Document:

Exhibit 10.1

 

FORM
OF

 

SECURITIES
PURCHASE AGREEMENT

 

This Securities Purchase
Agreement (this “Agreement”) is dated as of March 5, 2019, between Xenetic Biosciences, Inc., a Nevada corporation
(the “Company”), and each purchaser identified on the signature pages hereto (each, including its successors
and assigns, a “Purchaser” and collectively the “Purchasers”).

 

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

 

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

 

ARTICLE I.

DEFINITIONS

 

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

 

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

 

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

 

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

 

“Base
Warrant” means the Common Stock purchase warrants delivered to the Purchasers at the Closing in accordance with Section
2.2(a) hereof, which Warrants shall be exercisable beginning six months and one day from the Closing Date and have a term of exercise
equal to seven (7) years, in the form of Exhibit A attached hereto.

 

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

 

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

 

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

 

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

 

 

 

    	 	1	 

     

    

 

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

 

“Closing
Date” means the Trading Day on which all of the Transaction Documents have been executed and delivered by the applicable
parties thereto, and all conditions precedent to (i) the Purchasers’ obligations to pay the Subscription Amount and (ii)
the Company’s obligations to deliver the Securities, in each case, have been satisfied or waived, but in no event later than
the second (2nd) Trading Day following the date hereof.

 

“Closing
Statement” means the Closing Statement in the form on Annex A attached hereto.

 

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

 

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

 

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

 

“Common
Units” means each Common Unit consisting of (a) one Share and (b) a Base Warrant to purchase one (1) Base Warrant Share.

 

“Common
Unit Purchase Price” equals $2.00 per each Common Unit, subject to adjustment for reverse and forward stock splits, stock
dividends, stock combinations and other similar transactions of the Common Stock that occur after the date of this Agreement.

 

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

 

“Company
Counsel” means Akerman LLP, with offices located at 350 East Las Olas Boulevard, Suite 1600, Ft. Lauderdale, FL 33301.

 

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

 

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

 

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

 

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

 

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

 

 

 

    	 	2	 

     

    

 

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

 

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

 

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

 

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

 

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

 

“Hesperix
Agreement” shall mean that certain share purchase agreement, dated March 1, 2019, by and among the Company, Hesperix
SA, a Swiss corporation, the owners of Hesperix SA, and Alexey Andreevich Vinogradov, pursuant to which the Company will purchase
all of the issued and outstanding shares of capital stock of Hesperix SA.

 

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

 

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

 

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

 

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

 

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

 

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

 

“OPKO
Agreement” means that certain assignment agreement, dated March 1, 2019, by and between the Company and OPKO Pharmaceuticals,
LLC (“OPKO”) pursuant to which OPKO will assign to the Company certain rights to the XCART technology.

 

 

 

    	 	3	 

     

    

 

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

 

“Placement
Agent” means Maxim Group LLC.

 

“Pre-Funded
Units” means each Pre-Funded Unit consisting of (a) one Pre-Funded Warrant to initially purchase one Pre-Funded Warrant
Share, and (b) a Base Warrant to purchase one (1) Base Warrant Share.

 

“Pre-Funded
Unit Purchase Price” equals $1.999 per each Pre-Funded Unit, subject to adjustment for reverse and forward stock splits,
stock dividends, stock combinations and other similar transactions of the Common Stock that occur after the date of this Agreement.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Registration
Statement” means the effective registration statement with Commission file No. 333- 227572 which registers the sale of
the Shares, the Pre-Funded Warrants and the Pre-Funded Warrant Shares to the Purchasers.

 

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

 

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

 

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

 

 

 

    	 	4	 

     

    

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Transfer
Agent” means Empire Stock Transfer, Inc., the current transfer agent of the Company, with a mailing address of 1859 Whitney
Mesa Dr., Henderson, NV 89014 and a facsimile number of (702) 974-1444, and any successor transfer agent of the Company.

 

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

 

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

 

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

 

“Warrant
Shares” means the Base Warrant Shares and the Pre-Funded Warrant Shares issuable upon exercise of the Warrants.

 

 

 

    	 	5	 

     

    

 

ARTICLE II.

PURCHASE AND SALE

 

2.1             
Closing. On the Closing Date, upon the terms and subject to the conditions set forth herein, substantially concurrent
with the execution and delivery of this Agreement by the parties hereto, the Company agrees to sell, and the Purchasers, severally
and not jointly, agree to purchase, up to an aggregate of $3,097,491 of Common Units as determined pursuant to Section 2.2(a);
provided, however, that, solely to the extent a Purchaser determines that such Purchaser (together with such Purchaser’s
Affiliates, and any Person acting as a group together with such purchaser or any of such Purchaser’s Affiliates) would beneficially
own in excess of the Beneficial Ownership Limitation, in lieu of purchasing Common Units, such Purchaser may elect to purchase
Pre-Funded Units at the Pre-Funded Unit Purchase Price in lieu of Common Units. The “Beneficial Ownership Limitation”
shall be 9.99% (or, at the election of the Purchaser, 4.99%) of the number of Common Stock outstanding immediately after giving
effect to the issuance of the Securities on the Closing Date. Unless otherwise directed by the Placement Agent, each Purchaser
shall deliver, via wire transfer or a certified check, immediately available funds equal to its Pre-Funded Unit Subscription Amount
pursuant to Section 2.2(b)(ii), and the Company shall deliver to each Purchaser its respective Shares and Base Warrants or Pre-Funded
Warrants (as applicable to such Purchaser) and Base Warrants, as determined pursuant to Section 2.2(a), and the Company and each
Purchaser shall deliver the other items set forth in Section 2.2 deliverable at the Closing. Upon satisfaction of the covenants
and conditions set forth in Sections 2.2 and 2.3, the Closing shall occur at the offices of EGS or such other location as the parties
shall mutually agree. The Company covenants that, if the Purchaser delivers a Notice of Exercise (as defined in the Pre-Funded
Warrant) no later than 12:00 p.m. (New York City time) on the Closing Date to exercise any Pre-Funded Warrants between the date
hereof and the Closing Date, the Company shall deliver Pre-Funded Warrant Shares to the Purchaser on the Closing Date in connection
with such Notice of Exercise. Unless otherwise directed by the Placement Agent, settlement of the Shares shall occur via “Delivery
Versus Payment” (“DVP”) (i.e., on the Closing Date, the Company shall issue the Shares registered in the Purchasers’
names and addresses and released by the Transfer Agent directly to the account(s) at the Placement Agent identified by each Purchaser;
upon receipt of such Shares, the Placement Agent shall promptly electronically deliver such Shares to the applicable Purchaser,
and payment therefor shall be made by the Placement Agent (or its clearing firm) by wire transfer to the Company).

 

2.2             
Deliveries.

 

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

 

(i)              
this Agreement duly executed by the Company;

 

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

 

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

 

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

 

(v)            
for each Purchaser of Pre-Funded Units, a Pre-Funded Warrant registered in the name of such Purchaser to purchase up to
a number of shares of Common Stock equal to such Purchaser’s Pre-Funded Unit Subscription Amount divided by the Pre-Funded
Unit Purchase Price, with an exercise price equal to $0.001, subject to adjustment therein (such Pre-Funded Warrant certificate
shall be delivered via .pdf by email at the Closing; provided, that the original Warrant Certificate may be delivered within
three Trading Days of the Closing Date);

 

 

 

    	 	6	 

     

    

 

(vi)            
a Base Warrant registered in the name of such Purchaser to purchase up to a number of shares of Common Stock equal to 100%
of such Purchaser’s Shares and Pre-Funded Warrant Shares initially underlying the Pre-Funded Warrants, with an exercise price
equal to $2.25 subject to adjustment as provided for therein; and

 

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

 

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

 

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

 

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

 

2.3             
Closing Conditions.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

 

    	 	7	 

     

    

 

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

 

ARTICLE III.

REPRESENTATIONS AND WARRANTIES

 

3.1             
Representations and Warranties of the Company. Except as set forth in the SEC Reports or in the Disclosure Schedules,
which SEC Reports and Disclosure Schedules shall be deemed a part hereof and shall qualify any representation or otherwise made
herein to the extent of the disclosure contained in the SEC Reports or the corresponding section of the Disclosure Schedules, the
Company hereby makes the following representations and warranties to each Purchaser; provided, that the representations
and warranties set forth in Sections 3.1(g) and (j) are not qualified by reference to the SEC Reports:

 

(a)          
Subsidiaries. All of the direct and indirect subsidiaries of the Company are set forth on Schedule 3.1(a).
The Company owns, directly or indirectly, all of the capital stock or other equity interests of each Subsidiary free and clear
of any Liens, and all of the issued and outstanding shares of capital stock of each Subsidiary are validly issued and are fully
paid, non-assessable and free of preemptive and similar rights to subscribe for or purchase securities.

 

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

 

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

 

 

 

    	 	8	 

     

    

 

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

 

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

 

(f)           
Issuance of the Securities; Registration. The Securities are duly authorized and, when issued and paid for in accordance
with the applicable Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all
Liens imposed by the Company. The Warrant Shares, when issued in accordance with the terms of the Warrants, will be validly issued,
fully paid and nonassessable, free and clear of all Liens imposed by the Company. The Company has reserved from its duly authorized
capital stock the maximum number of shares of Common Stock issuable pursuant to this Agreement and the Warrants. The Company has
prepared and filed the Registration Statement in conformity with the requirements of the Securities Act, which became effective
on October 12, 2018 (the “Effective Date”), including the Prospectus, and such amendments and supplements
thereto as may have been required to the date of this Agreement. The Registration Statement is effective under the Securities Act
and no stop order preventing or suspending the effectiveness of the Registration Statement or suspending or preventing the use
of the Prospectus has been issued by the Commission and no proceedings for that purpose have been instituted or, to the knowledge
of the Company, are threatened by the Commission. The Company, if required by the rules and regulations of the Commission, shall
file the Prospectus with the Commission pursuant to Rule 424(b). At the time the Registration Statement and any amendments thereto
became effective, at the date of this Agreement and at the Closing Date, the Registration Statement and any amendments thereto
conformed and will conform in all material respects to the requirements of the Securities Act and did not and will not contain
any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the
statements therein not misleading; and the Prospectus and any amendments or supplements thereto, at the time the Prospectus or
any amendment or supplement thereto was issued and at the Closing Date, conformed and will conform in all material respects to
the requirements of the Securities Act and did not and will not contain an untrue statement of a material fact or omit to state
a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made,
not misleading. The Company was at the time of the filing of the Registration Statement eligible to use Form S-3. The Company is
eligible to use Form S-3 under the Securities Act and it meets the transaction requirements with respect to the aggregate market
value of securities being sold pursuant to this offering and during the twelve (12) months prior to this offering, as set forth
in General Instruction I.B.6 of Form S-3.

 

 

 

    	 	9	 

     

    

 

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

 

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

 

 

 

    	 	10	 

     

    

 

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

 

(j)           
Litigation. Except as set forth on Schedule 3.1(j), there is no action, suit, inquiry, notice of violation, proceeding
or investigation pending or, to the knowledge of the Company, threatened against or affecting the Company, any Subsidiary or any
of their respective properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority
(federal, state, county, local or foreign) (collectively, an “Action”). None of the Actions set forth on Schedule
3.1(j) (i) adversely affects or challenges the legality, validity or enforceability of any of the Transaction Documents or the
Securities or (ii) could, if there were an unfavorable decision, have or reasonably be expected to result in a Material Adverse
Effect. Neither the Company nor any Subsidiary, nor any director or officer thereof, is or has been the subject of any Action involving
a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty. There has not
been, and to the knowledge of the Company, there is not pending or contemplated, any investigation by the Commission involving
the Company or any current or former director or officer of the Company. The Commission has not issued any stop order or other
order suspending the effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange Act
or the Securities Act.

 

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

 

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

 

 

 

    	 	11	 

     

    

 

(m)          
Environmental Laws. The Company and its Subsidiaries (i) are in compliance with all federal, state, local and
foreign laws relating to pollution or protection of human health or the environment (including ambient air, surface water, groundwater,
land surface or subsurface strata), including laws relating to emissions, discharges, releases or threatened releases of chemicals,
pollutants, contaminants, or toxic or hazardous substances or wastes (collectively, “Hazardous Materials”) into
the environment, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport
or handling of Hazardous Materials, as well as all authorizations, codes, decrees, demands, or demand letters, injunctions, judgments,
licenses, notices or notice letters, orders, permits, plans or regulations, issued, entered, promulgated or approved thereunder
(“Environmental Laws”); (ii) have received all permits licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses; and (iii) are in compliance with all terms and conditions of any such
permit, license or approval where in each clause (i), (ii) and (iii), the failure to so comply could be reasonably expected to
have, individually or in the aggregate, a Material Adverse Effect.

 

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

 

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

 

(p)          
Intellectual Property. The Company and the Subsidiaries have valid, binding and enforceable licenses or other rights
or clear title to all patents, patent applications, trademarks, trademark applications, service marks, trade names, trade secrets,
inventions, copyrights, licenses and other intellectual property rights and similar rights necessary or required for use in connection
with their respective businesses as described in the SEC Reports and which the failure to so have could have a Material Adverse
Effect (collectively, the “Intellectual Property Rights”).  None of, and neither the Company nor any Subsidiary
has received a notice (written or otherwise) that any of, the Intellectual Property Rights has expired, terminated or been abandoned,
or is expected to expire or terminate or be abandoned, within two (2) years from the date of this Agreement.  Neither the
Company nor any Subsidiary has received, since the date of the latest audited financial statements included within the SEC Reports,
a written notice of a claim or otherwise has any knowledge that the drug candidates of the Company and its Subsidiaries violate
or infringe upon the rights of any Person, except as could not have or reasonably be expected to not have a Material Adverse Effect. 
To the knowledge of the Company and its Subsidiaries, all such Intellectual Property Rights are valid and enforceable with all
required fees and maintenance fees for the Intellectual Property Rights having been paid. To the knowledge of the Company and its
Subsidiaries, the Company, its Subsidiaries, and their licensors have complied with the duty of candor and disclosure toward the
U.S. Patent and Trademark Office or any similar foreign patent office (collectively, the “Patent Offices”) for
each of the patents and patent applications included in the Intellectual Property Rights; and has not received notice by the Patent
Offices of any adverse proceeding with respect to the Intellectual Property Rights; and all owned Intellectual Property Rights
have been assigned to the Company and its Subsidiaries with assignments of all patents and patent applications included in the
Intellectual Property Rights have been recorded with Patent Offices as required; and there is no existing infringement by another
Person of any of the Intellectual Property Rights.  The Company and its Subsidiaries have taken reasonable security measures
to protect the secrecy, confidentiality and value of all of their intellectual properties, except where failure to do so could
not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

 

 

    	 	12	 

     

    

 

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

 

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

 

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

 

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

 

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

 

 

    	 	13	 

     

    

 

(v)          
[Reserved]

 

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

 

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

 

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

 

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

 

 

 

    	 	14	 

     

    

 

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

 

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

 

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

 

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

 

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

 

 

    	 	15	 

     

    

 

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

 

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

 

(hh)        
FDA. As to each product subject to the jurisdiction of the U.S. Food and Drug Administration (“FDA”)
under the Federal Food, Drug and Cosmetic Act, as amended, and the regulations thereunder (“FDCA”) that is subject
to clinical trial and tested by the Company or any of its Subsidiaries (each such product, a “Clinical Trial Product”),
such Clinical Trial Product is being manufactured, packaged, labeled, tested, and maintained by the Company in compliance with
all applicable requirements under FDCA and adhering to the principals of good clinical practices (GCPs) relating to registration,
investigational use, good clinical practices, record keeping and filing of reports, except where the failure to be in compliance
would not have a Material Adverse Effect. There is no pending, completed or, to the Company's knowledge, threatened, action (including
any lawsuit, arbitration, or legal or administrative or regulatory proceeding, charge, complaint, or investigation) against the
Company or any of its Subsidiaries, and none of the Company or any of its Subsidiaries has received any notice, warning letter
or other communication from the FDA or any other governmental entity, which (i) contests the Investigational New Drug (IND) application,
the clinical trials and the uses of during such clinical trials, and promotion of any Clinical Trial Product, (ii) withdraws its
approval of, requests the recall, suspension, or seizure of, or withdraws or orders the withdrawal of advertising or sales promotional
materials relating to, any Clinical Trial Product, (iii) imposes a clinical hold on any clinical investigation by the Company
or any of its Subsidiaries, (iv) enjoins production at any facility of the Company or any of its Subsidiaries, (v) enters or proposes
to enter into a consent decree of permanent injunction with the Company or any of its Subsidiaries, or (vi) otherwise alleges any
violation of any laws, rules or regulations by the Company or any of its Subsidiaries, and which, either individually or in the
aggregate, would have a Material Adverse Effect. The Company has not been informed by the FDA that the FDA will prohibit the clinical
trial, marketing, sale, license or use in the United States of any product proposed to be investigated and tested through clinical
trials, developed, produced or marketed by the Company.

 

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

 

 

    	 	16	 

     

    

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

 

    	 	17	 

     

    

 

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

 

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

 

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

 

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

 

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

 

 

 

    	 	18	 

     

    

 

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

 

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

 

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

 

(h)         
Acquisition of XCART Platform. Each Purchaser acknowledges and agrees that (i) the Company’s acquisition of
the “XCART Platform” is subject to the satisfaction of the various closing conditions contained in the Hesperix Agreement
and the OPKO Agreement, including, but not limited to, obtaining stockholder approval and the financing conditions, set forth therein
and (ii) if the closing acquisition is not complete by July 1, 2019, the Company will not acquire the “XCART Platform.”

 

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

 

 

 

    	 	19	 

     

    

 

 

ARTICLE IV.

OTHER AGREEMENTS OF THE PARTIES

 

4.1             
Removal of Legends.

 

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

 

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

 

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

 

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

 

 

 

    	 	20	 

     

    

 

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

 

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

 

 

 

    	 	21	 

     

    

 

(e)           
The Shares and Pre-Funded Warrants shall be issued free of legends. If all or any portion of a Pre-Funded Warrant is exercised
at a time when there is an effective registration statement to cover the issuance or resale of the Pre-Funded Warrant Shares or
if the Pre-Funded Warrant is exercised via cashless exercise, the Pre-Funded Warrant Shares issued pursuant to any such exercise
shall be issued free of all legends. If at any time following the date hereof the Registration Statement (or any subsequent registration
statement registering the sale or resale of the Pre-Funded Warrant Shares) is not effective or is not otherwise available for the
sale or resale of the Pre-Funded Warrant Shares, the Company shall immediately notify the holders of the Pre-Funded Warrants in
writing that such registration statement is not then effective and thereafter shall promptly notify such holders when the registration
statement is effective again and available for the sale or resale of the Pre-Funded Warrant Shares (it being understood and agreed
that the foregoing shall not limit the ability of the Company to issue, or any Purchaser to sell, any of the Pre-Funded Warrant
Shares in compliance with applicable federal and state securities laws). The Company shall use best efforts to keep a registration
statement (including the Registration Statement) registering the issuance or resale of the Pre-Funded Warrant Shares effective
during the term of the Pre-Funded Warrants.

 

4.2             
Furnishing of Information.

 

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

 

(b)          
At any time during the period commencing from the six (6) month anniversary of the date hereof and ending at such time that
all of the Base Warrant Shares (assuming cashless exercise) may be sold without the requirement for the Company to be in compliance
with Rule 144(c)(1) and otherwise without restriction or limitation pursuant to Rule 144, if a registration statement covering
the resale of all Base Warrant Shares is not effective and if the Company (i) shall fail for any reason to satisfy the current
public information requirement under Rule 144(c) or (ii) has ever been an issuer described in Rule 144(i)(1)(i) or becomes an issuer
in the future, and the Company shall fail to satisfy any condition set forth in Rule 144(i)(2) (a “Public Information
Failure”) then, in addition to such Purchaser’s other available remedies, the Company shall pay to a Purchaser,
in cash, as partial liquidated damages and not as a penalty, by reason of any such delay in or reduction of its ability to sell
the Base Warrant Shares, an amount in cash equal to two percent (2.0%) of the aggregate Exercise Price of such Purchaser’s
Base Warrants on the day of a Public Information Failure and on every thirtieth (30th) day (pro -rated for periods totaling
less than thirty days) thereafter until the earlier of (a) the date such Public Information Failure is cured and (b) such time
that such public information is no longer required  for the Purchasers to transfer the Base Warrant Shares pursuant to Rule
144.  The payments to which a Purchaser shall be entitled pursuant to this Section 4.2(b) are referred to herein as “Public
Information Failure Payments.”  Public Information Failure Payments shall be paid on the earlier of (i) the last
day of the calendar month during which such Public Information Failure Payments are incurred and (ii) the third (3rd)
Business Day after the event or failure giving rise to the Public Information Failure Payments is cured.  In the event the
Company fails to make Public Information Failure Payments in a timely manner, such Public Information Failure Payments shall bear
interest at the rate of 1.5% per month (prorated for partial months) until paid in full. Nothing herein shall limit such Purchaser’s
right to pursue actual damages for the Public Information Failure, and such Purchaser shall have the right to pursue all remedies
available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief.

 

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

 

 

 

    	 	22	 

     

    

 

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

 

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

 

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

 

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

 

 

 

    	 	23	 

     

    

 

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

 

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

 

 

 

    	 	24	 

     

    

 

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

 

4.11           
Intentionally omitted.

 

4.12           
Subsequent Equity Sales.

 

(a)          
From the date hereof until 60 days after the Closing Date, neither the Company nor any Subsidiary shall issue, enter into
any agreement to issue or announce the issuance or proposed issuance of any shares of Common Stock or Common Stock Equivalents.

 

(b)          
From the date hereof until such time as no Purchaser holds any of the Warrants, the Company shall be prohibited from effecting
or entering into an agreement to effect any issuance by the Company or any of its Subsidiaries of Common Stock or Common Stock
Equivalents (or a combination of units thereof) involving a Variable Rate Transaction. “Variable Rate Transaction”
means a transaction in which the Company (i) issues or sells any debt or equity securities that are convertible into, exchangeable
or exercisable for, or include the right to receive additional shares of Common Stock either (A) at a conversion price, exercise
price or exchange rate or other price that is based upon and/or varies with the trading prices of or quotations for the shares
of Common Stock at any time after the initial issuance of such debt or equity securities, or (B) with a conversion, exercise or
exchange price that is subject to being reset at some future date after the initial issuance of such debt or equity security or
upon the occurrence of specified or contingent events directly or indirectly related to the business of the Company or the market
for the Common Stock or (ii) enters into, or effects a transaction under, any agreement, including, but not limited to, an equity
line of credit, whereby the Company may issue securities at a future determined price. Any Purchaser shall be entitled to obtain
injunctive relief against the Company to preclude any such issuance, which remedy shall be in addition to any right to collect
damages.

 

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

 

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

 

 

 

    	 	25	 

     

    

 

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

 

4.15           
Capital Changes. Until the one year anniversary of the Closing Date, the Company shall not undertake a reverse or
forward stock split or reclassification of the Common Stock without the prior written consent of the Purchasers holding a majority
in interest of the Shares, which consent shall not be unreasonably withheld.

 

4.16          
Exercise Procedures. The form of Notice of Exercise included in the Warrants set forth the totality of the procedures
required of the Purchasers in order to exercise the Warrants. No additional legal opinion, other information or instructions shall
be required of the Purchasers to exercise their Warrants. Without limiting the preceding sentences, no ink-original Notice of Exercise
shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise form
be required in order to exercise the Warrants. The Company shall honor exercises of the Warrants and shall deliver Warrant Shares
in accordance with the terms, conditions and time periods set forth in the Transaction Documents.

 

4.17           
Form D; Blue Sky Filings. The Company agrees to timely file a Form D with respect to the Base Warrant and Base Warrant
Shares as required under Regulation D and to provide a copy thereof, promptly upon request of any Purchaser. The Company shall
take such action as the Company shall reasonably determine is necessary in order to obtain an exemption for, or to qualify the
Base Warrant and Base Warrant Shares for, sale to the Purchasers at the Closing under applicable securities or “Blue Sky”
laws of the states of the United States, and shall provide evidence of such actions promptly upon request of any Purchaser.

 

4.18           
Registration Statement. As soon as practicable (and in any event within 90 calendar days of the date of this Agreement),
the Company shall file a registration statement on Form S-3 (or other appropriate form if the Company is not then S-3 eligible)
providing for the resale by the Purchasers of the Base Warrant Shares issued and issuable upon exercise of the Base Warrants. 
The Company shall use commercially reasonable efforts to cause such registration to become effective within 181 days following
the Closing Date and to keep such registration statement effective at all times until no Purchaser owns any Base Warrants or Base
Warrant Shares issuable upon exercise thereof.

 

 

 

    	 	26	 

     

    

 

ARTICLE V.

MISCELLANEOUS

 

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

 

5.2             
Fees and Expenses. At the Closing, the Company has agreed to reimburse the Placement Agent the non-accountable sum
of $35,000 for its legal fees and expenses. Except as expressly set forth in the Transaction Documents to the contrary, each party
shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred
by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall
pay all Transfer Agent fees (including, without limitation, any fees required for same-day processing of any instruction letter
delivered by the Company and any exercise notice delivered by a Purchaser), stamp taxes and other taxes and duties levied in connection
with the delivery of any Securities to the Purchasers.

 

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

 

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

 

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

 

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

 

 

    	 	27	 

     

    

 

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

 

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

 

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

 

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

 

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

 

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

 

 

    	 	28	 

     

    

 

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

 

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

 

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

 

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

 

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

 

 

 

    	 	29	 

     

    

 

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

 

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

 

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

 

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

 

(Signature Pages
Follow)

 

 

 

    	 	30	 

     

    

 

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

 

	
        XENetic
        biosciences, inc.

         

         
	Address for Notice:
	
        By:__________________________________________

        Name:

        Title:

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

        E-Mail:

        Fax:

 

 

 

 

 

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGE FOR PURCHASER FOLLOWS]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 	31	 

     

    

 

[PURCHASER SIGNATURE PAGES TO XBIO SECURITIES
PURCHASE AGREEMENT]

 

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

 

 

 

Name of Purchaser: _____________________________________________________________

 

Signature of Authorized Signatory of
Purchaser: ______________________________________

 

Name of Authorized Signatory: ____________________________________________________

 

Title of Authorized Signatory: _____________________________________________________

 

Email Address of Authorized Signatory:
_____________________________________________

 

Facsimile Number of Authorized Signatory:
__________________________________________

 

Address for Notice to Purchaser:

 

 

 

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

 

 

Common Unit Subscription Amount:
$_________________

 

Common Units: _________________

 

Shares: _________________

 

Base Warrant Shares: __________________

 

Pre-Funded Unit Subscription Amount: $_____________

 

 

 

    	 	32	 

     

    

 

Pre-Funded Units: __________________

 

Pre-Funded Warrant Shares: ______________

 

Base Warrants: _________________

 

EIN Number: _______________________

 

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

 

[SIGNATURE PAGES CONTINUE]

 

 

 

    	 	33	 

     

    

 

 

Schedule 3.1(a) Subsidiary

 

	Subsidiary	Country / State of Incorporation
	 	 
	Xenetic Biosciences (UK), Ltd.	United Kingdom registered company
	 	 
	Lipoxen Technologies, Ltd.	United Kingdom registered company
	 	 
	Xenetic Bioscience, Incorporated	Delaware
	 	 
	SymbioTec, GmbH	German Registered Company
	 	 

 

 

 

 

 

 

    	 	34	 

     

    

 

Schedule 3.1(g) Capitalization 

 

The following table
sets forth our capitalization as of February 28, 2019:

  

	 	 	As of February 28, 2019	 
	 	 	(Unaudited)	 
	 	 	Issued & Outstanding Shares	 	 	$	 
	 	 	 	 	 	 	 
	Stockholders’ equity:	 	 	 	 	 	 	 	 
	Preferred stock, 10,000,000 shares authorized:

                                             Series A, $0.001 par value
	 	 	970,000	 	 	 	970	 
	Series B, $0.001 per value	 	 	1,804,394	 	 	 	1,804	 
	Common Stock, $0.001 par value; 45,454,546 shares authorized; 9,727,724 shares issued and 9,403,889 outstanding	 	 	9,727,724	 	 	 	9,726	 
	Additional paid-in capital	 	 	–	 	 	 	168,161,329	 
	Treasury stock,	 	 	(323,835	)	 	 	(5,281,180	)
	Total shares and contributed capital	 	 	12,178,283	 	 	 	162,892,649	 

_________________

 

Common stock
beneficially owned by affiliates:

 

PJSC Pharmsynthez is
an Affiliate of the Company and beneficially owns the following Common Stock:

 

	 	 	Shares	 
	Series A Preferred Stock	 	 	970,000	 
	Series B Preferred Stock	 	 	1,454,545	 
	Common Stock	 	 	5,365,455	 
	Warrants:	 	 	 	 
	  Issued in conjunction with the Nov 2016 IPO	 	 	1,454,545	 
	  2015 & 2016 Financings	 	 	1,060,614	 

 

Pharmsynthez owns all
of the series A Preferred Stock and 821,567 shares of common stock through its wholly-owned subsidiary – SynBio, LLC.

The Series A Preferred
stock is convertible into Common Stock on a 1-for-1 basis.

The Series B Preferred
stock is convertible into Common Stock on a 1-for-1 basis. The Series B Preferred stock has full ratchet protection. To the extent
the Company enters into a subsequent down-round financing, as defined, at a price lower than $4.00, the conversion ratio will be
adjusted based on the ratio of the subsequent financing compared to the $4.00.

IPO warrants –
Conversion price of $4.00 and an expiration date of November 7, 2021.

2015 & 2016 Financing
warrants – conversion price of $4.95 with an average remaining life of 1.85 years.

 

Series B Preferred
Stock

 

Subsequent
Equity Sales.    The Series B Preferred Stock has full ratchet price based anti-dilution protection, subject
to customary carve outs, in the event of a down-round financing at a price per share below the stated value of the Series B Preferred
Stock.

 

 

 

    	 	35	 

     

    

 

Other
Securities

 

		·	1,176,268 shares of common stock issuable upon the exercise of outstanding warrants (these warrants are in addition to the
warrants listed above);

 

		·	1,833,011 shares of common stock issuable upon the exercise of outstanding options;

 

		·	50,000 shares of common stock underlying outstanding restricted stock units;

 

		·	88,817 shares of common stock issuable in connection with the common stock awards;

 

		·	4,875,000 shares of common stock to be issued in connection with the Share
Purchase Agreement, dated March 1, 2019, by and among the Company, Hesperix SA, a Swiss corporation (“Hesperix”), the
owners of Hesperix (each a “Seller”), and Alexey Andreevich Vinogradov, as the representative of each Seller (the “Share
Purchase Agreement”); and

 

		·	2,625,000 shares of common stock to be issued in connection with an
assignment agreement dated March 1, 2019 by and between the Company and OPKO Pharmaceuticals, LLC (“OPKO”). 

 

Stockholder agreements, Voting agreements or Other Similar
agreements

 

		·	Voting Agreement, dated March 1, 2019, with Pharmsynthez filed as Exhibit 10.2 to the Company’s Form 8-K filed on March
4, 2019.

 

		·	Voting Agreement, dated March 1, 2019, with OPKO, filed as Exhibit 10.3 to the Company’s Form 8-K filed on March 4, 2019.

 

		·	Voting Agreement, dated March 1, 2019, with Dr. Genkin, filed as Exhibit 10.4 to the Company’s Form 8-K filed on March
4, 2019.

 

		·	Stockholder Agreements to be entered into connection with the Share Purchase Agreement, attached as Exhibit C to the Share
Purchase Agreement, filed as Exhibit 2.1 to the Company’s Form 8-K filed on March 4, 2019.

 

 

 

 

 

 

 

    	 	36	 

     

    

 

Schedule 3.1(i) Material Changes; Undisclosed
Events, Liabilities or Developments

 

		(i)	Going Concern

 

The Company has been disclosing that it will need to raise additional
capital in order to continue as a going concern. The Company’s auditors have included an explanatory paragraph expressing
substantial doubt about the Company’s ability to continue as a going concern. While the Company did raise capital from the
issuance of warrants in June 2018, it has been disclosing within its public filings that it will need to raise additional working
capital in the very near term in order to fund its future operations.

 

		(ii)	None.

 

		(iii)	Accounting methods

 

The Company has not altered any of its accounting methods. The
Financial Accounting Standards Board does issue new standards that may or may not apply to the Company. These new standards and
status of adoption are highlighted within our public filings.

 

		(iv)	None.

 

		(v)	Issuance of equity securities

 

In 2018, the Company issued 316,348 shares of common stock,
upon the conversion of 316,348 shares of Series B preferred Stock.

 

In 2018, the Company issued 370,000 shares of common stock upon
the exercise of 370,000 warrants, at $4.00 per warrant, resulting in an aggregate of $1.5 million of proceeds to the Company.

 

 

 

    	 	37	 

     

    

 

Schedule 3.1(j) Litigation

None.

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 	38	 

     

    

 

Schedule 3.1(r) Transactions with Affiliates
and Employees

PJSC Pharmsynthez

 

Pharmsynthez is the Company’s largest
and controlling stockholder with ownership of approximately 57.1% of the Company’s issued and outstanding common stock. Pharmsynthez’s
ownership of Company common stock does not include approximately 1.0 million shares of common stock issuable upon the conversion
of our Series A Preferred Stock, approximately 1.5 million shares of common stock issuable upon the conversion of our Series B
Preferred Stock, or approximately 2.5 million shares issuable upon the exercise of outstanding warrants. Dr. Genkin is a director
of the Company and serves as the Executive Chairman of Pharmsynthez. Another of our directors, Mr. Knyazev, is also a director
of Pharmsynthez. One of our executive officers, Dr. Curtis Lockshin, is an officer of a wholly-owned subsidiary of Pharmsynthez.

 

In November 2009, the
Company entered into a collaborative research and development license agreement with Pharmsynthez (the “Pharmsynthez Arrangement”)
pursuant to which the Company granted an exclusive license to Pharmsynthez to develop, commercialize and market six drug candidates
based on the Company’s PolyXen and ImuXen technology in certain territories. In exchange, Pharmsynthez granted an exclusive
license to the Company to use any pre-clinical and clinical data developed by Pharmsynthez, within the scope of the Pharmsynthez
Arrangement, and to engage in further research, development and commercialization of drug candidates outside of certain territories
at the Company’s own expense.

 

Financing Agreements 

 

In July 2015, we entered
into a Securities Purchase Agreement with Pharmsynthez providing for the issuance of certain promissory notes and certain warrants
to purchase shares of our common stock.

 

In November 2015, we
entered into the Kevelt APA with AS Kevelt and Pharmsynthez. The Kevelt APA provided for the transfer to us of certain intellectual
property rights with respect to the immunomodulatory drug candidate XBIO-101 held by AS Kevelt. In April 2016, we completed the
purchase of the intellectual property rights associated with the Kevelt APA and issued 3.0 million shares of common stock pursuant
to the agreement.

 

The Kevelt APA also
provided for our issuance of certain convertible promissory notes and warrants to purchase shares of our common stock. During the
quarter ended March 31, 2016, we issued $3.5 million of convertible promissory notes to Pharmsynthez receiving $3.5 million in
cash proceeds. In April 2016, Pharmsynthez converted all of its convertible promissory notes (both the July 2015 note and the Q1
2016 notes) and associated interest of approximately $12.3 million into 1.4 million shares of common stock. As such, we issued
to Pharmsynthez 1.3 million shares of common stock in connection with conversion of the convertible notes, which amount, together
with the 3.0 million shares of common stock in connection with the closing of the Kevelt APA, resulted in an aggregate of 4.4 million
new shares of common stock being issued to Pharmsynthez.

 

During the quarter
ended September 30, 2016, we issued $1.0 million of convertible promissory notes to Pharmsynthez, receiving $1.0 million in cash
proceeds of which $0.5 million of the notes was applied toward our November 2016 offering. On November 1, 2016, Pharmsynthez purchased
1,454,545 shares of Convertible Series B Preferred Stock in our initial public offering for $6.0 million.

 

SynBio LLC

 

Effective February
27, 2017, Pharmsynthez acquired 100% of SynBio.

 

In August 2011, SynBio
and the Company entered into a stock subscription and collaborative development of pharmaceutical products agreement (the “Co-Development
Agreement”). The Company granted an exclusive license to SynBio to develop pharmaceutical products using certain molecule(s)
based on SynBio’s technology and the Company’s proprietary technology (PolyXen, OncoHist and ImuXen) that prolongs
the active life and/or improves the pharmacokinetics of certain therapeutic proteins and peptides (as well as conventional drugs).
In return, SynBio granted an exclusive license to the Company to use the pre-clinical and clinical data generated by SynBio in
certain agreed products and engage in the development of commercial candidates.

 

 

 

    	 	39	 

     

    

 

SynBio and the Company
are each responsible for funding their own research activities. There are no milestone or other research-related payments due under
the agreement other than fees for the supply of each company’s respective research supplies based on their technology, which,
when provided, are due to mutual convenience and not representative of an ongoing or recurring obligation to supply research supplies.
Serum Institute of India Limited (“Serum Institute”) has agreed to directly provide the research supplies to SynBio,
where the Company is not liable for any failure to supply the research supplies as a result of any act or fault of Serum Institute.
Upon successful commercialization of any resultant products, the Company is entitled to receive royalties on sales in certain territories
and pay royalties to SynBio for sales outside those certain territories.

   

Through December 31,
2017, the Company and SynBio continued to engage in research and development activities with no resultant commercial products.
The Company did not recognize revenue in connection with the Co-Development Agreement during the years ended December 31, 2017
and 2016.

 

On September 23, 2016,
SynBio exchanged 970,000 shares of our common stock for an equal number of shares of Series A Preferred Stock.

 

Effective October 26,
2016, we entered into a voting agreement with SynBio whereby SynBio agreed to vote their shares of common stock in the same proportion
as the shares of common stock held by non-affiliates on all matters subject to stockholder approval for a period of one year.

 

Loan Agreement

 

In May 2011, we received
a short-term unsecured loan facility of up to $1.7 million from SynBio, of which none was outstanding as of December 31, 2017 and
2016, respectively. In connection with the Kevelt APA, we made a series of payments during 2016 totaling $323,640 to creditors
of Kevelt. Pursuant to the Kevelt APA such payments are considered direct offsets to the loan with SynBio. The loan had an interest
rate of 8.04% per annum as of the date of grant, with interest payable upon repayment of the loan, which was to be seven months
after the closing date of the loan. In December 2016, we entered into an agreement with SynBio, Pharmsynthez, and Kevelt, which
settled all amounts owed by us on the SynBio loan; for services provided by Kevelt to us in connection with the XBIO-101 Phase
2 project; and the purchase of drug candidate supply from Kevelt sufficient to meet the needs of the XBIO-101 Phase 2 clinical
trial. Pursuant to the agreement, we transferred $620,387 to the counterparties. We repaid the remainder of the loan facility with
proceeds from our November 1, 2016 offering.

 

Serum Institute

 

Serum Institute owns
approximately 7.2% of our total issued and outstanding common stock at March 31, 2018. One of our directors, Firdaus Jal Dastoor,
is currently a Group Director in charge of Finance and Corporate Affairs and Company Secretary of Serum Institute. In the period
from 2004 through 2011, we entered into certain amended license and supply agreements with Serum Institute. The original license
agreement with Serum Institute was a collaborative Development and Manufacturing Arrangement to develop agreed upon potential commercial
product candidates using our PolyXen technology. Following the 2011 amendment, which is still in effect, Serum Institute retained
an exclusive license to use our PolyXen technology to research and develop one potential commercial product, Polysialylated Erythropoietin
(PSA-EPO) in territories excluding the United States of America, European Economic Area and Japan, among certain other territories.
Serum Institute will be responsible for conducting all pre-clinical and clinical trials required to achieve regulatory approvals
within the certain predetermined territories at Serum Institute’s own expense.

 

Manufacturing Agreement 

 

The 2011 amendment
with Serum Institute also provides for the supply of PSA by Serum Institute to us and our collaborative partners. Serum Institute
has the non-exclusive right to supply PSA to us, and our collaborative partners and customers on a cost-plus basis. On an individual
basis, Serum Institute may enter into separate supply agreements with us and/or our collaborative partners for the purpose of providing
a supply of PSA directly to the collaborative partners. Further, any agreement between Serum Institute and a collaborative partner
shall not create any obligation or liability for us. In September 2016, we issued 211,486 shares of common stock to Serum in exchange
for $750,000 of research and development and clinical PSA supply as well as settlement of approximately $163,000 of prior purchases
of PSA supply.

 

 

 

    	 	40	 

     

    

 

OPKO

 

OPKO is a wholly-owned subsidiary of OPKO
Health, Inc. (“OPKO Health”). OPKO Health owns approximately 4.3% of the Company’s issued and outstanding common
stock. OPKO Health’s ownership of Company common stock does not include approximately 0.3 million shares of common stock
issuable upon the conversion of our Series B Preferred Stock and approximately 0.5 million shares issuable upon the exercise of
outstanding warrants. A director of the Company, Adam Logal, is the Senior Vice President and Chief Financial Officer of OPKO Health.
OPKO Health also owns approximately 9.0% of the issued and outstanding stock of Pharmsynthez. On March 1, 2019, we entered into
an Assignment Agreement with OPKO, filed as Exhibit 10.1 to the Company’s Form 8-K filed on March 4, 2019.

 

 

 

 

 

 

 

 

 

 

    	 	41	 

     

    

 

Schedule 3.1(x) Application of Takeover
Protections

Business Combinations

 

The “business combination” provisions
of Sections 78.411 to 78.444, inclusive, of the NRS, generally prohibit a Nevada corporation with at least 200 stockholders from
engaging in various “combination” transactions with any interested stockholder for a period of two years after the
date of the transaction in which the person became an interested stockholder, unless the corporation’s board of directors
approves the transaction by which the stockholder becomes an interested stockholder in advance, or the proposed combination in
advance of the stockholder becoming an interested stockholder. The proposed combination may be approved after the stockholder becomes
an interested stockholder with preapproval by the board of directors and a vote at a special or annual meeting of stockholders
holding at least 60 percent of the voting power not owned by the interested stockholder or its affiliates or associates. A “combination”
is generally defined to include mergers or consolidations or any sale, lease exchange, mortgage, pledge, transfer, or other disposition,
in one transaction or a series of transactions, with an “interested stockholder” (a) having an aggregate market value
equal to 5% or more of the aggregate market value of the assets of the corporation, (b) having an aggregate market value equal
to 5% or more of the aggregate market value of all outstanding shares of the corporation, or (c) representing 10% or more of the
earning power or net income of the corporation. In general, an “interested stockholder” is any person who, together
with affiliates and associates, beneficially owns (or within two years, did own) 10% or more of a corporation’s voting stock.
After the two-year moratorium period, additional stockholder approvals or fair value requirements must be met by the interested
stockholder up to four years after the stockholder became an interested stockholder.

 

The statute could be used to prohibit or
delay mergers or other takeover or change in control attempts and, accordingly, may discourage attempts to acquire our Company
even though such a transaction may offer our stockholders the opportunity to sell their stock at a price above the prevailing market
price. Our charter states that we have elected not to be governed by the “business combination” provisions, therefore
such provisions currently do not apply to us.

 

Control Share Acquisitions

 

The “control share” provisions
of Sections 78.378 to 78.3793, inclusive, of the NRS apply to Nevada corporations with at least 200 stockholders, including at
least 100 stockholders of record who are Nevada residents, and that conduct business directly or indirectly in Nevada, including
through an affiliated corporation. The control share statute prohibits an acquirer, under certain circumstances, from voting its
shares of a target corporation’s stock after crossing certain ownership threshold percentages, unless the acquirer obtains
approval of the target corporation’s disinterested stockholders. The statute specifies three thresholds: one-fifth or more
but less than one-third, one-third but less than a majority, and a majority or more, of the outstanding voting power. Generally,
once an acquirer crosses one of the above thresholds, those shares in an offer or acquisition and acquired within 90 days thereof
become “control shares” and such control shares are deprived of the right to vote until disinterested stockholders
restore the right. These provisions also provide that if control shares are accorded full voting rights and the acquiring person
has acquired a majority or more of all voting power, all other stockholders who do not vote in favor of authorizing voting rights
to the control shares are entitled to demand payment for the fair value of their shares in accordance with statutory procedures
established for dissenters’ rights.

 

A corporation may elect to not be governed
by, or “opt out” of, the control share provisions by making an election in its articles of incorporation or bylaws,
provided that the opt-out election must be in place on the 10th day following the date an acquiring person has acquired a controlling
interest, that is, crossing any of the three thresholds described above. We have not opted out of the control share statutes, and
will be subject to these statutes if we are an “issuing corporation” as defined in such statutes. As we currently have
fewer than 100 stockholders of record who are residents of Nevada, we do not believe that we are an “issuing corporation”
as defined by the control share statutes.

 

The effect of the Nevada control share statutes
is that the acquiring person, and those acting in association with the acquiring person, will obtain only such voting rights in
the control shares as are conferred by a resolution of the stockholders at an annual or special meeting. The Nevada control share
law, if applicable, could have the effect of discouraging takeovers of our Company.

 

 

 

 

    	 	42	 

     

    

 

Anti-takeover Effect of Certain Provisions of Nevada Law
and of Our Charter and Bylaws

 

Our charter and bylaws and Nevada law contain
provisions that may delay, defer or prevent a change in control or other transaction that might involve a premium price for shares
of our common stock or otherwise be in the best interests of our stockholders, including business combination provisions, the ability
of our board of directors to authorize undesignated preferred stock, supermajority vote requirements and advance notice requirements
for director nominations and stockholder proposals. Likewise, if the provision in the bylaws opting out of the business combination
provisions of the NRS were rescinded or if we were to opt in, these provisions of the NRS could have similar anti-takeover effects.
See “Business Combinations” and “Control Share Acquisitions” above.

 

These provisions are expected to discourage
coercive takeover practices and inadequate takeover bids. These provisions are also designed to encourage persons seeking to acquire
control of us to first negotiate with our board of directors. We believe that the benefits of increased protection of our potential
ability to negotiate with the proponent of an unfriendly or unsolicited proposal to acquire or restructure us outweigh the disadvantages
of discouraging these proposals because negotiation of these proposals could result in an improvement of their terms.

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 	43	 

     

    

 

Schedule 3.1(aa) Solvency

 

 (i) Going Concern

 

The Company has been disclosing that it will need to raise additional
capital in order to continue as a going concern. The Company’s auditors have included an explanatory paragraph expressing
substantial doubt about the Company’s ability to continue as a going concern. While the Company did raise capital from the
issuance of warrants in June 2018, it has been disclosing within its public filings that it will need to raise additional working
capital in the very near term in order to fund its future operations.

 

(ii) Unreasonably small capital

 

See item (i) Going Concern.

 

(iii) Current cash
flow together with proceeds the Company would receive ... would be sufficient to pay all amounts on or in respect of liabilities
when such amounts are required to be paid.

 

See item (i) Going Concern

 

Indebtedness

 

The Company does not have any Indebtedness except for trade
payables and accrued expenses incurred in the normal course of business. The Company did enter into a new lease agreement for office
space in January 2019. The January 2019 lease requires monthly lease payments of $2,340 for 21 months through September 30, 2020.
Total aggregate lease payments will approximately be $49,000, of which $7,000 has been paid to date.

 

 

 

 

 

 

 

 

 

 

 

 

    	 	44	 

     

    

 

Schedule 3.1(dd) Accountants

 

Marcum LLP

 

 

 

 

 

 

 

 

 

 

 

 

    	 	45	 

     

    

 

Schedule 4.7 Use of Proceeds

None.

 

 

 

 

 

 

 

 

 

 

 

 

    	 	46ex_136903.htm

 

Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (hereinafter referred to as “Agreement”) is entered into by and between CLS Holdings USA, Inc., a Nevada corporation (hereinafter referred to as the “Company”), and Andrew Glashow (hereinafter referred to as “Executive”).

 

1.     Term of Employment. The initial term of this Agreement shall be for two (2) years, beginning on March 1, 2019 (the “Effective Date”) and ending on February 28, 2021. Upon expiration of the initial term, this Agreement shall automatically renew for successive terms of one (1) year, unless, without limiting the application of Sections 5, 6 and 7 of this Agreement, either party, at least sixty (60) days prior to such renewal, gives the other party written notice of intent not to renew.

 

2.     Duties and Responsibilities. The Company hereby employs Executive as President and Chief Operating Officer with such powers and duties in that capacity as may be established from time to time by the Board of Directors of the Company in its discretion. In addition, Executive will devote his entire time, attention and energies to the business of the Company, its parent and their affiliates in such capacity as may be requested by the Board of Directors of the Company from time to time in its discretion during the term of this Agreement. During his employment, Executive will not engage in any other business activities, regardless of whether such activity is pursued for profits, gains, or other pecuniary advantage. Executive shall use his best efforts and skill to best promote the business and the interests of the Company. Executive shall at all times use his best efforts to preserve and maintain the business relationships between the Company and its executives, employees, clients, suppliers and vendors.

 

3.     Compensation.

 

(a)     Base Salary. During the term of this Agreement, the Company will pay a base salary of One Hundred Seventy Five Thousand Dollars ($175,000.00) per annum to Executive, payable in installments according to the Company’s normal payroll practices and less legal and applicable withholdings.

 

(b)     Salary Increases. The Company may, in its sole discretion, increase Executive’s salary from time to time, depending on criteria such as Executive’s performance and the financial performance of the Company. 

 

(c)     Bonus. In addition to Executive’s base compensation hereunder, Executive shall be entitled to receive, on an annual basis, a performance-based bonus (i) in cash equal to one percent (1%) of the Company’s annual earnings before interest, taxes, depreciation and amortization (“EBITDA”) and (ii) in restricted shares of the Company’s common stock, par value $0.0001 per share, equal to one percent (1%) of the Company’s EBITDA. The bonus shall be payable ninety (90) days following the end of each calendar year during the term of this Agreement. As an express condition of Executive’s receipt of the bonus, Executive must be employed with the Company on the last day of the applicable calendar year. Executive shall not be entitled to any partial or pro-rated bonus if Executive is not employed at the end of any calendar year during the term of this Agreement.

 

 

 

 

(d)     Vacation. Executive shall be entitled to two weeks’ vacation per year during each of the first two years following the Effective Date, three weeks’ vacation during the third year following the Effective Date, and four weeks’ vacation per year during each year thereafter during the term of this Agreement.

 

(e)     Holidays, Sick Days and Personal Days. Executive shall be entitled to paid holidays and sick days in accordance with the Company’s policies applicable to all employees.

 

(f)     Salary Continuation. If Executive is unable to work due to a physical or mental illness (of a nature that meets the definition of “total disability” for purposes of any Company disability insurance), the Company shall continue Executive’s base salary for up to 90 days after Executive first becomes disabled. This provision shall only apply once during the term of this Agreement.

 

(g)     Health, Life and Disability Insurance and Profit Sharing Plans. Executive shall be entitled to participate in Company group health, life, disability, stock option, retirement, or 401(k) plans or programs, if and when such plans or programs are offered by the Company, subject to the Executive having met any eligibility requirements for participation therein.

 

(h)     Restricted Stock Signing Bonus. The Company hereby grants to Executive 500,000 shares of the Company’s restricted stock, half of which shall vest on March 1, 2020, and half of which shall vest on March 1, 2021, assuming the Executive remains employed by the Company on such dates or has been removed by the Company prior to such vesting date or dates without cause.

 

(i)     Expense Reimbursement. The Company shall reimburse Executive for his expenses incurred in providing services to the Company, including expenses for travel, entertainment and similar items, in accordance with the Company’s reimbursement policies as determined from time to time by the Board of the Company.

 

4.     Performance Review. The Company shall provide Executive with an interim review and evaluation of his performance on each anniversary of this Agreement. It is contemplated that this review will normally occur in August of each year, but said review may be postponed or delayed in appropriate circumstances. Executive shall be responsible for taking action to initiate the performance review.

 

5.     Death or Disability.

 

(a)     In the event of Executive’s death, this Agreement and the Employment’s salary and compensation shall automatically end.

 

(b)     Subject to Section 3(f), if Executive becomes unable to perform his employment duties on a full-time basis the during the term of this Agreement, his compensation under this Agreement shall automatically be suspended after any accrued paid time off has been exhausted and shall continue to be suspended until such time as Executive becomes able to resume his job duties for the Company. In the event that Executive becomes unable to perform his employment duties for a cumulative period of six months within any span of twelve months during the term of this Agreement, this Agreement and Executive’s employment will be automatically terminated.

 

2

 

 

6.     Termination by Company for Cause.

 

(a)     The Company may terminate this Agreement, and Executive’s employment, “for cause” at any time. As used herein, “for cause” shall mean any one of the following:

(i)     The willful breach or habitual neglect by Executive of his job duties and responsibilities after notice by the Company; or

 

(ii)     Conviction of any felony that should cause Executive to be unfit for continued employment by the Company or prevent Executive from performing his duties hereunder; or

 

(iii)     Commission of an act of “dishonesty,” which act directly or indirectly involves the Company (an act of Executive shall not be deemed to be “dishonest” if Executive took such action in Executive’s good faith belief that it was honest and in the best interest of the Company); or

 

(iv)     Any act or omission deemed as grounds for termination of employees as set forth in the Company’s personnel policies in existence at the time; or          

 

(v)     A material breach of this Agreement, after notice and an opportunity to cure.

 

In the event the Company terminates Executive’s employment for cause, Executive’s salary and any additional cash or equity compensation that would otherwise be payable for that calendar year and prior years and subsequent years shall automatically terminate and be forfeited.

 

7.     Effect on Restricted Stock in Event of Termination. Upon termination of this Agreement by the Company for cause, any restricted stock granted, or to be granted, pursuant to Section 3(h) hereof that has not been earned or vested as of the date of termination shall be cancelled. Upon termination of this Agreement by the Company without cause, any restricted stock granted pursuant to Section 3(h) hereof that is not vested shall vest immediately upon the date of termination.

 

8.     Cooperation. Upon the termination of this Agreement for any reason, Executive agrees to cooperate with the Company in effecting a smooth transition of the management of the Company with respect to the duties and responsibilities, which Executive performed for the Company. Further, after termination of this Agreement, Executive will upon reasonable notice, furnish such information and proper assistance to the Company as it may reasonably require in connection with any litigation to which the Company is or may become party.

 

9.     Confidentiality, Non-Compete and Property Rights. As a material inducement to the Company to enter into this Agreement, Executive has executed and delivered, or will execute and deliver, effective as of the Effective Date, a Confidentiality, Non-Compete and Property Rights Agreement (“Non-Compete Agreement”) in substantially the form attached hereto as Exhibit A. Upon the Effective Date, Executive shall have resigned as an officer,

 

3

 

 

director, and/or employee from any and all businesses with which he is or has been affiliated other than the Permitted Entities, if any, identified in the Non-Compete Agreement.

 

10.     Resolution of Disputes by Arbitration. Any claim or controversy that arises out of or relates to this Agreement, or the breach of it, will be resolved by arbitration in Miami, Florida in accordance with the rules then existing of the American Arbitration Association. Judgment upon the award rendered may be entered in any court possessing jurisdiction over arbitration awards. This Section shall not limit or restrict the Company’s right to obtain injunctive relief for violations of the Non-Compete Agreement. The prevailing party shall be entitled to payment for all costs and reasonable attorneys’ fees (both trial and appellate) incurred by the prevailing party in regard to the proceedings.

 

11.     Adequate Consideration. Executive expressly agrees that the Company has provided adequate, reasonable consideration for the obligations imposed upon him in this Agreement.

 

12.     Effect of Prior Agreements. This Agreement supersedes any prior agreement or understanding between the Company and Executive.

 

13.     Limited Effect of Waiver by Company. If the Company waives a breach of any provision of this Agreement by Executive, that waiver will not operate or be construed as a waiver of later breaches by Executive.

 

14.     Notices.     All notices and other communications that are required or may be given under this Agreement shall be in writing and shall be delivered personally, by overnight courier or by certified mail, with postage prepaid and with a return receipt requested, addressed to the party concerned at the following addresses:

 

	 	If to the Company:	CLS Holdings USA, Inc.
	 	 	11767 S. Dixie Highway, Suite 115
	 	 	Miami, Florida 33156
	 	 	Attn: Jeffrey Binder
	 	 	 
	 	 	 
	 	With a copy to:	Nelson Mullins Broad and Cassel
	 	 	1 North Clematis Street, Suite 500
	 	 	West Palm Beach, Florida 33401
	 	 	Attn: Kathleen L. Deutsch, Esq.
	 	 	 
	 	 	 
	 	If to Executive: 	Andrew Glashow
	 	 	1C Bowens Landing
	 	 	
			Newport, RI 02840

			

 

15.     Severability. If any provision of this Agreement is held invalid for any reason, such invalid provision shall be reformed, to the extent possible, to best reflect the intention of the parties, and the other provisions of this Agreement will remain in effect, insofar as they are consistent with law.

 

4

 

 

 

16.     Assumption of Agreement by Company’s Successors and Assigns. At the Company’s sole option, the Company’s rights and obligations under this Agreement will inure to the benefit and be binding upon the Company’s successors and assigns. Executive may not assign his rights and obligations under this Agreement.

 

17.     Applicable Law. Executive and the Company agree that this Agreement shall be subject to, and enforceable under, the laws of the State of Florida, without giving effect to Florida’s choice of law provisions.

 

18.     Entire Agreement; Oral Modifications Not Binding. This instrument is the entire Agreement between the Company and Executive with respect to the subject matter hereof. Executive agrees that no other promises or commitments have been made to Executive. This Agreement may be altered by the parties only by a written Agreement signed by the party against whom enforcement of any waiver, change, modification, extension, or discharge is sought.

 

 

[SIGNATURES ON FOLLOWING PAGE]

 

 

 

 

 

 

 

 

 

 

5

 

 

IN WITNESS WHEREOF, the parties have executed this Employment Agreement on March 1, 2019.

 

	CLS HOLDINGS USA, INC.  	EXECUTIVE
	 	 
	By: /s/ Jeffrey Binder                                            	/s/ Andrew Glashow                   
	Jeffrey Binder	Andrew Glashow
	Chairman, and Chief Executive Officer	 

 

 

 

 

 

6

 

 

EXHIBIT A

 

CONFIDENTIALITY, NON-COMPETE

AND PROPERTY RIGHTS AGREEMENT

 

 

 

 

 

 

7

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00293-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00293-of-00352.parquet"}]]