in a form reasonably acceptable to the Company; and 

(n) cooperate with the Holders to facilitate the timely preparation and delivery of certificates or book entry positions representing Registrable Securities to be delivered to a transferee pursuant to the Registration Statements, which certificates or book entry positions shall be free, to the extent permitted by the Purchase Agreement, of all restrictive legends, and to enable such Registrable Securities to be in such denominations and registered in such names as any such Holders may request.

7.5 The Holders shall have no right to take any action to restrain, enjoin or otherwise delay any registration pursuant to Section 7.1 hereof as a result of any controversy that may arise with respect to the interpretation or implementation of this Agreement. 

7.6 (a) To the fullest extent permitted by applicable law, the Company shall indemnify each Holder and each Person controlling such Holder within the meaning of Section 15 of the Securities Act, with respect to which any registration that has been effected pursuant to this Agreement, against all claims, losses, damages, liabilities and costs (including, without limitation, reasonable costs of preparation and reasonable attorneys’ fees) (or action in respect thereof) (collectively, “Losses”), including any of the foregoing incurred in settlement of any litigation, commenced or threatened (subject to Section 7.6 (c) below), arising out of or based on any 

 

 

untrue statement (or alleged untrue statement) of a material fact contained in any Registration Statement, prospectus, any amendment or supplement thereof, or other document incident to any such registration, qualification or compliance or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in light of the circumstances in which they were made, or any violation by the Company of any rule or regulation promulgated by the Securities Act applicable to the Company and relating to any action or inaction required of the Company in connection with any such registration, qualification or compliance, and will reimburse each Holder and each Person controlling such Holder, for reasonable legal and other out-of-pocket expenses reasonably incurred in connection with investigating or defending any such Losses; provided that the Company will not be liable in any such case to the extent that any untrue statement or omission or allegation thereof are based is made in reliance upon and in conformity with written information furnished to the Company by or on behalf of such Holder for use in preparation of any Registration Statement, prospectus, amendment or supplement and expressly approved in writing by such Holder expressly for use in the Registration Statement, such prospectus or such form of prospectus or in any amendment or supplement thereto; provided further, that the Company will not be liable in any such case where the Losses arise out of or are related to the failure of such Holder to comply with the covenants and agreements contained in this Agreement respecting sales of Registrable Securities, and except that the foregoing indemnity agreement is subject to the condition that, insofar as it relates to any such untrue statement or alleged untrue statement or omission or alleged omission made in any preliminary prospectus but eliminated or remedied in the amended prospectus on file with the SEC at the time any Registration Statement becomes effective or in an amended prospectus filed with the SEC pursuant to Rule 424(b) which meets the requirements of Section 10(a) of the Securities Act (each, a “Final Prospectus”), such indemnity shall not inure to the benefit of any such Holder or any such controlling person, if a copy of a Final Prospectus furnished by the Company to the Holder for delivery was not furnished to the Person asserting the Losses at or prior to the time such furnishing is required by the Securities Act and a Final Prospectus would have cured the defect giving rise to such Losses.  

(b) Each Holder will severally, and not jointly, indemnify the Company, each of its directors and officers, and each Person who controls the Company within the meaning of Section 15 of the Securities Act, against all claims, losses, damages and liabilities (or actions in respect thereof), including any of the foregoing incurred in settlement of any litigation, commenced or threatened (subject to Section 7.6 (c) below), arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any Registration Statement, prospectus, or any amendment or supplement thereof, incident to any such registration, or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in light of the circumstances in which they were made where such material misstatement or omission is based upon and in conformity with written information furnished in writing to the Company by or on behalf of such Holder for use in preparation of any Registration Statement, prospectus, amendment or supplement, and expressly approved in writing by such Holder expressly for use in the Registration Statement, such prospectus or such form of prospectus or in any amendment or supplement thereto, and will reimburse the Company, such directors and officers, and each Person controlling the Company for reasonable legal and any other expenses reasonably incurred in connection with investigating or defending any such claim, loss, damage, liability or action as incurred, in each case to the extent, but only to the extent, that such untrue statement or omission or allegation thereof is made in reliance upon and in conformity with such written information furnished to the Company by or on behalf of the Holder for use in preparation of any Registration Statement, prospectus, amendment or supplement; provided that the indemnity shall not apply to the extent that such claim, loss, damage or liability results from the fact that a current copy of a prospectus was not made available to the Person asserting the loss, liability, claim or damage at or prior to the time such furnishing is required by the Securities Act and a Final Prospectus would have cured the defect giving rise to such loss, claim, damage or liability. Notwithstanding the foregoing, a Holder’s aggregate liability pursuant to this subsection (b) and subsection (d) shall be limited to the net amount received by the Holder from the sale of the Registrable Securities.  

(c) Each party entitled to indemnification under this Section 7.6 (the “Indemnified Party”) shall give notice to the party required to provide indemnification (the “Indemnifying Party”) promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party (at its expense) to assume the defense of any such claim or any litigation resulting therefrom, provided that counsel for the Indemnifying Party, who shall conduct the defense of such claim or litigation, shall be approved by the Indemnified Party (whose approval shall not unreasonably be withheld), and the Indemnified Party may participate in such defense, and provided further that the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations under this Agreement, unless such failure is materially prejudicial to the Indemnifying Party in defending such claim or litigation. An Indemnified Party shall have the right to employ separate counsel in any such proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party or Parties unless:  (1) the Indemnifying Party has agreed in writing to pay such fees and expenses; (2) the Indemnifying Party shall have failed promptly to assume the defense of such proceeding and to employ counsel reasonably satisfactory to such Indemnified Party in any such proceeding; or (3) the named parties to any such proceeding (including any impleaded parties) include both such Indemnified Party and the Indemnifying Party, and such Indemnified Party shall have been advised by counsel that a conflict of interest is likely to exist if the same counsel were to represent such Indemnified Party and the Indemnifying Party (in which case, if such Indemnified Party notifies the Indemnifying Party in writing that it elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not have the right to assume the defense thereof and such counsel shall be at the expense of the Indemnifying Party); provided, that the Indemnifying Party shall not be liable for the fees and expenses of more than one separate firm of attorneys at any time for all Indemnified Parties pursuant to this Section 

 

 

7.6(c). An Indemnifying Party shall not be liable for any settlement of an action or claim effected without its written consent (which consent will not be unreasonably withheld). No Indemnifying Party, in its defense of any such claim or litigation, shall, except with the consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation. Each Indemnified Party shall furnish such information regarding itself or the claim in question as an Indemnifying Party may reasonably request in writing and as shall be reasonably required in connection with defense of such claim and litigation resulting therefrom.

All fees and expenses of the Indemnified Party (including reasonable fees and expenses to the extent incurred in connection with investigating or preparing to defend such proceeding in a manner not inconsistent with this Section) shall be paid to the Indemnified Party, as incurred, within ten (10) Business Days of written notice thereof to the Indemnifying Party (regardless of whether it is ultimately determined that an Indemnified Party is not entitled to indemnification hereunder; provided, that the Indemnifying Party may require such Indemnified Party to undertake to reimburse all such fees and expenses to the extent it is finally judicially determined that such Indemnified Party is not entitled to indemnification hereunder).

(d) If the indemnification provided for in this Section 7.6 is held by a court of competent jurisdiction to be unavailable to an Indemnified Party with respect to any Losses referred to therein, then the Indemnifying Party, in lieu of indemnifying such Indemnified Party thereunder, shall contribute to the amount paid or payable by such Indemnified Party as a result of such loss, liability, claim, damage or expense in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party on the one hand and of the Indemnified Party on the other in connection with the statements or omissions which resulted in such Losses as well as any other relevant equitable considerations. The relative fault of the Indemnifying Party and of the Indemnified Party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the Indemnifying Party or by the Indemnified Party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. Notwithstanding the provisions of this Section 7.6(d), no Holder shall be required to contribute, in the aggregate, any amount in excess of the amount by which the net proceeds actually received by such Holder from the sale of the Registrable Securities subject to the indemnification hereunder exceeds the amount of any damages that such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission.  No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.

The indemnity and contribution agreements contained in this Article 7 are in addition to any liability that the Indemnifying Parties may have to the Indemnified Parties and are not in diminution or limitation of the indemnification provisions under the Purchase Agreement.

7.7 (a) Each Holder agrees that, upon receipt of any notice from the Company of the happening of any event requiring the preparation of a supplement or amendment to a prospectus relating to Registrable Securities so that, as thereafter delivered to the Holders, such prospectus shall not contain an 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, each Holder will forthwith discontinue disposition of Registrable Securities pursuant to a Registration Statement and prospectus contemplated by Section 7.1 until its receipt of copies of the supplemented or amended prospectus from the Company and, if so directed by the Company, each Holder shall deliver to the Company all copies, other than permanent file copies then in such Holder’s possession, of the prospectus covering such Registrable Securities current at the time of receipt of such notice. 

(b) Each Holder shall suspend, upon request of the Company, any disposition of Registrable Securities pursuant to any Registration Statement and prospectus contemplated by Section 7.1 during no more than two periods of no more than 30 calendar days each during any 12-month period to the extent that the board of directors of the Company determines in good faith that the sale of Registrable Securities under any such Registration Statement would be reasonably likely to cause a violation of the Securities Act or Exchange Act. 

(c) As a condition to the inclusion of its Registrable Securities, each Holder shall furnish to the Company such information regarding such Holder and the distribution proposed by such Holder as the Company may reasonably request in writing, including completing a Registration Statement Questionnaire in the form provided by the Company, or as shall be required in connection with any registration referred to in this Article 7. 

(d) Each Holder hereby covenants with the Company not to make any sale of the Registrable Securities without effectively causing the prospectus delivery requirements under the Securities Act to be satisfied. 

(e) Each Holder agrees not to take any action with respect to any distribution deemed to be made pursuant to a Registration Statement which would constitute a violation of Regulation M under the Exchange Act or any other applicable rule, regulation or law. 

(f) At the end of the Registration Period the Holders shall discontinue sales of shares pursuant to any Registration Statement upon receipt of notice from the Company of its intention to remove from registration the shares covered by any such Registration Statement 

 

 

which remain unsold, and such Holders shall notify the Company of the number of shares registered which remain unsold immediately upon receipt of such notice from the Company. 

7.8 With a view to making available to the Holders the benefits of certain rules and regulations of the SEC which at any time permit the sale of the Registrable Securities to the public without registration, so long as the Holders still own Registrable Securities, the Company shall use its reasonable best efforts to: 

(a) make and keep public information available, as those terms are understood and defined in Rule 144 under the Securities Act, at all times; 

(b) file with the SEC in a timely manner all reports and other documents required of the Company under the Exchange Act; and 

(c) so long as a Holder owns any Registrable Securities, furnish to such Holder, upon any reasonable request, a written statement by the Company as to its compliance with Rule 144 under the Securities Act, and of the Exchange Act, a copy of the most recent annual or quarterly report of the Company, and such other reports and documents of the Company as such Holder may reasonably request in availing itself of any rule or regulation of the SEC allowing a Holder to sell any such securities without registration. 

7.9 The rights to cause the Company to register Registrable Securities granted to the Holders by the Company under Section 7.1 may be assigned by a Holder in connection with a transfer by such Holder of all or a portion of its Registrable Securities, provided, however, that (i) such transfer must be effected in accordance with applicable securities laws; (ii) such Holder gives prior written notice to the Company at least ten (10) days prior to the proposed transfer; and (iii) such transferee agrees to comply with the terms and provisions of this Agreement, and such transfer is otherwise in compliance with this Agreement. 

7.10 Prior to the time that Registration Statement(s) covering the resale of all Registrable Securities have been declared effective by the SEC, the Company shall not file with the SEC a registration statement under the Securities Act of any of its equity securities other than a registration statement required to be filed pursuant to this Agreement, a registration statement on Form S-8 or, in connection with an acquisition, a registration statement on Form S-4; provided, however, that the foregoing restrictions in this Section 7.10 shall terminate upon such time as all of the Registrable Securities (i) have been publicly sold by the Holders or (ii) may be sold under Rule 144 during any 90 day period. 

7.11 The rights of any Holder under any provision of this Article 7 may be waived (either generally or in a particular instance, either retroactively or prospectively and either for a specified period of time or indefinitely) or amended by an instrument in writing signed by such Holder. 

7.12 The Notwithstanding anything to the contrary contained in this Agreement, in the event the staff of the SEC (the “Staff”) or the SEC seeks to characterize any offering pursuant to a Registration Statement filed pursuant to this Agreement as constituting an offering of securities by, or on behalf of, the Company, or in any other manner, such that the Staff or the SEC do not permit such Registration Statement to become effective and used for resales in a manner that does not constitute such an offering and that permits the continuous resale at the market by the Holders participating therein (or as otherwise may be acceptable to each Holder) without being named therein as an “underwriter,” then the Company shall reduce the number of shares to be included in such Registration Statement by all Holders until such time as the Staff and the SEC shall so permit such Registration Statement to become effective as aforesaid. In making such reduction, the Company shall reduce the number of shares to be included by all Holders on a pro rata basis (based upon the number of Registrable Securities otherwise required to be included for each Holder) unless the inclusion of shares by a particular Holder or a particular set of Holders are resulting in the Staff or the SEC’s “by or on behalf of the Company” offering position, in which event the shares held by such Holder or set of Holders shall be the only shares subject to reduction (and if by a set of Holders on a pro rata basis by such Holders or on such other basis as would result in the exclusion of the least number of shares by all such Holders). In addition, in the event that the Staff or the SEC requires any Holder seeking to sell securities under a Registration Statement filed pursuant to this Agreement to be specifically identified as an “underwriter” in order to permit such Registration Statement to become effective, and such Holder does not consent to being so named as an underwriter in such Registration Statement, then, in each such case, the Company shall reduce the total number of Registrable Securities to be registered on behalf of such Holder, until such time as the Staff or the SEC does not require such identification or until such Holder accepts such identification and the manner thereof. Any reduction pursuant to this paragraph will first reduce all securities that are not Registrable Securities and then to the Holders pro rata in accordance with the number of such Registrable Securities sought to be included in such Registration Statement by reference to the amount of Registrable Securities set forth opposite such Holder’s name on Exhibit A (and in the case of a subsequent transfer, the initial Holder’s) relative to the aggregate amount of all Registrable Securities. In the event of any reduction in Registrable Securities pursuant to this paragraph, an affected Holder shall have the right to require, upon delivery of a written request to the Company signed by such Holder, the Company to file a registration statement within 30 days of such request (subject to any restrictions imposed by Rule 415 or required by the Staff or the SEC) for resale by such Holder in a manner acceptable to such Holder, and the Company shall following such request cause to be and keep effective such registration statement in the same manner as otherwise contemplated in this Agreement for registration statements hereunder, in each case until such time as: (i) all Registrable Securities held by such Holder have been registered and sold pursuant to an effective Registration Statement in a manner acceptable to such Holder; or (ii) all Registrable Securities may be resold by such Holder without restriction (including, without limitation, volume 

 

 

limitations) pursuant to Rule 144 (taking account of any Staff position with respect to “affiliate” status) and without the need for current public information required by Rule 144(c)(1) (or Rule 144(i)(2), if applicable); or (iii) such Holder agrees to be named as an underwriter in any such Registration Statement in a manner acceptable to such Holder as to all Registrable Securities held by such Holder and that have not theretofore been included in a Registration Statement under this Agreement (it being understood that the special demand right under this sentence may be exercised by an Holder multiple times and with respect to limited amounts of Registrable Securities in order to permit the resale thereof by such Holder as contemplated above). Any reduction made to securities included in a Registration Statement in accordance with this Section 7.12 shall not constitute a Registration Default and shall not be subject to the payment requirements under Section 7.3.       

ARTICLE 8 

DEFINITIONS 

8.1 “Agreement” has the meaning set forth in the preamble. 

8.2 “Affiliate” means, with respect to any Person (as defined below), any other Person controlling, controlled by or under direct or indirect common control with such Person (for the purposes of this definition “control,” when used with respect to any specified Person, shall mean the power to direct the management and policies of such person, directly or indirectly, whether through ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” shall have meanings correlative to the foregoing). 

8.2 “Applicable Laws” has the meaning set forth in Section 2.30.

8.3 “Authorizations” has the meaning set forth in Section 2.30.

8.4 “Business Day” means a day Monday through Friday on which banks are generally open for business in New York City. 

8.5 “Bylaws” has the meaning set forth in Section 2.3. 

8.6 “Certificate of Incorporation” has the meaning set forth in Section 2.3. 

8.7 “Closing” has the meaning set forth in Section 1.3. 

8.8 “Closing Date” has the meaning set forth in Section 1.3. 

8.9 “Common Stock” means the common stock, par value $0.001 per share, of the Company. 

8.10 “Company” has the meaning set forth in the preamble. 

8.11 “Company Product” has the meaning set forth in Section 2.30.

8.11 “Disqualification Event” has the meaning set forth in Section 3.13.

8.12 “DTC” has the meaning set forth in Section 3.8(b).

8.13 “Effective Deadline” has the meaning set forth in Section 7.1.

8.14 “Environmental Laws” has the meaning set forth in section 2.32.

8.15 “ERISA” has the meaning set forthin Section 2.34.

8.16“Evaluation Date” has the meaning set forth in Section 2.7. 

8.17 “Exchange Act” means the Securities Exchange Act of 1934, as amended. 

8.18 “FCPA” has the meaning set forth in Section 2.18.

8.19 “FDA” has the meaning set forth in Section 2.30.

8.20 “Filing Date” has the meaning set forth in Section 7.1. 

8.21“Final Prospectus” has the meaning set forth in Section 7.6(a). 

8.22 “Financial Statements” means the financial statements of the Company included in the SEC Documents. 

 

 

8.23 “Financing” has the meaning set forth in Section 8.14. 

8.24 “Holders” means any person holding Registrable Securities or any person to whom the rights under Article 7 have been transferred in accordance with Section 7.9 hereof. 

8.25 “Indemnified Party” has the meaning set forth in Section 7.6(c). 

8.26 “Indemnifying Party” has the meaning set forth in Section 7.6(c). 

8.27 “Initial Registration Statement” has the meaning set forth in Section 7.1. 

8.28 “Intellectual Property” has the meaning set forth in Section 2.10. 

8.29 “Investment Company Act” has the meaning set forth in Section 2.12. 

8.30 “Losses” has the meaning set forth in Section 7.6(a).

8.31 “Material Adverse Effect” means a material adverse effect on (a) the business, operations, assets or financial condition of the Company, taken as a whole, or (b) the ability of the Company to perform its obligations pursuant to the transactions contemplated by this Agreement. 

8.27 “Material Agreements” has the meaning set forth in Section 2.6. 

8.28 “Nasdaq” means The Nasdaq Stock Market LLC. 

8.29 “New Registration Statement” has the meaning set forth in Section 7.1. 

8.30 “Offering” means the private placement of the Company’s Securities contemplated by this Agreement. 

8.31 “Penalty Period” has the meaning set forth in Section 7.3. 

8.32 “Person” means any person, individual, corporation, limited liability company, partnership, trust or other nongovernmental entity or any governmental agency, court, authority or other body (whether foreign, federal, state, local or otherwise). 

8.33 “Placement Agent” means MTS Health Partners. 

8.34 “Preferred Stock” means the preferred stock, par value $0.001 per share, of the Company.

8.35 “Purchasers” has the meaning set forth in the preamble. 

8.36 “Purchase Price” has the meaning set forth in Section 1.1. 

8.37 The terms “register,” “registered” and “registration” refer to the registration effected by preparing and filing a registration statement in compliance with the Securities Act, and the declaration or ordering of the effectiveness of such registration statement. 

8.38 “Registrable Securities” means (i) the Shares and (ii) the Exercise Shares; provided, however, that securities shall only be treated as Registrable Securities if and only for so long as they (A) have not been disposed of pursuant to a registration statement declared effective by the SEC, (B) have not been sold in a transaction exempt from the registration and prospectus delivery requirements of the Securities Act so that all transfer restrictions and restrictive legends with respect thereto are removed upon the consummation of such sale or (C) are held by a Holder or a permitted transferee pursuant to Section 7.9. 

8.39 “Registration Default” has the meaning set forth in Section 7.3. 

8.40 “Registration Expenses” has the meaning set forth in Section 7.2. 

8.41 “Registration Statement” means any one or more registration statements of the Company filed under the Securities Act that covers the resale of any of the Registrable Securities pursuant to the provisions of this Agreement (including without limitation the Initial Registration Statement, the New Registration Statement and any Remainder Registration Statements) and amendments and supplements to such Registration Statements, including post-effective amendments. 

8.42 “Registration Period” has the meaning set forth in Section 7.4(a). 

8.43 “Remainder Registration Statement” has the meaning set forth in Section 7.1. 

8.44 “Rule 144” means Rule 144 promulgated under the Securities Act, or any successor rule. 

 

 

8.45 “Rule 415” means Rule 415 promulgated under the Securities Act, or any successor rule. 

8.46 “Rule 506(d) Related Party” shall have the meaning set forth in Section 3.13.

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

8.48 “SEC Documents” has the meaning set forth in Section 2.6. 

8.49 “Securities” has the meaning set forth in Section 1.1. 

8.50 “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations thereunder, or any similar successor statute. 

8.51 “Selling Expenses” has the meaning set forth in Section 7.2. 

8.52 “Shares” has the meaning set forth in Section 1.1. 

8.53 “Staff” has the meaning set forth in Section 7.12. 

8.54 “Stock Purchase Price” has the meaning set forth in Section 1.1. 

8.55 “Subsidiary” of any person shall mean any corporation, partnership, limited liability company, joint venture or other legal entity of which such Person (either above or through or together with any other subsidiary) owns, directly or indirectly, more than 50% of the stock or other equity interests the holders of which are generally entitled to vote for the election of the board of directors or other governing body of such corporation or other legal entity. 

8.56 “U.S. GAAP” has the meaning set forth in Section 2.6.

8.57 “Venrock” has the meaning set forth in Section 4.7.

8.58 “Venrock Director” has the meaning set forth in Section 4.7.

8.59 “Exercise Shares” has the meaning set forth in Section 2.4. 

8.60 “Warrants” has the meaning set forth in Section 1.1. 

ARTICLE 9 

GOVERNING LAW; MISCELLANEOUS 

9.1 Governing Law; Jurisdiction. This Agreement will be governed by and interpreted in accordance with the laws of the State of New York without regard to the principles of conflict of laws. 

9.2 Counterparts; Signatures by Facsimile. This Agreement may be executed in two or more counterparts, all of which are considered one and the same agreement and will become effective when counterparts have been signed by each party and delivered to the other parties. This Agreement, once executed by a party, may be delivered to the other parties hereto by facsimile or e-mail transmission of a copy of this Agreement bearing the signature of the party so delivering this Agreement. 

9.3 Headings. The headings of this Agreement are for convenience of reference only, are not part of this Agreement and do not affect its interpretation. 

9.4 Severability. If any provision of this Agreement is invalid or unenforceable under any applicable statute or rule of law, then such provision will be deemed modified in order to conform with such statute or rule of law. Any provision hereof that may prove invalid or unenforceable under any law will not affect the validity or enforceability of any other provision hereof. 

9.5 Entire Agreement; Amendments. This Agreement (including all schedules and exhibits hereto) constitutes the entire agreement among the parties hereto with respect to the subject matter hereof and thereof. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein or therein. This Agreement supersedes all prior agreements and understandings among the parties hereto with respect to the subject matter hereof. No provision of this Agreement may be waived or amended other than by an instrument in writing signed by the party to be charged with enforcement. Any amendment or waiver by a party effected in accordance with this Section 9.5 shall be binding upon such party, including with respect to any Securities purchased under this Agreement at the time outstanding and held by such party (including securities into which such Securities are convertible and for which such Securities are exercisable) and each future holder of all such securities. 

 

 

9.6 Notices. All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when sent by confirmed email, telex or facsimile if sent during normal business hours of the recipient, if not, then on the next Business Day, (c) five days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one Business Day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. The addresses for such communications are: 

 

	
 
	
 
	
 

	
If to the Company:
	
    
	
ARCA biopharma, Inc.

	
 
	
    
	
11080 CirclePoint Rd., Suite 140

	
 
	
    
	
Westminster, CO 80020

	
 
	
    
	
Facsimile: (720) 208-9261

	
 
	
    
	
Attn: Chief Accounting Officer

	
 
	
    
	
cc: General Counsel

	
 
	
 

	
With a copy to:
	
    
	
Cooley LLP

	
 
	
    
	
380 Interlocken Crescent, Suite 900

	
 
	
    
	
Broomfield, CO 80021

	
 
	
    
	
Attn: Brent Fassett

If to a Purchaser: To the address set forth immediately below such Purchaser’s name on the signature pages hereto. Each party will provide 10 days’ advance written notice to the other parties of any change in its address. 

9.7 Successors and Assigns. This Agreement is binding upon and inures to the benefit of the parties and their successors and assigns. The Company will not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Purchasers, and no Purchaser may assign this Agreement or any rights or obligations hereunder without the prior written consent of the Company, except as permitted in accordance with Section 6.9 hereof. 

9.8 Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto, their respective permitted successors and assigns and the Placement Agent, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person. 

9.9 Further Assurances. Each party will do and perform, or cause to be done and performed, all such further acts and things, and will execute and deliver all other agreements, certificates, instruments and documents, as another 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. 

9.10 No Strict Construction. The language used in this Agreement is 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. 

9.11 Equitable Relief. The Company recognizes that, if it fails to perform or discharge any of its obligations under this Agreement, any remedy at law may prove to be inadequate relief to the Purchasers. The Company therefore agrees that the Purchasers are entitled to seek temporary and permanent injunctive relief in any such case. Each Purchaser also recognizes that, if it fails to perform or discharge any of its obligations under this Agreement, any remedy at law may prove to be inadequate relief to the Company. Each Purchaser therefore agrees that the Company is entitled to seek temporary and permanent injunctive relief in any such case. 

9.12 Survival of Representations and Warranties. Notwithstanding any investigation made by any party to this Agreement, all representations and warranties made by the Company and the Purchasers herein shall survive for a period of one year following the date hereof. 

9.13 Independent Nature of Purchasers’ Obligations and Rights. The obligations of each Purchaser under this Agreement are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance of the obligations of any other Purchaser under this Agreement. Nothing contained herein and no action taken by any Purchaser pursuant 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, or are deemed affiliates with respect to such obligations or the transactions contemplated by this Agreement. Each Purchaser shall be entitled to independently protect and enforce its rights, including without limitation the rights arising out of this Agreement, and it shall not be necessary for any other Purchaser to be joined as an additional party in any proceeding for such purpose. 

9.14 Waiver of Conflicts. Each Purchaser acknowledges that Cooley LLP, outside general counsel to the Company, has in the past performed and is or may now or in the future represent one or more Purchasers or their affiliates in matters unrelated to the transactions contemplated by this Agreement (the “Financing”), including representation of such Purchasers or their affiliates in matters of a similar nature to the Financing. The applicable rules of professional conduct require that Cooley LLP inform the 

 

 

Purchasers hereunder of this representation and obtain their consent. Cooley LLP has served as outside general counsel to the Company and has negotiated the terms of the Financing solely on behalf of the Company. Each Purchaser hereby (a) acknowledges that they have had an opportunity to ask for and have obtained information relevant to such representation, including disclosure of the reasonably foreseeable adverse consequences of such representation; (b) acknowledges that with respect to the Financing, Cooley LLP has represented solely the Company, and not any Purchaser or any stockholder, director or employee of the Company or any Purchaser; and (c) gives its informed consent to Cooley LLP’s representation of the Company in the Financing. 

9.15 Replacement of Shares or Warrants.  If the Shares are certificated and any certificate or instrument evidencing any Shares or Warrants is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof, or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company and the Company’s transfer agent of such loss, theft or destruction and the execution by the holder thereof of a customary lost certificate affidavit of that fact and an agreement to indemnify and hold harmless the Company and the Company’s transfer agent for any losses in connection therewith or, if required by the transfer agent, a bond in such form and amount as is required by the transfer agent.  The applicants for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs associated with the issuance of such replacement Shares or Warrant.  If a replacement certificate or instrument evidencing any Shares or Warrant is requested due to a mutilation thereof, the Company may require delivery of such mutilated certificate or instrument as a condition precedent to any issuance of a replacement.

[Signature Page Follows] 

 

 

 

 

 

IN WITNESS WHEREOF, the undersigned Purchasers and the Company have caused this Agreement to be duly executed as of the date first above written. 

 

		
	
ARCA biopharma, Inc.

	
 

	
By:
	
/s/ Michael R. Bristow

	
Name:
	
Michael R. Bristow

	
Title:
	
Chief Executive Officer

 

[Signature Page to Securities Purchase Agreement] 

 

 

VENROCK HEALTHCARE CAPITAL PARTNERS II, L.P.

530 Fifth Avenue, 22nd Floor

New York, NY 10036

 

		
	
By:
	
VHCP Management II, LLC

	
Its:
	
General Partner

	
 
	
 

	
By:
	
/s/ David L. Stepp

	
 
	
Authorized Signatory

 

VHCP CO-INVESTMENT HOLDINGS II, LLC

530 Fifth Avenue, 22nd Floor

New York, NY 10036

 

		
	
By:
	
VHCP Management II, LLC

	
Its:
	
Manager

	
 

	
By:
	
/s/ David L. Stepp

	
 
	
Authorized Signatory

 

VENROCK HEALTHCARE CAPITAL PARTNERS, L.P.

530 Fifth Avenue, 22nd Floor

New York, NY 10036

 

		
	
By:
	
VHCP Management, LLC

	
Its:
	
General Partner

	
 
	
 

	
By:
	
/s/ David L. Stepp

	
 
	
Authorized Signatory

 

VHCP CO-INVESTMENT HOLDINGS, LLC

530 Fifth Avenue, 22nd Floor

New York, NY 10036

 

		
	
By:
	
VHCP Management, LLC

	
Its:
	
Manager

	
 

	
By:
	
/s/ David L. Stepp

	
 
	
Authorized Signatory

 [Signature Page to Securities Purchase Agreement] 

  

 

GROWTH EQUITY OPPORTUNITIES FUND IV, LLC

 

		
	
By:
	
New Enterprise Associates 15, L.P., its sole member

	
By:
	
NEA Partners 15, L.P., its general partner

	
By:
	
NEA 15 GP, LLC, its general partner

 

		
	
By:
	
/s/ Sasha Keough

	
 
	
Name: Sasha Keough

	
 
	
Title: Vice President

 

		
	
Address:
	
c/o New Enterprise Associates, Inc.

	
 
	
Attn: Sasha Keough, Esq.

	
 
	
1954 Greenspring Drive, Suite 600

	
 
	
Timonium, Maryland 21093

	
 
	
 

	
Facsimile:
	
(410) 842-4100

 [Signature Page to Securities Purchase Agreement] 

  

 

FRANKLIN STRATEGIC SERIES –

FRANKLIN BIOTECHNOLOGY DISCOVERY

FUND

 

		
	
By:
	
Franklin Advisers, Inc., its investment manager

	
 
	
 

	
By:
	
/s/ Evan McCulloch

	
 
	
Name: Evan McCulloch

	
 
	
Title: Vice President

 

		
	
Address:
	
One Franklin Parkway

	
 
	
San Mateo, CA 94403

	
 
	
 

	
Facsimile:
	
 

 [Signature Page to Securities Purchase Agreement] 

  

 

FRANKLIN TEMPLETON INVESTMENT

FUNDS – FRANKLIN BIOTECHNOLOGY

DISCOVERY FUND

By:Franklin Advisers, Inc., its investment manager

 

	
By: 
	
/s/ Evan McCulloch

	
 
	
Name: Evan McCulloch

	
 
	
Title: Vice President

 

	
Address:
	
One Franklin Parkway

	
 
	
San Mateo, CA 94403

	
 
	
 

	
Facsimile:
	
 

 

 [Signature Page to Securities Purchase Agreement] 

  

 

RA Capital Healthcare Fund, L.P.

20 Park Plaza; Suite 1200

Boston, MA 02116

 

	
By:
	
RA Capital Management, LLC

	
Its:
	
General Partner

 

	
By: 
	
/s/ Rajeev Shah

	
 
	
Authorized Signatory

 

Blackwell Partners LLC – Series A

20 Park Plaza; Suite 1200

Boston, MA 02116

 

	
By:
	
 

	
Its: 
	
Authorized Signatory

 

	
By:
	
 

	
Its: 
	
Authorized Signatory

 

 [Signature Page to Securities Purchase Agreement] 

  

 

RA Capital Healthcare Fund, L.P.

20 Park Plaza; Suite 1200

Boston, MA 02116

 

	
By:
	
RA Capital Management, LLC

	
Its:
	
General Partner

 

	
By:
	
 

	
 
	
Authorized Signatory

 

Blackwell Partners LLC – Series A

20 Park Plaza; Suite 1200

Boston, MA 02116

 

	
By: 
	
/s/ Jannine Lall

	
Its: 
	
Authorized Signatory

 

	
By: 
	
/s/ Justin B. Nixon

	
Its: 
	
Authorized Signatory

 

 [Signature Page to Securities Purchase Agreement] 

  

 

TEKLA LIFE SCIENCES INVESTORS

 

	
By: 
	
/s/ Laura Woodward

	
 
	
Name: Laura Woodward

	
 
	
Title: Treasurer

 

	
Address:
	
100 Federal St, 19th Floor

	
 
	
Boston, MA 02110

 

	
·
	
The name Tekla Life Sciences Investors is the designation of the Trustees for the time being under a Declaration of Trust dated February 20, 1992, as amended, and all persons dealing with Tekla Life Sciences Investors must look solely to the trust property for the enforcement of any claim against Tekla Life Sciences Investors, as neither the Trustees, officers nor shareholders assume any personal liability for the obligations entered into on behalf of Tekla Life Sciences Investors.

 

 [Signature Page to Securities Purchase Agreement] 

  

 

Capital Ventures International

by: Heights Capital Management, Inc.

its authorized agent

 

		
	
By: 
	
/s/ Martin Kobinger

	
 
	
Name: Martin Kobinger

	
 
	
Title: Investment Manager

 

		
	
Address:
	
c/o Heights Capital Management

	
 
	
101 California Street, Suite 3250

	
 
	
San Francisco, CA 94111

 

		
	
Facsimile:
	
(415) 403-6525

 

 [Signature Page to Securities Purchase Agreement] 

  

 

 

		
	
DAFNA LIFESCIENCE, L.P.

	
By: 
	
/s/ Fariba Ghodsian

	
 
	
Name: Fariba Ghodsian

	
 
	
Title: C.I.O.

 

		
	
Address:
	
DAFNA Capital Mgmt

	
 
	
10990 Wilshire Blvd Suite 1400

	
 
	
Los Angeles, CA 90024

	
Facsimile:
	
(310) 445-6594

 

 [Signature Page to Securities Purchase Agreement] 

  

 

 

		
	
DAFNA LIFESCIENCE MARKET NEUTRAL, L.P.

	
By: 
	
/s/ Fariba Ghodsian

	
 
	
Name: Fariba Ghodsian

	
 
	
Title: C.I.O.

 

		
	
Address:
	
DAFNA Capital Mgmt

	
 
	
10990 Wilshire Blvd Suite 1400

	
 
	
Los Angeles, CA 90024

	
Facsimile:
	
(310) 445-6594

 

 [Signature Page to Securities Purchase Agreement] 

  

 

 

		
	
DAFNA LIFESCIENCE SELECT, L.P.

	
By: 
	
/s/ Fariba Ghodsian

	
 
	
Name: Fariba Ghodsian

	
 
	
Title: C.I.O.

 

		
	
Address:
	
DAFNA Capital Mgmt

	
 
	
10990 Wilshire Blvd Suite 1400

	
 
	
Los Angeles, CA 90024

	
Facsimile:
	
(310) 445-6594

 

 

 

 [Signature Page to Securities Purchase Agreement] 

  

 

EXHIBIT A 

SCHEDULE OF PURCHASERS 

 

	
Purchaser
	
  
	
Shares
	
 
	
  
	
Warrants
	
 
	
  
	
Aggregate Purchase
Price
	
 

	
Venrock Healthcare Capital Partners II, L.P.
	
  
	
 
	
5,373,623
	
  
	
  
	
 
	
2,149,449
	
  
	
  
	
$
	
4,731,475.05
	
  

	
VHCP Co-Investment Holdings II, LLC
	
  
	
 
	
2,178,904
	
  
	
  
	
 
	
871,562
	
  
	
  
	
$
	
1,918,524.97
	
  

	
Venrock Healthcare Capital Partners, L.P.
	
  
	
 
	
2,736,388
	
  
	
  
	
 
	
1,094,555
	
  
	
  
	
$
	
2,409,389.63
	
  

	
VHCP Co-Investment Holdings, LLC
	
  
	
 
	
500,409
	
  
	
  
	
 
	
200,164
	
  
	
  
	
$
	
440,610.12
	
  

	
Growth Equity Opportunities Fund IV, LLC
	
 
	
 
	
10,221,465
	
 
	
 
	
 
	
4,088,586
	
 
	
 
	
$
	
8,999,999.93
	
 

	
Franklin Strategic Series – Franklin Biotechnology Discovery Fund
	
 
	
 
	
3,517,888
	
 
	
 
	
 
	
1,407,155
	
 
	
 
	
$
	
3,097,500.38
	
 

	
Franklin Templeton Investment Funds – Franklin Biotechnology Discovery Fund
	
 
	
 
	
5,000,000
	
 
	
 
	
 
	
2,000,000
	
 
	
 
	
$
	
4,402,500.00
	
 

	
RA Capital Healthcare Fund, L.P.
	
 
	
 
	
4,673,481
	
 
	
 
	
 
	
1,869,392
	
 
	
 
	
$
	
4,115,000.02
	
 

	
Blackwell Partners LLC – Series A
	
 
	
 
	
1,005,111
	
 
	
 
	
 
	
402,044
	
 
	
 
	
$
	
885,000.24
	
 

	
Tekla Life Sciences Investors
	
 
	
 
	
5,678,592
	
 
	
 
	
 
	
2,271,437
	
 
	
 
	
$
	
5,000,000.26
	
 

	
Capital Ventures International 
	
 
	
 
	
567,859
	
 
	
 
	
 
	
227,144
	
 
	
 
	
$
	
499,999.85
	
 

	
DAFNA Lifescience LP
	
 
	
 
	
323,680
	
 
	
 
	
 
	
129,472
	
 
	
 
	
$
	
285,000.24
	
 

	
DAFNA Lifescience Market Neutral LP
	
 
	
 
	
22,714
	
 
	
 
	
 
	
9,086
	
 
	
 
	
$
	
19,999.68
	
 

	
DAFNA Lifescience Select LP
	
 
	
 
	
221,465
	
 
	
 
	
 
	
88,586
	
 
	
 
	
$
	
194,999.93
	
 

	
 
	
 
	
 
	
 

	
Total
	
  
	
 
	
42,021,579
	
  
	
  
	
 
	
16,808,632
	
  
	
  
	
$
	
$37,000,000.30
	
  

 

 

  

 

EXHIBIT B-1 

FORM OF WARRANT FOR PURCHASERS OVER 10%

THIS WARRANT AND THE UNDERLYING SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THE SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER APPLICABLE SECURITIES LAWS OR UNLESS OFFERED, SOLD, PLEDGED, HYPOTHECATED OR TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS. THE COMPANY SHALL BE ENTITLED TO REQUIRE AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED TO THE EXTENT THAT AN OPINION IS REQUIRED PURSUANT TO THE AGREEMENT UNDER WHICH THE SECURITIES WERE ISSUED. 

ARCA BIOPHARMA, INC. 

WARRANT TO PURCHASE COMMON STOCK 

 

	
No. CW
	
June 16, 2015

Void After June 16, 2022 

THIS CERTIFIES THAT, for value received,                      , with its principal office at                             , or its assigns (the “Holder”), is entitled to subscribe for and purchase at the Exercise Price (defined below) from ARCA biopharma, Inc., a Delaware corporation, with its principal office at 11080 CirclePoint Rd., Suite 140, Westminster, CO 80020 (the “Company”) up to                      shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”), subject to adjustment as provided herein. This Warrant is one of a series of Warrants being issued pursuant to the terms of the Securities Purchase Agreement, dated June 10, 2015, by and among the Company and the original Holder of this Warrant and the other parties named therein (the “Purchase Agreement”). Capitalized terms not otherwise defined herein shall have the respective meanings ascribed to such terms in the Purchase Agreement. 

1. DEFINITIONS. As used herein, the following terms shall have the respective meanings: 

(a) “Exercise Period” shall mean the period commencing December 13, 2015, 180 days after the Closing Date, and ending June 16, 2022, unless sooner terminated as provided below. 

(b) “Exercise Price” shall mean $0.8716 per share, subject to adjustment pursuant to Section 5 below. 

(c) “Exercise Shares” shall mean the shares of the Company’s Common Stock issued upon exercise of this Warrant, subject to adjustment pursuant to the terms herein, including but not limited to pursuant to Sections 5 and 6 below. 

2. EXERCISE OF WARRANT. 

2.1 Method of Exercise. The rights represented by this Warrant may be exercised in whole or in part at any time during the Exercise Period, by delivery of the following to the Company at its address set forth above (or at such other address as it may designate by notice in writing to the Holder): 

(a) An executed Notice of Exercise in the form attached hereto; 

(b) Payment of the Exercise Price either (i) in cash or by check or wire transfer of immediately available funds, or (ii) pursuant to a cashless exercise, as described below; and 

(c) This Warrant. 

Upon the exercise of the rights represented by this Warrant, Exercise Shares shall be issued and registered in the name of the Holder or persons affiliated with the Holder, if the Holder so designates, within a reasonable time after the rights represented by this Warrant shall have been so exercised.  The Exercise Shares shall be issued in certificate form if so requested. 

The person in whose name any Exercise Shares are to be issued upon exercise of this Warrant shall be deemed to have become the holder of record of such shares on the date on which this Warrant was surrendered and payment of the Exercise Price was made, irrespective of the date of issuance of the shares of Common Stock, except that, if the date of such surrender and payment is a date 

 

 

when the stock transfer books of the Company are closed, such person shall be deemed to have become the holder of such shares at the close of business on the next succeeding date on which the stock transfer books are open. 

2.2 Cashless Exercise. Notwithstanding any provisions herein to the contrary, if, at any time during the Exercise Period, the Current Market Price (as defined below) of one share of Common Stock is greater than the Exercise Price (at the date of calculation as set forth below), in lieu of exercising this Warrant by payment of cash, the Holder may exercise this Warrant by a cashless exercise by surrender of this Warrant at the principal office of the Company together with the properly endorsed Notice of Exercise, and the date of receipt by the Company of the foregoing shall be deemed the date of exercise of this Warrant.  On such date of exercise, the Company shall issue to the Holder a number of shares of Common Stock computed using the following formula: 

 

	
 
	
      
	
X =
	
      
	
Y (B-A)

      B

	
 
	
 
	
 

	
Where:
	
  
	
X =
	
  
	
the number of shares of Common Stock to be issued to the Holder.

	
 
	
 
	
 

	
 
	
  
	
Y =
	
  
	
the number of shares of Common Stock purchasable upon exercise of all of the Warrant or, if only a portion of the Warrant is being exercised, the portion of the Warrant being exercised.

	
 
	
 
	
 

	
 
	
  
	
A =
	
  
	
the Exercise Price.

	
 
	
 
	
 

	
 
	
  
	
B =
	
  
	
the Current Market Price of one share of Common Stock (on the date of calculation).

“Current Market Price” means on any particular date: 

(a) if the Common Stock is traded on The Nasdaq Global Market or The Nasdaq Capital Market, the closing price of the Common Stock of the Company on such market on the day prior to the date of exercise of the Warrant as reported by Bloomberg Financial Markets (“Bloomberg”) (or comparable reporting service if Bloomberg is not then reporting sales prices of such security); 

(b) if the Common Stock is traded on any registered national stock exchange but is not traded on The Nasdaq Global Market or The Nasdaq Capital Market, the closing price of the Common Stock of the Company on such exchange on the day prior to the date of exercise of the Warrant as reported by Bloomberg (or comparable reporting service if Bloomberg is not then reporting sales prices of such security); 

(c) if the Common Stock is traded over-the-counter, but not on The Nasdaq Global Market, The Nasdaq Capital Market or a registered national stock exchange, the last sales price of the Common Stock of the Company on the day prior to the date of exercise of the Warrant as reported by Bloomberg (or comparable reporting service if Bloomberg is not then reporting sales prices of such security), or, if no sales price is so reported, the last bid price of the Common Stock of the Company on the day prior to the date of exercise of the Warrant as reported by Bloomberg (or comparable reporting service if Bloomberg is not then reporting sales prices of such security); and

(d) if there is no active public market for the Common Stock, the value thereof, as determined in good faith by the board of directors of the Company as of the date of exercise of the Warrant. 

2.3 Partial Exercise. If this Warrant is exercised in part only, the Company shall, upon surrender of this Warrant, execute and deliver, within 10 days of the date of exercise, a new Warrant evidencing the rights of the Holder, or such other person as shall be designated in the Notice of Exercise, to purchase the balance of the Exercise Shares purchasable hereunder. In no event shall this Warrant be exercised for a fractional Exercise Share, and the Company shall not distribute a Warrant exercisable for a fractional Exercise Share. Fractional Exercise Shares shall be treated as provided in Section 6 hereof. 

2.4 No Settlement for Cash. The Warrant cannot be settled with the Company for cash. 

2.5 Exercise Limitation. Notwithstanding any provisions herein to the contrary, the Holder shall not be entitled to exercise this Warrant for a number of Exercise Shares in excess of that number of Exercise Shares which, upon giving effect to such exercise, would cause the aggregate number of shares of Common Stock beneficially owned by the Holder to exceed 19.9% of the outstanding shares of the Common Stock following such exercise. For purposes of the foregoing provision, the aggregate number of shares of Common Stock beneficially owned by the Holder shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which determination of such provision is being made, but shall exclude the shares of Common Stock which would be issuable upon (i) exercise of the remaining, unexercised Warrants beneficially owned by the Holder and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company beneficially owned by the Holder subject to a limitation on conversion or exercise analogous to the limitation contained herein. Except as set forth in the preceding sentence, for purposes of this Section 2.5, beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act. For purposes of this Section 2.5, in determining the number of outstanding shares of Common Stock, the Holder may rely on the number 

 

 

of outstanding shares of Common Stock as reflected in (x) the Company’s most recent Form 10-Q or Form 10-K, as the case may be, filed with the SEC on the date thereof, (y) a more recent public announcement by the Company or (z) any other notice by the Company or its transfer agent setting forth the number of shares of Common Stock outstanding. Upon the written request of the Holder, the Company shall within three trading days confirm in writing or by electronic mail to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder since the date as of which such number of outstanding shares of Common Stock was reported. 

3. COVENANTS OF THE COMPANY. 

3.1 Covenants as to Exercise Shares. The Company covenants and agrees that all Exercise Shares that may be issued upon the exercise of the rights represented by this Warrant will, upon issuance, be validly issued and outstanding, fully paid and nonassessable, and free from all taxes, liens and charges with respect to the issuance thereof. The Company further covenants and agrees that the Company will at all times during the Exercise Period, have authorized and reserved, free from preemptive rights, a sufficient number of shares of its Common Stock to provide for the exercise of the rights represented by this Warrant. If at any time during the Exercise Period the number of authorized but unissued shares of Common Stock shall not be sufficient to permit exercise of this Warrant, the Company will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock (or other securities as provided herein) to such number of shares as shall be sufficient for such purposes. 

3.2 No Impairment. Except and to the extent as waived or consented to by the Holder or otherwise in accordance with Section 11 hereof, the Company will not, by amendment of its Certificate of Incorporation (as such may be amended from time to time), or through any means, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist in the carrying out of all the provisions of this Warrant and in the taking of all such action as may be necessary or appropriate in order to protect the exercise rights of the Holder against impairment. 

3.3 Notices of Record Date. In the event of any taking by the Company of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend (other than a cash dividend which is the same as cash dividends paid in previous quarters) or other distribution, the Company shall mail to the Holder, at least 10 days prior to the date specified herein, a notice specifying the date on which any such record is to be taken for the purpose of such dividend or distribution. 

3.4 Notice of Expiration. In the event this Warrant is still outstanding, the Company shall provide written notice to the Holder of the impending expiration of this Warrant no more than 90 days and no less than 60 days prior to June 16, 2022 (the “Expiration Date”). In the event that immediately prior to the close of business on the Expiration Date, the Current Market Price of one share of Common Stock (as determined in accordance with Section 2.2 above) is greater than the then applicable Exercise Price, this Warrant shall be deemed to be automatically exercised on a net exercise issue basis pursuant to Section 2.2 above, and the Company shall deliver the applicable number of shares of Common Stock to the Holder pursuant to the provisions of Section 2.2 above and this Section 3.4. 

4. REPRESENTATIONS OF HOLDER. 

4.1 Acquisition of Warrant for Personal Account. The Holder represents and warrants that it is acquiring the Warrant and the Exercise Shares solely for its account for investment and not with a present view toward the public distribution of said Warrant or Exercise Shares or any part thereof and has no intention of selling or distributing said Warrant or Exercise Shares or any arrangement or understanding with any other persons regarding the sale or distribution of said Warrant or, except in accordance with the provisions of Article 6 of the Purchase Agreement, the Exercise Shares, and except as would not result in a violation of the Securities Act. The Holder will not, directly or indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase or otherwise acquire or take a pledge of) the Warrant except in accordance with the Securities Act and will not, directly or indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase or otherwise acquire or take a pledge of) the Exercise Shares except in accordance with the provisions of Article 6 of the Purchase Agreement or pursuant to and in accordance with the Securities Act. 

4.2 Securities Are Not Registered. 

(a) The Holder understands that the offer and sale of the Warrant or the Exercise Shares have not been registered under the Securities Act on the basis that no distribution or public offering of the stock of the Company is to be effected. The Holder realizes that the basis for the exemption may not be present if, notwithstanding its representations, the Holder has a present intention of acquiring the Warrant and the Exercise Shares for a fixed or determinable period in the future, selling (in connection with a distribution or otherwise), granting any participation in, or otherwise distributing the securities. The Holder has no such present intention. 

(b) The Holder recognizes that the Warrant and the Exercise Shares must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration is available. The Holder recognizes that the Company has no obligation to register the Warrant or, except as provided in the Purchase Agreement, the Exercise Shares of the Company, or to comply with any exemption from such registration. 

 

 

(c) The Holder is aware that neither the Warrant nor the Exercise Shares may be sold pursuant to Rule 144 adopted under the Securities Act unless certain conditions are met, including, among other things, the existence of a public market for the shares, the availability of certain current public information about the Company, the resale following the required holding period under Rule 144 and the number of shares being sold during any three month period not exceeding specified limitations. Holder is aware that any such sale made in reliance on Rule 144, if Rule 144 is available, may be made only in accordance with the terms of Rule 144. 

4.3 Disposition of Warrant and Exercise Shares. 

(a) The Holder further agrees not to make any disposition of all or any part of the Warrant or Exercise Shares in any event unless and until: 

(i) The Company shall have received a letter secured by the Holder from the SEC stating that no action will be recommended to the SEC with respect to the proposed disposition; 

(ii) There is then in effect a registration statement under the Securities Act covering such proposed disposition and such disposition is made in accordance with said registration statement; or 

(iii) The Holder shall have notified the Company of the proposed disposition and shall have furnished the Company with a detailed statement of the circumstances surrounding the proposed disposition, and if reasonably requested by the Company, the Holder shall have furnished the Company with an opinion of counsel, reasonably satisfactory to the Company, for the Holder to the effect that such disposition will not require registration of such Warrant or Exercise Shares under the Securities Act or any applicable state securities laws; provided, that no opinion shall be required for any disposition made or to be made in accordance with the provisions of Rule 144. 

(b) The Holder understands and agrees that all certificates evidencing the Exercise Shares to be issued to the Holder may bear a legend in substantially the following form; provided, that such legend shall be removed (or such Exercise Shares shall be issued without such legend upon exercise of this Warrant) as required pursuant to Section 3.8(b) of the Purchase Agreement: 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THE SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER APPLICABLE SECURITIES LAWS, OR UNLESS OFFERED, SOLD, PLEDGED, HYPOTHECATED OR TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS. THE COMPANY SHALL BE ENTITLED TO REQUIRE AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED TO THE EXTENT THAT AN OPINION IS REQUIRED PURSUANT TO THE AGREEMENT UNDER WHICH THE SECURITIES WERE ISSUED. 

5. ADJUSTMENT OF EXERCISE SHARES AND EXERCISE PRICE. In the event of changes in the outstanding Common Stock of the Company by reason of stock dividends, split-ups, recapitalizations, reclassifications, combinations or exchanges of shares, separations, reorganizations, liquidations, or the like, the number and class of shares available under the Warrant in the aggregate and the Exercise Price shall be appropriately and proportionately adjusted to give the Holder of the Warrant, on exercise for the same aggregate Exercise Price, the total number, class, and kind of shares as the Holder would have owned had the Warrant been exercised prior to the event and had the Holder continued to hold such shares until after the event requiring adjustment. The form of this Warrant need not be changed because of any adjustment in the number, class, and kind of shares subject to this Warrant. The Company shall promptly provide all Holders a certificate from its Chief Accounting Officer notifying such Holders in writing of any adjustment in the Exercise Price and/or the total number, class, and kind of shares issuable upon exercise of this Warrant, which certificate shall specify the Exercise Price and number, class and kind of shares under this Warrant after giving effect to such adjustment. 

6. FRACTIONAL SHARES. No fractional shares shall be issued upon the exercise of this Warrant. All Exercise Shares (including fractions) issuable upon exercise of this Warrant may be aggregated for purposes of determining whether the exercise would result in the issuance of any fractional share. If, after aggregation, the exercise would result in the issuance of a fractional share, the Company shall, in lieu of issuance of any fractional share, pay the Holder otherwise entitled to such fraction a sum in cash equal to the product resulting from multiplying the then Current Market Price of an Exercise Share by such fraction. 

7. CERTAIN EVENTS. In the event of, at any time during the Exercise Period, any capital reorganization, or any reclassification of the capital stock of the Company (other than a change in par value or from par value to no par value or no par value to par value or as a result of a stock dividend or subdivision, split-up or combination of shares), or the consolidation or merger of the Company with or into another corporation (other than a merger solely to effect a reincorporation of the Company into another state), in each case, in which the stockholders of the Company immediately prior to such capital reorganization, reclassification, consolidation or merger, will hold less than a majority of the outstanding shares of the Company or resulting corporation immediately after such capital reorganization, reclassification, consolidation or merger, or the sale or other disposition of all or substantially all of the properties and 

 

 

assets of the Company and its subsidiaries, taken as a whole, in its entirety to any other person, other than sales or other dispositions that do not require stockholder approval (each, an “Event”), the Company shall provide to the Holder 15 days’ advance written notice of such Event, and the Holder shall have the option, in its sole discretion, to allow any unexercised portion of the Warrant to be deemed automatically exercised pursuant to Section 2.2. This Warrant will be binding upon the successors and assigns of the Company upon an Event. 

8. NO STOCKHOLDER RIGHTS. This Warrant in and of itself shall not entitle the Holder to any voting rights or other rights as a stockholder of the Company. 

9. TRANSFER OF WARRANT. Subject to applicable laws and compliance with Section 4.3 hereof, this Warrant and all rights hereunder are transferable, by the Holder in person or by duly authorized attorney, upon delivery of this Warrant and the form of assignment attached hereto to any transferee designated by Holder. The transferee shall sign an investment letter in form and substance satisfactory to the Company. 

10. LOST, STOLEN, MUTILATED OR DESTROYED WARRANT. If this Warrant is lost, stolen, mutilated or destroyed, the Company may, on such terms as to indemnity or otherwise as it may reasonably impose (which shall, in the case of a mutilated Warrant, include the surrender thereof), issue a new Warrant of like denomination and tenor as the Warrant so lost, stolen, mutilated or destroyed. Any such new Warrant shall constitute an original contractual obligation of the Company, whether or not the allegedly lost, stolen, mutilated or destroyed Warrant shall be at any time enforceable by anyone. 

11. MODIFICATIONS AND WAIVER. This Warrant and any provision hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the Company and (i) Purchasers holding Warrants representing at least a majority of the number of Exercise Shares then issuable upon exercise of the Warrants sold in the Offering, provided, however, that such modification, amendment or waiver is made with respect to all Warrants issued in the Offering and does not adversely affect the Holder without adversely affecting all holders of Warrants in a similar manner; or (ii) the Holder. 

12. NOTICES, ETC. All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified; (b) when sent by confirmed email, telex or facsimile if sent during normal business hours of the recipient, if not, then on the next business day; (c) five days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (d) one business day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the Company at the address listed on the signature page and to the Holders at the addresses in the Company’s records, or at such other address as the Company or Holder may designate by ten days’ advance written notice to the other party hereto. 

13. ACCEPTANCE. Receipt of this Warrant by the Holder shall constitute acceptance of and agreement to all of the terms and conditions contained herein. 

14. GOVERNING LAW. This Warrant and all rights, obligations and liabilities hereunder shall be governed by the laws of the State of New York without regard to the principles of conflict of laws. 

15. DESCRIPTIVE HEADINGS. The descriptive headings of the several paragraphs of this Warrant are inserted for convenience only and do not constitute a part of this Warrant. The language in this Warrant shall be construed as to its fair meaning without regard to which party drafted this Warrant. 

16. SEVERABILITY. The invalidity or unenforceability of any provision of this Warrant in any jurisdiction shall not affect the validity or enforceability of such provision in any other jurisdiction, or affect any other provision of this Warrant, which shall remain in full force and effect. 

17. ENTIRE AGREEMENT. This Warrant constitutes the entire agreement between the parties pertaining to the subject matter contained in it and supersedes all prior and contemporaneous agreements, representations, and undertakings of the parties, whether oral or written, with respect to such subject matter. 

[Signature Page Follows] 

 

 

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its duly authorized officer as of June 16, 2015. 

 

	
 
	
 
	
 

	
ARCA biopharma, INC.

	
 
	
 

	
By:
	
 
	
 

	
 
	
 
	
 

	
Name:
	
 
	
Michael R. Bristow

	
 
	
 
	
 

	
Title:
	
 
	
Chief Executive Officer

	
 
	
 
	
 

	
Address:
	
 
	
11080 CirclePoint Rd., Suite 140

	
 
	
 
	
Westminster, CO 80020

	
 
	
 
	
Attention: Chief Accounting Officer

	
 
	
 
	
Facsimile: (720) 208-9261

 

 

 

 

 

NOTICE OF EXERCISE 

TO: ARCA biopharma, Inc. 

(1) The undersigned hereby elects to (check one box only): 

q purchase          shares of the Common Stock of ARCA biopharma, Inc. (the “Company”) pursuant to the terms of the attached Warrant, and tenders herewith payment of the exercise price in full for such shares, together with all applicable transfer taxes, if any. 

q purchase the number of shares of Common Stock of the Company by cashless exercise pursuant to the terms of the Warrant as shall be issuable upon cashless exercise of the portion of the Warrant relating to          shares, and shall tender payment of all applicable transfer taxes, if any. 

(2) Please issue a certificate or certificates representing said shares of Common Stock in the name of the undersigned or in such other name as is specified below: 

 

	
 

	
 

	
(Name)

	
 

	
 

	
(Address)

(3) The undersigned represents that: (i) the aforesaid shares of Common Stock are being acquired for the account of the undersigned for investment and not with a view to, or for resale in connection with, the distribution thereof and that the undersigned has no present intention of distributing or reselling such shares; (ii) the undersigned is aware of the Company’s business affairs and financial condition and has acquired sufficient information about the Company to reach an informed and knowledgeable decision regarding its investment in the Company; (iii) the undersigned is experienced in making investments of this type and has such knowledge and background in financial and business matters that the undersigned is capable of evaluating the merits and risks of this investment and protecting the undersigned’s own interests; (iv) the undersigned understands that the shares of Common Stock issuable upon exercise of this Warrant have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), by reason of a specific exemption from the registration provisions of the Securities Act, which exemption depends upon, among other things, the bona fide nature of the investment intent as expressed herein, and, because such securities have not been registered under the Securities Act, they must be held indefinitely unless subsequently registered under the Securities Act or an exemption from such registration is available; (v) the undersigned is aware that the aforesaid shares of Common Stock may not be sold pursuant to Rule 144 adopted under the Securities Act unless certain conditions are met and until the undersigned has held the shares for the time period prescribed by Rule 144, that among the conditions for use of the Rule is the availability of current information to the public about the Company and that the Company has not made such information available and has no present plans to do so; and (vi) the undersigned agrees not to make any disposition of all or any part of the aforesaid shares of Common Stock unless and until there is then in effect a registration statement under the Securities Act covering such proposed disposition and such disposition is made in accordance with said registration statement, or the undersigned has furnished the Company with an opinion of counsel, reasonably satisfactory to the Company, to the effect that such disposition is not required to be registered pursuant to the Securities Act or any applicable state securities laws; provided, that no opinion shall be required for any disposition made or to be made in accordance with the provisions of Rule 144. 

 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
(Date)
	
 
	
 
	
 
	
(Signature)

	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
(Print name)

 

 

 

ASSIGNMENT FORM 

(To assign the foregoing Warrant, subject to compliance with section 4.3 hereof, execute this form and supply required information. Do not use this form to purchase shares.) 

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

 

	
 

	
Name:

	
 

	
 

	
(Please Print)

	
 

	
Address:

	
 

	
 

	
(Please Print)

 

	
 

	
Dated:            , 20    

 

	
 
	
 
	
 

	
Holder’s
	
 
	
 

	
Signature:
	
 
	
 

	
 
	
 

	
Holder’s
	
 
	
 

	
Address:
	
 
	
 

NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatever. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.

 

 

 

 

 

EXHIBIT B-2

FORM OF WARRANT FOR PURCHASERS UNDER 10%

THIS WARRANT AND THE UNDERLYING SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THE SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER APPLICABLE SECURITIES LAWS OR UNLESS OFFERED, SOLD, PLEDGED, HYPOTHECATED OR TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS. THE COMPANY SHALL BE ENTITLED TO REQUIRE AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED TO THE EXTENT THAT AN OPINION IS REQUIRED PURSUANT TO THE AGREEMENT UNDER WHICH THE SECURITIES WERE ISSUED. 

ARCA BIOPHARMA, INC. 

WARRANT TO PURCHASE COMMON STOCK 

 

	
 
	
 
	
 

	
No. CW
	
  
	
June 16, 2015

Void After June 16, 2022 

THIS CERTIFIES THAT, for value received,                      , with its principal office at                             , or its assigns (the “Holder”), is entitled to subscribe for and purchase at the Exercise Price (defined below) from ARCA biopharma, Inc., a Delaware corporation, with its principal office at 11080 CirclePoint Rd., Suite 140, Westminster, CO 80020 (the “Company”) up to                      shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”), subject to adjustment as provided herein. This Warrant is one of a series of Warrants being issued pursuant to the terms of the Securities Purchase Agreement, dated June 10, 2015, by and among the Company and the original Holder of this Warrant and the other parties named therein (the “Purchase Agreement”). Capitalized terms not otherwise defined herein shall have the respective meanings ascribed to such terms in the Purchase Agreement. 

1. DEFINITIONS. As used herein, the following terms shall have the respective meanings: 

(a) “Exercise Period” shall mean the period commencing December 13, 2015, 180 days after the Closing Date, and ending June 16, 2022, unless sooner terminated as provided below. 

(b) “Exercise Price” shall mean $0.8716 per share, subject to adjustment pursuant to Section 5 below. 

(c) “Exercise Shares” shall mean the shares of the Company’s Common Stock issued upon exercise of this Warrant, subject to adjustment pursuant to the terms herein, including but not limited to pursuant to Sections 5 and 6 below. 

2. EXERCISE OF WARRANT. 

2.1 Method of Exercise. The rights represented by this Warrant may be exercised in whole or in part at any time during the Exercise Period, by delivery of the following to the Company at its address set forth above (or at such other address as it may designate by notice in writing to the Holder): 

(a) An executed Notice of Exercise in the form attached hereto; 

(b) Payment of the Exercise Price either (i) in cash or by check or wire transfer of immediately available funds, or (ii) pursuant to a cashless exercise, as described below; and 

(c) This Warrant. 

Upon the exercise of the rights represented by this Warrant, Exercise Shares shall be issued and registered in the name of the Holder or persons affiliated with the Holder, if the Holder so designates, within a reasonable time after the rights represented by this Warrant shall have been so exercised.  The Exercise Shares shall be issued in certificate form if so requested. 

The person in whose name any Exercise Shares are to be issued upon exercise of this Warrant shall be deemed to have become the holder of record of such shares on the date on which this Warrant was surrendered and payment of the Exercise Price was made, irrespective of the date of issuance of the shares of Common Stock, except that, if the date of such surrender and payment is a date 

 

 

when the stock transfer books of the Company are closed, such person shall be deemed to have become the holder of such shares at the close of business on the next succeeding date on which the stock transfer books are open. 

2.2 Cashless Exercise. Notwithstanding any provisions herein to the contrary, if, at any time during the Exercise Period, the Current Market Price (as defined below) of one share of Common Stock is greater than the Exercise Price (at the date of calculation as set forth below), in lieu of exercising this Warrant by payment of cash, the Holder may exercise this Warrant by a cashless exercise by surrender of this Warrant at the principal office of the Company together with the properly endorsed Notice of Exercise, and the date of receipt by the Company of the foregoing shall be deemed the date of exercise of this Warrant.  On such date of exercise, the Company shall issue to the Holder a number of shares of Common Stock computed using the following formula: 

 

	
 
	
 
	
 
	
 
	
 

	
 
	
  
	
X =
	
  
	
Y (B-A)

      B

	
 
	
 
	
 

	
Where:
	
  
	
X =
	
  
	
the number of shares of Common Stock to be issued to the Holder.

	
 
	
 
	
 

	
 
	
  
	
Y =
	
  
	
the number of shares of Common Stock purchasable upon exercise of all of the Warrant or, if only a portion of the Warrant is being exercised, the portion of the Warrant being exercised.

	
 
	
 
	
 

	
 
	
  
	
A =
	
  
	
the Exercise Price.

	
 
	
 
	
 

	
 
	
  
	
B =
	
  
	
the Current Market Price of one share of Common Stock (on the date of calculation).

“Current Market Price” means on any particular date: 

(a) if the Common Stock is traded on The Nasdaq Global Market or The Nasdaq Capital Market, the closing price of the Common Stock of the Company on such market on the day prior to the date of exercise of the Warrant as reported by Bloomberg Financial Markets (“Bloomberg”) (or comparable reporting service if Bloomberg is not then reporting sales prices of such security); 

(b) if the Common Stock is traded on any registered national stock exchange but is not traded on The Nasdaq Global Market or The Nasdaq Capital Market, the closing price of the Common Stock of the Company on such exchange on the day prior to the date of exercise of the Warrant as reported by Bloomberg (or comparable reporting service if Bloomberg is not then reporting sales prices of such security); 

(c) if the Common Stock is traded over-the-counter, but not on The Nasdaq Global Market, The Nasdaq Capital Market or a registered national stock exchange, the last sales price of the Common Stock of the Company on the day prior to the date of exercise of the Warrant as reported by Bloomberg (or comparable reporting service if Bloomberg is not then reporting sales prices of such security), or, if no sales price is so reported, the last bid price of the Common Stock of the Company on the day prior to the date of exercise of the Warrant as reported by Bloomberg (or comparable reporting service if Bloomberg is not then reporting sales prices of such security); and

(d) if there is no active public market for the Common Stock, the value thereof, as determined in good faith by the board of directors of the Company as of the date of exercise of the Warrant. 

2.3 Partial Exercise. If this Warrant is exercised in part only, the Company shall, upon surrender of this Warrant, execute and deliver, within 10 days of the date of exercise, a new Warrant evidencing the rights of the Holder, or such other person as shall be designated in the Notice of Exercise, to purchase the balance of the Exercise Shares purchasable hereunder. In no event shall this Warrant be exercised for a fractional Exercise Share, and the Company shall not distribute a Warrant exercisable for a fractional Exercise Share. Fractional Exercise Shares shall be treated as provided in Section 6 hereof. 

2.4 No Settlement for Cash. The Warrant cannot be settled with the Company for cash. 

2.5 Exercise Limitation. Notwithstanding any provisions herein to the contrary, the Holder shall not be entitled to exercise this Warrant for a number of Exercise Shares in excess of that number of Exercise Shares which, upon giving effect to such exercise, would cause the aggregate number of shares of Common Stock beneficially owned by the Holder to exceed 9.9% of the outstanding shares of the Common Stock following such exercise. For purposes of the foregoing provision, the aggregate number of shares of Common Stock beneficially owned by the Holder shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which determination of such provision is being made, but shall exclude the shares of Common Stock which would be issuable upon (i) exercise of the remaining, unexercised Warrants beneficially owned by the Holder and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company beneficially owned by the Holder subject to a limitation on conversion or exercise analogous to the limitation contained herein. Except as set forth in the preceding sentence, for 

 

 

purposes of this Section 2.5, beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act. The Holder may waive the foregoing limitation by written notice to the Company upon not less than 61 days prior written notice (with such waiver taking effect only upon the expiration of such 61 day notice period and applying only to the Holder and not to any other holder of Warrants sold in the Offering). For purposes of this Section 2.5, in determining the number of outstanding shares of Common Stock, the Holder may rely on the number of outstanding shares of Common Stock as reflected in (x) the Company’s most recent Form 10-Q or Form 10-K, as the case may be, filed with the SEC on the date thereof, (y) a more recent public announcement by the Company or (z) any other notice by the Company or its transfer agent setting forth the number of shares of Common Stock outstanding. Upon the written request of the Holder, the Company shall within three trading days confirm in writing or by electronic mail to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder since the date as of which such number of outstanding shares of Common Stock was reported. 

3. COVENANTS OF THE COMPANY. 

3.1 Covenants as to Exercise Shares. The Company covenants and agrees that all Exercise Shares that may be issued upon the exercise of the rights represented by this Warrant will, upon issuance, be validly issued and outstanding, fully paid and nonassessable, and free from all taxes, liens and charges with respect to the issuance thereof. The Company further covenants and agrees that the Company will at all times during the Exercise Period, have authorized and reserved, free from preemptive rights, a sufficient number of shares of its Common Stock to provide for the exercise of the rights represented by this Warrant. If at any time during the Exercise Period the number of authorized but unissued shares of Common Stock shall not be sufficient to permit exercise of this Warrant, the Company will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock (or other securities as provided herein) to such number of shares as shall be sufficient for such purposes. 

3.2 No Impairment. Except and to the extent as waived or consented to by the Holder or otherwise in accordance with Section 11 hereof, the Company will not, by amendment of its Certificate of Incorporation (as such may be amended from time to time), or through any means, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist in the carrying out of all the provisions of this Warrant and in the taking of all such action as may be necessary or appropriate in order to protect the exercise rights of the Holder against impairment. 

3.3 Notices of Record Date. In the event of any taking by the Company of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend (other than a cash dividend which is the same as cash dividends paid in previous quarters) or other distribution, the Company shall mail to the Holder, at least 10 days prior to the date specified herein, a notice specifying the date on which any such record is to be taken for the purpose of such dividend or distribution. 

3.4 Notice of Expiration. In the event this Warrant is still outstanding, the Company shall provide written notice to the Holder of the impending expiration of this Warrant no more than 90 days and no less than 60 days prior to June 16, 2022 (the “Expiration Date”). In the event that immediately prior to the close of business on the Expiration Date, the Current Market Price of one share of Common Stock (as determined in accordance with Section 2.2 above) is greater than the then applicable Exercise Price, this Warrant shall be deemed to be automatically exercised on a net exercise issue basis pursuant to Section 2.2 above, and the Company shall deliver the applicable number of shares of Common Stock to the Holder pursuant to the provisions of Section 2.2 above and this Section 3.4. 

4. REPRESENTATIONS OF HOLDER. 

4.1 Acquisition of Warrant for Personal Account. The Holder represents and warrants that it is acquiring the Warrant and the Exercise Shares solely for its account for investment and not with a present view toward the public distribution of said Warrant or Exercise Shares or any part thereof and has no intention of selling or distributing said Warrant or Exercise Shares or any arrangement or understanding with any other persons regarding the sale or distribution of said Warrant or, except in accordance with the provisions of Article 6 of the Purchase Agreement, the Exercise Shares, and except as would not result in a violation of the Securities Act. The Holder will not, directly or indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase or otherwise acquire or take a pledge of) the Warrant except in accordance with the Securities Act and will not, directly or indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase or otherwise acquire or take a pledge of) the Exercise Shares except in accordance with the provisions of Article 6 of the Purchase Agreement or pursuant to and in accordance with the Securities Act. 

4.2 Securities Are Not Registered. 

(a) The Holder understands that the offer and sale of the Warrant or the Exercise Shares have not been registered under the Securities Act on the basis that no distribution or public offering of the stock of the Company is to be effected. The Holder realizes that the basis for the exemption may not be present if, notwithstanding its representations, the Holder has a present intention of acquiring the Warrant and the Exercise Shares for a fixed or determinable period in the future, selling (in connection with a distribution or otherwise), granting any participation in, or otherwise distributing the securities. The Holder has no such present intention. 

 

 

(b) The Holder recognizes that the Warrant and the Exercise Shares must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration is available. The Holder recognizes that the Company has no obligation to register the Warrant or, except as provided in the Purchase Agreement, the Exercise Shares of the Company, or to comply with any exemption from such registration. 

(c) The Holder is aware that neither the Warrant nor the Exercise Shares may be sold pursuant to Rule 144 adopted under the Securities Act unless certain conditions are met, including, among other things, the existence of a public market for the shares, the availability of certain current public information about the Company, the resale following the required holding period under Rule 144 and the number of shares being sold during any three month period not exceeding specified limitations. Holder is aware that any such sale made in reliance on Rule 144, if Rule 144 is available, may be made only in accordance with the terms of Rule 144. 

4.3 Disposition of Warrant and Exercise Shares. 

(a) The Holder further agrees not to make any disposition of all or any part of the Warrant or Exercise Shares in any event unless and until: 

(i) The Company shall have received a letter secured by the Holder from the SEC stating that no action will be recommended to the SEC with respect to the proposed disposition; 

(ii) There is then in effect a registration statement under the Securities Act covering such proposed disposition and such disposition is made in accordance with said registration statement; or 

(iii) The Holder shall have notified the Company of the proposed disposition and shall have furnished the Company with a detailed statement of the circumstances surrounding the proposed disposition, and if reasonably requested by the Company, the Holder shall have furnished the Company with an opinion of counsel, reasonably satisfactory to the Company, for the Holder to the effect that such disposition will not require registration of such Warrant or Exercise Shares under the Securities Act or any applicable state securities laws; provided, that no opinion shall be required for any disposition made or to be made in accordance with the provisions of Rule 144. 

(b) The Holder understands and agrees that all certificates evidencing the Exercise Shares to be issued to the Holder may bear a legend in substantially the following form; provided, that such legend shall be removed (or such Exercise Shares shall be issued without such legend upon exercise of this Warrant) as required pursuant to Section 3.8(b) of the Purchase Agreement: 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THE SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER APPLICABLE SECURITIES LAWS, OR UNLESS OFFERED, SOLD, PLEDGED, HYPOTHECATED OR TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS. THE COMPANY SHALL BE ENTITLED TO REQUIRE AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED TO THE EXTENT THAT AN OPINION IS REQUIRED PURSUANT TO THE AGREEMENT UNDER WHICH THE SECURITIES WERE ISSUED. 

5. ADJUSTMENT OF EXERCISE SHARES AND EXERCISE PRICE. In the event of changes in the outstanding Common Stock of the Company by reason of stock dividends, split-ups, recapitalizations, reclassifications, combinations or exchanges of shares, separations, reorganizations, liquidations, or the like, the number and class of shares available under the Warrant in the aggregate and the Exercise Price shall be appropriately and proportionately adjusted to give the Holder of the Warrant, on exercise for the same aggregate Exercise Price, the total number, class, and kind of shares as the Holder would have owned had the Warrant been exercised prior to the event and had the Holder continued to hold such shares until after the event requiring adjustment. The form of this Warrant need not be changed because of any adjustment in the number, class, and kind of shares subject to this Warrant. The Company shall promptly provide all Holders a certificate from its Chief Accounting Officer notifying such Holders in writing of any adjustment in the Exercise Price and/or the total number, class, and kind of shares issuable upon exercise of this Warrant, which certificate shall specify the Exercise Price and number, class and kind of shares under this Warrant after giving effect to such adjustment. 

6. FRACTIONAL SHARES. No fractional shares shall be issued upon the exercise of this Warrant. All Exercise Shares (including fractions) issuable upon exercise of this Warrant may be aggregated for purposes of determining whether the exercise would result in the issuance of any fractional share. If, after aggregation, the exercise would result in the issuance of a fractional share, the Company shall, in lieu of issuance of any fractional share, pay the Holder otherwise entitled to such fraction a sum in cash equal to the product resulting from multiplying the then Current Market Price of an Exercise Share by such fraction. 

7. CERTAIN EVENTS. In the event of, at any time during the Exercise Period, any capital reorganization, or any reclassification of the capital stock of the Company (other than a change in par value or from par value to no par value or no par value to par value or as a result of a stock dividend or subdivision, split-up or combination of shares), or the consolidation or merger of the Company with or 

 

 

into another corporation (other than a merger solely to effect a reincorporation of the Company into another state), in each case, in which the stockholders of the Company immediately prior to such capital reorganization, reclassification, consolidation or merger, will hold less than a majority of the outstanding shares of the Company or resulting corporation immediately after such capital reorganization, reclassification, consolidation or merger, or the sale or other disposition of all or substantially all of the properties and assets of the Company and its subsidiaries, taken as a whole, in its entirety to any other person, other than sales or other dispositions that do not require stockholder approval (each, an “Event”), the Company shall provide to the Holder 15 days’ advance written notice of such Event, and the Holder shall have the option, in its sole discretion, to allow any unexercised portion of the Warrant to be deemed automatically exercised pursuant to Section 2.2. This Warrant will be binding upon the successors and assigns of the Company upon an Event. 

8. NO STOCKHOLDER RIGHTS. This Warrant in and of itself shall not entitle the Holder to any voting rights or other rights as a stockholder of the Company. 

9. TRANSFER OF WARRANT. Subject to applicable laws and compliance with Section 4.3 hereof, this Warrant and all rights hereunder are transferable, by the Holder in person or by duly authorized attorney, upon delivery of this Warrant and the form of assignment attached hereto to any transferee designated by Holder. The transferee shall sign an investment letter in form and substance satisfactory to the Company. 

10. LOST, STOLEN, MUTILATED OR DESTROYED WARRANT. If this Warrant is lost, stolen, mutilated or destroyed, the Company may, on such terms as to indemnity or otherwise as it may reasonably impose (which shall, in the case of a mutilated Warrant, include the surrender thereof), issue a new Warrant of like denomination and tenor as the Warrant so lost, stolen, mutilated or destroyed. Any such new Warrant shall constitute an original contractual obligation of the Company, whether or not the allegedly lost, stolen, mutilated or destroyed Warrant shall be at any time enforceable by anyone. 

11. MODIFICATIONS AND WAIVER. This Warrant and any provision hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the Company and (i) Purchasers holding Warrants representing at least a majority of the number of Exercise Shares then issuable upon exercise of the Warrants sold in the Offering, provided, however, that such modification, amendment or waiver is made with respect to all Warrants issued in the Offering and does not adversely affect the Holder without adversely affecting all holders of Warrants in a similar manner; or (ii) the Holder. 

12. NOTICES, ETC. All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified; (b) when sent by confirmed email, telex or facsimile if sent during normal business hours of the recipient, if not, then on the next business day; (c) five days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (d) one business day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the Company at the address listed on the signature page and to the Holders at the addresses in the Company’s records, or at such other address as the Company or Holder may designate by ten days’ advance written notice to the other party hereto. 

13. ACCEPTANCE. Receipt of this Warrant by the Holder shall constitute acceptance of and agreement to all of the terms and conditions contained herein. 

14. GOVERNING LAW. This Warrant and all rights, obligations and liabilities hereunder shall be governed by the laws of the State of New York without regard to the principles of conflict of laws. 

15. DESCRIPTIVE HEADINGS. The descriptive headings of the several paragraphs of this Warrant are inserted for convenience only and do not constitute a part of this Warrant. The language in this Warrant shall be construed as to its fair meaning without regard to which party drafted this Warrant. 

16. SEVERABILITY. The invalidity or unenforceability of any provision of this Warrant in any jurisdiction shall not affect the validity or enforceability of such provision in any other jurisdiction, or affect any other provision of this Warrant, which shall remain in full force and effect. 

17. ENTIRE AGREEMENT. This Warrant constitutes the entire agreement between the parties pertaining to the subject matter contained in it and supersedes all prior and contemporaneous agreements, representations, and undertakings of the parties, whether oral or written, with respect to such subject matter. 

[Signature Page Follows] 

 

 

 

 

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its duly authorized officer as of June 16, 2015. 

 

	
 
	
 
	
 

	
ARCA biopharma, INC.

	
 
	
 

	
By:
	
 
	
 

	
 
	
 
	
 

	
Name:
	
 
	
Michael R. Bristow

	
 
	
 
	
 

	
Title:
	
 
	
Chief Executive Officer

	
 
	
 

	
Address:
	
 
	
11080 CirclePoint Rd., Suite 140

	
 
	
 
	
Westminster, CO 80020

	
 
	
 
	
Attention: Chief Accounting Officer

	
 
	
 
	
Facsimile: (720) 208-9261

 

 

 

NOTICE OF EXERCISE 

TO: ARCA biopharma, Inc. 

(1) The undersigned hereby elects to (check one box only): 

q purchase          shares of the Common Stock of ARCA biopharma, Inc. (the “Company”) pursuant to the terms of the attached Warrant, and tenders herewith payment of the exercise price in full for such shares, together with all applicable transfer taxes, if any.

q purchase the number of shares of Common Stock of the Company by cashless exercise pursuant to the terms of the Warrant as shall be issuable upon cashless exercise of the portion of the Warrant relating to          shares, and shall tender payment of all applicable transfer taxes, if any. 

(2) Please issue a certificate or certificates representing said shares of Common Stock in the name of the undersigned or in such other name as is specified below: 

 

	
 

	
(Name)

	
 

	
 

	
(Address)

(3) The undersigned represents that: (i) the aforesaid shares of Common Stock are being acquired for the account of the undersigned for investment and not with a view to, or for resale in connection with, the distribution thereof and that the undersigned has no present intention of distributing or reselling such shares; (ii) the undersigned is aware of the Company’s business affairs and financial condition and has acquired sufficient information about the Company to reach an informed and knowledgeable decision regarding its investment in the Company; (iii) the undersigned is experienced in making investments of this type and has such knowledge and background in financial and business matters that the undersigned is capable of evaluating the merits and risks of this investment and protecting the undersigned’s own interests; (iv) the undersigned understands that the shares of Common Stock issuable upon exercise of this Warrant have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), by reason of a specific exemption from the registration provisions of the Securities Act, which exemption depends upon, among other things, the bona fide nature of the investment intent as expressed herein, and, because such securities have not been registered under the Securities Act, they must be held indefinitely unless subsequently registered under the Securities Act or an exemption from such registration is available; (v) the undersigned is aware that the aforesaid shares of Common Stock may not be sold pursuant to Rule 144 adopted under the Securities Act unless certain conditions are met and until the undersigned has held the shares for the time period prescribed by Rule 144, that among the conditions for use of the Rule is the availability of current information to the public about the Company and that the Company has not made such information available and has no present plans to do so; and (vi) the undersigned agrees not to make any disposition of all or any part of the aforesaid shares of Common Stock unless and until there is then in effect a registration statement under the Securities Act covering such proposed disposition and such disposition is made in accordance with said registration statement, or the undersigned has furnished the Company with an opinion of counsel, reasonably satisfactory to the Company, to the effect that such disposition is not required to be registered pursuant to the Securities Act or any applicable state securities laws; provided, that no opinion shall be required for any disposition made or to be made in accordance with the provisions of Rule 144. 

 

	
 
	
 
	
 

	
(Date)
	
 
	
(Signature)

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
 
	
(Print name)

 

 

 

 

 

ASSIGNMENT FORM 

(To assign the foregoing Warrant, subject to compliance with section 4.3 hereof, execute this form and supply required information. Do not use this form to purchase shares.) 

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

 

	
Name:

	
 

	
 

	
(Please Print)

	
 

	
Address:

	
 

	
 

	
(Please Print)

 

	
Dated:            , 20    

 

	
Holder’s
	
 
	
 

	
Signature:
	
 
	
 

	
 
	
 
	
 

	
Holder’s
	
 
	
 

	
Address:
	
 
	
 

NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatever. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.

 

 

 

EXHIBIT C 

FORM OF LEGAL OPINION

 

 

 

 

	
Brent D. Fassett

T: +1 720 566 4025

fassettbd@cooley.com
	
 

 

June __, 2015

To the Purchasers Set Forth on Schedule A Hereto

Ladies and Gentlemen:

We have acted as counsel for ARCA biopharma, Inc., a Delaware corporation (the “Company”), in connection with the issuance and sale of an aggregate of (i) [______] shares of the Company’s Common Stock (the “Shares”) and (ii) warrants (the “Warrants”) to purchase up to an aggregate of [_______] shares of the Company’s Common Stock (the “Warrant Shares”) to the Purchasers under that certain Securities Purchase Agreement, dated as of June __, 2015 (the “Purchase Agreement”). We are rendering this opinion pursuant to Section 5.2(d) of the Purchase Agreement. Except as otherwise defined herein, capitalized terms used but not defined herein have the respective meanings given to them in the Purchase Agreement.

In connection with this opinion, we have examined and relied upon the representations and warranties as to factual matters contained in and made pursuant to the Purchase Agreement and the Warrants by the various parties and originals or copies certified to our satisfaction, of such records, documents, certificates, opinions, memoranda and other instruments as in our judgment are necessary or appropriate to enable us to render the opinion expressed below.

As to certain factual matters, we have relied upon a certificate of an officer of the Company and have not sought independently to verify such matters.  Where we render an opinion “to our knowledge” or concerning a matter “known to us” or our opinion otherwise refers to our knowledge, it is based solely upon (i) an inquiry of attorneys within this firm who have represented the Company in this transaction, (ii) receipt of a certificate executed by an officer of the Company covering such matters, and (iii) such other investigation, if any, that we specifically set forth herein. We have conducted no further investigation.

In rendering this opinion, we have assumed: the authenticity of all documents submitted to us as originals; the conformity to originals of all documents submitted to us as copies; the accuracy, completeness and authenticity of certificates of public officials; the due authorization, execution and delivery of all documents (except the due authorization, execution and delivery by the Company of the Purchase Agreement and the Warrants (together, the “Transaction Documents”)), where authorization, execution and delivery are prerequisites to the effectiveness of such documents; and the genuineness and authenticity of all signatures on original documents (except the signatures on behalf of the Company on the Transaction Agreements). We have also assumed:  that all individuals executing and delivering documents had the legal capacity to so execute and deliver; that the Transaction Documents are obligations binding upon the parties thereto other than the Company; and that there are no extrinsic agreements or understandings among the parties to the Transaction Documents or to the Material Agreements (as defined below) that would modify or interpret the terms of any such Transaction Documents or the respective rights or obligations of the parties thereunder.

Our opinion is expressed only with respect to the federal securities laws of the United States, the laws of the State of New York and the General Corporation Law of the State of Delaware (the “DGCL”).  We express no opinion as to whether the laws of any other jurisdiction apply, and we express no opinion to the extent that the laws of any jurisdiction other than those identified above are applicable to the subject matter hereof. 

We are not rendering any opinion as to any statute, rule, regulation, ordinance, decree or decisional law relating to antitrust, banking, land use, environmental, pension, employee benefit, tax, fraudulent conveyance, usury, laws governing the legality of investments for regulated entities, Regulations T, U or X of the Board of Governors of the Federal Reserve System or local law or regulations. Furthermore, we express no opinion with respect to compliance with antifraud laws, rules or regulations relating to securities or the offer and sale thereof; compliance with fiduciary duties by the Board of Directors; compliance with safe harbors for disinterested Board of Director approvals; compliance with state securities or blue sky laws; compliance with the Investment Company Act of 1940; or compliance with laws that place limitations on corporate distributions.

We have further assumed, that none of the Company, its affiliates or any person acting on their behalf has engaged in any form of “general solicitation or general advertising” within the meaning contemplated by Rule 502(c) of Regulation D promulgated under the Securities Act of 1933, as amended (the “Securities Act”). We have further assumed, that the Company is not disqualified from relying on Regulation D under the Securities Act by reason of the “bad actor” disqualification provisions in Rule 506(d) of Regulation D and that the Company is not required to make any disclosure of “bad actor” events to the purchasers of the Securities under Rule 506(e) of Regulation D. 

With regard to our opinion in paragraphs 1 and 2 below with respect to the good standing of the Company, we have relied solely upon certificates of the Secretaries of State of the indicated jurisdictions as of a recent date.

 

 

380 Interlocken Crescent, Suite 900, Broomfield, Co 80021-8023 T: (720) 566-4000 F: (720) 566-4099 www.cooley.com

	
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With regard to our opinion in paragraph 2 below with respect to the Company’s qualification to do business as a foreign corporation, we have based our opinion solely upon an examination of the certificates issued by the office of the Secretary of State of the indicated jurisdictions as of a recent date.

With regard to our opinion in paragraph 4 below concerning the Transaction Documents constituting valid and binding obligations of the Company:

(i)Our opinion is subject to, and may be limited by, (a) applicable bankruptcy, reorganization, insolvency, moratorium, fraudulent conveyance, debtor and creditor, and similar laws which relate to or affect creditors’ rights generally, and (b) general principles of equity (including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing) regardless of whether considered in a proceeding in equity or at law;

(ii)Our opinion is subject to the qualification that (a) the enforceability of provisions for indemnification or limitations on liability may be limited by applicable law and by public policy considerations, and (b) the availability of specific performance, an injunction or other equitable remedies is subject to the discretion of the court before which the request is brought;

(iii)We express no opinion with respect to any provision of the Transaction Documents that: (a) requires the Company to make payment upon breach or otherwise provides for liquidated damages, monetary penalties or other economic remedies; (b) purports to be severable in the event a provision determined by a court to be an essential part of the agreed exchange is determined to be invalid or unenforceable; (c) specifies provisions may be waived only in writing, to the extent that an oral agreement or implied agreement by trade practice or course of conduct has been created that modifies such provision; (d) contains a waiver of an inconvenient forum, (e) relates to advance waivers of claims, defenses, rights granted by law, or notice, opportunity for hearing, evidentiary requirements, statutes of limitations, trial by jury, service of process or procedural rights, (f) restricts non-written modifications and waivers, (g) provides for the payment of legal and other professional fees where such payment is contrary to law or public policy, (h) relates to exclusivity, election or accumulation of rights or remedies, or (i) specifies a party’s waiver of any breach or any provision is not to be construed as a waiver by such party of any prior breach of such provision or of any other provision of the relevant agreement; and

(iv)We express no opinion as to whether a state court outside of the State of New York or a federal court of the United States would give effect to the choice of New York law provided for in the Transaction Documents.  Our opinion, insofar as it relates to the enforceability of the choice of New York law assumes satisfaction of the requirements of Section 5-1401 of the New York General Obligations Law, which permits contracting parties to specify that the law of the State of New York is applicable if such requirements are satisfied. Our opinion, insofar as it relates to the enforceability of the submission to the jurisdiction of the courts of the State of New York and the federal courts situated therein assumes satisfaction of the requirements of Section 5-1402 of the New York General Obligations Law, which permits contracting parties to submit to the jurisdiction of the courts of the State of New York if such requirements are satisfied.

With regard to our opinion in paragraph 5 below with respect to securities of the Company to be issued after the date hereof, we express no opinion to the extent that (i) the Warrants by their terms become exercisable for securities or other property other than the Warrant Shares or cause the holders of such Warrants to receive any securities or rights to receive or acquire securities other than the Warrant Shares or (ii) notwithstanding the Company’s current reservation of the Warrant Shares, future issuances of securities of the Company and/or antidilution adjustments to outstanding securities of the Company cause the Warrants to be exercisable for more shares of the Company’s Common Stock than the number that then remain authorized but unissued.  Further, with regard to our opinion in paragraph 4 and 5 below, we have assumed that any adjustments to the per share exercise price under the Warrants will not cause the per share exercise price under the Warrants to be less than par value.

With regard to our opinion paragraph 6 below concerning defaults under and any material breaches of any agreement identified on Schedule B hereto, we have relied solely upon (i) inquiries of officers of the Company, (ii) a list supplied to us by the Company of material agreements to which the Company is a party, or by which it is bound, a copy of which is attached hereto as Schedule B hereto (the “Material Agreements”), and (iii) an examination of the Material Agreements in the form provided to us by the Company.  We have made no further investigation. Further, with regard to our opinion in paragraph 6 below concerning Material Agreements, we express no opinion as to (i) financial covenants or similar provisions therein requiring financial calculations or determinations to ascertain compliance, (ii) provisions therein relating to the occurrence of a “material adverse event” or words of similar import, or (iii) any statement or writing that may constitute parol evidence bearing on interpretation or construction. We have assumed that the Material Agreements would be interpreted in accordance with their plain meaning.

With regard to our opinion in paragraph 7 below with respect to pending or overtly threatened litigation, we have made an inquiry of the attorneys within this firm who have represented the Company in this transaction, examined and relied upon a certificate executed by an officer of the Company covering such matters, and checked the records of this firm to ascertain that we are not acting as counsel of record for the Company in any such matter.  We have made no further investigation.

 

380 Interlocken Crescent, Suite 900, Broomfield, Co 80021-8023 T: (720) 566-4000 F: (720) 566-4099 www.cooley.com

	
Page Three
	
 

 

With regard to our opinion in paragraph 8 concerning exemption from registration, our opinion is expressed only with respect to the offer and sale of the Shares and the Warrants without regard to any offers or sales of other securities occurring prior to or subsequent to the date hereof.  

With regard to our opinion in paragraph 9 below, we have based our opinion, to the extent we consider appropriate, on Rule 3a-8 under the Investment Company Act of 1940, as amended (the “Investment Company Act”), and a certificate of an officer of the Company as to factual matters relating to compliance with each of the requirements necessary to comply with Rule 3a‐8.  We have conducted no further investigation.

On the basis of the foregoing, in reliance thereon and with the foregoing qualifications, we are of the opinion that:

1.The Company is validly existing as a corporation in good standing under the laws of the State of Delaware with the requisite corporate power to own its property and assets and to conduct its business as it is currently being conducted. 

2.The Company is duly qualified to do business as a foreign corporation and is in good standing under the laws of the State of Colorado. 

3.The Company’s authorized capital stock consists of 100,000,000 shares of Common Stock and 5,000,000 shares of Preferred Stock, par value $0.001 per share, none of which are designated.

4.Each of the Transaction Documents has been duly authorized by all necessary corporate action on the part of the Company and has been duly executed and delivered by the Company.  Each of the Transaction Documents constitutes a valid and binding obligation of the Company enforceable in accordance with its terms.

5.The Shares have been duly authorized and, when issued and paid for by the Purchasers pursuant to the Purchase Agreement, will be validly issued, fully paid and nonassessable.  The Warrant Shares have been duly authorized and reserved for issuance pursuant to the terms of the Warrants and, when issued and paid for by the Purchasers in accordance with the terms of the Warrants, will be validly issued, fully paid and nonassessable. 

6.The execution and delivery of the Transaction Documents by the Company and the issuance of the Shares and Warrants pursuant thereto do not (i) violate any provision of the Company’s Amended and Restated Certificate of Incorporation, as amended, or Amended and Restated Bylaws, (ii) do not constitute a default under or a material breach of any Material Agreement, and (iii) do not violate (a) any governmental statute, rule or regulation which in our experience is typically applicable to transactions of the nature contemplated by the Transaction Documents or (b) any order, writ, judgment, injunction, decree, determination or award which has been entered against the Company and of which we are aware, in each case to the extent the violation of which would materially and adversely affect the Company.

7.To our knowledge, there is no action, proceeding or investigation pending or overtly threatened against the Company before any court or administrative agency that questions the validity of the Transaction Documents or that could reasonably be expected to result, either individually or in the aggregate, in a material adverse effect on the Company.

8.The offer and sale of the Shares and the Warrants are exempt from the registration requirements of the Securities Act, subject to the timely filing of a Form D pursuant to Securities and Exchange Commission Regulation D. 

9.No consent, approval, authorization or filing with or order of any U.S. Federal, Delaware (with respect to the DGCL) or New York court or governmental agency or body having jurisdiction over the Company is required for the for the offer and sale of the Securities pursuant to the terms of the Subscription Agreements, except (a) for the filing of a Form D pursuant to Securities and Exchange Commission Regulation D and (b) for any necessary filings under applicable blue sky laws.

10.The Company is not, and, after giving effect to the offering and sale of the Shares and the Warrants, will not be required to be registered as an “investment company” as defined in the Investment Company Act.

This letter is furnished only to you as the Purchasers under the Purchase Agreement and is solely for your benefit in connection with the transactions referenced in the first paragraph. This letter may not be relied upon by you for any other purpose, or furnished to, assigned to, quoted to, or relied upon by any other person, firm or other entity for any purpose (including any person, firm or other entity that acquires Securities from or through you) without our prior written consent, which may be granted or withheld in our sole discretion. 

 

380 Interlocken Crescent, Suite 900, Broomfield, Co 80021-8023 T: (720) 566-4000 F: (720) 566-4099 www.cooley.com

	
Page Four
	
 

 

This letter is limited to the matters expressly set forth in this letter, and no opinion has been implied, or may be inferred, beyond the matters expressly stated.  This letter speaks only as to law and facts in effect or existing as of the date hereof and we undertake no obligation or responsibility to update or supplement this letter to reflect any facts or circumstances that may hereafter come to our attention or any changes in any law that may hereafter occur.

 

 

 

380 Interlocken Crescent, Suite 900, Broomfield, Co 80021-8023 T: (720) 566-4000 F: (720) 566-4099 www.cooley.com

	
Page Five
	
 

 

Very truly yours,

Cooley llp

 

	
By: 
	
 

	
 
	
Brent D. Fassett

 

 

 

 

380 Interlocken Crescent, Suite 900, Broomfield, Co 80021-8023 T: (720) 566-4000 F: (720) 566-4099 www.cooley.com

 

SCHEDULE A

Schedule of Purchasers

Venrock Healthcare Capital Partners II, L.P.

VHCP Co-Investment Holdings II, LLC

Venrock Healthcare Capital Partners, L.P.

VHCP Co-Investment Holdings, LLC

Growth Equity Opportunities Fund IV, LLC

Franklin Strategic Series – Franklin Biotechnology Discovery Fund

Franklin Templteon Investment Funds – Franklin Biotechnology Discovery Fund

RA Capital Healthcare Fund, L.P.

Blackwell Partners LLC – Series A

Tekla Life Sciences Investors

Capital Ventures International 

Dafna Lifescience LP

Dafna Lifescience Market Neutral LP

Dafna Lifescience Select LP

 

 

 

380 Interlocken Crescent, Suite 900, Broomfield, Co 80021-8023 T: (720) 566-4000 F: (720) 566-4099 www.cooley.com

 

SCHEDULE B

Material Agreements

License and Sublicense Agreement, dated October 28, 2003, by and between ARCA Discovery, Inc. and CPEC, L.L.C.

Amendment to License and Sublicense Agreement, dated February 22, 2006, by and between ARCA Discovery, Inc. and CPEC L.L.C.

Manufacturing Agreement, dated September 11, 2006, by and between ARCA Discovery, Inc. and Patheon, Inc.

ARCA Discovery, Inc. 2004 Stock Incentive Plan.

Amendment No. 1 to the ARCA Discovery, Inc. 2004 Stock Incentive Plan.

Amendment No. 2 to the ARCA Discovery, Inc. 2004 Stock Incentive Plan.

Amendment No. 3 to the ARCA Discovery, Inc. 2004 Stock Incentive Plan.

Amendment No. 4 to the ARCA Discovery, Inc. 2004 Stock Incentive Plan.

Amendment No. 5 to the ARCA Discovery, Inc. 2004 Stock Incentive Plan.

Amendment No. 6 to the ARCA Discovery, Inc. 2004 Stock Incentive Plan.

ARCA biopharma, Inc. 2004 Stock Incentive Plan, Form of Executive Incentive Stock Option Agreement.

ARCA biopharma, Inc. 2004 Stock Incentive Plan, Form of Non-Executive Incentive Stock Option Agreement.

ARCA biopharma, Inc. 2004 Stock Incentive Plan, Form of Nonqualified Stock Option Agreement.

ARCA biopharma, Inc. 2004 Equity Incentive Plan (f/k/a Nuvelo, Inc. 2004 Equity Incentive Plan), Form of Partial Acceleration Stock Option Agreement.

ARCA biopharma, Inc. 2004 Equity Incentive Plan (f/k/a Nuvelo, Inc. 2004 Equity Incentive Plan), Form of No Acceleration Stock Option Agreement.

ARCA biopharma, Inc. 2004 Equity Incentive Plan (f/k/a Nuvelo, Inc. 2004 Equity Incentive Plan), Form of Director Stock Option Agreement.

ARCA biopharma, Inc. 2004 Equity Incentive Plan (f/k/a Nuvelo, Inc. 2004 Equity Incentive Plan), Form of Notice of Grant of Stock Option.

ARCA biopharma, Inc. 2004 Equity Incentive Plan (f/k/a Nuvelo, Inc. 2004 Equity Incentive Plan), Form of Notice of Director Grant of Stock Option.

Amended and Restated Employment and Retention Agreement, dated June 4, 2008, by and between ARCA biopharma, Inc. and Michael R. Bristow.

Assignment and Assumption Agreement, dated January 26, 2009, by and between ARCA biopharma, Inc. and ARCA biopharma Colorado, Inc.

Amended and Restated Employment Agreement, dated June 12, 2008, by and between ARCA biopharma, Inc. and Christopher D. Ozeroff.

Assignment and Assumption Agreement, dated January 26, 2009, by and between ARCA biopharma, Inc. and ARCA biopharma Colorado, Inc.

Amended and Restated ARCA biopharma, Inc. 2004 Equity Incentive Plan.

Form of Option Amendment pursuant to ARCA biopharma, Inc. 2004 Equity Incentive Plan and ARCA biopharma, Inc. 2004 Stock Option Plan (change of control).

Form of Option Agreement and Grant Notice pursuant to ARCA biopharma, Inc. 2004 Equity Incentive Plan (NDA/change of control acceleration).

 

380 Interlocken Crescent, Suite 900, Broomfield, Co 80021-8023 T: (720) 566-4000 F: (720) 566-4099 www.cooley.com

 

Employment Agreement, dated February 11, 2009, by and between ARCA biopharma, Inc. and Patrick Wheeler. 

Form of Indemnification Agreement between ARCA biopharma, Inc. and its directors and officers.

Form of Subscription Agreement.

License Agreement, dated April 15, 2011, by and between ARCA biopharma and the University of Cincinnati.

Amended and Restated Exclusive License Agreement, dated August 12, 2011, by and between the Regents of the University of Colorado and ARCA biopharma, Inc.

Subscription Agreement, dated April 18, 2011, by and between ARCA biopharma, Inc. and Freestone Advantage Partners, LP.

Subscription Agreement, dated April 18, 2011, by and between ARCA biopharma, Inc. and Cranshire Capital, L.P.

Subscription Agreement, dated April 18, 2011, by and between ARCA biopharma, Inc. and Iroquois Master Fund Ltd.

Subscription Agreement, dated December 19, 2011, by and between ARCA biopharma, Inc. and Cranshire Capital Master Fund, Ltd.

Subscription Agreement, dated December 19, 2011, by and between ARCA biopharma, Inc. and Freestone Advantage Partners II, LP

Subscription Agreement, dated December 19, 2011, by and between ARCA biopharma, Inc. and Iroquois Master Fund Ltd.

Subscription Agreement, dated December 19, 2011, by and between ARCA biopharma, Inc. and Kingsbrook Opportunities Master Fund LP

Subscription Agreement, dated December 19, 2011, by and between ARCA biopharma, Inc. and Empery Asset Master LTD

Subscription Agreement, dated December 19, 2011, by and between ARCA biopharma, Inc. and Hartz Capital Investments, LLC

Registration Rights Agreement, dated December 22, 2011, by and among ARCA biopharma, Inc. and Cranshire Capital Master Fund, Ltd., Freestone Advantage Partners II, LP, Iroquois Master Fund Ltd., Kingsbrook Opportunities Master Fund LP, Empery Asset Master LTD and Hartz Capital Investments, LLC.

Waiver and Amendment Agreement, dated March 30, 2012, by and between ARCA biopharma, Inc. and Michael Bristow.

Waiver and Amendment Agreement, dated March 30, 2012, by and between ARCA biopharma, Inc. and Patrick Wheeler.

Waiver and Amendment Agreement, dated March 30, 2012, by and between ARCA biopharma, Inc. and Christopher Ozeroff.

Subscription Agreement, dated August 2, 2012, by and between Arca biopharma, Inc. and Anson Investments Master Fund LP.

Subscription Agreement, dated August 2, 2012, by and between Arca biopharma, Inc. and Cranshire Capital Master Fund, Ltd.

Subscription Agreement, dated August 2, 2012, by and between Arca biopharma, Inc. and Pyramid Trading, LP

Subscription Agreement, dated August 2, 2012, by and between Arca biopharma, Inc. and Sabby Volatility Warrant Master Fund, Ltd.

Subscription Agreement, dated August 2, 2012, by and between Arca biopharma, Inc. and Sabby Healthcare Volatity Master Fund, Ltd.

Subscription Agreement, dated October 22, 2012, by and between Arca biopharma, Inc. and Atlas Venture Fund VII, L.P

Subscription Agreement, dated October 22, 2012, by and between Arca biopharma, Inc. and Investocor Trust

Subscription Agreement, dated October 22, 2012, by and between Arca biopharma, Inc. and Lansing Brown Investments, LLC

Subscription Agreement, dated October 22, 2012, by and between Arca biopharma, Inc. and Christopher Ozeroff.

Registration Rights Agreement, dated October 25, 2012, by and among Arca biopharma, Inc. and Atlas Venture Fund VII, L.P, Investocor Trust, Lansing Brown Investments, LLC and Christopher Ozeroff.

Subscription Agreement, dated December 18, 2012, by and between Arca biopharma, Inc. and Atlas Ventures Fund VII, L.P.

Subscription Agreement, dated December 18, 2012, by and between Arca biopharma, Inc. and Michael Bristow

 

380 Interlocken Crescent, Suite 900, Broomfield, Co 80021-8023 T: (720) 566-4000 F: (720) 566-4099 www.cooley.com

 

Registration Rights Agreement, dated December 20, 2012, by and among Arca biopharma, Inc. and Atlas Ventures Fund VII, L.P. and Michael Bristow

Amendment to the Registration Rights Agreement, dated December 18, 2012, by and among Arca biopharma, Inc. and Atlas Venture Fund VII, L.P., Investocor Trust, Lansing Brown Investments, LLC and Christopher D. Ozeroff

Form of Subscription Agreement by and among the Company and the purchasers identified therein, dated January 22, 2013

Form of Registration Rights Agreement.

Subscription Agreement.

Clinical Trial Collaboration Agreement between ARCA biopharma, Inc. and Medtronic, Inc. dated as of April 18, 2013.

Placement Agency Agreement by and between ARCA biopharma, Inc. and Dawson James Securities, Inc., dated January 21, 2014.

Amendment No. 1 Placement Agency Agreement by and between ARCA biopharma, Inc. and Dawson James Securities, Inc., dated January 31, 2014.

Letter Agreement between ARCA biopharma, Inc. and Medtronic, Inc. dated as of July 26, 2013.

Office Lease Agreement by and between ARCA biopharma, Inc. and Circle Point Properties, LLC, effective August 1, 2013.

Amendment Agreement by and between ARCA biopharma, Inc. and Michael R. Bristow, effective as of June 13, 2013.

Amendment Agreement by and between ARCA biopharma, Inc. and Patrick M. Wheeler, effective as of June 13, 2013.

Amendment Agreement by and between ARCA biopharma, Inc. and Christopher Ozeroff, effective as of June 13, 2013.

ARCA biopharma, Inc. 2013 Equity Incentive Plan.

Form of Stock Option Agreement and Option Grant Notice under 2013 Equity Incentive Plan (Standard).

Form of Stock Option Agreement and Option Grant Notice under 2013 Equity Incentive Plan (Officer).

Form of Stock Option Agreement and Option Grant Notice under 2013 Equity Incentive Plan (Director).

Form of Restricted Stock Unit Award Agreement and Notice of Grant Award under 2013 Equity Incentive Plan (Standard).

Form of Restricted Stock Unit Award Agreement and Notice of Grant Award under 2013 Equity Incentive Plan (Officer).

Clinical Research Agreement by and between ARCA biopharma, Inc. and Duke University, dated November 5, 2013.

Change Order No. 1 to Clinical Research Agreement between ARCA biopharma, Inc. and Duke University, dated November 12, 2014.

First Amendment to Clinical Trial Collaboration Agreement between ARCA biopharma, Inc. and Medtronic, Inc. dated July 28, 2014.

Second Amendment to Clinical Trial Collaboration Agreement between ARCA biopharma, Inc. and Medtronic, Inc. dated September 9, 2014.

Employment Agreement, dated December 29, 2014, by and between ARCA biopharma, Inc. and Brian Selby.

Amended and Restated Employment Agreement, dated December 29, 2014, by and between ARCA biopharma, Inc. and Thomas A. Keuer.

Canadian Addendum to Clinical Trial Collaboration Agreement between ARCA biopharma, Inc. and Medtronic, Inc. dated February 4, 2015.

 

380 Interlocken Crescent, Suite 900, Broomfield, Co 80021-8023 T: (720) 566-4000 F: (720) 566-4099 www.cooley.comExhibit
4.1

 

FINAL
FORM

 

FORM
OF SERIES A-1 WARRANT

 

THE
NUMBER OF SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT MAY BE LESS THAN THE AMOUNTS SET FORTH ON THE FACE HEREOF
PURSUANT TO SECTION 1(a) OF THIS WARRANT.

 

Tempus
Applied Solutions Holdings, Inc.

 

Series
A-1 Warrant To Purchase Common Stock

 

Warrant
No.:

 

Date
of Issuance: July ___, 2015 (“Issuance Date”)1

 

Tempus
Applied Solutions Holdings, Inc., a Delaware corporation (the “Company”), hereby certifies that, for good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, [INVESTOR],
the registered holder hereof, or its permitted assigns (the “Holder”), is entitled, subject to the terms set
forth below, to purchase from the Company, at the Exercise Price (as defined below) then in effect, upon exercise of this Warrant
to Purchase Common Stock (including any Warrants to Purchase Common Stock issued in exchange, transfer or replacement hereof,
the “Warrant”), at any time or times on or after the Issuance Date, but not after 11:59 p.m., New York time,
on the Expiration Date (as defined below), _________________2 (subject to adjustment as provided herein) fully paid
and non-assessable shares of Common Stock (as defined below) (the “Warrant Shares”, and such number of Warrant
Shares, the “Warrant Number”). Except as otherwise defined herein, capitalized terms in this Warrant shall
have the meanings set forth in Section 18. This Warrant is one of the Warrants to Purchase Common Stock (including, without
limitation, all Series A-1 Warrants and Series B-1 Warrants (together, the “New Investor Warrants”) and the
Series A-2 Warrants and Series B-2 Warrants (together the “Affiliate Investor Warrants” and collectively, with
the New Investor Warrants, the “Investor Warrants”)) issued pursuant to, with respect to the New Investor Warrants,
(i) the Company’s Registration Statement on Form S-4 (File number 333-201424) (the “Registration Statement”),
(ii) the Merger Agreement in exchange for certain shares of non-voting preferred stock of TAS Financing Sub Inc., a Delaware corporation
(“TAS Financing Sub”) (each holder of TAS Financing Sub preferred stock immediately prior to the time of consummation
of the Business Combination, a “Buyer”), which were originally issued by TAS Financing Sub on July ___, 2015
(the “Subscription Date”) and (iii) the Exchange Agreements.

 

 

1
Insert Closing Date of Business Combination.

 

2
1.875 Warrant Shares for each share of TAS Financing Sub Preferred Stock exchanged in the Business Combination.

 

    	1

    	 

    

 

1.           EXERCISE
OF WARRANT.

 

(a)         
Mechanics of Exercise. Subject to the terms and conditions hereof (including, without limitation, the limitations set forth
in Section 1(f)), this Warrant may be exercised by the Holder on any day on or after the Issuance Date (an “Exercise
Date”), in whole or in part, by delivery (whether via facsimile or otherwise) of a written notice, in the form attached
hereto as Exhibit A (the “Exercise Notice”), of the Holder’s election to exercise this
Warrant. Within one (1) Trading Day following an exercise of this Warrant as aforesaid, the Holder shall deliver payment to the
Company of an amount equal to the Exercise Price in effect on the date of such exercise multiplied by the number of Warrant Shares
as to which this Warrant was so exercised (the “Aggregate Exercise Price”) in cash or via wire transfer of
immediately available funds if the Holder did not notify the Company in such Exercise Notice that such exercise was made pursuant
to a Cashless Exercise (as defined in Section 1(d)). The Holder shall not be required to deliver the original of this Warrant
in order to effect an exercise hereunder. Execution and delivery of an Exercise Notice with respect to less than all of the Warrant
Shares shall have the same effect as cancellation of the original of this Warrant and issuance of a new Warrant evidencing the
right to purchase the remaining number of Warrant Shares. Execution and delivery of an Exercise Notice for all of the then-remaining
Warrant Shares shall have the same effect as cancellation of the original of this Warrant after delivery of the Warrant Shares
in accordance with the terms hereof. On or before the first (1st) Trading Day following the date on which the Company
has received an Exercise Notice, the Company shall transmit by facsimile or electronic mail an acknowledgment of confirmation
of receipt of such Exercise Notice, in the form attached hereto as Exhibit B, to the Holder and the Company’s
transfer agent (the “Transfer Agent”), which confirmation shall constitute an instruction to the Transfer Agent
to process such Exercise Notice in accordance with the terms herein. On or before the third (3rd) Trading Day following
the date on which the Company has received such Exercise Notice (or such earlier date as required pursuant to the 1934 Act or
other applicable law, rule or regulation for the settlement of a trade of such Warrant Shares initiated on the applicable Exercise
Date), the Company shall (X) provided that the Transfer Agent is participating in The Depository Trust Company (“DTC”)
Fast Automated Securities Transfer Program, upon the request of the Holder, credit such aggregate number of shares of Common Stock
to which the Holder is entitled pursuant to such exercise to the Holder’s or its designee’s balance account with DTC
through its Deposit/Withdrawal at Custodian system, or (Y) if the Transfer Agent is not participating in the DTC Fast Automated
Securities Transfer Program, upon the request of the Holder, issue and deliver (via reputable overnight courier) to the address
as specified in the Exercise Notice, a certificate, registered in the name of the Holder or its designee, for the number of shares
of Common Stock to which the Holder shall be entitled pursuant to such exercise. Upon delivery of an Exercise Notice, the Holder
shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this
Warrant has been exercised, irrespective of the date such Warrant Shares are credited to the Holder’s DTC account or the
date of delivery of the certificates evidencing such Warrant Shares (as the case may be). If this Warrant is submitted in connection
with any exercise pursuant to this Section 1(a) and the number of Warrant Shares represented by this Warrant submitted for
exercise is greater than the number of Warrant Shares being acquired upon an exercise and upon surrender of this Warrant to the
Company by the Holder, then, at the request of the Holder, the Company shall as soon as practicable and in no event later than
three (3) Business Days after any exercise and at its own expense, issue and deliver to the Holder (or its designee) a new Warrant
(in accordance with Section 7(d)) representing the right to purchase the number of Warrant Shares purchasable immediately
prior to such exercise under this Warrant, less the number of Warrant Shares with respect to which this Warrant is exercised.
No fractional shares of Common Stock are to be issued upon the exercise of this Warrant, but rather the number of shares of Common
Stock to be issued shall be rounded up to the nearest whole number. The Company shall pay any and all transfer, stamp, issuance
and similar taxes, costs and expenses (including, without limitation, fees and expenses of the Transfer Agent) that may be payable
with respect to the issuance and delivery of Warrant Shares upon exercise of this Warrant. Notwithstanding the foregoing, except
in the case where an exercise of this Warrant is validly made pursuant to a Cashless Exercise, the Company’s failure to
deliver Warrant Shares to the Holder on or prior to the later of ((i) three (3) Trading Days after receipt of the applicable Exercise
Notice (or such earlier date as required pursuant to the 1934 Act or other applicable law, rule or regulation for the settlement
of a trade of such Warrant Shares initiated on the applicable Exercise Date) and (ii) one (1) Trading Day after the Company’s
receipt of the Aggregate Exercise Price (or valid notice of a Cashless Exercise) (such later date, the “Share Delivery
Deadline”) shall not be deemed to be a breach of this Warrant.

 

    	2

    	 

    

 

(b)         
Exercise Price. For purposes of this Warrant, “Exercise Price” means $4.80, subject to adjustment as
provided herein.

 

(c)         
Company’s Failure to Timely Deliver Securities. If the Company shall fail, for any reason or for no reason, on or
prior to the Share Delivery Deadline, either (I) if the Transfer Agent is not participating in the DTC Fast Automated Securities
Transfer Program, to issue and deliver to the Holder (or its designee) a certificate for the number of Warrant Shares to which
the Holder is entitled and register such Warrant Shares on the Company’s share register or, if the Transfer Agent is participating
in the DTC Fast Automated Securities Transfer Program, to credit the balance account of the Holder or the Holder’s designee
with DTC for such number of undelivered Warrant Shares to which the Holder is entitled upon the Holder’s exercise of this
Warrant (as the case may be) or (II) if a registration statement (or prospectus contained therein) covering the issuance or resale
of the Warrant Shares that are the subject of the Exercise Notice (the “Unavailable Warrant Shares”) is not
available for the issuance of such Unavailable Warrant Shares and the Company fails to promptly (x) so notify the Holder and (y)
deliver the Warrant Shares electronically (including, if at any time after the three calendar month anniversary of the Issuance
Date, without any restrictive legend) by crediting such aggregate number of Warrant Shares to which the Holder is entitled pursuant
to such exercise to the Holder’s or its designee’s balance account with DTC through its Deposit/Withdrawal At Custodian
system (the event described in the immediately foregoing clause (II) is hereinafter referred as a “Notice Failure”
and together with the event described in clause (I) above, a “Delivery Failure”), then, in addition to all
other remedies available to the Holder, (X) the Company shall pay in cash to the Holder on each day after the Share Delivery Date
and during such Delivery Failure an amount equal to 1% of the product of (A) the sum of the number of shares of Common Stock not
issued to the Holder on or prior to the Share Delivery Deadline and to which the Holder is entitled, multiplied by (B) any trading
price of the Common Stock selected by the Holder in writing as in effect at any time during the period beginning on the applicable
Exercise Date and ending on the applicable Share Delivery Date, and (Y) the Holder, upon written notice to the Company, may void
its Exercise Notice with respect to, and retain or have returned, as the case may be, any portion of this Warrant that has not
been exercised pursuant to such Exercise Notice; provided that the voiding of an Exercise Notice shall not affect the Company’s
obligations to make any payments which have accrued prior to the date of such notice pursuant to this Section 1(c) or otherwise.
In addition to the foregoing, if on or prior to the Share Delivery Deadline either (I) if the Transfer Agent is not participating
in the DTC Fast Automated Securities Transfer Program, the Company shall fail to issue and deliver to the Holder (or its designee)
a certificate and register such shares of Common Stock on the Company’s share register or, if the Transfer Agent is participating
in the DTC Fast Automated Securities Transfer Program, the Transfer Agent shall fail to credit the balance account of the Holder
or the Holder’s designee with DTC for the number of shares of Common Stock to which the Holder is entitled upon the Holder’s
exercise hereunder or pursuant to the Company’s obligation pursuant to clause (ii) below or (II) a Notice Failure occurs,
and if on or after such Share Delivery Deadline the Holder purchases (in an open market transaction or otherwise) shares of Common
Stock to deliver in satisfaction of a sale by the Holder of all or any portion of the number of shares of Common Stock issuable
upon such exercise that the Holder anticipated receiving from the Company (a “Buy-In”), then, in addition to
all other remedies available to the Holder, the Company shall, within three (3) Business Days after the Holder’s request
and in the Holder’s discretion, either (i) pay cash to the Holder in an amount equal to the Holder’s total purchase
price (including brokerage commissions and other out-of-pocket expenses, if any) for the shares of Common Stock so purchased (including,
without limitation, by any other Person in respect, or on behalf, of the Holder) (the “Buy-In Price”), at which
point the Company’s obligation to so issue and deliver such certificate (and to issue such shares of Common Stock) or credit
the balance account of such Holder or such Holder’s designee, as applicable, with DTC for the number of Warrant Shares to
which the Holder is entitled upon the Holder’s exercise hereunder (as the case may be) (and to issue such Warrant Shares)
shall terminate, or (ii) promptly honor its obligation to so issue and deliver to the Holder a certificate or certificates representing
such Warrant Shares or credit the balance account of such Holder or such Holder’s designee, as applicable, with DTC for
the number of Warrant Shares to which the Holder is entitled upon the Holder’s exercise hereunder (as the case may be) and
pay cash to the Holder in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of Warrant
Shares 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 applicable Exercise Notice and ending on the date of such issuance and payment under this clause (ii) (the “Buy-In
Payment Amount”). Nothing shall limit the Holder’s right to pursue any other remedies available to it hereunder,
at law or in equity, including, without limitation, a decree of specific performance and/or injunctive relief with respect to
the Company’s failure to timely deliver certificates representing shares of Common Stock (or to electronically deliver such
shares of Common Stock) upon the exercise of this Warrant as required pursuant to the terms hereof. If the Holder elects to effect
a cash exercise of this Warrant at a time a registration statement is not available for the issuance or resale of such applicable
Warrant Shares, the Company shall, within one (1) Trading Day of receipt of such applicable Exercise Notice, notify the Holder
that unless the Holder withdraws such Exercise Notice and submits an Exercise Notice electing a cashless exercise, if available,
such Warrant Shares shall be issued on the Share Delivery Date in certificate form bearing a restrictive securities legend. The
parties agree that any such issuance and delivery with a restrictive securities legend on or prior to the applicable Share Delivery
Deadline shall not be a Delivery Failure.

 

    	3

    	 

    

 

(d)         
Cashless Exercise. If at any time after the three calendar month anniversary of the Issuance Date, there is no effective
registration statement registering, or no current prospectus available for, the issuance or resale of the Warrant Shares by the
Holder, then, notwithstanding anything contained herein to the contrary (other than Section 1(f) below), the Holder may,
in its sole discretion, exercise this Warrant in whole or in part and, in lieu of making the cash payment otherwise contemplated
to be made to the Company upon such exercise in payment of the Aggregate Exercise Price, elect instead to receive upon such exercise
the “Net Number” of Warrant Shares determined according to the following formula (a “Cashless Exercise”):

 

Net
Number = (A x B) - (A x C)

                                      D

 

For
purposes of the foregoing formula:

 

A
= the total number of shares with respect to which this Warrant is then being exercised.

 

B
= the greater of: (i) the quotient of (x) the sum of the VWAP of the Common Stock for each of the twenty (20) Trading Days ending
at the close of business on the Principal Market immediately prior to the time of exercise as set forth in the applicable Exercise
Notice, divided by (y) twenty (20); and (ii) the last Closing Sale Price of the Common Stock immediately preceding the delivery
of the applicable Exercise Notice

 

C
= the Exercise Price then in effect for the applicable Warrant Shares at the time of such exercise.

 

D
= as applicable: (i) the Closing Sale Price of the Common Stock on the Trading Day immediately preceding the date of the applicable
Exercise Notice if such Exercise Notice is (1) both executed and delivered pursuant to Section 1(a) hereof on a day that
is not a Trading Day or (2) both executed and delivered pursuant to Section 1(a) hereof on a Trading Day prior to the opening
of “regular trading hours” (as defined in Rule 600(b)(64) of Regulation NMS promulgated under the federal securities
laws) on such Trading Day, (ii) the Bid Price of the Common Stock as of the time of the Holder’s execution of the applicable
Exercise Notice if such Exercise Notice is executed during “regular trading hours” on a Trading Day and is delivered
within two (2) hours thereafter pursuant to Section 1(a) hereof, or (iii) the Closing Sale Price of the Common Stock on the
date of the applicable Exercise Notice if the date of such Exercise Notice is a Trading Day and such Exercise Notice is both executed
and delivered pursuant to Section 1(a) hereof after the close of “regular trading hours” on such Trading Day.

 

For
purposes of Rule 144(d) promulgated under the 1933 Act, as in effect on the Subscription Date, it is intended that the Warrant
Shares issued in a Cashless Exercise shall be deemed to have been acquired by the Holder, and the holding period for the Warrant
Shares shall be deemed to have commenced, on the date this Warrant was originally issued pursuant to the Merger Agreement

 

(e)         
Disputes. In the case of a dispute as to the determination of the Exercise Price or the arithmetic calculation of the number
of Warrant Shares to be issued pursuant to the terms hereof, the Company shall promptly issue to the Holder the number of Warrant
Shares that are not disputed and resolve such dispute in accordance with Section 13.

 

    	4

    	 

    

 

(f)         
Limitations on Exercises. The Company shall not effect the exercise of any portion of this Warrant, and the Holder shall
not have the right to exercise any portion of this Warrant, pursuant to the terms and conditions of this Warrant and any such
exercise shall be null and void and treated as if never made, to the extent that after giving effect to such exercise, the Holder
together with the other Attribution Parties collectively would beneficially own in excess of [4.99][9.99]3% (the “Maximum
Percentage”) of the shares of Common Stock outstanding immediately after giving effect to such exercise. For purposes
of the foregoing sentence, the aggregate number of shares of Common Stock beneficially owned by the Holder and the other Attribution
Parties shall include the number of shares of Common Stock held by the Holder and all other Attribution Parties plus the number
of shares of Common Stock issuable upon exercise of this Warrant with respect to which the determination of such sentence is being
made, but shall exclude shares of Common Stock which would be issuable upon (A) exercise of the remaining, unexercised portion
of this Warrant beneficially owned by the Holder or any of the other Attribution Parties and (B) exercise or conversion of the
unexercised or unconverted portion of any other securities of the Company (including, without limitation, any convertible notes
or convertible preferred stock or warrants, including other Investor Warrants) beneficially owned by the Holder or any other Attribution
Party subject to a limitation on conversion or exercise analogous to the limitation contained in this Section 1(f)(i). For purposes
of this Section 1(f)(i), beneficial ownership shall be calculated in accordance with Section 13(d) of the 1934 Act. For purposes
of determining the number of outstanding shares of Common Stock the Holder may acquire upon the exercise of this Warrant without
exceeding the Maximum Percentage, the Holder may rely on the number of outstanding shares of Common Stock as reflected in (x)
the Company’s most recent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K or other
public filing with the SEC, as the case may be, (y) a more recent public announcement by the Company or (z) any other written
notice by the Company or the Transfer Agent, if any, setting forth the number of shares of Common Stock outstanding (the “Reported
Outstanding Share Number”). If the Company receives an Exercise Notice from the Holder at a time when the actual number
of outstanding shares of Common Stock is less than the Reported Outstanding Share Number, the Company shall (i) notify the Holder
in writing of the number of shares of Common Stock then outstanding and, to the extent that such Exercise Notice would otherwise
cause the Holder’s beneficial ownership, as determined pursuant to this Section 1(f)(i), to exceed the Maximum Percentage,
the Holder must notify the Company of a reduced number of Warrant Shares to be acquired pursuant to such Exercise Notice (the
number of shares by which such purchase is reduced, the “Reduction Shares”) and (ii) as soon as reasonably
practicable, the Company shall return to the Holder any exercise price paid by the Holder for the Reduction Shares. For any reason
at any time, upon the written or oral request of the Holder, the Company shall within one (1) Business Day confirm orally and
in writing or by electronic mail to the Holder the number of shares of Common Stock then outstanding. In any case, the number
of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the
Company, including this Warrant, by the Holder and any other Attribution Party since the date as of which the Reported Outstanding
Share Number was reported. In the event that the issuance of shares of Common Stock to the Holder upon exercise of this Warrant
results in the Holder and the other Attribution Parties being deemed to beneficially own, in the aggregate, more than the Maximum
Percentage of the number of outstanding shares of Common Stock (as determined under Section 13(d) of the 1934 Act), the number
of shares so issued by which the Holder’s and the other Attribution Parties’ aggregate beneficial ownership exceeds
the Maximum Percentage (the “Excess Shares”) shall be deemed null and void and shall be cancelled ab initio,
and the Holder shall not have the power to vote or to transfer the Excess Shares. As soon as reasonably practicable after the
issuance of the Excess Shares has been deemed null and void, the Company shall return to the Holder the exercise price paid by
the Holder for the Excess Shares. Upon delivery of a written notice to the Company, the Holder may from time to time increase
(with such increase not effective until the sixty-first (61st) day after delivery of such notice) or decrease the Maximum
Percentage to any other percentage not in excess of 9.99% as specified in such notice; provided that (i) any such increase in
the Maximum Percentage will not be effective until the sixty-first (61st) day after such notice is delivered to the
Company and (ii) any such increase or decrease will apply only to the Holder and the other Attribution Parties and not to any
other holder of Investor Warrants that is not an Attribution Party of the Holder. For purposes of clarity, the shares of Common
Stock issuable pursuant to the terms of this Warrant in excess of the Maximum Percentage shall not be deemed to be beneficially
owned by the Holder for any purpose including for purposes of Section 13(d) or Rule 16a-1(a)(1) of the 1934 Act. No prior inability
to exercise this Warrant pursuant to this paragraph shall have any effect on the applicability of the provisions of this paragraph
with respect to any subsequent determination of exercisability. The provisions of this paragraph shall be construed and implemented
in a manner otherwise than in strict conformity with the terms of this Section 1(f)(i) to the extent necessary to correct this
paragraph or any portion of this paragraph which may be defective or inconsistent with the intended beneficial ownership limitation
contained in this Section 1(f)(i) or to make changes or supplements necessary or desirable to properly give effect to such limitation.
The limitation contained in this paragraph may not be waived and shall apply to a successor holder of this Warrant.

 

 

3
As elected by the Holder to the Company in writing on or prior to the Subscription Date.

 

    	5

    	 

    

 

(g)         
Reservation of Shares.

 

(i)          
Required Reserve Amount. So long as this Warrant remains outstanding, the Company shall at all times keep reserved for
issuance under this Warrant a number of shares of Common Stock at least equal to 150% of the maximum number of shares of Common
Stock as shall be necessary to satisfy the Company’s obligation to issue shares of Common Stock under the Investor Warrants
then outstanding (without regard to any limitations on exercise) (the “Required Reserve Amount”); provided
that at no time shall the number of shares of Common Stock reserved pursuant to this Section 1(g)(i) be reduced other than proportionally
in connection with any exercise or redemption of Investor Warrants or such other event covered by Section 2(a) below. The Required
Reserve Amount (including, without limitation, each increase in the number of shares so reserved) shall be allocated pro rata
among the holders of the Investor Warrants based on number of shares of Common Stock issuable upon exercise of Investor Warrants
held by each holder on the Issuance Date (without regard to any limitations on exercise) or increase in the number of reserved
shares, as the case may be (the “Authorized Share Allocation”). In the event that a holder shall sell or otherwise
transfer any of such holder’s Investor Warrants, each transferee shall be allocated a pro rata portion of such holder’s
Authorized Share Allocation. Any shares of Common Stock reserved and allocated to any Person which ceases to hold any Investor
Warrants shall be allocated to the remaining holders of Investor Warrants, pro rata based on the number of shares of Common Stock
issuable upon exercise of the Investor Warrants then held by such holders (without regard to any limitations on exercise).

 

(ii)         
Insufficient Authorized Shares. If, notwithstanding Section 1(g)(i) above, and not in limitation thereof, at any time while
any of the Investor Warrants remain outstanding, the Company does not have a sufficient number of authorized and unreserved shares
of Common Stock to satisfy its obligation to reserve the Required Reserve Amount (an “Authorized Share Failure”),
then the Company shall immediately take all action necessary to increase the Company’s authorized shares of Common Stock
to an amount sufficient to allow the Company to reserve the Required Reserve Amount for all the Investor Warrants then outstanding.
Without limiting the generality of the foregoing sentence, as soon as practicable after the date of the occurrence of an Authorized
Share Failure, but in no event later than sixty (60) days after the occurrence of such Authorized Share Failure, the Company shall
hold a meeting of its stockholders for the approval of an increase in the number of authorized shares of Common Stock. In connection
with such meeting, the Company shall provide each stockholder with a proxy statement and shall use its best efforts to solicit
its stockholders’ approval of such increase in authorized shares of Common Stock and to cause its board of directors to
recommend to the stockholders that they approve such proposal. In the event that the Company is prohibited from issuing shares
of Common Stock upon an exercise of this Warrant due to the failure by the Company to have sufficient shares of Common Stock available
out of the authorized but unissued shares of Common Stock (such unavailable number of shares of Common Stock, the “Authorization
Failure Shares”), in lieu of delivering such Authorization Failure Shares to the Holder, the Company shall pay cash
in exchange for the cancellation of such portion of this Warrant exercisable into such Authorized Failure Shares at a price equal
to the sum of (i) the product of (x) such number of Authorization Failure Shares and (y) the greatest Closing Sale Price of the
Common Stock on any Trading Day during the period commencing on the date the Holder delivers the applicable Exercise Notice with
respect to such Authorization Failure Shares to the Company and ending on the date of such issuance and payment under this Section
1(g); and (ii) to the extent the Holder purchases (in an open market transaction or otherwise) shares of Common Stock to deliver
in satisfaction of a sale by the Holder of Authorization Failure Shares, any Buy-In Payment Amount and any brokerage commissions
and other out-of-pocket expenses, if any, (to the extent not included in any Buy-In Payment Amount paid to the Holder), of the
Holder incurred in connection therewith. Nothing contained in this Section 1(g)(ii) shall limit any obligations of the Company
under any provision of the Merger Agreement or any Exchange Agreement.

 

(h)         
Alternate Delivery of Preferred Shares. At the option of the Holder, in lieu of the issuance and delivery to the Holder
(or its designee) of all, or any part, of any aggregate number of Warrant Shares then deliverable to the Holder upon any exercise
of this Warrant or otherwise hereunder (such number of Warrant Shares, the “Alternate Delivery Share Amount”),
the Holder may elect in the applicable Exercise Notice or otherwise in writing to the Company to cause the Company to issue and
deliver to the Holder (or its designee) such aggregate number of Preferred Shares then convertible into the Alternate Delivery
Share Amount of shares of Common Stock.

 

    	6

    	 

    

 

2.           
ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES. The Exercise
Price and number of Warrant Shares issuable upon exercise of this Warrant are subject to adjustment from time to time as set forth
in this Section 2.

 

(a)         
Stock Dividends and Splits. Without limiting any provision of Section 2(b) or Section 4, if the Company, at any
time on or after the Issuance Date, (i) pays a stock dividend on one or more classes of its then outstanding shares of Common
Stock or otherwise makes a distribution on any class of capital stock that is payable in shares of Common Stock, (ii) subdivides
(by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its then outstanding shares of Common
Stock into a larger number of shares or (iii) combines (by combination, reverse stock split or otherwise) one or more classes
of its then outstanding shares of Common Stock into a smaller number of shares, then in each such case the Exercise Price shall
be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock outstanding immediately before
such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event.
Any adjustment made pursuant to clause (i) of this paragraph shall become effective immediately after the record date for the
determination of stockholders entitled to receive such dividend or distribution, and any adjustment pursuant to clause (ii) or
(iii) of this paragraph shall become effective immediately after the effective date of such subdivision or combination. If any
event requiring an adjustment under this paragraph occurs during the period that an Exercise Price is calculated hereunder, then
the calculation of such Exercise Price shall be adjusted appropriately to reflect such event.

 

(b)         
Adjustment upon Issuance of Shares of Common Stock. If and whenever on or after the Issuance Date, the Company issues or
sells, or in accordance with this Section 2 is deemed to have issued or sold, any shares of Common Stock (including the issuance
or sale of shares of Common Stock owned or held by or for the account of the Company, but excluding any Excluded Securities issued
or sold or deemed to have been issued or sold (and this Section 2(b) shall be inapplicable with respect to any such Excluded Securities
for a consideration per share (the “New Issuance Price”) less than a price equal to the Exercise Price in effect
immediately prior to such issuance or sale or deemed issuance or sale (such Exercise Price then in effect is referred to herein
as the “Applicable Price”) (the foregoing a “Dilutive Issuance”), then immediately after
such Dilutive Issuance, the Exercise Price then in effect shall be reduced to an amount equal to the New Issuance Price. For all
purposes of the foregoing (including, without limitation, determining the adjusted Exercise Price and the New Issuance Price under
this Section 2(b)), the following shall be applicable:

 

(i)          
Issuance of Options. If the Company in any manner grants or sells any Options and the lowest price per share for which
one share of Common Stock is at any time issuable upon the exercise of any such Option or upon conversion, exercise or exchange
of any Convertible Securities issuable upon exercise of any such Option or otherwise pursuant to the terms thereof is less than
the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the
Company at the time of the granting or sale of such Option for such price per share. For purposes of this Section 2(b)(i),
the “lowest price per share for which one share of Common Stock is issuable upon the exercise of any such Options or upon
conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option or otherwise pursuant
to the terms thereof” shall be equal to (1) the lower of (x) the sum of the lowest amounts of consideration (if any) received
or receivable by the Company with respect to any one share of Common Stock upon the granting or sale of such Option, upon exercise
of such Option and upon conversion, exercise or exchange of any Convertible Security issuable upon exercise of such Option or
otherwise pursuant to the terms thereof and (y) the lowest exercise price set forth in such Option for which one share of Common
Stock is issuable upon the exercise of any such Options or upon conversion, exercise or exchange of any Convertible Securities
issuable upon exercise of any such Option or otherwise pursuant to the terms thereof minus (2) the sum of all amounts paid or
payable to the holder of such Option (or any other Person) upon the granting or sale of such Option, upon exercise of such Option
and upon conversion, exercise or exchange of any Convertible Security issuable upon exercise of such Option or otherwise pursuant
to the terms thereof plus the value of any other consideration received or receivable by, or benefit conferred on, the holder
of such Option (or any other Person). Except as contemplated in (iii) below, no further adjustment of the Exercise Price shall
be made upon the actual issuance of such shares of Common Stock or of such Convertible Securities upon the exercise of such Options
or otherwise pursuant to the terms of or upon the actual issuance of such shares of Common Stock upon conversion, exercise or
exchange of such Convertible Securities.

 

    	7

    	 

    

 

(ii)         
Issuance of Convertible Securities. If the Company in any manner issues or sells any Convertible Securities and the lowest
price per share for which one share of Common Stock is at any time issuable upon the conversion, exercise or exchange thereof
or otherwise pursuant to the terms thereof is less than the Applicable Price, then such share of Common Stock shall be deemed
to be outstanding and to have been issued and sold by the Company at the time of the issuance or sale of such Convertible Securities
for such price per share. For the purposes of this Section 2(b)(ii), the “lowest price per share for which one share
of Common Stock is issuable upon the conversion, exercise or exchange thereof or otherwise pursuant to the terms thereof”
shall be equal to (1) the lower of (x) the sum of the lowest amounts of consideration (if any) received or receivable by the Company
with respect to one share of Common Stock upon the issuance or sale of the Convertible Security and upon conversion, exercise
or exchange of such Convertible Security or otherwise pursuant to the terms thereof and (y) the lowest conversion price set forth
in such Convertible Security for which one share of Common Stock is issuable upon conversion, exercise or exchange thereof or
otherwise pursuant to the terms thereof minus (2) the sum of all amounts paid or payable to the holder of such Convertible Security
(or any other Person) upon the issuance or sale of such Convertible Security plus the value of any other consideration received
or receivable by, or benefit conferred on, the holder of such Convertible Security (or any other Person). Except as contemplated
in (iii) below, no further adjustment of the Exercise Price shall be made upon the actual issuance of such shares of Common Stock
upon conversion, exercise or exchange of such Convertible Securities or otherwise pursuant to the terms thereof, and if any such
issuance or sale of such Convertible Securities is made upon exercise of any Options for which adjustment of this Warrant has
been or is to be made pursuant to other provisions of this Section 2(b), except as contemplated below, no further adjustment
of the Exercise Price shall be made by reason of such issuance or sale.

 

    	8

    	 

    

 

(iii)            
Change in Option Price or Rate of Conversion. If the purchase or exercise price provided for in any Options, the additional
consideration, if any, payable upon the issue, conversion, exercise or exchange of any Convertible Securities, or the rate at
which any Convertible Securities are convertible into or exercisable or exchangeable for shares of Common Stock increases or decreases
at any time (other than proportional changes in conversion or exercise prices, as applicable, in connection with an event referred
to in Section 2(a)), the Exercise Price in effect at the time of such increase or decrease shall be adjusted to the Exercise Price
which would have been in effect at such time had such Options or Convertible Securities provided for such increased or decreased
purchase price, additional consideration or increased or decreased conversion rate, as the case may be, at the time initially
granted, issued or sold. For purposes of this Section 2(b)(iii), if the terms of any Option or Convertible Security that
was outstanding as of the Subscription Date are increased or decreased in the manner described in the immediately preceding sentence,
then such Option or Convertible Security and the shares of Common Stock deemed issuable upon exercise, conversion or exchange
thereof shall be deemed to have been issued as of the date of such increase or decrease. No adjustment pursuant to this Section 2(b)
shall be made if such adjustment would result in an increase of the Exercise Price then in effect.

 

    	9

    	 

    

 

(iv)            
Calculation of Consideration Received. If any Option and/or Convertible Security and/or Adjustment Right is issued in connection
with the issuance or sale or deemed issuance or sale of any other securities of the Company (as determined by the Holder, the
“Primary Security”, and such Option and/or Convertible Security and/or Adjustment Right, the “Secondary
Securities”), together comprising one integrated transaction, (or one or more transactions if such issuances or sales
or deemed issuances or sales of securities of the Company either (A) have at least one investor or purchaser in common, (B) are
consummated in reasonable proximity to each other and/or (C) are consummated under the same plan of financing) the aggregate consideration
per share of Common Stock with respect to such Primary Security shall be deemed to be equal to the difference of (x) the lowest
price per share for which one share of Common Stock was issued (or was deemed to be issued pursuant to Section 2(b)(i) or 2(b)(ii)
above, as applicable) in such integrated transaction solely with respect to such Primary Security, minus (y) with respect to such
Secondary Securities, the sum of (I) the Black Scholes Consideration Value of each such Option, if any, (II) the fair market value
(as determined by the Holder in good faith) or the Black Scholes Consideration Value, as applicable, of such Adjustment Right,
if any, and (III) the fair market value (as determined by the Holder) of such Convertible Security, if any, in each case, as determined
on a per share basis in accordance with this Section 2(b)(iv). If any shares of Common Stock, Options or Convertible Securities
are issued or sold or deemed to have been issued or sold for cash, the consideration received therefor (for the purpose of determining
the consideration paid for such Common Stock, Option or Convertible Security, but not for the purpose of the calculation of the
Black Scholes Consideration Value) will be deemed to be the net amount of consideration received by the Company therefor. If any
shares of Common Stock, Options or Convertible Securities are issued or sold for a consideration other than cash, the amount of
such consideration received by the Company (for the purpose of determining the consideration paid for such Common Stock, Option
or Convertible Security, but not for the purpose of the calculation of the Black Scholes Consideration Value) will be the fair
value of such consideration, except where such consideration consists of publicly traded securities, in which case the amount
of consideration received by the Company for such securities will be the arithmetic average of the VWAPs of such security for
each of the five (5) Trading Days immediately preceding the date of receipt. If any shares of Common Stock, Options or Convertible
Securities are issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving
entity, the amount of consideration therefor (for the purpose of determining the consideration paid for such Common Stock, Option
or Convertible Security, but not for the purpose of the calculation of the Black Scholes Consideration Value) will be deemed to
be the fair value of such portion of the net assets and business of the non-surviving entity as is attributable to such shares
of Common Stock, Options or Convertible Securities (as the case may be). The fair value of any consideration other than cash or
publicly traded securities will be determined jointly by the Company and the Holder. If such parties are unable to reach agreement
within ten (10) days after the occurrence of an event requiring valuation (the “Valuation Event”), the fair
value of such consideration will be determined within five (5) Trading Days after the tenth (10th) day following such
Valuation Event by an independent, reputable appraiser jointly selected by the Company and the Holder. The determination of such
appraiser shall be final and binding upon all parties absent manifest error and the fees and expenses of such appraiser shall
be borne by the Company.

 

(v)         
Record Date. If the Company takes a record of the holders of shares of Common Stock for the purpose of entitling them (A) to
receive a dividend or other distribution payable in shares of Common Stock, Options or in Convertible Securities or (B) to
subscribe for or purchase shares of Common Stock, Options or Convertible Securities, then such record date will be deemed to be
the date of the issuance or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such
dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase (as the
case may be).

 

(c)         Number
of Warrant Shares. Simultaneously with any adjustment to the Exercise Price pursuant to Section 2(a), the number of Warrant
Shares that may be purchased upon exercise of this Warrant shall be increased or decreased proportionately, so that after such
adjustment the aggregate Exercise Price payable hereunder for the adjusted number of Warrant Shares shall be the same as the aggregate
Exercise Price in effect immediately prior to such adjustment (without regard to any limitations on exercise contained herein).

 

    	10

    	 

    

 

(d)         
Holder’s Right of Alternative Exercise Price Following Issuance of Certain Options or Convertible Securities. In
addition to and not in limitation of the other provisions of this Section 2, if the Company in any manner issues or sells
or enters into any agreement to issue or sell, any Common Stock, Options or Convertible Securities (any such securities, “Variable
Price Securities”) after the Subscription Date that are issuable pursuant to such agreement or convertible into or exchangeable
or exercisable for shares of Common Stock at a price which varies or may vary with the market price of the Common Shares, including
by way of one or more reset(s) to a fixed price, but exclusive of such formulations reflecting customary anti-dilution provisions
(such as share splits, share combinations, share dividends and similar transactions) (each of the formulations for such variable
price being herein referred to as, the “Variable Price”), the Company shall provide written notice thereof
via facsimile and overnight courier to the Holder on the date of such agreement and the issuance of such Convertible Securities
or Options. From and after the date the Company enters into such agreement or issues any such Variable Price Securities, the Holder
shall have the right, but not the obligation, in its sole discretion to substitute the Variable Price for the Exercise Price upon
exercise of this Warrant by designating in the Exercise Notice delivered upon any exercise of this Warrant that solely for purposes
of such exercise the Holder is relying on the Variable Price rather than the Exercise Price then in effect. The Holder’s
election to rely on a Variable Price for a particular exercise of this Warrant shall not obligate the Holder to rely on a Variable
Price for any future exercises of this Warrant.

 

(e)         
Stock Combination Event Adjustment. If at any time and from time to time on or after the Issuance Date there occurs
any stock split, stock dividend, stock combination recapitalization or other similar transaction involving the Common Stock (each,
a “Stock Combination Event”, and such date thereof, the “Stock Combination Event Date”)
and the Event Market Price is less than the Exercise Price then in effect (after giving effect to the adjustment in clause (b)
above), then on the sixteenth (16th) Trading Day immediately following such Stock Combination Event, the Exercise Price then in
effect on such sixteenth (16th) Trading Day (after giving effect to the adjustment in clause (b) above) shall be reduced (but
in no event increased) to the Event Market Price. For the avoidance of doubt, if the adjustment in the immediately preceding sentence
would otherwise result in an increase in the Exercise Price hereunder, no adjustment shall be made.

 

(f)         
Other Events. In the event that the Company (or any Subsidiary (as defined in the Merger Agreement)) shall take any action
to which the provisions hereof are not strictly applicable, or, if applicable, would not operate to protect the Holder from dilution
or if any event occurs of the type contemplated by the provisions of this Section 2 but not expressly provided for by such provisions
(including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features,
but excluding the issuance of any Excluded Securities), then the Company’s board of directors shall in good faith determine
and implement an appropriate adjustment in the Exercise Price and the number of Warrant Shares (if applicable) so as to protect
the rights of the Holder, provided that no such adjustment pursuant to this Section 2(e) will increase the Exercise Price or decrease
the number of Warrant Shares as otherwise determined pursuant to this Section 2, provided further that if the Holder does not
accept such adjustments as appropriately protecting its interests hereunder against such dilution, then the Company’s board
of directors and the Holder shall agree, in good faith, upon an independent investment bank of nationally recognized standing
to make such appropriate adjustments, whose determination shall be final and binding absent manifest error and whose fees and
expenses shall be borne by the Company.

 

(g)         
Calculations. All calculations under this Section 2 shall be made by rounding to the nearest cent or the nearest 1/100th
of a share, as applicable. The number of shares of Common Stock outstanding at any given time shall not include shares owned
or held by or for the account of the Company, and the disposition of any such shares shall be considered an issuance or sale of
Common Stock.

 

    	11

    	 

    

 

(h)         
Voluntary Adjustment by Company. The Company may at any time during the term of this Warrant, with the prior written consent
of the Holder, reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the board
of directors of the Company.

 

3.           
RIGHTS UPON DISTRIBUTION OF ASSETS. In addition to any adjustments pursuant
to Section 2 above, if the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire
its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any
distribution of cash, stock or other securities, property, options, evidence of indebtedness or any other assets by way of a dividend,
spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”),
at any time after the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution
to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock
acquirable upon complete exercise of this Warrant (without regard to any limitations or restrictions on exercise of this Warrant,
including without limitation, the Maximum Percentage) immediately before the date on which a record is taken for such Distribution,
or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the
participation in such Distribution (provided, however, that to the extent that the Holder’s right to participate
in any such Distribution would result in the Holder and the other Attribution Parties exceeding the Maximum Percentage, then the
Holder shall not be entitled to participate in such Distribution to such extent (and shall not be entitled to beneficial ownership
of such shares of Common Stock as a result of such Distribution (and beneficial ownership) to such extent) and the portion of
such Distribution to the Holder shall be held in abeyance for the benefit of the Holder until such time or times, if ever, as
its right thereto would not result in the Holder and the other Attribution Parties exceeding the Maximum Percentage, at which
time or times the Holder shall be granted such Distribution (and any Distributions declared or made on such initial Distribution
or on any subsequent Distribution held similarly in abeyance) to the same extent as if there had been no such limitation).

 

4.           
PURCHASE RIGHTS; FUNDAMENTAL TRANSACTIONS.

 

(a)         
Purchase Rights. In addition to any adjustments pursuant to Section 2 above, if at any time the Company grants, issues
or sells any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property pro rata to the
record holders of any class of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire,
upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder
had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations
or restrictions on exercise of this Warrant, including without limitation, the Maximum Percentage) immediately before the date
on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as
of which the record holders of shares of Common Stock are to be determined for the grant, issuance or sale of such Purchase Rights
(provided, however, that to the extent that the Holder’s right to participate in any such Purchase Right would
result in the Holder and the other Attribution Parties exceeding the Maximum Percentage, then the Holder shall not be entitled
to participate in such Purchase Right to such extent (and shall not be entitled to beneficial ownership of such shares of Common
Stock as a result of such Purchase Right (and beneficial ownership) to such extent) and the Holder’s right to participate
in such Purchase Right to such extent shall be held in abeyance for the benefit of the Holder until such time or times, if ever,
as its right thereto would not result in the Holder and the other Attribution Parties exceeding the Maximum Percentage, at which
time or times the Holder shall be granted such right (and any Purchase Right granted, issued or sold on such initial Purchase
Right or on any subsequent Purchase Right held similarly in abeyance) to the same extent as if there had been no such limitation).

 

    	12

    	 

    

 

(b)         
Fundamental Transactions. The Company shall not enter into or be party to a Fundamental Transaction unless the Successor
Entity assumes in writing all of the obligations of the Company under this Warrant and the other Exchange Documents (as defined
in the applicable Exchange Agreement) in accordance with the provisions of this Section 4(b) pursuant to written agreements
in form and substance reasonably satisfactory to the Holder and approved by the Holder prior to such Fundamental Transaction,
including agreements to deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written
instrument substantially similar in form and substance to this Warrant, including, without limitation, which is exercisable for
a corresponding number of shares of capital stock equivalent to the shares of Common Stock acquirable and receivable upon exercise
of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and
with an exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account the
relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital
stock, such adjustments to the number of shares of capital stock and such exercise price being for the purpose of protecting the
economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction). Upon the consummation of
each Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of
the applicable Fundamental Transaction, the provisions of this Warrant and the other Exchange Documents referring to the “Company”
shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the
obligations of the Company under this Warrant and the other Exchange Documents with the same effect as if such Successor Entity
had been named as the Company herein. Upon consummation of each Fundamental Transaction, the Successor Entity shall deliver to
the Holder confirmation that there shall be issued upon exercise of this Warrant at any time after the consummation of the applicable
Fundamental Transaction, in lieu of the shares of Common Stock (or other securities, cash, assets or other property (except such
items still issuable under Sections 3 and 4(a) above, which shall continue to be receivable thereafter)) issuable upon the
exercise of this Warrant prior to the applicable Fundamental Transaction, such shares of publicly traded common stock (or its
equivalent) of the Successor Entity (including its Parent Entity) which the Holder would have been entitled to receive upon the
happening of the applicable Fundamental Transaction had this Warrant been exercised immediately prior to the applicable Fundamental
Transaction (without regard to any limitations on the exercise of this Warrant), as adjusted in accordance with the provisions
of this Warrant. Notwithstanding the foregoing, and without limiting Section 1(f) hereof, the Holder may elect, at its sole option,
by delivery of written notice to the Company to waive this Section 4(b) to permit the Fundamental Transaction without the
assumption of this Warrant. In addition to and not in substitution for any other rights hereunder, prior to the consummation of
each Fundamental Transaction pursuant to which holders of shares of Common Stock are entitled to receive securities or other assets
with respect to or in exchange for shares of Common Stock (a “Corporate Event”), the Company shall make appropriate
provision to insure that the Holder will thereafter have the right to receive upon an exercise of this Warrant at any time after
the consummation of the applicable Fundamental Transaction but prior to the Expiration Date, in lieu of the shares of the Common
Stock (or other securities, cash, assets or other property (except such items still issuable under Sections 3 and 4(a) above,
which shall continue to be receivable thereafter)) issuable upon the exercise of the Warrant prior to such Fundamental Transaction,
such shares of stock, securities, cash, assets or any other property whatsoever (including warrants or other purchase or subscription
rights) which the Holder would have been entitled to receive upon the happening of the applicable Fundamental Transaction had
this Warrant been exercised immediately prior to the applicable Fundamental Transaction (without regard to any limitations on
the exercise of this Warrant). Provision made pursuant to the preceding sentence shall be in a form and substance reasonably satisfactory
to the Holder. Notwithstanding the foregoing, the provisions of this Section 4(b) will not apply to a Fundamental Transaction
where the purchaser or other Successor Entity, after giving effect to such Fundamental Transaction, does not have any equity securities
that are then listed or designated for quotation on an Eligible Market or other national securities exchange or automated quotation
system.

 

    	13

    	 

    

 

(c)         
Black Scholes Value. Notwithstanding the foregoing and the provisions of Section 4(b) above, at the request of the
Holder delivered at any time commencing on the earliest to occur of (x) the public disclosure of any Fundamental Transaction,
(y) the consummation of any Fundamental Transaction and (z) the Holder first becoming aware of any Fundamental Transaction through
the date that is ninety (90) days after the public disclosure of the consummation of such Fundamental Transaction by the Company
pursuant to a Current Report on Form 8-K filed with the SEC, the Company or the Successor Entity (as the case may be) shall purchase
this Warrant from the Holder on the date of such request by paying to the Holder cash in an amount equal to the Black Scholes
Value.

 

(d)         
Application. The provisions of this Section 4 shall apply similarly and equally to successive Fundamental Transactions
and Corporate Events and shall be applied as if this Warrant (and any such subsequent warrants) were fully exercisable and without
regard to any limitations on the exercise of this Warrant (provided that the Holder shall continue to be entitled to the benefit
of the Maximum Percentage, applied however with respect to shares of capital stock registered under the 1934 Act and thereafter
receivable upon exercise of this Warrant (or any such other warrant)).

 

5.           
NONCIRCUMVENTION. The Company hereby covenants and agrees that the Company
will not, by amendment of its certificate of incorporation, bylaws or through any reorganization, transfer of assets, consolidation,
merger, scheme of arrangement, dissolution, issuance or sale of securities, or any other voluntary action, avoid or seek to avoid
the observance or performance of any of the terms of this Warrant, and will at all times in good faith carry out all the provisions
of this Warrant and take all action as may be required to protect the rights of the Holder. Without limiting the generality of
the foregoing, the Company (a) shall not increase the par value of any shares of Common Stock receivable upon the exercise of
this Warrant above the Exercise Price then in effect, and (b) shall take all such actions as may be necessary or appropriate in
order that the Company may validly and legally issue fully paid and non-assessable shares of Common Stock upon the exercise of
this Warrant. Notwithstanding anything herein to the contrary, if after the three calendar month anniversary of the Issuance Date,
the Holder is not permitted to exercise this Warrant in full for any reason (other than pursuant to restrictions set forth in
Section 1(f) hereof), the Company shall use its best efforts to promptly remedy such failure, including, without limitation, obtaining
such consents or approvals as necessary to permit such exercise into shares of Common Stock.

 

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6.           
WARRANT HOLDER NOT DEEMED A STOCKHOLDER. Except as otherwise specifically
provided herein, the Holder, solely in its capacity as a holder of this Warrant, shall not be entitled to vote or receive dividends
or be deemed the holder of share capital of the Company for any purpose, nor shall anything contained in this Warrant be construed
to confer upon the Holder, solely in its capacity as the Holder of this Warrant, any of the rights of a stockholder of the Company
or any right to vote, give or withhold consent to any corporate action (whether any reorganization, issue of stock, reclassification
of stock, consolidation, merger, conveyance or otherwise), receive notice of meetings, receive dividends or subscription rights,
or otherwise, prior to the issuance to the Holder of the Warrant Shares which it is then entitled to receive upon the due exercise
of this Warrant. In addition, nothing contained in this Warrant shall be construed as imposing any liabilities on the Holder to
purchase any securities (upon exercise of this Warrant or otherwise) or as a stockholder of the Company, whether such liabilities
are asserted by the Company or by creditors of the Company. Notwithstanding this Section 6, the Company shall provide the
Holder with copies of the same notices and other information given to the stockholders of the Company generally, contemporaneously
with the giving thereof to the stockholders.

 

7.           
REISSUANCE OF WARRANTS.

 

(a)         
Transfer of Warrant. If this Warrant is to be transferred, the Holder shall surrender this Warrant to the Company, whereupon
the Company will forthwith issue and deliver upon the order of the Holder a new Warrant (in accordance with Section 7(d)),
registered as the Holder may request, representing the right to purchase the number of Warrant Shares being transferred by the
Holder and, if less than the total number of Warrant Shares then underlying this Warrant is being transferred, a new Warrant (in
accordance with Section 7(d)) to the Holder representing the right to purchase the number of Warrant Shares not being transferred.

 

(b)         
Lost, Stolen or Mutilated Warrant. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the
loss, theft, destruction or mutilation of this Warrant (as to which a written certification and the indemnification contemplated
below shall suffice as such evidence), and, in the case of loss, theft or destruction, of any indemnification undertaking by the
Holder to the Company in customary and reasonable form and, in the case of mutilation, upon surrender and cancellation of this
Warrant, the Company shall execute and deliver to the Holder a new Warrant (in accordance with Section 7(d)) representing
the right to purchase the Warrant Shares then underlying this Warrant.

 

    	15

    	 

    

 

(c)         
Exchangeable for Multiple Warrants. This Warrant is exchangeable, upon the surrender hereof by the Holder at the principal
office of the Company, for a new Warrant or Warrants (in accordance with Section 7(d)) representing in the aggregate the
right to purchase the number of Warrant Shares then underlying this Warrant, and each such new Warrant will represent the right
to purchase such portion of such Warrant Shares as is designated by the Holder at the time of such surrender; provided, however,
no warrants for fractional shares of Common Stock shall be given.

 

(d)         
Issuance of New Warrants. Whenever the Company is required to issue a new Warrant pursuant to the terms of this Warrant,
such new Warrant (i) shall be of like tenor with this Warrant, (ii) shall represent, as indicated on the face of such new Warrant,
the right to purchase the Warrant Shares then underlying this Warrant (or in the case of a new Warrant being issued pursuant to
Section 7(a) or Section 7(c), the Warrant Shares designated by the Holder which, when added to the number of shares of Common
Stock underlying the other new Warrants issued in connection with such issuance, does not exceed the number of Warrant Shares
then underlying this Warrant), (iii) shall have an issuance date, as indicated on the face of such new Warrant which is the same
as the Issuance Date, and (iv) shall have the same rights and conditions as this Warrant.

 

8.           
NOTICES. Whenever notice is required to be given under this Warrant, unless
otherwise provided herein, such notice shall be given in accordance with Section 16(e) of the applicable Exchange Agreement. The
Company shall provide the Holder with prompt written notice of all actions taken pursuant to this Warrant (other than the issuance
of shares of Common Stock upon exercise in accordance with the terms hereof), including in reasonable detail a description of
such action and the reason therefor. Without limiting the generality of the foregoing, the Company will give written notice to
the Holder (i) immediately upon each adjustment of the Exercise Price and the number of Warrant Shares, setting forth in reasonable
detail, and certifying, the calculation of such adjustment(s), (ii) at least ten (10) Trading Days prior to the date on which
the Company closes its books or takes a record (A) with respect to any dividend or distribution upon the shares of Common Stock,
(B) with respect to any grants, issuances or sales of any Options, Convertible Securities or rights to purchase stock, warrants,
securities or other property to holders of shares of Common Stock or (C) for determining rights to vote with respect to any Fundamental
Transaction, dissolution or liquidation, provided in each case that such information shall be made known to the public prior to
or in conjunction with such notice being provided to the Holder, (iii) at least ten (10) Trading Days prior to the consummation
of any Fundamental Transaction and (iv) within one (1) Business Day of the occurrence of an Authorized Share Failure or Conversion
Failure (as each term is defined in the Preferred Shares), setting forth in reasonable detail any material events with respect
to such Authorized Share Failure or Conversion Failure and any efforts by the Company to cure such Authorized Share Failure or
Conversion Failure. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information
regarding the Company or any of its Subsidiaries, the Company shall simultaneously file such notice with the SEC pursuant to a
Current Report on Form 8-K. It is expressly understood and agreed that the time of execution specified by the Holder in each Exercise
Notice shall be definitive and may not be disputed or challenged by the Company.

 

9.           
AMENDMENT AND WAIVER. Except as otherwise provided herein, the provisions
of this Warrant (other than Section 1(f)) may be amended and the Company may take any action herein prohibited, or omit to
perform any act herein required to be performed by it, only if the Company has obtained the written consent of the Holder. No
waiver shall be effective unless it is in writing and signed by an authorized representative of the waiving party.

 

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10.           SEVERABILITY.
If any provision of this Warrant is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent
jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the
broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect
the validity of the remaining provisions of this Warrant so long as this Warrant as so modified continues to express, without
material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity
or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations
of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties. The parties will
endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s),
the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).

 

11.           GOVERNING
LAW. This Warrant shall be governed by and construed and enforced in accordance with, and all questions concerning
the construction, validity, interpretation and performance of this Warrant shall be governed by, the internal laws of the State
of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York
or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York.
The Company 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 the Company at the address set forth in Section 16(e) of the applicable Exchange Agreement
and agrees that such service shall constitute good and sufficient service of process and notice thereof. The Company hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting in The City of New York, Borough of Manhattan, for
the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein,
and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that
the venue of such suit, action or proceeding is improper. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. Nothing contained herein shall be deemed or operate to preclude the Holder from
bringing suit or taking other legal action against the Company in any other jurisdiction to collect on the Company’s obligations
to the Holder, to realize on any collateral or any other security for such obligations, or to enforce a judgment or other court
ruling in favor of the Holder. THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A
JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS WARRANT OR ANY TRANSACTION
CONTEMPLATED HEREBY.

 

12.           CONSTRUCTION;
HEADINGS. This Warrant shall be deemed to be jointly drafted by the Company and the Holder and shall not be construed
against any Person as the drafter hereof. The headings of this Warrant are for convenience of reference and shall not form part
of, or affect the interpretation of, this Warrant. Terms used in this Warrant but defined in the other Exchange Documents shall
have the meanings ascribed to such terms on the Issuance Date in such other Exchange Documents unless otherwise consented to in
writing by the Holder.

 

    	17

    	 

    

 

13.           DISPUTE
RESOLUTION.

 

(a)         
Submission to Dispute Resolution.

 

(i)          
In the case of a dispute relating to the Exercise Price, the Closing Sale Price, the Bid Price, Black Scholes Consideration Value,
Black Scholes Value or fair market value or the arithmetic calculation of the number of Warrant Shares (as the case may be) (including,
without limitation, a dispute relating to the determination of any of the foregoing), the Company or the Holder (as the case may
be) shall submit the dispute to the other party via facsimile or personal delivery (A) if by the Company, within two (2) Business
Days after the occurrence of the circumstances giving rise to such dispute or (B) if by the Holder, at any time after the Holder
learned of the circumstances giving rise to such dispute. If the Holder and the Company are unable to promptly resolve such dispute
relating to such Exercise Price, such Closing Sale Price, such Bid Price, such Black Scholes Consideration Value, Black Scholes
Value or such fair market value or such arithmetic calculation of the number of Warrant Shares (as the case may be), at any time
after the second (2nd) Business Day following such initial notice by the Company or the Holder (as the case may be)
of such dispute to the Company or the Holder (as the case may be), then the Holder may, at its sole option, select an independent,
reputable investment bank to resolve such dispute.

 

(ii)         
The Holder and the Company shall each deliver to such investment bank (A) a copy of the initial dispute submission so delivered
in accordance with the first sentence of this Section 13 and (B) written documentation supporting its position with respect to
such dispute, in each case, no later than 5:00 p.m. (New York time) by the fifth (5th) Business Day immediately following
the date on which the Holder selected such investment bank (the “Dispute Submission Deadline”) (the
documents referred to in the immediately preceding clauses (A) and (B) are collectively referred to herein as the “Required
Dispute Documentation”) (it being understood and agreed that if either the Holder or the Company fails to so deliver
all of the Required Dispute Documentation by the Dispute Submission Deadline, then the party who fails to so submit all of the
Required Dispute Documentation shall no longer be entitled to (and hereby waives its right to) deliver or submit any written documentation
or other support to such investment bank with respect to such dispute and such investment bank shall resolve such dispute based
solely on the Required Dispute Documentation that was delivered to such investment bank prior to the Dispute Submission Deadline).
Unless otherwise agreed to in writing by both the Company and the Holder or otherwise requested by such investment bank, neither
the Company nor the Holder shall be entitled to deliver or submit any written documentation or other support to such investment
bank in connection with such dispute (other than the Required Dispute Documentation).

 

(iii)         The
Company and the Holder shall cause such investment bank to determine the resolution of such dispute and notify the Company and
the Holder of such resolution no later than ten (10) Business Days immediately following the Dispute Submission Deadline. The
fees and expenses of such investment bank shall be borne solely by the Company, and such investment bank’s resolution of
such dispute shall be final and binding upon all parties absent manifest error.

 

    	18

    	 

    

 

(b)         
Miscellaneous. The Company expressly acknowledges and agrees that (i) this Section 13 constitutes an agreement to arbitrate
between the Company and the Holder (and constitutes an arbitration agreement) under the rules then in effect under § 7501,
et seq. of the New York Civil Practice Law and Rules (“CPLR”) and that the Holder is authorized to apply for
an order to compel arbitration pursuant to CPLR § 7503(a) in order to compel compliance with this Section 13, (ii) a dispute
relating to the Exercise Price includes, without limitation, disputes as to (A) whether an issuance or sale or deemed issuance
or sale of Common Stock occurred under Section 2(b), (B) the consideration per share at which an issuance or deemed issuance of
Common Stock occurred, (C) whether any issuance or sale or deemed issuance or sale of Common Stock was an issuance or sale or
deemed issuance or sale of Excluded Securities, (D) whether an agreement, instrument, security or the like constitutes and Option
or Convertible Security and (E) whether a Dilutive Issuance occurred, (iii) the terms of this Warrant and each other applicable
Exchange Document shall serve as the basis for the selected investment bank’s resolution of the applicable dispute, such
investment bank shall be entitled (and is hereby expressly authorized) to make all findings, determinations and the like that
such investment bank determines are required to be made by such investment bank in connection with its resolution of such dispute
(including, without limitation, determining (A) whether an issuance or sale or deemed issuance or sale of Common Stock occurred
under Section 2(b), (B) the consideration per share at which an issuance or deemed issuance of Common Stock occurred, (C) whether
any issuance or sale or deemed issuance or sale of Common Stock was an issuance or sale or deemed issuance or sale of Excluded
Securities, (D) whether an agreement, instrument, security or the like constitutes and Option or Convertible Security and (E)
whether a Dilutive Issuance occurred) and in resolving such dispute such investment bank shall apply such findings, determinations
and the like to the terms of this Warrant and any other applicable Exchange Documents, (iv) the Holder (and only the Holder),
in its sole discretion, shall have the right to submit any dispute described in this Section 13 to any state or federal court
sitting in The City of New York, Borough of Manhattan in lieu of utilizing the procedures set forth in this Section 13 and (v)
nothing in this Section 13 shall limit the Holder from obtaining any injunctive relief or other equitable remedies (including,
without limitation, with respect to any matters described in this Section 13).

 

14.           REMEDIES,
CHARACTERIZATION, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF. The remedies provided in this Warrant shall be
cumulative and in addition to all other remedies available under this Warrant and the other Exchange Documents, at law or in equity
(including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the right of the Holder
to pursue actual and consequential damages for any failure by the Company to comply with the terms of this Warrant. The Company
covenants to the Holder that there shall be no characterization concerning this instrument other than as expressly provided herein.
Amounts set forth or provided for herein with respect to payments, exercises and the like (and the computation thereof) shall
be the amounts to be received by the Holder and shall not, except as expressly provided herein, be subject to any other obligation
of the Company (or the performance thereof). The Company acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate. The Company therefore agrees
that, in the event of any such breach or threatened breach, the holder of this Warrant shall be entitled, in addition to all other
available remedies, to an injunction restraining any breach, without the necessity of showing economic loss and without any bond
or other security being required. The Company shall provide all information and documentation to the Holder that is requested
by the Holder to enable the Holder to confirm the Company’s compliance with the terms and conditions of this Warrant (including,
without limitation, compliance with Section 2 hereof). The issuance of shares and certificates for shares as contemplated
hereby upon the exercise of this Warrant shall be made without charge to the Holder or such shares for any issuance tax or other
costs in respect thereof, provided that the Company shall not be required to pay any tax which may be payable in respect of any
transfer involved in the issuance and delivery of any certificate in a name other than the Holder or its agent on its behalf.

 

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15.           PAYMENT
OF COLLECTION, ENFORCEMENT AND OTHER COSTS. If (a) this Warrant is placed in the hands of an attorney for collection
or enforcement or is collected or enforced through any legal proceeding or the holder otherwise takes action to collect amounts
due under this Warrant or to enforce the provisions of this Warrant or (b) there occurs any bankruptcy, reorganization, receivership
of the company or other proceedings affecting company creditors’ rights and involving a claim under this Warrant, then the
Company shall pay the costs incurred by the Holder for such collection, enforcement or action or in connection with such bankruptcy,
reorganization, receivership or other proceeding, including, without limitation, attorneys’ fees and disbursements.

 

16.           TRANSFER.
This Warrant may be offered for sale, sold, transferred or assigned without the consent of the Company.

 

17.           PARTICIPATION
RIGHTS. From the date of this Agreement until the first anniversary of the Issuance Date, the Company will not, directly
or indirectly, effect any Subsequent Placement (as defined below) unless the Company shall have first complied with this Section
17.

 

(a)         
At least five (5) Business Days prior to any proposed or intended Subsequent Placement, the Company or its agent shall orally
contact the Holder and ask whether such Holder is willing to agree to receive material, non-public information (each such notice,
a “Pre-Notice”), provided that neither the Company nor its agents shall provide any material, non-public information
with respect to the Company or any of its Subsidiaries to the Holder without the express written consent of the Holder to receive
such material, non-public information. Upon the written request of the Holder delivered to the Company no later than one (1) Business
Day after the Holder’s receipt of such Pre-Notice, and only upon a written request by the Holder, the Company shall promptly,
but no later than one (1) Business Day after such request, deliver to the Holder an irrevocable written notice (the “Offer
Notice”) of any proposed or intended issuance or sale or exchange (the “Offer”) of the securities
being offered (the “Offered Securities”) in a Subsequent Placement within one (1) Business Day of the determination
of the terms of such Subsequent Placement, which Offer Notice shall (w) identify and describe the Offered Securities, (x) describe
the price and other final terms upon which they are to be issued, sold or exchanged, and the number or amount of the Offered Securities
to be issued, sold or exchanged, (y) identify the persons or entities (if known) to which or with which the Offered Securities
are to be offered, issued, sold or exchanged and (z) offer to issue and sell to or exchange with the Holder (which offer being
non-transferable to any successor to or assignee of the Holder) and the other initial holders of Series A-1 Warrants (or their
assigns, in proportion to the portion of such Series A-1 Warrants assigned, as applicable) (the “Other Holders”,
and together with the Holder, the “Holders”) in the aggregate at least 35% of the Offered Securities, with
such Offered Securities allocated among the Holders (a) based on the number of shares of Common Stock initially issuable upon
exercise of the Series A-1 Warrants issued to the Holder (or deemed issued in connection with any assignment of this Warrant)
in proportion to all of the Holders (without regard to any limitations on exercise set forth herein or therein and assuming a
cash exercise thereof) (the “Basic Amount”), and (b) if the Holder elects to purchase its Basic Amount, but
other Holders do not, any additional portion of the Offered Securities attributable to the Basic Amounts of the other Holders
as the Holder shall indicate it will purchase or acquire should the other Holders subscribe for less than their Basic Amounts
(the “Undersubscription Amount”). Notwithstanding anything herein to the contrary, the Company’s obligations
under this Section 17 shall survive any exercise of this Warrant.

 

    	20

    	 

    

 

(b)         
To accept an Offer, in whole or in part, the Holder must deliver a written notice to the Company prior to the end of the third
(3rd) full Business Day after the Holder’s receipt of the Offer Notice (for purposes of this Section 17(b), receipt of the
Offer Notice shall not be deemed to have occurred until the Holder shall have actually received such Offer Notice) (the “Offer
Period”), setting forth the portion of the Holder’s Basic Amount that the Holder elects to purchase and, if the
Holder shall elect to purchase all of its Basic Amount, the Undersubscription Amount, if any, that the Holder elects to purchase
(in either case, the “Notice of Acceptance”). If the Basic Amounts subscribed for by the Holder and all Other
Holders are less than the total of all of the Basic Amounts, then, if the Holder has set forth an Undersubscription Amount in
its Notice of Acceptance, the Holder shall be entitled to purchase, in addition to the Basic Amounts subscribed for, the Undersubscription
Amount it has subscribed for; provided, however, that if the Undersubscription Amounts subscribed for exceed the difference between
the total of all the Basic Amounts and the Basic Amounts subscribed for (the “Available Undersubscription Amount”),
if the Holder has subscribed for any Undersubscription Amount, then the Holder shall be entitled to purchase only that portion
of the Available Undersubscription Amount as the Basic Amount of the Holder bears to the total Basic Amounts of all Holders that
have subscribed for Undersubscription Amounts, subject to rounding by the Company to the extent it deems reasonably necessary.

 

(c)         
The Company shall have ten (10) Business Days from the expiration of the Offer Period above to offer, issue, sell or exchange
all or any part of such Offered Securities as to which Pubco was not required to offer to the Holders or as to which a Notice
of Acceptance has not been given by the Holder (such Offered Securities, the “Refused Securities”), but only
to the offerees described in the Offer Notice (if so described therein) and only upon terms and conditions (including, without
limitation, unit prices and interest rates) that are not more favorable to the acquiring Person or Persons or less favorable to
the Company than those set forth in the Offer Notice.

 

    	21

    	 

    

 

(d)         
In the event the Company shall propose to sell less than all the Refused Securities (any such sale to be in the manner and on
the terms specified in Section 17(c) above), then the Holder may, at its sole option and in its sole discretion, either (x) withdraw
its Notice of Acceptance or (y) reduce the number or amount of the Offered Securities specified in its Notice of Acceptance to
an amount that shall be not less than the number or amount of the Offered Securities that the Holder elected to purchase pursuant
to Section 17(b) above multiplied by a fraction, (i) the numerator of which shall be the number or amount of Offered Securities
the Company actually proposes to issue, sell or exchange (including Offered Securities to be issued or sold to the Holder pursuant
to Section 17(c) above prior to such reduction) and (ii) the denominator of which shall be the original amount of the Offered
Securities. In the event that the Holder so elects to withdraw its Notice of Acceptance or reduce the number or amount of Offered
Securities specified in its Notice of Acceptance, the Company may not issue, sell or exchange more than the reduced number or
amount of the Offered Securities to be sold in such Subsequent Placement after giving effect thereto unless and until such securities
have again been offered to the Holder in accordance with Section 17(a) above.

 

(e)         
Upon the closing of the issuance, sale or exchange of all or less than all of the Refused Securities, the Holder shall acquire
from the Company, and the Company shall issue to the Holder, the number or amount of Offered Securities specified in the Holder’s
Notice of Acceptance, as reduced pursuant to Section 17(d) above if the Holder has so elected, upon the terms and conditions specified
in the Offer. The purchase by the Holder of any Offered Securities is subject in all cases to (i) the preparation, execution and
delivery by the Company and the Holder of a purchase agreement relating to such Offered Securities reasonably satisfactory in
form and substance to the Holder, the Company and their respective counsels (the “Subsequent Placement Agreement”),
(ii) the Holder’s satisfaction, in its sole discretion, with the final terms and/or conditions that differ from those contained
in the Offer Notice, and (iii) the Holder’s reasonable satisfaction with the identity of the other Persons to which the
Offered Securities will be sold.

 

(f)         
Any Offered Securities not acquired by the Holder or other Persons in accordance with this Section 17 may not be issued, sold
or exchanged until they are again offered to the Holder under the procedures specified in this Agreement.

 

(g)         
The Company and the Holder agree that if the Holder elects to participate in the Offer, without the written consent of the Holder,
neither the Subsequent Placement Agreement with respect to such Offer nor any other transaction documents related thereto shall
include any term or provision whereby the Holder shall be required to agree to any restrictions on trading as to any securities
of the Company with respect to any period after the public announcement of such Subsequent Placement beyond those restrictions
on the transfer or sale of the securities purchased in such Subsequent Placement agreed to by other purchasers in such Subsequent
Placement or be required to consent to any amendment to or termination of, or grant any waiver or release under or in connection
with, any agreement previously entered into with the Company or any instrument received from the Company.

 

(h)         
The restrictions contained in this Section 17 shall not apply in respect of the issuance of Excluded Securities.

 

(i)          
For the purpose of this Section 17, the following definitions shall apply:

 

(i)          
“Participation Securities” means any capital stock or other security of the Company or any of its Subsidiaries
that is at any time and under any circumstances directly or indirectly convertible into, exercisable or exchangeable for, or which
otherwise entitles the Holder thereof to acquire, any capital stock or other equity security of the Company (including, without
limitation, Common Stock) or any of its Subsidiaries.

 

    	22

    	 

    

 

(ii)         
“Subsequent Placement” means any issuance, offer, sale, grant of any option or right to purchase, or other
disposal by the Company or any of its Subsidiaries, directly or indirectly, of any equity security or any equity-linked or related
security (including, without limitation, any “equity security” (as that term is defined under Rule 405 promulgated
under the 1933 Act), any Participation Securities, any preferred stock or any purchase rights), but for the avoidance of doubt
excluding any secondary offerings contemplated by the Founders Registration Rights Agreement or the Registration Rights Agreement
(each as defined in the Merger Agreement).

 

18.          CERTAIN
DEFINITIONS. For purposes of this Warrant, the following terms shall have the following meanings:

 

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

 

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

 

(c)         
“Adjustment Right” means any right granted with respect to any securities issued in connection with, or with
respect to, any issuance or sale (or deemed issuance or sale in accordance with Section 2) of shares of Common Stock (other
than rights of the type described in Section 3 and 4 hereof) that could result in a decrease in the net consideration received
by the Company in connection with, or with respect to, such securities (including, without limitation, any cash settlement rights,
cash adjustment or other similar rights).

 

(d)         
“Affiliate” means, with respect to any Person, any other Person that directly or indirectly controls, is controlled
by, or is under common control with, such Person, it being understood for purposes of this definition that “control”
of a Person means the power directly or indirectly either to vote 10% or more of the stock having ordinary voting power for the
election of directors of such Person or direct or cause the direction of the management and policies of such Person whether by
contract or otherwise.

 

(e)         
[Reserved]

 

(f)         
“Approved Stock Plan” means any employee benefit plan which has been approved by the board of directors of
the Company prior to or subsequent to the date hereof pursuant to which shares of Common Stock, non-qualified and qualified options
to purchase Common Stock, stock appreciation rights, restricted stock awards, restricted stock units, stock bonus awards, performance
compensation awards (including cash bonus awards) or any combination of the foregoing may be issued to any employee, officer or
director for services provided to the Company in their respective capacities as such. For the avoidance of doubt, an Approved
Stock Plan may permit issuances of awards to other Persons than those specified in this definition, but such awards issued to
Persons other than those specified in this definition shall not be Excluded Securities issued pursuant to an Approved Stock Plan
for purposes of this Warrant.

 

    	23

    	 

    

 

(g)         
“Attribution Parties” means, collectively, the following Persons and entities: (i) any investment vehicle,
including, any funds, feeder funds or managed accounts, currently, or from time to time after the Issuance Date, directly or indirectly
managed or advised by the Holder’s investment manager or any of its Affiliates or principals, (ii) any direct or indirect
Affiliates of the Holder or any of the foregoing, (iii) any Person acting or who could be deemed to be acting as a Group together
with the Holder or any of the foregoing and (iv) any other Persons whose beneficial ownership of the Company’s Common Stock
would or could be aggregated with the Holder’s and the other Attribution Parties for purposes of Section 13(d) of the 1934
Act. For clarity, the purpose of the foregoing is to subject collectively the Holder and all other Attribution Parties to the
Maximum Percentage.

 

(h)         
“Bid Price” means, for any security as of the particular time of determination, the bid price for such security
on the Principal Market as reported by Bloomberg as of such time of determination, or, if the Principal Market is not the principal
securities exchange or trading market for such security, the bid price of such security on the principal securities exchange or
trading market where such security is listed or traded as reported by Bloomberg as of such time of determination, or if the foregoing
does not apply, the bid price of such security in the over-the-counter market on the electronic bulletin board for such security
as reported by Bloomberg as of such time of determination, or, if no bid price is reported for such security by Bloomberg as of
such time of determination, the average of the bid prices of any market makers for such security as reported in the “pink
sheets” by OTC Markets Group Inc. (formerly Pink Sheets LLC) as of such time of determination. If the Bid Price cannot be
calculated for a security as of the particular time of determination on any of the foregoing bases, the Bid Price of such security
as of such time of determination shall be the fair market value as mutually determined by the Company and the Holder. If the Company
and the Holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved in accordance
with the procedures in Section 13. All such determinations shall be appropriately adjusted for any stock dividend, stock
split, stock combination or other similar transaction during such period.

 

(i)          
“Black Scholes Consideration Value” means the value of the applicable Option, Convertible Security or Adjustment
Right (as the case may be) as of the date of issuance thereof calculated using the Black Scholes Option Pricing Model obtained
from the “OV” function on Bloomberg utilizing (i) an underlying price per share equal to the Closing Sale Price of
the Common Stock on the Trading Day immediately preceding the public announcement of the execution of definitive documents with
respect to the issuance of such Option or Convertible Security (as the case may be), (ii) a risk-free interest rate corresponding
to the U.S. Treasury rate for a period equal to the remaining term of such Option, Convertible Security or Adjustment Right (as
the case may be) as of the date of issuance of such Option, Convertible Security or Adjustment Right (as the case may be), (iii)
a zero cost of borrow and (iv) an expected volatility equal to 80%.

 

    	24

    	 

    

 

(j)          
“Black Scholes Value” means the value of the unexercised portion of this Warrant remaining on the date of the
Holder’s request pursuant to Section 4(c), which value is calculated using the Black Scholes Option Pricing Model obtained
from the “OV” function on Bloomberg utilizing (i) an underlying price per share equal to the greater of (1) the highest
Closing Sale Price of the Common Stock during the period beginning on the Trading Day immediately preceding the announcement of
the applicable Fundamental Transaction (or the consummation of the applicable Fundamental Transaction, if earlier) and ending
on the Trading Day of the Holder’s request pursuant to Section 4(c) and (2) the sum of the price per share being offered
in cash in the applicable Fundamental Transaction (if any) plus the value of the non-cash consideration being offered in the applicable
Fundamental Transaction (if any), (ii) a strike price equal to the Exercise Price in effect on the date of the Holder’s
request pursuant to Section 4(c), (iii) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal
to the greater of (1) the remaining term of this Warrant as of the date of the Holder’s request pursuant to Section 4(c)
and (2) the remaining term of this Warrant as of the date of consummation of the applicable Fundamental Transaction or as of the
date of the Holder’s request pursuant to Section 4(c) if such request is prior to the date of the consummation of the
applicable Fundamental Transaction, (iv) a zero cost of borrow and (v) an expected volatility equal to 80%.

 

(k)         
“Bloomberg” means Bloomberg, L.P.

 

(l)          
“Business Combination” shall have the meaning as set forth in the Registration Statement.

 

(m)         “Business
Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized
or required by law to remain closed.

 

(n)         
“Closing Sale Price” means, for any security as of any date, the last closing trade price for such security
on the Principal Market, as reported by Bloomberg, or, if the Principal Market begins to operate on an extended hours basis and
does not designate the closing trade price, then the last trade price of such security prior to 4:00:00 p.m., New York time, as
reported by Bloomberg, or, if the Principal Market is not the principal securities exchange or trading market for such security,
the last trade price of such security on the principal securities exchange or trading market where such security is listed or
traded as reported by Bloomberg, or if the foregoing does not apply, the last trade price of such security in the over-the-counter
market on the electronic bulletin board for such security as reported by Bloomberg, or, if no last trade price is reported for
such security by Bloomberg, the average of the ask prices of any market makers for such security as reported in the “pink
sheets” by OTC Markets Group Inc. (formerly Pink Sheets LLC). If the Closing Sale Price cannot be calculated for a security
on a particular date on any of the foregoing bases, the Closing Sale Price of such security on such date shall be the fair market
value as mutually determined by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market
value of such security, then such dispute shall be resolved in accordance with the procedures in Section 13. All such determinations
shall be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during such
period.

 

(o)         
“Common Stock” means (i) the Company’s shares of common stock, $0.0001 par value per share, and
(ii) any capital stock into which such common stock shall have been changed or any share capital resulting from a reclassification
of such common stock.

 

    	25

    	 

    

 

(p)         
“Convertible Securities” means any stock or other security (other than Options) that is at any time and under
any circumstances, directly or indirectly, convertible into, exercisable or exchangeable for, or which otherwise entitles the
holder thereof to acquire, any shares of Common Stock.

 

(q)         
“Eligible Market” means The New York Stock Exchange, the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global
Select Market, the Nasdaq Global Market, the OTCQB or the Principal Market.

 

(r)          
“Exchange Agreement” means any of those certain Purchase and Exchange Agreements, dated as of June 10, 2015,
each by and among the Company, Chart Acquisition Corp., Tempus Applied Solutions, LLC, TAS Financing Sub and Chart Financing Sub
Inc., on the one hand, and a Buyer, on the other hand.

 

(s)         
“Event Market Price” means, with respect to any Stock Combination Event Date, the quotient determined by dividing
(x) the sum of the VWAP of the Common Stock for each of the five (5) lowest Trading Days during the twenty (20) consecutive Trading
Day period ending and including the Trading Day immediately preceding the sixteenth (16th) Trading Day after such Stock Combination
Event Date, divided by (y) five (5).

 

(t)          
“Excluded Securities” means (i) shares of Common Stock, non-qualified and qualified options to purchase Common
Stock, stock appreciation rights, restricted stock awards, restricted stock units, stock bonus awards, performance compensation
awards (including cash bonus awards) or any combination of the foregoing issued to directors, officers or employees of the Company
for services provided to the Company in their respective capacities as such pursuant to an Approved Stock Plan (as defined above),
provided that (A) all such issuances (taking into account the shares of Common Stock issuable upon exercise of such options) after
the Issuance Date pursuant to this clause (i) do not, in the aggregate, exceed more than 10% of the Common Stock issued and outstanding
at the time of the issuance of the Warrants, after giving effect to the consummation of the Business Combination and to shares
issuable thereafter pursuant to the terms of the Merger Agreement and (B) the exercise price of any such options is not lowered,
none of such options are amended to increase the number of shares issuable thereunder and none of the terms or conditions of any
such options are otherwise materially changed in any manner that adversely affects any of the Buyers; (ii) shares of Common Stock
issued upon the conversion or exercise of Convertible Securities (other than standard options to purchase Common Stock issued
pursuant to an Approved Stock Plan that are covered by clause (i) above) issued prior to the Issuance Date, provided that the
conversion price of any such Convertible Securities (other than standard options to purchase Common Stock issued pursuant to an
Approved Stock Plan that are covered by clause (i) above) is not lowered, none of such Convertible Securities (other than standard
options to purchase Common Stock issued pursuant to an Approved Stock Plan that are covered by clause (i) above) are amended to
increase the number of shares issuable thereunder and none of the terms or conditions of any such Convertible Securities (other
than standard options to purchase Common Stock issued pursuant to an Approved Stock Plan that are covered by clause (i) above)
are otherwise materially changed in any manner that adversely affects any of the Buyers; (iii) the shares of Common Stock issuable
upon conversion of the Preferred Shares or otherwise pursuant to the terms of the Preferred Shares; provided, that the terms of
the Preferred Shares are not amended, modified or changed on or after the Issuance Date (other than antidilution adjustments pursuant
to the terms thereof in effect as of the Issuance Date); (iv) the shares of Common Stock issuable upon exercise of the Investor
Warrants or the Pubco Warrants (as defined in the Merger Agreement) issued in the Business Combination pursuant to the Merger
Agreement and the Registration Agreement; provided, that the terms of the Investor Warrant or Pubco Warrant are not amended, modified
or changed on or after the Issuance Date (other than antidilution adjustments pursuant to the terms thereof in effect as of the
Issuance Date); (v) shares of Common Stock or other securities of the Company issued pursuant to the terms of the Merger Agreement,
including without limitation Earn-Out Shares and Purchase Price Adjustment Shares (each as defined in the Merger Agreement); and
(vi) securities issued pursuant to acquisitions or strategic transactions approved by a majority of the disinterested directors
of the Company, provided that any such issuance shall only be to a Person (or to the equity holders 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.

 

    	26

    	 

    

 

(u)         
“Expiration Date” means the date that is the fifth (5th) anniversary of the Issuance Date or, if
such date falls on a day other than a Business Day or on which trading does not take place on the Principal Market (a “Holiday”),
the next date that is not a Holiday.

 

(v)         
“Fundamental Transaction” means (A) that the Company shall, directly or indirectly, including through subsidiaries,
Affiliates or otherwise, in one or more related transactions, (i) consolidate or merge with or into (whether or not the Company
is the surviving corporation) another Subject Entity, or (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially
all of the properties or assets of the Company or any of its “significant subsidiaries” (as defined in Rule 1-02 of
Regulation S-X) to one or more Subject Entities, or (iii) make, or allow one or more Subject Entities to make, or allow the Company
to be subject to or have its Common Stock be subject to or party to one or more Subject Entities making, a purchase, tender or
exchange offer that is accepted by the holders of at least either (x) 50% of the outstanding shares of Common Stock, (y) 50% of
the outstanding shares of Common Stock calculated as if any shares of Common Stock held by all Subject Entities making or party
to, or Affiliated with any Subject Entities making or party to, such purchase, tender or exchange offer were not outstanding;
or (z) such number of shares of Common Stock such that all Subject Entities making or party to, or Affiliated with any Subject
Entity making or party to, such purchase, tender or exchange offer, become collectively the beneficial owners (as defined in Rule
13d-3 under the 1934 Act) of at least 50% of the outstanding shares of Common Stock, or (iv) consummate a stock or share purchase
agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme
of arrangement) with one or more Subject Entities whereby all such Subject Entities, individually or in the aggregate, acquire,
either (x) at least 50% of the outstanding shares of Common Stock, (y) at least 50% of the outstanding shares of Common Stock
calculated as if any shares of Common Stock held by all the Subject Entities making or party to, or Affiliated with any Subject
Entity making or party to, such stock purchase agreement or other business combination were not outstanding; or (z) such number
of shares of Common Stock such that the Subject Entities become collectively the beneficial owners (as defined in Rule 13d-3 under
the 1934 Act) of at least 50% of the outstanding shares of Common Stock, or (v) reorganize, recapitalize or reclassify its Common
Stock, (B) that the Company shall, directly or indirectly, including through subsidiaries, Affiliates or otherwise, in one or
more related transactions, allow any Subject Entity individually or the Subject Entities in the aggregate to be or become the
“beneficial owner” (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, whether through acquisition,
purchase, assignment, conveyance, tender, tender offer, exchange, reduction in outstanding shares of Common Stock, merger, consolidation,
business combination, reorganization, recapitalization, spin-off, scheme of arrangement, reorganization, recapitalization or reclassification
or otherwise in any manner whatsoever, of either (x) at least 50% of the aggregate ordinary voting power represented by issued
and outstanding Common Stock, (y) at least 50% of the aggregate ordinary voting power represented by issued and outstanding Common
Stock not held by all such Subject Entities as of the date of this Warrant calculated as if any shares of Common Stock held by
all such Subject Entities were not outstanding, or (z) a percentage of the aggregate ordinary voting power represented by issued
and outstanding shares of Common Stock or other equity securities of the Company sufficient to allow such Subject Entities to
effect a statutory short form merger or other transaction requiring other shareholders of the Company to surrender their shares
of Common Stock without approval of the shareholders of the Company or (C) directly or indirectly, including through subsidiaries,
Affiliates or otherwise, in one or more related transactions, the issuance of or the entering into any other instrument or transaction
structured in a manner to circumvent, or that circumvents, the intent of this definition in which case this definition shall be
construed and implemented in a manner otherwise than in strict conformity with the terms of this definition to the extent necessary
to correct this definition or any portion of this definition which may be defective or inconsistent with the intended treatment
of such instrument or transaction.

 

(w)         “Group”
means a “group” as that term is used in Section 13(d) of the 1934 Act and as defined in Rule 13d-5 thereunder.

 

(x)         
“Merger Agreement” shall have the meaning as set forth in the Registration Statement.

 

(y)         
“Options” means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible
Securities.

 

(z)         
“Parent Entity” of a Person means an entity that, directly or indirectly, controls the applicable Person and
whose common stock or equivalent equity security is quoted or listed on an Eligible Market, or, if there is more than one such
Person or Parent Entity, the Person or Parent Entity with the largest public market capitalization as of the date of consummation
of the Fundamental Transaction.

 

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

 

(bb)       “Preferred
Shares” has the meaning ascribed to such term in the Exchange Agreements, and shall include all shares of preferred
stock of the Company issued in exchange therefor or replacement thereof.

 

    	27

    	 

    

 

(cc)        “Principal
Market” means the OTCQB.

 

(dd)       “SEC”
means the United States Securities and Exchange Commission or the successor thereto.

 

(ee)        “Series
A-1 Warrants” means the Pubco Series A-1 Warrants as defined in the Merger Agreement, and shall include all warrants
to purchase Common Stock issued in exchange therefor or replacement thereof.

 

(ff)         “Series
A-2 Warrants” means the Pubco Series A-2 Warrants as defined in the Merger Agreement, and shall include all warrants
to purchase Common Stock issued in exchange therefor or replacement thereof.

 

(gg)       “Series
B-1 Warrants” means the Pubco Series B-1 Warrants as defined in the Merger Agreement, and shall include all warrants
to purchase Common Stock issued in exchange therefor or replacement thereof.

 

(hh)       “Series
B-2 Warrants” means the Pubco Series B-2 Warrants as defined in the Merger Agreement, and shall include all warrants
to purchase Common Stock issued in exchange therefor or replacement thereof.

 

(ii)         
“Subject Entity” means any Person, Persons or Group or any Affiliate or associate of any such Person, Persons
or Group.

 

(jj)         
 “Successor Entity” means the Person (or, if so elected by the Holder, the Parent Entity) formed by, resulting
from or surviving any Fundamental Transaction or the Person (or, if so elected by the Holder, the Parent Entity) with which such
Fundamental Transaction shall have been entered into.

 

(kk)         “Trading
Day” means, as applicable, (x) with respect to all price or trading volume determinations relating to the Common Stock,
any day on which the Common Stock is traded on the Principal Market, or, if the Principal Market is not the principal trading
market for the Common Stock, then on the principal securities exchange or securities market on which the Common Stock is then
traded, provided that “Trading Day” shall not include any day on which the Common Stock is scheduled to trade on such
exchange or market for less than 4.5 hours or any day that the Common Stock is suspended from trading during the final hour of
trading on such exchange or market (or if such exchange or market does not designate in advance the closing time of trading on
such exchange or market, then during the hour ending at 4:00:00 p.m., New York time) unless such day is otherwise designated as
a Trading Day in writing by the Holder or (y) with respect to all determinations other than price determinations relating to the
Common Stock, any day on which The New York Stock Exchange (or any successor thereto) is open for trading of securities.

 

    	28

    	 

    

 

(ll)         
“VWAP” means, for any security as of any date, the dollar volume-weighted average price for such security on
the Principal Market (or, if the Principal Market is not the principal trading market for such security, then on the principal
securities exchange or securities market on which such security is then traded) during the period beginning at 9:30:01 a.m., New
York time, and ending at 4:00:00 p.m., New York time, as reported by Bloomberg through its “HP” function (set to weighted
average) or, if the foregoing does not apply, the dollar volume-weighted average price of such security in the over-the-counter
market on the electronic bulletin board for such security during the period beginning at 9:30:01 a.m., New York time, and ending
at 4:00:00 p.m., New York time, as reported by Bloomberg, or, if no dollar volume-weighted average price is reported for such
security by Bloomberg for such hours, the average of the highest closing bid price and the lowest closing ask price of any of
the market makers for such security as reported in the “pink sheets” by OTC Markets Group Inc. (formerly Pink Sheets
LLC). If the VWAP cannot be calculated for such security on such date on any of the foregoing bases, the VWAP of such security
on such date shall be the fair market value as mutually determined by the Company and the Holder. If the Company and the Holder
are unable to agree upon the fair market value of such security, then such dispute shall be resolved in accordance with the procedures
in Section 13. All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination,
recapitalization or other similar transaction during such period.

 

[Signature
page follows]

 

    	29

    	 

    

 

IN
WITNESS WHEREOF, the Company has caused this Series A-1 Warrant to Purchase Common Stock to be duly executed as of the Issuance
Date set out above.

 

Tempus
Applied Solutions Holdings, Inc. 

 

		By:	

                                         
	 	 	Name:

                              Title:

 

 

[Signature
Page to Series A-1 Warrant]

 

    	 

    	 

    

 

EXHIBIT
A

  

 EXERCISE
NOTICE

 

TO
BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS

Series A-1 WARRANT TO PURCHASE COMMON STOCK

 

TEMPUS
APPLIED SOLUTIONS HOLDINGS, INC.

 

The
undersigned holder hereby exercises the right to purchase _________________ of the shares of Common Stock (“Warrant Shares”)
of Tempus Applied Solutions Holdings, Inc., a Delaware corporation (the “Company”), evidenced by Warrant to
Purchase Common Stock No. _______ (the “Warrant”). Capitalized terms used herein and not otherwise defined
shall have the respective meanings set forth in the Warrant.

 

1.        Form
of Exercise Price. The Holder intends that payment of the Aggregate Exercise Price shall be made as:

 

	 	____________	a
    “Cash Exercise” with respect to _________________ Warrant Shares;

    

    and/or

 

	 	____________	a
    “Cashless Exercise” with respect to ______________ Warrant Shares.

 

In
the event that the Holder has elected a Cashless Exercise with respect to some or all of the Warrant Shares to be issued pursuant
hereto, the Holder hereby represents and warrants that (i) this Exercise Notice was executed by the Holder at __________ [a.m.][p.m.]
on the date set forth below and (ii) if applicable, the Bid Price as of such time of execution of this Exercise Notice was $________.

 

☐       Check
here if requesting that _________ of the Warrant Shares deliverable hereunder should be issued as Preferred Shares.

 

2.       Payment
of Exercise Price. In the event that the Holder has elected a Cash Exercise with respect to some or all of the Warrant Shares
to be issued pursuant hereto, the Holder shall pay the Aggregate Exercise Price in the sum of $___________________ to the Company
in accordance with the terms of the Warrant.

 

3.        Delivery
of Warrant Shares. The Company shall deliver to Holder, or its designee or agent as specified below, __________ Warrant Shares
in accordance with the terms of the Warrant. Delivery shall be made to Holder, or for its benefit, as follows:

 

☐       Check
here if requesting delivery as a certificate to the following name and to the following address:

	Issue
    to:	 
	 	 
	 	 

 

    	A-1

    	 

    

 

☐       Check
here if requesting delivery by Deposit/Withdrawal at Custodian as follows:

	DTC
    Participant:	 
	DTC
    Number:	 
	Account
    Number:	 

 

	Date:
                                         _____________ __, _____

         

         

        ____________________________

        

        Name of Registered Holder

         

	By:
                                         ____________________________

                                         Name:

                                         Title:

         

        Tax
        ID:____________________________

         

        Facsimile:__________________________

         

        E-mail
        Address:_____________________

 

    	A-2

    	 

    

 

EXHIBIT
B

 

ACKNOWLEDGMENT

 

The
Company hereby acknowledges this Exercise Notice and hereby directs ______________ to issue the above indicated number of shares
of Common Stock in accordance with the Transfer Agent Instructions dated ______________, from the Company and acknowledged and
agreed to by _______________.

 

Tempus
Applied Solutions Holdings, Inc. 

 

		By:	

                                         
	 	 	Name:

                              Title:

 

 

B-1

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