Document:

Blueprint

 

 

Form of

 

Q BIOMED INC.

 

[*] Share of Common Stock

and

One Warrant to Purchase [*] Share of Common Stock

 

PLACEMENT AGENT AGREEMENT

 

__________,
2018

 

Roth
Capital Partners, LLC

888 San
Clemente Drive

Newport
Beach, CA 92660

 

Ladies
and Gentlemen:

 

Subject
to the terms and conditions herein (this “Agreement”), Q BioMed
Inc., a Nevada corporation (the “Company”), hereby agrees
to sell registered securities of the Company, consisting of up to
[*] shares (the “Shares”) of the
Company’s common stock, $0.001 par value per share (the
“Common
Stock”) and common stock purchase warrants to purchase
up to an aggregate of [*] shares of Common Stock with an exercise
price of $[*] per share (the “Warrants”, as exercised,
the “Warrant
Shares”) directly to various investors (each, an
“Investor” and,
collectively, the “Investors”) through Roth
Capital Partners, LLC, as lead placement agent (the
“Placement
Agent”). The Warrants and the Shares are collectively
referred to herein as the “Primary Securities” and
the Primary Securities, together with the Warrant Shares, are
collectively referred to herein as the “Securities”. The
documents executed and delivered by the Company and the Investors
in connection with the Offering (as defined below), including,
without limitation, a securities purchase agreement (the
“Purchase
Agreement”) and the Warrants shall be collectively
referred to herein as the “Transaction Documents.”
The purchase price to the Investors for each Share and accompanying
Warrant is $[*]. The Placement Agent may retain other brokers or
dealers to act as sub-agents or selected-dealers on its behalf in
connection with the Offering.

 

The
Company hereby confirms its agreement with the Placement Agent as
follows:

 

Section
1.              
Agreement to Act as Placement Agent.

 

(a)              
On the basis of the representations, warranties and agreements of
the Company herein contained, and subject to all the terms and
conditions of this Agreement, the Placement Agent shall be the lead
Placement Agent in connection with the offering and sale by the
Company of the Securities pursuant to the Company’s
registration statement on Form S-1 (File No. 333-222008) (as
amended or supplemented from time to time and including the
exhibits thereto at any given time, the “Registration Statement”),
with the terms of such offering (the “Offering”) to be subject
to market conditions and negotiations between the Company, the
Placement Agent and the prospective Investors. The Placement Agent
will act on a reasonable best efforts basis and the Company agrees
and acknowledges that there is no guarantee of the successful
placement of the Securities, or any portion thereof, in the
prospective Offering. Under no circumstances will the Placement
Agent or any of its “Affiliates” (as defined below) be
obligated to underwrite or purchase any of the Securities for its
own account or otherwise provide any financing. The Placement Agent
shall act solely as the Company’s agent and not as principal.
The Placement Agent shall have no authority to bind the Company
with respect to any prospective offer to purchase Securities and
the Company shall have the sole right to accept offers to purchase
Securities and may reject any such offer, in whole or in part.
Subject to the terms and conditions hereof, payment of the purchase
price for, and delivery of, the Securities shall be made at one or
more closings (each a “Closing” and the date on
which each Closing occurs, a “Closing Date”). Subject
only with to Section 2 and Schedule I of the Engagement Letter
entered into by the Company and the Placement Agent on or about
November 14, 2017 and attached hereto as Exhibit I, as maximum
compensation for services rendered, on each Closing Date, the
Company shall pay to the Placement Agent the fees and expenses set
forth below:

 

(i)                
A cash fee equal to eight percent (8.0%) of the gross proceeds
received by the Company from the sale of the Securities at the
Closing.

 

(ii)              A
warrant to purchase that number of Common Stock equal to six
percent (6%) of the Common Stock issued on such Closing Date
(excluding shares of Common Stock issuable upon the exercise of any
Warrants issued to Investors).

 

(iii)               The
Company also agrees to reimburse Placement Agent’s reasonable
out of pocket expenses payable immediately upon a Closing of the
Offering Out of pocket expenses and legal expenses exceeding an
aggregate of $50,000 shall require prior approval by the
Company,

 

(b)              
The term of the Placement Agent’s exclusive engagement will
be until the completion of the Offering. The Placement Agent shall
be entitled to collect all fees under this Agreement earned through
termination. In addition to the foregoing, the Company hereby
grants to the Placement Agent the exclusive right (such right, the
“Right of First
Refusal”), for the twelve (12) month period commencing
on the date hereof, to provide investment banking services to the
Company on an exclusive basis in all matters involving the
Company’s equity securities or other instruments that may at
any time be convertible into, exchangeable for, or otherwise
entitle the holder thereof to receive, directly or indirectly,
equity securities of the Company, for which investment banking
services are sought by the Company (a “Future Offering”). In
connection with the Right of First Refusal, investment banking
services shall include, without limitation, (i) acting as lead,
book-running manager for any underwritten public offering; (ii)
acting as exclusive placement agent or financial advisor in
connection with any private offering of securities of the Company;
and (iii) acting as financial advisor in connection with any sale
or other transfer by the Company, directly or indirectly, of a
majority or controlling portion of its capital stock or assets to
another entity, any purchase or other transfer by another entity,
directly or indirectly, of a majority or controlling portion of the
capital stock or assets of the Company, and any merger or
consolidation of the Company with another entity. At any time
during such period that the Company contemplates conducting a
Future Offering, the Company shall deliver to the Placement Agent a
written notice (the “Notice”) stating its
intention to conduct the Future Offering, the material terms and
conditions thereof, including the amount to be raised and the type
of security to be issued and the compensation requested by the
competing broker-dealer firm if any, and an offer to the Placement
Agent to manage the Future Offering pursuant to this Right of First
Refusal. At any time within 30 days after receipt of the Notice,
the Placement Agent may, by giving written notice to the Company,
elect to exercise this Right of First Refusal. The failure of the
Placement Agent to exercise this Right of First Refusal within such
30 day period will be deemed a rejection of the offer solely with
respect to the applicable Future Offering. Any decision by the
Placement Agent to act in any such capacity shall be contained in
separate agreements, which agreements would contain, among other
matters, provisions for customary fees for transactions of similar
size and nature, as may be mutually agreed upon, and
indemnification of the Placement Agent and its Affiliates and shall
be subject to general market conditions. If the Placement Agent
declines to exercise the Right of First Refusal (which it may do in
its sole and absolute discretion), the Company shall have the right
to retain any other person or persons to provide such services on
terms and conditions which are not materially more favorable to
such other person or persons than the terms declined by the
Placement Agent. 

 

(d)              
Nothing in this Agreement shall be construed to limit the ability
of the Placement Agent or its Affiliates to pursue, investigate,
analyze, invest in, or engage in investment banking, financial
advisory or any other business relationship with Persons (as
defined below) other than the Company. As used herein (i)
“Persons” 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 and (ii) “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 of 1933, as amended (the “Securities
Act”).

 

1

 

 

 

 

Section
2.              
Representations, Warranties and Covenants of the Company.
The Company hereby represents, warrants and covenants to the
Placement Agent as of the date hereof, and as of each Closing Date,
as follows:

 

(a)              
Securities Law
Filings. The Company has filed with the Securities and
Exchange Commission (the “Commission”) the
Registration Statement under the Securities Act, which was
originally filed on December 12, 2017, as amended on December 22,
2017, and January [*], 2018, for the registration under the
Securities Act of the Securities, and was declared effective by the
Commission on January [*], 2018. Following the effectiveness of the
Registration Statement and the determination of pricing among the
Company and the prospective Investors introduced to the Company by
Placement Agent, the Company will file with the Commission pursuant
to Rules 430A and 424(b) under the Securities Act, and the rules
and regulations (the “Rules and Regulations”)
of the Commission promulgated thereunder, a final prospectus
relating to the placement of the Securities, their respective
pricings and the plan of distribution thereof and will advise the
Placement Agent of all further information (financial and other)
with respect to the Company required to be set forth therein. Such
prospectus in the form in which it appears in the Registration
Statement is hereinafter called the “Preliminary Prospectus”;
and the amended or supplemented form of prospectus, in the form in
which it will be filed with the Commission pursuant to Rules 430A
and/or 424(b) is hereinafter called the “Final Prospectus”; and
the Preliminary Prospectus and Final Prospectus are collectively,
the “Prospectus”. Any
reference in this Agreement to the Registration Statement, the
Preliminary Prospectus or the Final Prospectus shall be deemed to
refer to and include the documents incorporated by reference
therein (the “Incorporated Documents”),
if any, which were or are filed under the Securities Exchange Act
of 1934, as amended (the “Exchange Act”), at any
given time, as the case may be; and any reference in this Agreement
to the terms “amend,” “amendment” or
“supplement” with respect to the Registration
Statement, the Preliminary Prospectus or the Final Prospectus shall
be deemed to refer to and include the filing of any document under
the Exchange Act after the date of this Agreement, or the issue
date of the Preliminary Prospectus or the Final Prospectus, as the
case may be, deemed to be incorporated therein by reference. All
references in this Agreement to financial statements and schedules
and other information which is “contained,”
“included,” “described,”
“referenced,” “set forth” or
“stated” in the Registration Statement, the Preliminary
Prospectus or the Final Prospectus (and all other references of
like import) shall be deemed to mean and include all such financial
statements and schedules and other information which is or is
deemed to be incorporated by reference in the Registration
Statement, the Preliminary Prospectus or the Final Prospectus, as
the case may be. The Company has not received any notice that the
Commission has issued or intends to issue a stop order suspending
the effectiveness of the Registration Statement, the Preliminary
Prospectus or the Final Prospectus or intends to commence a
proceeding for any such purpose.

 

(b)              
Assurances. The
Registration Statement, as amended, (and any further documents to
be filed with the Commission) contains all exhibits and schedules
as required by the Securities Act. Each of the Registration
Statement and any post-effective amendment thereto, at the time it
became effective, complied in all material respects with the
Securities Act and the applicable Rules and Regulations and did not
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make
the statements therein not misleading. The Registration Statement
and the Final Prospectus, each as of its respective date, comply or
will comply in all material respects with the Securities Act and
the applicable Rules and Regulations. Each of the Registration
Statement and the Final Prospectus, as amended or supplemented, did
not and will not contain as of the date thereof any untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The
Incorporated Documents, when they were filed with the Commission,
conformed in all material respects to the requirements of the
Exchange Act and the applicable rules and regulations promulgated
thereunder, and none of such documents, when they were filed with
the Commission, contained any untrue statement of a material fact
or omitted to state a material fact necessary to make the
statements therein (with respect to Incorporated Documents
incorporated by reference in the Final Prospectus), in light of the
circumstances under which they were made not misleading. No
post-effective amendment to the Registration Statement reflecting
any facts or events arising after the date thereof which represent,
individually or in the aggregate, a fundamental change in the
information set forth therein is required to be filed with the
Commission. There are no documents required to be filed with the
Commission in connection with the transaction contemplated hereby
that (x) have not been filed as required pursuant to the Securities
Act or (y) will not be filed within the requisite time period.
There are no contracts or other documents required to be described
in the Prospectus, or to be filed as exhibits or schedules to the
Registration Statement, which have not been described or filed as
required.

 

(c)              
Offering Materials.
Neither the Company nor any of its directors and officers has
distributed and none of them will distribute, prior to each Closing
Date, any offering material in connection with the offering and
sale of the Securities other than the Preliminary Prospectus, the
Final Prospectus, the Registration Statement, copies of the
documents incorporated by reference therein and any other materials
permitted by the Securities Act.

 

(d)              
Subsidiaries. All
of the direct and indirect subsidiaries of the Company (the
“Subsidiaries”) are set
forth in the Incorporated Documents. The Company owns, directly or
indirectly, all of the capital stock or other equity interests of
each Subsidiary free and clear of any liens, charges, security
interests, encumbrances, rights of first refusal, preemptive rights
or other restrictions (collectively, “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.

 

(e)              
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, and as described in the
Registration Statement and Prospectus. 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
a Material Adverse Effect (as defined below), and no an action,
claim, suit, investigation or proceeding (including, without
limitation, an informal investigation or partial proceeding, such
as a deposition), whether commenced or threatened
(“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. As used in this Agreement,
“Material Adverse
Effect” means any material adverse effect on (i) the
business, properties, assets, liabilities, operations (including
results thereof), condition (financial or otherwise) or prospects
of the Company or any Subsidiary, individually or taken as a whole,
(ii) the transactions contemplated hereby or in any of the other
Transaction Documents or any other agreements or instruments to be
entered into in connection herewith or therewith, or the legality,
validity or enforceability of any such agreement, or (iii) the
authority or ability of the Company or any of its Subsidiaries to
perform any of their respective obligations under this Agreement or
any of the Transaction Documents. 

 

(f)               
Authorization;
Enforcement. The Company has the requisite corporate power
and authority to enter into and to consummate the transactions
contemplated by this Agreement, the Transaction Documents, and the
Prospectus and otherwise to carry out its obligations hereunder and
thereunder. The execution and delivery of each of this Agreement
and the Transaction Documents by the Company and the consummation
by it of the transactions contemplated hereby and thereby and under
the Prospectus have been duly authorized by all necessary action on
the part of the Company and no further action is required by the
Company, the Company’s Board of Directors (the
“Board of
Directors”) or the Company’s stockholders in
connection therewith other than in connection with the Required
Approvals (as defined below). This Agreement has been duly executed
by the Company and, when delivered in accordance with the terms
hereof, 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.

 

2

 

 

 

 

 

(g)              
No Conflicts. The
execution, delivery and performance by the Company of this
Agreement, the Transaction Documents, and the transactions
contemplated pursuant to the Prospectus, the issuance and sale of
the Securities and the consummation by it of the transactions
contemplated hereby and thereby to which it is a party 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.

 

(h)              
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 this Agreement and the transactions contemplated
pursuant to the Transaction Documents and the Prospectus, other
than: (i) the filing with the Commission of the Final Prospectus,
(ii) if any are required, application(s) to any of the following
markets or exchanges on which the Common Stock is listed or quoted
for trading on the date in question: the Nasdaq Capital Market; the
Nasdaq Global Market; the Nasdaq Global Select Market; the New York
Stock Exchange; the NYSE MKT, any level of the OTC Markets operated
by OTC Markets Group, Inc. or the OTC Bulletin Board (or any
successors to any of the foregoing) (the “Trading Market”) for the
listing or quotation of the Shares and the Warrant Shares for
trading thereon in the time and manner required thereby, and (iii)
such consents, approvals, authorizations, registrations or
qualifications as may be required under state or foreign securities
or “blue sky” laws and the rules of the Financial
Industry Regulatory Authority, Inc. (“FINRA”) (collectively,
the “Required
Approvals”). All Required Approvals have been or will
be obtained or effected on or prior to the Closing Date, and the
Company is not aware of any facts or circumstances which might
prevent the Company from obtaining and Required
Approvals.

 

 (i)                
Issuance of the
Securities; Registration. The Primary Securities are duly
authorized and, when issued and paid for in accordance with the
Prospectus, 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 the Final
Prospectus, including the Shares and the Warrant
Shares.

 

(j)                
Capitalization. The
capitalization of the Company, including the authorized and
outstanding securities, including any securities exercising or
convertible into shares of Common Stock, is as set forth in the
Prospectus. The Company has not issued any capital stock or other
securities 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 and options to purchase shares of Common
Stock to employees and consultants pursuant to the Company’s
employee stock purchase plans, pursuant to the conversion and/or
exercise of 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,
rights, options, warrants 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 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 this Agreement, the Transaction
Documents and the Prospectus. 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 of 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. 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 Investors) 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 of 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 of “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. All of the outstanding shares of capital stock of the
Company are validly issued, fully paid and nonassessable, have been
issued in compliance with all federal and state securities laws,
and none of such outstanding shares was issued in violation of any
preemptive rights or similar rights to subscribe for or purchase
securities. No further approval or authorization of any
stockholder, the Board of Directors or others is required for the
issuance and sale of the Securities. There are no stockholders
agreements, voting agreements or other similar agreements with
respect to the Company’s capital stock to which the Company
is a party or, to the knowledge of the Company, between or among
any of the Company’s stockholders. The SEC Reports (as
defined below) contain correct and complete copies of the
Company’s certificate of incorporation, as amended and as in
effect on the date hereof, and the Company’s bylaws, as
amended and as in effect on the date hereof, and the terms of all
Common Stock Equivalents, and the material rights of the holders
thereof in respect thereto.

 

(k)              
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 (the foregoing materials, including the
exhibits thereto and documents incorporated by reference therein,
together with the Registration Statement and the Prospectus, 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. The Company has delivered or has made available to the
Placement Agent true, correct and complete copies of each of the
SEC Reports not available on the EDGAR system. 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 financial
statements of the Company included in the SEC Reports (including,
without limitation, any notes or any letter of the independent
accountants of the Company with respect thereto) (the
“Financial
Statements”) 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. The 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 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. The reserves, if any, established by the Company or
the lack of reserves, if applicable, are reasonable based upon
facts and circumstances known by the Company on the date hereof and
there are no loss contingencies that are required to be accrued by
the Statement of Financial Accounting Standard No. 5 of the
Financial Accounting Standards Board which are not provided for by
the Company in its Financial Statements or otherwise. The Company
is not currently contemplating to amend or restate any of the
Financial Statements, nor is the Company currently aware of facts
or circumstances which would require the Company to amend or
restate any of the Financial Statements, in each case, in order for
any of the Financial Statements to be in compliance with GAAP and
the rules and regulations of the Commission. The Company has not
been informed by its independent accountants that they recommend
that the Company amend or restate any of the Financial Statements
or that there is any need for the Company to amend or restate any
of the Financial Statements.

 

(l)                
Material Changes;
Undisclosed Events, Liabilities or Developments. Since the
date of the latest audited Financial Statements included within the
SEC Reports, except as specifically disclosed in a subsequent SEC
Report filed prior to the date hereof, (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 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 the Transaction Documents and Prospectus or
disclosed in the Prospectus, 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,
including any transaction, arrangement, or other relationship
between the Company or any of its Subsidiaries and an
unconsolidated or other off balance sheet entity that would be
required to be disclosed by the Company under applicable securities
laws at the time this representation is made or deemed made that
has not been publicly disclosed at least 1 trading day of the
Common Stock on the Trading Market prior to the date that this
representation is made.

 

(m)            
Litigation. There
is no action, suit, inquiry, arbitration, notice of violation,
proceeding or investigation pending or, to the knowledge of the
Company, threatened against or affecting the Company, any
Subsidiary or any of their respective properties before or by any
court, arbitrator, governmental or administrative agency or
regulatory authority (federal, state, county, local or foreign)
(collectively, an “Action”) which (i)
adversely affects or challenges the legality, validity or
enforceability of any of this Agreement, the Transaction Documents
and the transactions contemplated pursuant to the Prospectus or the
Securities or (ii) could, if there were an unfavorable decision,
have or reasonably be expected to result in a Material Adverse
Effect. No director, officer or employee of the Company or any of
its Subsidiaries has willfully violated 18 U.S.C. §1519 or
engaged in spoliation in reasonable anticipation of litigation.
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 or any other U.S. or foreign
securities regulator 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. After reasonable inquiry of
its employees, the Company is not aware of any fact which might
result in or form the basis for any such Action, suit, arbitration,
investigation, inquiry or other proceeding. Neither the Company nor
any of its Subsidiaries is subject to any order, writ, judgment,
injunction, decree, determination or award of any governmental
agency or regulatory authority.

 

 

3

 

 

 

(n)              
Labor Relations. No
material 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. No executive officer of the Company or any Subsidiary, to
the knowledge of the Company, 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.

 

(o)              
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, its certificate of
incorporation, bylaws or other governing documents, or 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 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 (under this clause (iii)) as could not have or reasonably be
expected to result in a Material Adverse Effect. Except as set
forth in the SEC Reports, without limiting the generality of the
foregoing, the Company is not in violation of any of the rules,
regulations or requirements of the Trading Market and has no
knowledge of any facts or circumstances that could reasonably lead
to delisting, loss of quotation, or suspension of the Common Stock
by the Trading Market in the foreseeable future. Except as set
forth in the SEC Reports, during the two years prior to the date
hereof, (i) the Common Stock has been listed or designated for
quotation on the Trading Market, (ii) trading in or quotation of
the Common Stock has not been suspended by the Commission or the
Trading Market and (iii) the Company has received no communication,
written or oral, from the Commission or the Trading Market
regarding the suspension, loss of quotation, or delisting of the
Common Stock from the Trading Market. There is no agreement,
commitment, judgment, injunction, order or decree binding upon the
Company or any of its Subsidiaries or to which the Company or any
of its Subsidiaries is a party which has or would reasonably be
expected to have the effect of prohibiting or materially impairing
any business practice of the Company or any of its Subsidiaries,
any acquisition of property by the Company or any of its
Subsidiaries or the conduct of business by the Company or any of
its Subsidiaries as currently conducted other than such effects,
individually or in the aggregate, which have not had and would not
reasonably be expected to have a Material Adverse Effect on the
Company or any of its Subsidiaries.

 

(p)              
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.

 

(q)              
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, or any notice of adverse
finding, warning letter, or other correspondence or notice from any
governmental authority alleging or asserting noncompliance with any
Material Permits.

 

(r)               
Title to Assets.
The Company does not own any real property. 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.

 

(s)               
Patents and
Trademarks. The Company and the Subsidiaries have, or have
rights to use, all patents, patent applications, trademarks,
trademark applications, service marks, trade names, trade secrets,
inventions, copyrights, licenses and other intellectual property
rights and similar rights (collectively, the “Intellectual Property
Rights”) necessary or material to conduct their
respective businesses as now conducted and presently proposed to be
conducted. 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, except as
would not have a Material Adverse Effect. Neither the Company nor
any Subsidiary has received, since the date of the latest audited
Financial Statements included within the SEC Reports, a notice
(written or otherwise) of a claim or otherwise has any knowledge
that the Intellectual Property Rights violate or infringe upon the
rights of any Person, except as would not have a Material Adverse
Effect. To the knowledge of the Company, all such Intellectual
Property Rights are enforceable and there is no existing
infringement by another Person of any of the Intellectual Property
Rights. The Company and its Subsidiaries have taken reasonable
security measures to protect the secrecy, confidentiality and value
of all of their intellectual properties.

 

(t)                
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.

 

(u)              
Transactions With
Affiliates and Employees. Except as set forth in the SEC
Reports, 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.

 

(v)              
D&O
Questionnaires. To the Company’s knowledge, all
information contained in the questionnaires (the
“Questionnaires”)
completed by each of the Company’s directors and officers
immediately prior to the offering and sale of Securities, as
supplemented by all information concerning the Company’s
directors, officers and principal shareholders as described in the
Registration Statement and Prospectus as well as in the Lock-Up
Agreements (as defined below), provided to the Placement Agent, is
true and correct in all material respects and the Company has not
become aware of any information which would cause the information
disclosed in the Questionnaires to become inaccurate or incorrect
in any material respect.

 

 4

 

 

 

 

 

(w)            
Sarbanes-Oxley; Internal
Accounting Controls. To the extent disclosed in its SEC
Reports, the Company and the Subsidiaries are in compliance with
any and all applicable requirements of the Sarbanes-Oxley Act of
2002 and the rules and regulations promulgated thereunder or
implementing the provisions thereof (the “Sarbanes-Oxley Act”), 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 Company’s
disclosure controls and procedures of the Company and the
Subsidiaries as of the end of the period covered by the
Company’s 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.

 

(x)              
Board of Directors.
The qualifications of the persons serving as members of the Board
of Directors and the overall composition of the Board of Directors
comply with the Exchange Act and the Sarbanes-Oxley Act and the
listing rules, if any, of the Trading Market.

 

(y)              
Certain Fees.
Except as set forth in the Prospectus, no brokerage or
finder’s fees or commissions are or will be payable by the
Company to any broker, financial advisor or consultant, finder,
placement agent, investment banker, bank or other Person with
respect to the transactions contemplated by this Agreement, the
Transaction Documents and the Prospectus. The Investors 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 this Agreement, the Transaction
Documents and the Prospectus.

 

(z)              
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.

 

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

 

(bb)          
Listing and Maintenance
Requirements. The Common Stock is registered pursuant to
Section 12(b) or 12(g) of the Exchange Act, and the Company has
taken no action designed to, or which to its knowledge is likely to
have the effect of, terminating the registration of the Common
Stock under the Exchange Act nor has the Company received any
notification that the Commission is contemplating terminating such
registration. Except as disclosed in the SEC Reports, 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. Except as disclosed in the SEC Reports, 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.

 

(cc)           
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 Investors as a result of the Investors and the
Company fulfilling their obligations or exercising their rights
under this Agreement and the Transaction Documents and the
transactions contemplated pursuant to the Prospectus, including
without limitation as a result of the Company’s issuance of
the Securities and the Investors’ ownership of the
Securities.

 

(dd)          
Disclosure. Except
with respect to the material terms and conditions of the
transactions contemplated by this Agreement, the Transaction
Documents and the Prospectus, the Company confirms that neither it
nor any other Person acting on its behalf has provided any of the
Investors 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 Registration
Statement and Prospectus. The Company understands and confirms that
the Investors 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
Investors regarding the Company and, its Subsidiaries, their
respective businesses and the transactions contemplated hereby and
in the Transaction Documents, 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 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 light of the circumstances under
which they were made and when made, not misleading.

 

(ee)           
No Integrated
Offering. Neither the Company, nor any of its Affiliates,
nor any Person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited
any offers to buy any security, under circumstances that would
cause this Offering to be integrated with prior offerings by the
Company for purposes of any applicable shareholder approval
provisions of any Trading Market on which any of the securities of
the Company are listed or designated.

 

(ff)             
Solvency. Based on
the consolidated financial condition of the Company as of each
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, (ii) the
Company’s assets do not constitute unreasonably small capital
to carry on its business as now conducted and as proposed to be
conducted including its capital needs taking into account the
particular capital requirements of the business conducted by the
Company, consolidated and projected capital requirements and
capital availability thereof, and (iii) the current cash flow of
the Company, together with the proceeds the Company would receive,
were it to liquidate all of its assets, after taking into account
all anticipated uses of the cash, would be sufficient to pay all
amounts on or in respect of its liabilities when such amounts are
required to be paid. The Company does not intend to incur debts
beyond its ability to pay such debts as they mature (taking into
account the timing and amounts of cash to be payable on or in
respect of its debt). The Company has no knowledge of any facts or
circumstances which lead it to believe that it will file for
reorganization or liquidation under the bankruptcy or
reorganization laws of any jurisdiction within one year from each
Closing Date. The SEC Reports sets forth as of the date hereof all
outstanding secured and unsecured Indebtedness of the Company or
any Subsidiary, including any debt securities, notes, credit
agreements, credit facilities or other agreements, documents or
instruments evidencing Indebtedness of the Company or any of its
Subsidiaries or by which the Company or any of its Subsidiaries is
or may become bound or have any commitments. For purposes of this
Agreement: (x) “Indebtedness” of any
Person means, without duplication (A) all indebtedness for borrowed
money, (B) all obligations issued, undertaken or assumed as the
deferred purchase price of property or services (including, without
limitation, “capital leases” in accordance with GAAP)
(other than trade payables entered into in the ordinary course of
business consistent with past practice), (C) all reimbursement or
payment obligations with respect to letters of credit, surety bonds
and other similar instruments, (D) all obligations evidenced by
notes, bonds, debentures or similar instruments, including
obligations so evidenced incurred in connection with the
acquisition of property, assets or businesses, (E) all indebtedness
created or arising under any conditional sale or other title
retention agreement, or incurred as financing, in either case with
respect to any property or assets acquired with the proceeds of
such indebtedness (even though the rights and remedies of the
seller or bank under such agreement in the event of default are
limited to repossession or sale of such property), (F) all monetary
obligations under any leasing or similar arrangement which, in
connection with GAAP, consistently applied for the periods covered
thereby, is classified as a capital lease, (G) all indebtedness
referred to in clauses (A) through (F) above secured by (or for
which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien upon or in any
property or assets (including accounts and contract rights) owned
by any Person, even though the Person which owns such assets or
property has not assumed or become liable for the payment of such
indebtedness, and (H) all Contingent Obligations in respect of
indebtedness or obligations of others of the kinds referred to in
clauses (A) through (G) above; and (y) “Contingent Obligation”
means, as to any Person, any direct or indirect liability,
contingent or otherwise, of that Person with respect to any
Indebtedness, lease, dividend or other obligation of another Person
if the primary purpose or intent of the Person incurring such
liability, or the primary effect thereof, is to provide assurance
to the obligee of such liability that such liability will be paid
or discharged, or that any agreements relating thereto will be
complied with, or that the holders of such liability will be
protected (in whole or in part) against loss with respect thereto.
Neither the Company nor any Subsidiary is in violation under the
terms of, or in default with respect to any
Indebtedness.

 

5

 

 

 

 

(gg)          
Tax Status. The
Company and its Subsidiaries (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. The provisions for taxes
payable, if any, shown on the Financial Statements are sufficient
for all accrued and unpaid taxes, whether or not disputed, and for
all periods to and including the dates of such consolidated
Financial Statements. No issues have been raised (and are currently
pending) by any taxing authority in connection with any of the
returns or taxes asserted as due from the Company or its
Subsidiaries, and no waivers of statutes of limitation with respect
to the returns or collection of taxes have been given by or
requested from the Company or its Subsidiaries. The Company is not
operated in such a manner as to qualify as a passive foreign
investment company, as defined in Section 1297 of the Internal
Revenue Code of 1986, as amended (the “Code”). The net operating
loss carryforwards (“NOLs”) for United States
federal income tax purposes of the consolidated group of which the
Company is the common parent, if any, shall not be adversely
affected by the transactions contemplated hereby. The transactions
contemplated hereby do not constitute an “ownership
change” within the meaning of Section 382 of the Code,
thereby preserving the Company’s ability to utilize such
NOLs.

 

(hh)          
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 the
Foreign Corrupt Practices Act of 1977, as amended.

 

(ii)             Accountants.
The Company’s accounting firms are set forth in the
Registration Statement and the Prospectus. To the knowledge and
belief of the Company, (i) such accounting firms are registered
public accounting firm as required by the Exchange Act and (ii)
Marcum LLP shall express its
opinion with respect to the Financial Statements to be included in
the Company’s Annual Report for the fiscal year ending
November 30, 2017.

 

(jj)             
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 Placement Agent in
connection with the placement of the Securities.

 

(kk)          
Transfer Taxes. On
the Closing Date, all stock transfer or other taxes (other than
income or similar taxes) which are required to be paid in
connection with the issuance, sale and transfer of the Securities
to be sold to each Investor will be, or will have been, fully paid
or provided for by the Company, and all laws imposing such taxes
will be or will have been complied with.

 

(ll)             
Office of Foreign Assets
Control. Neither the Company nor any Subsidiary, 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.

 

(mm)               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 Investor’s
request.

 

(nn)          
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.

 

(oo)          
Illegal or Unauthorized
Payments; Political Contributions. Neither the Company nor
any of its Subsidiaries nor, to the best of the Company’s
knowledge (after reasonable inquiry of its officers and directors),
any of the officers, directors, employees, agents or other
representatives of the Company or any of its Subsidiaries or any
other business entity or enterprise with which the Company or any
Subsidiary is or has been affiliated or associated, has, directly
or indirectly, made or authorized any payment, contribution or gift
of money, property, or services, whether or not in contravention of
applicable law, (i) as a kickback or bribe to any Person or (ii) to
any political organization, or the holder of or any aspirant to any
elective or appointive public office except for personal political
contributions not involving the direct or indirect use of funds of
the Company or any of its Subsidiaries.

 

(pp)          
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 USA Patriot Act of
2001, the Currency and Foreign Transactions Reporting Act of 1970,
as amended, and all other applicable U.S. and non-U.S. anti-money
laundering laws and regulations, including, without limitation, the
laws, regulations and Executive Orders and sanctions programs
administered by the U.S. Office of Foreign Assets Control,
including, but not limited, to (i) Executive Order 13224 of
September 23, 2001 entitled, “Blocking Property and
Prohibiting Transactions With Persons Who Commit, Threaten to
Commit, or Support Terrorism” (66 Fed. Reg. 49079 (2001));
and (ii) any regulations contained in 31 CFR, Subtitle B, Chapter V
(collectively, the “Money Laundering Laws”),
and no action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving
the Company with respect to the Money Laundering Laws is pending
or, to the knowledge of the Company, threatened.

 

(qq)          
Stock Option Plans.
Each stock option granted by the Company was granted (i) in
accordance with the terms of the applicable stock option plan of
the Company 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 policy or practice of the Company 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.

 

(rr)               No
Disagreements with Accountants and Lawyers. There are no
material disagreements of any kind presently existing, or
reasonably anticipated by the Company to arise, between the Company
and the accountants and lawyers formerly or presently employed by
the Company and the Company is current with respect to any fees
owed to its accountants and lawyers which could affect the
Company’s ability to perform any of its obligations under any
of the Transaction Documents. In addition, on or prior to the date
hereof, the Company had discussions with its accountants about its
Financial Statements previously filed with the Commission. Based on
those discussions, the Company has no reason to believe that it
will need to restate any such Financial Statements or any part
thereof.

 

(ss)               Certificates.
Any certificate signed by an officer of the Company and delivered
to the Placement Agent or to counsel for the Placement
Agent shall be deemed to be a representation and warranty by the
Company to the Placement Agent as to the matters set forth
therein.

 

(tt)               Reliance.
The Company acknowledges that the Placement Agent will rely
upon the accuracy and truthfulness of the foregoing representations
and warranties and hereby consents to such reliance.

 

(uu)               FINRA
Affiliations. There are no affiliations with any FINRA
member firm among the Company’s officers, directors or, to
the knowledge of the Company, any five percent (5%) or greater
stockholder of the Company.

 

6

 

 

 

 

 

Section
3.              
Delivery and Payment. Each Closing shall occur at the
offices of Sichenzia Ross Ference Kesner LLP, 1185 Avenue of the
Americas, 37th Floor, New York,
New York 10036 (or at such other place as shall be agreed upon by
the Placement Agent and the Company) (“Placement Agent
Counsel”). Subject to the terms and conditions hereof,
at each Closing payment of the purchase price for the Securities
sold on such Closing Date shall be made by Federal Funds wire
transfer, against delivery of such Securities, and such Securities
shall be registered in such name or names and shall be in such
denominations, as the Placement Agent may request. Deliveries of
the documents with respect to the purchase of the Securities, if
any, shall be made at the offices of Placement Agent Counsel. All
actions taken at a Closing shall be deemed to have occurred
simultaneously.

 

Section
4.              
Covenants and Agreements of the Company. The Company further
covenants and agrees with the Placement Agent as
follows:

 

(a)              
Registration Statement
Matters. The Company will advise the Placement Agent
promptly after it receives notice thereof of the time when any
amendment to the Registration Statement has been filed or becomes
effective or any supplement to any Prospectus has been filed and
will furnish the Placement Agent with copies thereof. The Company
will file promptly all reports and any definitive proxy or
information statements required to be filed by the Company with the
Commission pursuant to Section 13(a), 14 or 15(d) of the Exchange
Act subsequent to the date of any Prospectus and for so long as the
delivery of a prospectus is required in connection with the
Offering. The Company will advise the Placement Agent, promptly
after it receives notice thereof (i) of any receipt of comments of,
or any request by the Commission to amend the Registration
Statement or to amend or supplement any Prospectus or for
additional information, and (ii) of the issuance by the Commission
of any stop order suspending the effectiveness of the Registration
Statement or any post-effective amendment thereto or any order
directed at any Incorporated Document, if any, or any amendment or
supplement thereto or any order preventing or suspending the use of
any Prospectus or any amendment or supplement thereto or any
post-effective amendment to the Registration Statement, of the
suspension of the qualification of the Securities for offering or
sale in any jurisdiction, of the institution or threatened
institution of any Proceeding for any such purpose, or of any
request by the Commission for the amending or supplementing of the
Registration Statement or a Prospectus or for additional
information. The Company shall use its best efforts to prevent the
issuance of any such stop order or prevention or suspension of such
use.  If the Commission shall enter any such stop order or
order or notice of prevention or suspension at any time, the
Company will use its best efforts to obtain the lifting of such
order at the earliest possible moment, or will file a new
registration statement and use its best efforts to have such new
registration statement declared effective as soon as
practicable.  Additionally, the Company agrees that it shall
comply with the provisions of Rules 424(b), 430A, 430B and
430C, as applicable, under the Securities Act, including with
respect to the timely filing of documents thereunder, and will use
its reasonable efforts to confirm that any filings made by the
Company under such Rule 424(b) are received in a timely
manner by the Commission.

 

(b)              
Blue Sky
Compliance. The Company will cooperate with the Placement
Agent and the Investors in endeavoring to qualify the Securities
for sale under the securities laws of such jurisdictions (United
States and foreign) as the Placement Agent or the Investors may
reasonably request and will make such applications, file such
documents, and furnish such information as may be reasonably
required for that purpose, provided the Company shall not be
required to qualify as a foreign corporation or to file a general
consent to service of process in any jurisdiction where it is not
now so qualified or required to file such a consent. The Company
will, from time to time, prepare and file such statements, reports
and other documents as are or may be required to continue such
qualifications in effect for so long a period as the Placement
Agent may reasonably request for distribution of the Securities.
The Company will advise the Placement Agent promptly of the
suspension of the qualification or registration of (or any such
exemption relating to) the Securities for offering, sale or trading
in any jurisdiction or any initiation or threat of any Proceeding
for any such purpose, and in the event of the issuance of any order
suspending such qualification, registration or exemption, the
Company shall use its best efforts to obtain the withdrawal thereof
at the earliest possible moment.

 

(c)              
Amendments and Supplements
to the Prospectus and Other Matters. The Company will comply
with the Securities Act and the Exchange Act, and the rules and
regulations of the Commission thereunder, so as to permit the
completion of the distribution of the Securities as contemplated in
this Agreement, the Transaction Documents, the Incorporated
Documents and any Prospectus. If during the period in which a
prospectus is required by law to be delivered in connection with
the distribution of Securities contemplated by the Transaction
Documents or the Prospectus (the “Prospectus Delivery
Period”), any event shall occur as a result of which,
in the judgment of the Company or in the opinion of the Placement
Agent or counsel for the Placement Agent, it becomes necessary to
amend or supplement the Incorporated Documents or any Prospectus in
order to make the statements therein, in the light of the
circumstances under which they were made, as the case may be, not
misleading, or if it is necessary at any time to amend or
supplement the Incorporated Documents or any Prospectus or to file
under the Exchange Act any Incorporated Document to comply with any
law, the Company will promptly prepare and file with the
Commission, and furnish at its own expense to the Placement Agent
and to dealers, an appropriate amendment to the Registration
Statement or supplement to the Registration Statement, the
Incorporated Documents or any Prospectus that is necessary in order
to make the statements in the Incorporated Documents and any
Prospectus as so amended or supplemented, in the light of the
circumstances under which they were made, as the case may be, not
misleading, or so that the Registration Statement, the Incorporated
Documents or any Prospectus, as so amended or supplemented, will
comply with law. Before amending the Registration Statement or
supplementing the Incorporated Documents or any Prospectus in
connection with the Offering, the Company will furnish the
Placement Agent with a copy of such proposed amendment or
supplement and will not file any such amendment or supplement to
which the Placement Agent reasonably objects.

 

(d)              
Copies of any Amendments
and Supplements to a Prospectus. The Company will furnish
the Placement Agent, without charge, during the period beginning on
the date hereof and ending on the later of the last Closing Date of
the Offering, as many copies of the Incorporated Documents and any
Prospectus and Free Writing Prospectus (as defined below), and any
amendments and supplements thereto (including any Incorporated
Documents, if any) as the Placement Agent may reasonably
request.

 

(e)              
Free Writing
Prospectus. The Company covenants that it will not, unless
it obtains the prior written consent of the Placement Agent, make
any offer relating to the Securities that would constitute a
“free writing prospectus” (as defined in Rule 405 of
the Securities Act) required to be filed by the Company with the
Commission or retained by the Company under Rule 433 of the
Securities Act (a “Free Writing
Prospectus”). In the event that the Placement Agent
expressly consents in writing to any Free Writing Prospectus (a
“Permitted Free
Writing Prospectus”), the Company covenants that it
shall comply with the requirements of Rule 164 and 433 of the
Securities Act applicable to such Permitted Free Writing
Prospectus, including in respect of timely filing with the
Commission, legending and record keeping. If at any time during the
Prospectus Delivery Period there occurred or occurs an event or
development the result of which a Free Writing Prospectus
conflicted or would conflict with the information contained in the
Registration Statement or any Prospectus or included or would
include, when taken together with the Final Prospectus and
Incorporated Documents, an untrue statement of a material fact or
omitted or would omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances
prevailing at that subsequent time, not misleading, the Company
will promptly notify the Placement Agent and will promptly amend or
supplement, at its own expense, such Free Writing Prospectus to
eliminate or correct such conflict, untrue statement or
omission.

 

(f)               
Lock-Up. The
Company hereby agrees that, without the prior written consent of
the Placement Agent, it will not, during the period from the date
hereof until the date that is ninety (90) days after the date of
the Final Prospectus (the “Lock-Up Period”), (i)
offer, pledge, issue, sell, contract to sell, purchase, contract to
purchase, lend, or otherwise transfer or dispose of, directly or
indirectly, any shares of Common Stock or any Common Stock
Equivalents; or (ii) enter into any swap or other arrangement that
transfers to another, in whole or in part, any of the economic
consequences of ownership of the Common Stock, whether any such
transaction described in clause (i) or (ii) above is to be settled
by delivery of Common Stock or such other securities, in cash or
otherwise; or (iii) file any registration statement with the
Commission relating to the offering of any shares of Common Stock
or any Common Stock Equivalents (other than a registration
statement for Common Stock and/or Common Stock Equivalents of the
Company that will not be declared effective by the Commission prior
to the expiration of the Lock-Up Period (each, a
“Subsequent Offering
Registration Statement”, and any such offering
pursuant thereto, each, a “Subsequent Offering”)).
The restrictions contained in the preceding sentence shall not
apply to (1) the Securities to be sold hereunder, (2) the issuance
of Common Stock upon the exercise of options or warrants or the
conversion or exercise of Common Stock Equivalents disclosed as
outstanding in the Registration Statement (excluding exhibits
thereto) or Prospectus, (3) the issuance of employee stock options
not exercisable during the Lock-Up Period and the grant of
restricted stock awards or restricted stock units or shares of
Common Stock pursuant to equity incentive plans described in the
Registration Statement (excluding exhibits thereto) or the Final
Prospectus or (4) any Subsequent Offering of shares of Common Stock
and/or Common Stock Equivalents that is consummated pursuant to a
Subsequent Offering Registration Statement after the expiration of
the Lock-Up Period. The Company agrees not to accelerate the
vesting of any option or warrant or the lapse of any repurchase
right prior to the expiration of the Lock-Up Period except with
respect to any employees, officers or directors of the Company that
have executed a Lock-Up Agreement. As used herein
“Business
Day” means any day other than a Saturday, Sunday or
other day on which commercial banks in New York, New York are
authorized or required by law to remain closed.

 

7

 

 

 

 

(g)              
Transfer Agent. The
Company will maintain, at its expense, a registrar and transfer
agent for the Common Stock.

 

(h)              
Trading Market. The
Company shall use its reasonable best efforts to obtain approval,
to the extent necessary, to include the Shares and the Warrant
Shares on the Trading Market.

 

(i)               Earnings
Statement. As soon as practicable and in accordance with
applicable requirements under the Securities Act, but in any event
not later than 18 months after the last Closing Date, the Company
will make generally available to its security holders and to the
Placement Agent an earnings statement, covering a period of at
least 12 consecutive months beginning after the last Closing Date,
that satisfies the provisions of Section 11(a) and Rule 158 under
the Securities Act.

 

(j)                Use
of Proceeds. The Company shall apply the net proceeds from
the sale of the Securities to be sold by it hereunder for the
purposes set forth in the Registration Statement and the Final
Prospectus under the heading “Use of
Proceeds”.

 

(k)              
Periodic Reporting
Obligations. During the Prospectus Delivery Period, the
Company will duly file, on a timely basis, with the Commission and
the Trading Market all reports and documents required to be filed
under the Exchange Act within the time periods and in the manner
required by the Exchange Act.

 

(l)                
Additional
Documents. The
Company will enter into any subscription, purchase or other
customary agreements as the Placement Agent or the Investors deem
necessary or appropriate to consummate the Offering, all of which
will be in form and substance reasonably acceptable to the
Placement Agent and the Investors. The Company agrees that the
Placement Agent may rely upon, and each is a third-party
beneficiary of, the representations and warranties, and applicable
covenants, set forth in the Transaction Documents and any other
such purchase, subscription or other agreement with Investors in
the Offering.

 

(m)              
No Manipulation of
Price.  The
Company will not take, directly or indirectly, any action designed
to cause or result in, or that has constituted or might reasonably
be expected to constitute, the stabilization or manipulation of the
price of any securities of the Company.

 

(n)              Acknowledgment.
The Company acknowledges that any advice given by the Placement
Agent to the Company is solely for the benefit and use of the Board
of Directors of the Company and may not be used, reproduced,
disseminated, quoted or referred to, without the Placement
Agent’s prior written consent.

 

Section
5.              
Conditions of the Obligations of the Placement Agent. The
obligations of the Placement Agent hereunder shall be subject to
the accuracy of the representations and warranties on the part of
the Company set forth in Section 2 hereof as well as any
representations of the Company in the Transaction Documents, in
each case as of the date hereof and as of each Closing Date as
though then made, to the timely performance by each of the Company
of its covenants and other obligations hereunder and under the
Transaction Documents on and as of such dates, and to each of the
following additional conditions:

 

(a)              
Accountants’ Comfort
Letter. On the date hereof, the Placement Agent shall have
received, and the Company shall have caused to be delivered to the
Placement Agent, a letter from Marcum LLP (the independent
registered public accounting firm of the Company), addressed to the
Placement Agent, dated as of the date hereof, in form and substance
satisfactory to the Placement Agent. The letter shall not disclose
any change in the condition (financial or other), earnings,
operations, business or prospects of the Company from that set
forth in the Incorporated Documents or the applicable Prospectus,
which, in the Placement Agent’s sole judgment, is material
and adverse and that makes it, in the Placement Agent’s sole
judgment, impracticable or inadvisable to proceed with the Offering
of the Securities as contemplated by such Prospectus.

 

(b)              
Transaction
Documents. The Company and each Subsidiary (as the case may
be) shall have duly executed and delivered to the Investors each of
the Transaction Documents to which it is a party, including the
Purchase Agreement and the applicable number of Warrants issuable
to each Investor pursuant to the terms thereunder.

 

(c)              
Compliance with
Registration Requirements; No Stop Order; No Objection from the
FINRA. The Final Prospectus (in accordance with Rule 424(b))
and any Permitted Free Writing Prospectus, if any, shall have been
duly filed with the Commission, as appropriate; no stop order
suspending the effectiveness of the Registration Statement or any
part thereof shall have been issued and no Proceeding for that
purpose shall have been initiated or threatened by the Commission;
no order preventing or suspending the use of any Prospectus or
Permitted Free Writing Prospectus shall have been issued and no
proceeding for that purpose shall have been initiated or threatened
by the Commission; no order having the effect of ceasing or
suspending the distribution of the Securities or any other
securities of the Company shall have been issued by any securities
commission, securities regulatory authority or stock exchange and
no proceedings for that purpose shall have been instituted or shall
be pending or, to the knowledge of the Company, contemplated by any
securities commission, securities regulatory authority or stock
exchange; all requests for additional information on the part of
the Commission shall have been complied with; and FINRA shall have
raised no objection to the fairness and reasonableness of the
placement terms and arrangements.

 

(d)              
Corporate
Proceedings. All corporate proceedings and other legal
matters in connection with this Agreement, the Registration
Statement and each Prospectus, and the registration, sale and
delivery of the Securities, shall have been completed or resolved
in a manner reasonably satisfactory to the Placement Agent’s
counsel, and such counsel shall have been furnished with such
papers and information as it may reasonably have requested to
enable such counsel to pass upon the matters referred to in this
Section 5.

 

(e)              
No Material Adverse
Effect. Subsequent to the execution and delivery of this
Agreement and prior to each Closing Date, in the Placement
Agent’s sole judgment after consultation with the Company,
there shall not have occurred any Material Adverse
Effect.

 

(f)               
No Materially Misleading
Fact. The Placement Agent shall not have reasonably
determined, and advised the Company, that the Registration
Statement, any Prospectus, or any amendment thereof or supplement
thereto, or any Free Writing Prospectus, contains an untrue
statement of fact which, in the reasonable opinion of the Placement
Agent, is material, or omits to state a fact which, in the
reasonable opinion of the Placement Agent, is material and is
required to be stated therein or necessary to make the statements
therein not misleading.

 

 8

 

 

 

 

 

(g)              
Opinion of Counsel.
The Placement Agent shall have received on each Closing Date the
favorable opinion of Ortoli Rosenstadt LLP, US legal counsel to the
Company, dated as of such Closing Date, including, without
limitation, a negative assurance letter addressed to the Placement
Agent, and in form and substance satisfactory to the Placement
Agent. On or before each Closing Date there shall have been
furnished to the Placement Agent the negative assurance letter of
Placement Agent Counsel, dated the Closing Date and addressed to
the Placement Agent, in form and substance reasonably satisfactory
to Placement Agent.

 

(h)              
Good Standing. The
Placement Agent shall have received a certificate evidencing the
formation and good standing of the Company from the Secretary of
State of Nevada as of a date within ten (10) days of each Closing
Date.

 

(i)                
Certified Charter.
The Placement Agent shall have received a certified copy of the
Certificate of Incorporation of the Company as certified by the
Nevada Secretary of State within ten (10) days of each Closing
Date.

 

(j)                
Secretary’s
Certificate. The Placement Agent shall have received on each
Closing Date a certificate of the Company, dated as of such Closing
Date, signed by the Secretary of the Company or such other officer
of the Company serving in such capacity, as to (i) the resolutions
of the Board of Directors approving the Offering and issuance and
pricing of the Securities, in a form reasonable acceptable to the
Placement Agent, (ii) the incumbency of the officers of the Company
executing this Agreement and the Transaction Documents, (iii) the
Certificate of Incorporation of the Company, and (iv) the Bylaws of
the Company, each as in effect at the Closing.

 

(k)              
Officers’
Certificate. The Placement Agent shall have received on each
Closing Date a certificate of the Company, dated as of such Closing
Date, signed by the Chief Executive Officer and Chief Financial
Officer of the Company, to the effect that, and the Placement Agent
shall be satisfied that, the signers of such certificate have
reviewed the Registration Statement, the Incorporated Documents,
the Prospectus, and this Agreement and to the further effect
that:

 

(i)                
The representations and warranties of the Company in this Agreement
and in the Transaction Documents are true and correct, as if made
on and as of such Closing Date, and the Company has complied with
all the agreements and satisfied all the conditions on its part to
be performed or satisfied at or prior to such Closing
Date;

 

(ii)              
No stop order suspending the effectiveness of the Registration
Statement or the use of the Prospectus has been issued and no
proceedings for that purpose have been instituted or are pending
or, to the Company’s knowledge, threatened under the
Securities Act; no order having the effect of ceasing or suspending
the distribution of the Securities or any other securities of the
Company has been issued by any securities commission, securities
regulatory authority or stock exchange in the United States and no
proceedings for that purpose have been instituted or are pending
or, to the knowledge of the Company, contemplated by any securities
commission, securities regulatory authority or stock exchange in
the United States;

 

(iii)            
When the Registration Statement became effective, at the time of
sale, and at all times subsequent thereto up to the delivery of
such certificate, the Registration Statement and the Incorporated
Documents, if any, when such documents became effective or were
filed with the Commission, contained all material information
required to be included therein by the Securities Act and the
Exchange Act and the applicable rules and regulations of the
Commission thereunder, as the case may be, and in all material
respects conformed to the requirements of the Securities Act and
the Exchange Act and the applicable rules and regulations of the
Commission thereunder, as the case may be, and the Registration
Statement and the Incorporated Documents, if any, did not and do
not include any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances
under which they were made, not misleading (provided, however, that
the preceding representations and warranties contained in this
paragraph (iii) shall not apply to any statements or omissions made
in reliance upon and in conformity with information furnished in
writing to the Company by the Placement Agent expressly for use
therein) and, since the effective date of the Registration
Statement, there has occurred no event required by the Securities
Act and the rules and regulations of the Commission thereunder to
be set forth in the Incorporated Documents which has not been so
set forth; and

 

(iv)             
Subsequent to the respective dates as of which information is given
in the Registration Statement, the Incorporated Documents and any
Prospectus, there has not been: (a) any Material Adverse Effect;
(b) any transaction that is material to the Company and the
Subsidiaries taken as a whole, except transactions entered into in
the ordinary course of business; (c) any obligation, direct or
contingent, that is material to the Company and the Subsidiaries
taken as a whole, incurred by the Company or any Subsidiary, except
obligations incurred in the ordinary course of business; (d) any
material change in the capital stock (except changes thereto
resulting from the exercise of outstanding stock options or
warrants) or outstanding indebtedness of the Company or any
Subsidiary; (e) any dividend or distribution of any kind declared,
paid or made on the capital stock of the Company; or (f) any loss
or damage (whether or not insured) to the property of the Company
or any Subsidiary which has been sustained or will have been
sustained which has a Material Adverse Effect.

 

(l)                Outstanding
Shares. The Placement Agent shall have received a letter
from the Company’s transfer agent certifying the number of
shares of Common Stock outstanding on the trading day immediately
prior to each Closing Date.

 

(m)              
Bring-down Comfort
Letter.  On
each Closing Date, the Placement Agent shall have received
from Marcum LLP a letter dated as of such Closing Date, in form and
substance satisfactory to the Placement Agent, to the effect
that they reaffirm the statements made in the letter furnished
pursuant to subsection (a) of this Section 5, except
that the specified date referred to therein for the carrying out of
procedures shall be no more than three Business Days prior
to such Closing Date.

 

(n)              
Stock Exchange
Listing. The Common Stock shall be registered under the
Exchange Act and shall be listed on the Trading Market, and the
Company shall not have taken any action designed to terminate, or
likely to have the effect of terminating, the registration of
the Common Stock under the Exchange Act or delisting or suspending
from trading the Common Stock from the Trading Market, nor, except
as disclosed in the SEC Reports as of the date hereof, shall the
Company have received any information suggesting that the
Commission or the Trading Market is contemplating terminating such
registration or listing. The Shares and the Warrant Shares shall be
approved for listing on the Trading Market, subject to official
notice of issuance.

 

(o)              
Lock-Ups. On or
before the date hereof, the Placement Agent shall have received
duly executed lock-up agreement, substantially in the form of
Exhibit A hereto
(each a “Lock-Up
Agreement”), from each of the parties specified in
Schedule
1.

 

(p)              
Transfer Agent Issuance
Instructions. The Company shall have issued irrevocable
instructions to its transfer agent with respect to the issuance of
the Shares to the Investors on such Closing Date, in a form
reasonable acceptable to the Placement Agent, in accordance with
the terms of the Purchase Agreement.

 

(q)             Transfer
Agent Lock-Up Instructions. On or before the first Closing
Date, the Company shall have issued irrevocable instructions to its
transfer agent, in a form reasonable acceptable to the Placement
Agent, to stop transfer of any shares of equity securities of the
Company in accordance with the various Lock-Up
Agreements.

 

(r)               
Additional
Documents. On or before each Closing Date, the Placement
Agent and counsel for the Placement Agent shall have received such
information and documents as they may reasonably require for the
purposes of enabling them to pass upon the issuance and sale of the
Securities as contemplated herein and in the Transaction Documents,
or in order to evidence the accuracy of any of the representations
and warranties, or the satisfaction of any of the conditions or
agreements, herein contained, including, without limitation, any
and all Required Approvals.

 

Section
6.              
Payment of Expenses. The Company agrees to pay all costs,
fees and expenses incurred by the Company in connection with the
performance of its obligations hereunder and in connection with the
transactions contemplated hereby and in the Transaction Documents,
including, without limitation: (i) all expenses incident to the
issuance, delivery and qualification of the Securities (including
all printing and engraving costs); (ii) all fees and expenses of
the registrar and transfer agent of the Common Stock; (iii) all
necessary issue, transfer and other stamp taxes in connection with
the issuance and sale of the Securities; (iv) all fees and
expenses of the Company’s counsel, independent public or
certified public accountants and other advisors; (v) all costs and
expenses incurred in connection with the preparation, printing,
filing, shipping and distribution of the Registration Statement
(including financial statements, exhibits, schedules, consents and
certificates of experts), the Preliminary Prospectus and Final
Prospectus, and all amendments and supplements thereto, and this
Agreement; (vi) all filing fees, reasonable attorneys’ fees
and expenses incurred by the Company or the Placement Agent in
connection with qualifying or registering (or obtaining exemptions
from the qualification or registration of) all or any part of the
Securities for offer and sale under the state securities or blue
sky laws or the securities laws of any other country, and, if
requested by the Placement Agent, preparing and printing a
“Blue Sky Survey,” an “International Blue Sky
Survey” or other memorandum, and any supplements thereto,
advising the Placement Agent of such qualifications, registrations
and exemptions; (vii) the filing fees incident to the review and
approval by FINRA of the Placement Agent’s participation in
the offering and distribution of the Securities; (viii) the fees
and expenses associated with including the Shares and the Warrant
Shares on the Trading Market; (ix) all costs and expenses incident
to the travel and accommodation of the Company’s and the
Placement Agent’s employees on the “roadshow,” if
any; and (x) all other fees, costs and expenses referred to in Part
II of the Registration Statement.

 

 

9

 

 

 

 

Section
7.              
Indemnification and Contribution.

 

(a) The
Company agrees to indemnify and hold harmless the Placement Agent,
its Affiliates and each person controlling the Placement Agent
(within the meaning of Section 15 of the Securities Act), and the
directors, officers, agents and employees of the Placement Agent,
its Affiliates and each such controlling person (the Placement
Agent, and each such entity or person, an “Indemnified Person”) from
and against any losses, claims, damages, judgments, assessments,
costs and other liabilities (collectively, the “Liabilities”), and shall
reimburse each Indemnified Person for all fees and expenses
(including the reasonable fees and expenses of one counsel for all
Indemnified Persons, except as otherwise expressly provided herein)
(collectively, the “Expenses”) as they are
incurred by an Indemnified Person in investigating, preparing,
pursuing or defending any Actions, whether or not any Indemnified
Person is a party thereto, (i) caused by, or arising out of or in
connection with, any untrue statement or alleged untrue statement
of a material fact contained in any Incorporated Document or by any
omission or alleged omission to state therein a material fact
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading (other
than untrue statements or alleged untrue statements in, or
omissions or alleged omissions from, information relating to an
Indemnified Person furnished in writing by or on behalf of such
Indemnified Person expressly for use in the Incorporated Documents)
or (ii) otherwise arising out of or in connection with advice or
services rendered or to be rendered by any Indemnified Person
pursuant to this Agreement and the Transaction Documents, the
transactions contemplated thereby or any Indemnified Person’s
actions or inactions in connection with any such advice, services
or transactions; provided,
however, that, in the case of clause (ii) only, the Company
shall not be responsible for any Liabilities or Expenses of any
Indemnified Person that are finally judicially determined to have
resulted solely from such Indemnified Person’s (x) gross
negligence or willful misconduct in connection with any of the
advice, actions, inactions or services referred to above or (y) use
of any offering materials or information concerning the Company in
connection with the offer or sale of the Securities in the Offering
which were not authorized for such use by the Company and which use
constitutes gross negligence or willful misconduct. The Company
also agrees to reimburse each Indemnified Person for all Expenses
as they are incurred in connection with enforcing such Indemnified
Person’s rights under this Agreement.

   

(b)       Upon
receipt by an Indemnified Person of actual notice of an Action
against such Indemnified Person with respect to which indemnity may
be sought under this Agreement, such Indemnified Person shall
promptly notify the Company in writing; provided that failure by
any Indemnified Person so to notify the Company shall not relieve
the Company from any liability which the Company may have on
account of this indemnity or otherwise to such Indemnified Person,
except to the extent the Company shall have been prejudiced by such
failure. The Company shall, if requested by the Placement Agent,
assume the defense of any such Action including the employment of
counsel reasonably satisfactory to the Placement Agent, which
counsel may also be counsel to the Company. Any Indemnified Person
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 Indemnified Person
unless: (i) the Company has failed promptly to assume the defense
and employ counsel or (ii) the named parties to any such Action
(including any impeded parties) include such Indemnified Person and
the Company, and such Indemnified Person shall have been advised in
the reasonable opinion of counsel that there is an actual conflict
of interest that prevents the counsel selected by the Company from
representing both the Company (or another client of such counsel)
and any Indemnified Person; provided that the Company shall not in
such event be responsible hereunder for the fees and expenses of
more than one firm of separate counsel for all Indemnified Persons
in connection with any Action or related Actions, in addition to
any local counsel. The Company shall not be liable for any
settlement of any Action effected without its written consent
(which shall not be unreasonably withheld). In addition, the
Company shall not, without the prior written consent of the
Placement Agent (which shall not be unreasonably withheld), settle,
compromise or consent to the entry of any judgment in or otherwise
seek to terminate any pending or threatened Action in respect of
which indemnification or contribution may be sought hereunder
(whether or not such Indemnified Person is a party thereto) unless
such settlement, compromise, consent or termination includes an
unconditional release of each Indemnified Person from all
Liabilities arising out of such Action for which indemnification or
contribution may be sought hereunder. The indemnification required
hereby shall be made by periodic payments of the amount thereof
during the course of the investigation or defense, as such expense,
loss, damage or liability is incurred and is due and
payable.

 

(c)       In
the event that the foregoing indemnity is unavailable to an
Indemnified Person other than in accordance with this Agreement,
the Company shall contribute to the Liabilities and Expenses paid
or payable by such Indemnified Person in such proportion as is
appropriate to reflect (i) the relative benefits to the Company, on
the one hand, and to the Placement Agent and any other Indemnified
Person, on the other hand, of the matters contemplated by this
Agreement and the Transaction Documents, or (ii) if the allocation
provided by the immediately preceding clause is not permitted by
applicable law, not only such relative benefits but also the
relative fault of the Company, on the one hand, and the Placement
Agent and any other Indemnified Person, on the other hand, in
connection with the matters as to which such Liabilities or
Expenses relate, as well as any other relevant equitable
considerations; provided that in no event shall the Company
contribute less than the amount necessary to ensure that all
Indemnified Persons, in the aggregate, are not liable for any
Liabilities and Expenses in excess of the amount of fees actually
received by the Placement Agent pursuant to this Agreement. For
purposes of this paragraph, the relative benefits to the Company,
on the one hand, and to the Placement Agent on the other hand, of
the matters contemplated by this Agreement and in the Transaction
Documents shall be deemed to be in the same proportion as (a) the
total value paid or contemplated to be paid to or received or
contemplated to be received by the Company in the transaction or
transactions that are within the scope of this Agreement and the
Transaction Documents, whether or not any such transaction is
consummated, bears to (b) the fees paid to the Placement Agent
under this Agreement. Notwithstanding the above, no person guilty
of fraudulent misrepresentation within the meaning of Section 11(f)
of the Securities Act, as amended, shall be entitled to
contribution from a party who was not guilty of fraudulent
misrepresentation.

 

(d)       The
Company also agrees that no Indemnified Person shall have any
liability (whether direct or indirect, in contract or tort or
otherwise) to the Company for or in connection with advice or
services rendered or to be rendered by any Indemnified Person
pursuant to this Agreement and the Transaction Documents, the
transactions contemplated thereby or any Indemnified Person’s
actions or inactions in connection with any such advice, services
or transactions except for Liabilities (and related Expenses) of
the Company that are finally judicially determined to have resulted
solely from such Indemnified Person’s gross negligence or
willful misconduct in connection with any such advice, actions,
inactions or services.

 

(e)       The
reimbursement, indemnity and contribution obligations of the
Company set forth herein shall apply to any modification of this
Agreement and shall remain in full force and effect regardless of
any termination of, or the completion of any Indemnified
Person’s services under or in connection with, this
Agreement.

  

Section
8.              
Representations and Indemnities to Survive Delivery. The
respective indemnities, agreements, representations, warranties and
other statements of the Company or any person controlling the
Company, of its officers, and of the Placement Agent set forth in
or made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation made by or on behalf of the
Placement Agent, the Company, or any of its or their partners,
officers or directors or any controlling person, as the case may
be, and will survive delivery of and payment for the Securities
sold hereunder and any termination of this Agreement. A successor
to a Placement Agent, or to the Company, its directors or officers
or any person controlling the Company, shall be entitled to the
benefits of the indemnity, contribution and reimbursement
agreements contained in this Agreement.

 

Section
9.              
Termination of this Agreement.

 

(a)              
The Placement Agent shall have the right to terminate this
Agreement by giving notice to the Company as hereinafter specified
at any time at or prior to the Closing Date, if in the discretion
of the Placement Agent, (i) there has occurred any material adverse
change in the securities markets or any event, act or occurrence
that has materially disrupted, or in the opinion of the Placement
Agent, will in the future materially disrupt, the securities
markets or there shall be such a material adverse change in general
financial, political or economic conditions or the effect of
international conditions on the financial markets in the United
States is such as to make it, in the judgment of the Placement
Agent, inadvisable or impracticable to market the Securities or
enforce contracts for the sale of the Securities, (ii) trading in
the Common Stock shall have been suspended by the Commission or the
Trading Market, or trading in securities generally on the OTC
Markets, the Nasdaq Stock Market, the NYSE or the NYSE MKT shall
have been suspended, (iii) minimum or maximum prices for trading
shall have been fixed, or maximum ranges for prices for securities
shall have been required, on the OTC Markets, the Nasdaq Stock
Market, the NYSE or NYSE MKT, by such exchange or by order of the
Commission or any other governmental authority having jurisdiction,
(iv) a banking moratorium shall have been declared by federal or
state authorities, (v) there shall have occurred any attack on,
outbreak or escalation of hostilities or act of terrorism involving
the United States, any declaration by the United States of a
national emergency or war, any substantial change or development
involving a prospective substantial change in United States or
international political, financial or economic conditions or any
other calamity or crisis, (vi) the Company suffers any loss by
strike, fire, flood, earthquake, accident or other calamity,
whether or not covered by insurance, (vii) the Company is in
material breach of any of its representations, warranties or
covenants under this Agreement, including if any condition
specified in Section 5 is not satisfied when and as required to be
satisfied, or (viii) in the judgment of the Placement Agent, there
has been, since the time of execution of this Agreement or since
the respective dates as of which information is given in the
Registration Statement or the Prospectus, any material adverse
change in the assets, properties, condition, financial or
otherwise, or in the results of operations, business affairs or
business prospects of the Company and its Subsidiaries considered
as a whole, whether or not arising in the ordinary course of
business. If the Placement Agent elects to terminate this Agreement
as provided in this Section, the Company shall be notified promptly
by the Placement Agent by telephone, confirmed by
letter.

 

 

10

 

 

 

 

(b)              
Notwithstanding anything to the contrary contained herein, the
provisions concerning confidentiality, indemnification and
contribution contained herein and the Company’s obligations
contained in the indemnification provisions, including any
obligations under Section 6 (Payment of Expenses), Section 7
(Indemnification and Contribution) and Section 8 (Representations
and Indemnities to Survive Delivery), will survive any expiration
or termination of this Agreement, and the Company’s
obligation to pay fees actually earned and payable and to reimburse
expenses actually incurred and reimbursable pursuant to Section 1
hereof and which are permitted to be reimbursed under FINRA Rule
5110(f)(2)(D), will survive any expiration or termination of this
Agreement.

 

(c)              
The terms of the Right of First Refusal shall survive the
termination of this Agreement unless this Agreement is terminated
by the Company for cause in compliance with FINRA Rule
5110(f)(2)(D)(ii), which includes the Placement Agent’s
material failure to provide the services contemplated in this
Agreement, and the Company’s exercise of this right for
termination for cause eliminates any obligations with respect to
the Right of First Refusal.

 

Section
10.          
Notices. All communications hereunder shall be in writing
and shall be mailed, hand or electronically delivered and confirmed
to the parties hereto as follows:

 

If to
the Placement Agent, to the address set forth above, attention:
Jared Schramm, Facsimile: (949) 720-7215

 

With a copy to:

 

Sichenzia
Ross Ference Kesner LLP

1185
Avenue of the Americas, 37th Floor

New
York, NY 10036

Facsimile:
(212) 930-9725

Attention:
Gregory Sichenzia

 

If to
the Company:

Q
Biomed Inc.

c/o Ortoli Rosenstadt LLP

501 Madison Avenue – 14th Floor

New York, NY 10022

Facsimile:
(212) 826-9307

Attention:
William S.
Rosenstadt

 

Any
party hereto may change the address for receipt of communications
by giving written notice to the others.

 

Section
11.          
Successors. This Agreement will inure to the benefit of and
be binding upon the parties hereto, and to the benefit of the
employees, officers and directors and controlling persons referred
to in Section 7 hereof, and to their respective successors, and
personal representative, and no other person will have any right or
obligation hereunder.

 

Section
12.          
Partial Unenforceability. The invalidity or unenforceability
of any section, paragraph or provision of this Agreement shall not
affect the validity or enforceability of any other section,
paragraph or provision hereof. If any section, paragraph or
provision of this Agreement is for any reason determined to be
invalid or unenforceable, there shall be deemed to be made such
minor changes (and only such minor changes) as are necessary to
make it valid and enforceable.

 

Section
13.          
Governing Law Provisions. This Agreement shall be deemed to
have been made and delivered in New York City and both this
Agreement and the transactions contemplated hereby shall be
governed as to validity, interpretation, construction, effect and
in all other respects by the internal laws of the State of New
York, without regard to the conflict of laws principles thereof.
Each of the Placement Agent and the Company: (i) agrees that any
legal suit, action or proceeding arising out of or relating to this
Agreement and/or the transactions contemplated hereby shall be
instituted exclusively in New York Supreme Court, County of New
York, or in the United States District Court for the Southern
District of New York, (ii) waives any objection which it may have
or hereafter to the venue of any such suit, action or proceeding,
and (iii) irrevocably consents to the jurisdiction of the New York
Supreme Court, County of New York, and the United States District
Court for the Southern District of New York in any such suit,
action or proceeding. Each of the Placement Agent and the Company
further agrees to accept and acknowledge service of any and all
process which may be served in any such suit, action or proceeding
in the New York Supreme Court, County of New York, or in the United
States District Court for the Southern District of New York and
agrees that service of process upon the Company mailed by certified
mail to the Company’s address shall be deemed in every
respect effective service of process upon the Company, in any such
suit, action or proceeding, and service of process upon the
Placement Agent mailed by certified mail to the Placement
Agent’s address shall be deemed in every respect effective
service process upon the Placement Agent, in any such suit, action
or proceeding. Notwithstanding any provision of this Agreement to
the contrary, the Company agrees that neither the Placement Agent
nor its Affiliates, and the respective officers, directors,
employees, agents and representatives of the Placement Agent, its
Affiliates and each other person, if any, controlling the Placement
Agent or any of its Affiliates, shall have any liability (whether
direct or indirect, in contract or tort or otherwise) to the
Company for or in connection with the engagement and transaction
described herein except for any such liability for losses, claims,
damages or liabilities incurred by us that are finally judicially
determined to have resulted from the bad faith or gross negligence
of such individuals or entities. If either party shall commence an
action or proceeding to enforce any provision of this Agreement,
then the prevailing party in such action or proceeding shall be
reimbursed by the other party for its reasonable attorney’s
fees and other costs and expenses incurred with the investigation,
preparation and prosecution of such action or
proceeding.

 

Section
14.          
Absence of Fiduciary Relationship. The Company acknowledges
and agrees that: (a) the Placement Agent has been retained solely
to act as the placement agent in connection with the sale of the
Securities and that no fiduciary, advisory or agency relationship
between the Company and the Placement Agent has been created in
respect of any of the transactions contemplated by this Agreement,
irrespective of whether the Placement Agent has advised or is
advising the Company on other matters; (b) the price and other
terms of the Securities set forth in this Agreement, the Final
Prospectus, and the Transaction Documents were established by the
Placement Agent and the Investors following discussions and
arm’s-length negotiations and the Company is capable of
evaluating and understanding and understands and accepts the terms,
risks and conditions of the transactions contemplated by this
Agreement; (c) it has been advised that the Placement Agent and its
Affiliates are engaged in a broad range of transactions that may
involve interests that differ from those of the Company and that
the Placement Agent does not have any obligation to disclose such
interest and transactions to the Company by virtue of any
fiduciary, advisory or agency relationship; and (d) it has been
advised that the Placement Agent is acting, in respect of the
transactions contemplated by this Agreement, solely for the benefit
of the Placement Agent, and not on behalf of the
Company.

 

Section
15.          
General Provisions. This Agreement constitutes the entire
agreement of the parties to this Agreement and supersedes all prior
written or oral and all contemporaneous oral agreements,
understandings and negotiations with respect to the subject matter
hereof, except for the engagement agreement entered into by and
between the Company and the Placement Agent, dated as of November
14, 2017, as amended, which shall survive the execution of this
Agreement. This Agreement may be executed in two or more
counterparts, each one of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement may not be amended or modified unless in
writing by all of the parties hereto, and no condition herein
(express or implied) may be waived unless waived in writing by each
party whom the condition is meant to benefit. No waiver of any of
the provisions of this Agreement shall be deemed or shall
constitute a waiver of any other provision hereof (regardless of
whether similar), nor shall any such waiver be deemed or constitute
a continuing waiver unless otherwise expressly provided. Section
headings herein are for the convenience of the parties only and
shall not affect the construction or interpretation of this
Agreement.

 

[The
remainder of this page has been intentionally left
blank.]

 

11

  

 

 

 

If the
foregoing is in accordance with your understanding of our
agreement, please sign below whereupon this instrument, along with
all counterparts hereof, shall become a binding agreement in
accordance with its terms. 

 

	
 

	

Very
truly yours,

	
 

	
 

	
 

	

Q BIOMED INC.,

	
 

	

a
Nevada corporation

	
 

	
 

	
 

	

By:

	
 

	

Name:Title:

 

 

The
foregoing Placement Agency Agreement is hereby confirmed and
accepted as of the date first above written.

 

	

ROTH CAPITAL PARTNERS, LLC

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

By:

	
 

	
 

	
 

	
 

	

Name:

	
 

	
 

	
 

	

Title:

	
 

	
 

 

 12

 

 

 

 

 

EXHIBIT A

 

Form of Lock-Up Agreement

 

_______,
2018

 

Roth
Capital Partners, LLC

57 W.
57th St.,
18th
Floor

New
York, NY 10019

 

As Placement Agent

 

Ladies
and Gentlemen:

 

This
Lock-Up Agreement is being delivered to you in connection with the
engagement by Q BioMed Inc., a Nevada corporation (the
“Company”) of Roth Capital
Partners, LLC, as the Company’s lead Placement Agent (the
“Placement
Agent,”) with respect to the proposed public offering
of securities of the Company (the “Offering”), including
shares of common stock, par value $ $0.001 per share, of the
Company (the “Common
Stock”). Capitalized terms used and not otherwise
defined herein shall have the meanings given them in the Engagement
Agreement, as may be amended from time to time, between the Company
and Placement Agent (the “Engagement
Agreement”).

 

In
order to induce you to act as placement agent to the Offering, the
undersigned agrees that, for a period (the “Lock-Up Period”)
beginning on the date hereof and ending on, and including, the date
that is ninety (90) days after the date of the final prospectus
supplement relating to the Offering, the undersigned will not,
without the prior written consent of the Placement Agent,
(i) sell, offer to sell, contract or agree to sell,
hypothecate, pledge, grant any option to purchase or otherwise
dispose of or agree to dispose of, directly or indirectly, or file
(or participate in the filing of) a registration statement with the
Securities and Exchange Commission (the “Commission”) in respect
of, or establish or increase a put equivalent position or liquidate
or decrease a call equivalent position within the meaning of
Section 16 of the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Commission promulgated thereunder
(the “Exchange
Act”) with respect to, any Common Stock or any other
securities of the Company that are substantially similar to Common
Stock, or any securities convertible into or exchangeable or
exercisable for, or any warrants or other rights to purchase, the
foregoing, (ii) enter into any swap or other arrangement that
transfers to another, in whole or in part, any of the economic
consequences of ownership of Common Stock or any other securities
of the Company that are substantially similar to Common Stock, or
any securities convertible into or exchangeable or exercisable for,
or any warrants or other rights to purchase, the foregoing, whether
any such transaction is to be settled by delivery of Common Stock
or such other securities, in cash or otherwise or
(iii) publicly announce an intention to effect any transaction
specified in clause (i) or (ii).

 

The
foregoing paragraph shall not apply to (a) the registration of the
offer and sale of securities in the Offering and the sale of the
securities to investors introduced by the Placement Agent in the
Offering, (b) bona fide gifts, provided the recipient thereof
agrees in writing with the Placement Agent to be bound by the terms
of this Lock-Up Agreement, (c) dispositions to any trust for the
direct or indirect benefit of the undersigned and/or the immediate
family of the undersigned, provided that such trust agrees in
writing with the Placement Agent to be bound by the terms of this
Lock-Up Agreement, (d) transfers of Common Stock or securities
convertible into Common Stock on death by will or intestacy, (e)
sales or transfers of Common Stock solely in connection with the
“cashless” exercise of Company stock options
outstanding on the date hereof for the purpose of exercising such
stock options (provided that any remaining Common Stock received
upon such exercise will be subject to the restrictions provided for
in this Lock-Up Agreement) or (f) sales or transfers of Common
Stock or securities convertible into Common Stock pursuant to a
sales plan entered into prior to the date hereof pursuant to
Rule 10b5-1 under the Exchange Act, a copy of which has been
provided to the Placement Agent. In addition, the restrictions sets
forth herein shall not prevent the undersigned from entering into a
sales plan pursuant to Rule 10b5-1 under the Exchange Act
after the date hereof, provided that (i) a copy
of such plan is provided to the Placement Agent promptly upon
entering into the same and (ii) no sales or transfers may be
made under such plan until the Lock-Up Period ends or this Lock-Up
Agreement is terminated in accordance with its terms. For purposes
of this paragraph, “immediate family” shall mean the
undersigned and the spouse, any lineal descendent, father, mother,
brother or sister of the undersigned.

 

In
addition, the undersigned hereby waives any rights the undersigned
may have to require registration of Common Stock in connection with
the filing of a registration statement relating to the Offering.
The undersigned further agrees that, for the Lock-Up Period, the
undersigned will not, without the prior written consent of the
Placement Agent, make any demand for, or exercise any right with
respect to, the registration of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock,
or warrants or other rights to purchase Common Stock or any such
securities.

 

The
undersigned hereby confirms that the undersigned has not, directly
or indirectly, taken, and hereby covenants that the undersigned
will not, directly or indirectly, take, any action designed, or
which has constituted or will constitute or might reasonably be
expected to cause or result in the stabilization or manipulation of
the price of any security of the Company to facilitate the sale or
resale of shares of Common Stock.

 

This
Lock-Up Agreement shall be construed and enforced in accordance
with the laws of the State of New York without regard to the
principles of conflict of laws.

 

If
(i) the Company notifies you in writing that it does not
intend to proceed with the Offering, (ii) the registration
statement filed with the Commission with respect to the Offering is
withdrawn, or (iii) if the closing of the Offering does not occur
prior to ninety (90) days from the date of this Lock-Up Agreement,
this Lock-Up Agreement shall be immediately terminated and of no
further force and effect.

 

[signature page follows]

 

 

13

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

	
 

	

Very
truly yours,

	
 

	
 

	
 

	
 

	
 

	

(Name -
Please Print)

	
 

	
 

	
 

	
 

	
 

	

(Signature)

	
 

	
 

	
 

	
 

	
 

	

(Name
of Signatory, in the case of entities - Please Print)

	
 

	
 

	
 

	
 

	
 

	

(Title
of Signatory, in the case of entities - Please Print)

 

	
 

	

Address:

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

 

 

 

 

 

 

 

 

 

 

 

 

[Signature
Page – Lock-Up Agreement]

 

14

 

 

 

 

 

 

SCHEDULE I

 

List of officers, directors and stockholders executing lock-up
agreements:

 

 

15Blueprint

 

 

SECURITIES PURCHASE AGREEMENT

 

This
SECURITIES PURCHASE
AGREEMENT (this “Agreement”), dated as of ____,
2018, is by and among Q BioMed Inc., a Nevada corporation (the
“Company”), and
each of the investors listed on the Schedule of Buyers attached
hereto (individually, a “Buyer” and collectively, the
“Buyers”).

 

RECITALS

 

A.       The
Company and each Buyer desire to enter into this transaction to
purchase (i) the Common Shares (as defined below), and (ii)
Warrants (as defined below) pursuant to a currently effective shelf
registration statement on Form S-1, to purchase Common Stock
registered thereunder (Registration Number 333-222008) (the
“Registration
Statement”), which Registration Statement has been
declared effective in accordance with the Securities Act of 1933,
as amended (the “1933
Act”), by the United States Securities and Exchange
Commission (the “SEC”).

 

B.       Each
Buyer wishes to purchase, and the Company wishes to sell, upon the
terms and conditions stated in this Agreement, (i) such aggregate
number of shares of Common Stock as set forth opposite such
Buyer’s name in column (3) on the Schedule of Buyers (which
aggregate amount for all Buyers shall be [ ] shares of Common Stock
and shall collectively be referred to herein as the
“Common
Shares”), and (ii) a warrant to initially acquire up
to such aggregate number of shares of Common Stock set forth
opposite such Buyer’s name in column (4) on the Schedule of
Buyers, as evidenced by a certificate in the form attached hereto
as Exhibit A-1
(the “Warrants”)
(as exercised, the “Warrant
Shares”).

 

C.       The
Common Shares, the Warrants and the Warrant Shares are collectively
referred to herein as the “Securities”.

 

AGREEMENT

 

NOW,
THEREFORE, in consideration of the premises and the mutual
covenants contained herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and each Buyer hereby agree as
follows:

 

	
 

	

1.

	

PURCHASE AND SALE OF COMMON SHARES AND WARRANTS.

 

(a)           Purchase
of Common Shares and Warrants. Subject to the satisfaction
(or waiver) of the conditions set forth in Sections 6 and 7 below,
the Company shall issue and sell to each Buyer, and each Buyer
severally, but not jointly, agrees to purchase from the Company on
the Closing Date (as defined below) (A) such aggregate number of
Common Shares as is set forth opposite such Buyer’s name in
column (3) on the Schedule of Buyers, and (B) Common Warrants to
initially acquire up to such aggregate number of Warrant Shares as
is set forth opposite such Buyer’s name in column (4) on the
Schedule of Buyers.

 

(b)          Closing.
The closing (the “Closing”) of the purchase of the
Common Shares and the Warrants by the Buyers shall occur at the
offices of Sichenzia Ross Ference Kesner LLP, 1185 Avenue of the
Americas, 37th Floor, New York, NY
10036. The date and time of the Closing (the “Closing Date”) shall be 10:00
a.m., New York time, on the first (1st) Business Day (as defined
below) on which the conditions to the Closing set forth in Sections
6 and 7 below are satisfied or waived (or such other date as is
mutually agreed to by the Company and each Buyer). As used herein
“Business Day”
means any day other than a Saturday, Sunday or other day on which
commercial banks in New York, New York are authorized or required
by law to remain closed.

 

(c)           Purchase
Price. The aggregate purchase price for the Common Shares
and Warrants (the “Purchase
Price”) shall be the amount set forth opposite such
Buyer’s name in column (5) on the Schedule of
Buyers.

 

(d)          Form
of Payment; Deliveries. On the Closing Date, (i) each Buyer
shall pay its respective Purchase Price to the Company for the
Common Shares and the Warrants to be issued and sold to such Buyer
at the Closing, by wire transfer of immediately available funds in
accordance with the Flow of Funds Letter (as defined below) and
(ii) the Company shall (A) cause VStock Transfer, LLC
(together with any subsequent transfer agent, the
“Transfer
Agent”) through the Depository Trust Company
(“DTC”) Fast
Automated Securities Transfer Program, to credit such aggregate
number of Common Shares that each Buyer is purchasing as is set
forth opposite such Buyer’s name in column (3) of the
Schedule of Buyers to such Buyer’s or its designee’s
balance account with DTC through its Deposit/Withdrawal at
Custodian system, and (B) deliver to each Buyer a Warrant pursuant
to which such Buyer shall have the right to initially acquire up to
such aggregate number of Warrant Shares as is set forth opposite
such Buyer’s name in column (4) of the Schedule of Buyers, in
each case, duly executed on behalf of the Company and registered in
the name of such Buyer or its designee.

 

(e)          Placement
Agent Fees. At the Closing, the Company shall pay (i) to
ROTH Capital Partners, LLC, as lead placement agent (the
“Lead Placement Agent”), all fees and
expenses due to the Lead Placement Agent as of the Closing Date,
and (ii) to Brookline Capital Markets, as co-lead placement agent
(the “Co-Lead
Placement Agent”), all
fees and expenses due to the Co-Lead Placement Agent as of the
Closing Date, each pursuant to the terms of that certain Placement
Agent Agreement, dated as of ______, 2018, by and between the
Company and the Lead Placement Agent (the “Placement Agent Agreement”), in
each case, by wire transfer of immediately available funds in
accordance with the Lead Placement Agent's and Co-Lead Placement
Agent’s respective written wire instructions.

 

1

 

 

 

	
 

	

2.

	

BUYER’S REPRESENTATIONS AND WARRANTIES.

 

Each
Buyer, severally and not jointly, represents and warrants to the
Company with respect to only itself that, as of the date hereof and
as of the Closing Date:

 

(a)          Organization;
Authority. Such Buyer is an entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of
its organization with the requisite power and authority to enter
into and to consummate the transactions contemplated by the
Transaction Documents (as defined below) to which it is a party and
otherwise to carry out its obligations hereunder and
thereunder.

 

(b)          Validity;
Enforcement. This Agreement has been duly and validly
authorized, executed and delivered on behalf of such Buyer and
shall constitute the legal, valid and binding obligations of such
Buyer enforceable against such Buyer in accordance with their
respective terms, except as such enforceability may be limited by
general principles of equity or to applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation and other
similar laws relating to, or affecting generally, the enforcement
of applicable creditors’ rights and remedies.

 

(c)          No
Conflicts. The execution, delivery and performance by such
Buyer of this Agreement and the consummation by such Buyer of the
transactions contemplated hereby will not (i) result in a violation
of the organizational documents of such Buyer, or (ii) conflict
with, or constitute a default (or an event which with notice or
lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which
such Buyer is a party or (iii) result in a violation of any law,
rule, regulation, order, judgment or decree (including federal and
state securities laws) applicable to such Buyer, except, in the
case of clauses (ii) and (iii) above, for such conflicts, defaults,
rights or violations which could not, individually or in the
aggregate, reasonably be expected to have a material adverse effect
on the ability of such Buyer to perform its obligations
hereunder.

 

(d)          Acknowledgement
of Risk. Such Buyer acknowledges and understands that its
investment in the Securities involves a significant degree of risk,
including, without limitation, (i) the Company remains an
early stage business with limited operating history and requires
substantial funds in addition to the proceeds from the sale of the
Securities; (ii) an investment in the Company is speculative,
and only purchasers who can afford the loss of their entire
investment should consider investing in the Company and the
Securities; (iii) such Buyer may not be able to liquidate its
investment; (iv) transferability of the Securities is limited;
(v) in the event of a disposition of the Securities, such
Buyer could sustain the loss of its entire investment;
(vi) the Company has not paid any dividends on its Common
Stock since inception and does not anticipate the payment of
dividends in the foreseeable future and (vii) those risks set out
in the Registration Statement.

 

 (e)          Acknowledgements
Regarding Placement Agent. Such Buyer acknowledges that the
Lead Placement Agent and Co-Lead Placement Agent are the exclusive
placement agents on a “best efforts” basis for the
Securities being offered hereby and will be compensated by the
Company for acting in such capacity. Such Buyer represents that
such Buyer was contacted regarding the sale of the Securities by
the Lead Placement Agent or the Co-Lead Placement Agent (or an
authorized agent or representative of one of them) with whom such
Buyer had a substantial pre-existing relationship and who entered
into a confidentiality agreement or otherwise agreed, orally or in
writing, to keep information with respect to the transactions
contemplated hereby confidential.

 

(f)           Review
of Registration Statement and SEC Documents. Such Buyer has
had the opportunity to review the Registration Statement and is
aware of the disclosures set out therein. Such Buyer has had the
opportunity to review the SEC Documents (as defined
herein).

 

	
 

	

3.

	

REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

 

As of
the date hereof and as of the Closing Date, the Company represents
and warrants to each of the Buyers that, except as set out in the
Registration Statement and the SEC Documents,:

 

(a)          Organization
and Qualification. Each of the Company and each of its
Subsidiaries are entities duly organized and validly existing and
in good standing under the laws of the jurisdiction in which they
are formed, and have the requisite power and authority to own their
properties and to carry on their business as now being conducted
and as presently proposed to be conducted. Each of the Company and
each of its Subsidiaries is duly qualified as a foreign entity to
do business and is in good standing in every jurisdiction in which
its ownership of property or the nature of the business conducted
by it makes such qualification necessary, except to the extent that
the failure to be so qualified or be in good standing would not
reasonably be expected to have a Material Adverse Effect (as
defined below). As used in this Agreement, “Material Adverse Effect” means any
material adverse effect on (i) the business, properties, assets,
liabilities, operations (including results thereof), condition
(financial or otherwise) or prospects of the Company or any
Subsidiary, individually or taken as a whole, (ii) the transactions
contemplated hereby or in any of the other Transaction Documents or
any other agreements or instruments to be entered into in
connection herewith or therewith or (iii) the authority or ability
of the Company or any of its Subsidiaries to perform any of their
respective obligations under any of the Transaction Documents (as
defined below). Other than the Persons (as defined below) set forth
in Exhibit 21.1 to the Registration Statement, the Company has no
Subsidiaries. “Subsidiaries” means any Person in
which the Company, directly or indirectly, (A) owns any of the
outstanding capital stock or holds any equity or similar interest
of such Person or (B) controls or operates all or any part of the
business, operations or administration of such Person, and each of
the foregoing, is individually referred to herein as a
“Subsidiary”.

 

(b)          Authorization;
Enforcement; Validity. The Company has the requisite power
and authority to enter into and perform its obligations under this
Agreement and the other Transaction Documents and to issue the
Securities in accordance with the terms hereof and thereof. The
execution and delivery of this Agreement and the other Transaction
Documents by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby (including, without
limitation, the issuance of the Common Shares, the issuance of the
Warrants and the reservation for issuance and issuance of the
Warrant Shares issuable upon exercise of the Warrants) have been
duly authorized by the Company’s board of directors and
(other than the filing with the SEC of the prospectus forming part
of the Registration Statement pursuant to Rule 424(b) under the
1933 Act (as amended or supplemented, from time to time, the
“Prospectus”)
and any other filings as may be required by any state securities
agencies) no further filing, consent or authorization is required
by the Company, its board of directors or its stockholders or other
governing body. This Agreement has been, and the other Transaction
Documents will be prior to the Closing, duly executed and delivered
by the Company, and each constitutes the legal, valid and binding
obligations of the Company, enforceable against the Company in
accordance with its respective terms, except as such enforceability
may be limited by general principles of equity or applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally, the enforcement
of applicable creditors’ rights and remedies and except as
rights to indemnification and to contribution may be limited by
federal or state securities law. “Transaction Documents” means,
collectively, this Agreement, the Warrants, the Irrevocable
Transfer Agent Instructions (as defined below) and each of the
other agreements and instruments entered into or delivered by any
of the parties hereto in connection with the transactions
contemplated hereby and thereby, as may be amended from time to
time.

 

 (c)          Issuance
of Securities; Registration Statement. The issuance of the
Common Shares and the Warrants are duly authorized and, upon
issuance and payment in accordance with the terms of the
Transaction Documents shall be validly issued, fully paid and
non-assessable and free from all preemptive or similar rights,
mortgages, defects, claims, liens, pledges, charges, taxes, rights
of first refusal, encumbrances, security interests and other
encumbrances (collectively “Liens”) with respect to the
issuance thereof. As of the Closing, the Company shall have
reserved from its duly authorized capital stock not less than 100%
of the maximum number of shares of Common Stock issuable upon
exercise of the Warrants (without taking into account any
limitations on the exercise of the Warrants set forth in the
Warrants). Upon exercise in accordance with the Warrants, the
Warrant Shares, when issued, will be validly issued, fully paid and
nonassessable and free from all preemptive or similar rights or
Liens with respect to the issue thereof, with the holders being
entitled to all rights accorded to a holder of Common Stock. The
issuance by the Company of the Securities has been registered under
the 1933 Act, the Securities are being issued pursuant to the
Registration Statement and all of the Securities are freely
transferable and freely tradable by each of the Buyers without
restriction (except as otherwise set forth in this Agreement),
whether by way of registration or some exemption therefrom. The
Registration Statement is effective and available for the issuance
of the Securities thereunder and the Company has not received any
notice that the SEC has issued or intends to issue a stop-order
with respect to the Registration Statement or that the SEC
otherwise has suspended or withdrawn the effectiveness of the
Registration Statement, either temporarily or permanently, or
intends or has threatened in writing to do so. The “Plan of
Distribution” section under the Registration Statement
permits the issuance and sale of the Securities hereunder and as
contemplated by the other Transaction Documents. Upon receipt of
the Securities, each of the Buyers will have good and marketable
title to the Securities. The Registration Statement and any
prospectus included therein, including the Prospectus, complied in
all material respects with the requirements of the 1933 Act and the
Securities Exchange Act of 1934, as amended (the
“1934 Act”) and
the rules and regulations of the SEC promulgated thereunder and all
other applicable laws and regulations. At the time the Registration
Statement and any amendments thereto became effective, at the date
of this Agreement and at each deemed effective date thereof
pursuant to Rule 430B(f)(2) of the 1933 Act, the Registration
Statement and any amendments thereto complied and will comply in
all material respects with the requirements of the 1933 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. 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, complied, and will comply, in all material
respects with the requirements of the 1933 Act and did not, and
will not, contain any untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made,
not misleading. The Company meets all of the requirements for the
use of Form S-1 under the 1933 Act for the offering and sale of the
Securities contemplated by this Agreement and the other Transaction
Documents, and the SEC has not notified the Company of any
objection to the use of the form of the Registration Statement
pursuant to Rule 401(g)(1) under the 1933 Act. At the earliest time
after the filing of the Registration Statement that the Company or
another offering participant made a bona fide offer (within the
meaning of Rule 164(h)(2) under the 1933 Act) relating to any of
the Securities, the Company was not and is not an “Ineligible
Issuer” (as defined in Rule 405 under the 1933 Act). The
Company (i) has not distributed any offering material in connection
with the offer or sale of any of the Securities and (ii) until no
Buyer holds any of the Securities, shall not distribute any
offering material in connection with the offer or sale of any of
the Securities to, or by, any of the Buyers (if required), in each
case, other than the Registration Statement or the
Prospectus.

 

 

2

 

 

 

 

 

 (d)          No
Conflicts. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby
(including, without limitation, the issuance of the Common Shares,
the Warrants and the Warrant Shares and the reservation for
issuance of the Warrant Shares) will not (i) result in a violation
of the Articles of Incorporation (as defined below) (including,
without limitation, any certificate of designation contained
therein), By-Laws (as defined below), certificate of formation,
memorandum of association, articles of association, by-laws or
other organizational documents of the Company or any of its
Subsidiaries, or any capital stock or other securities of the
Company or any of its Subsidiaries, (ii) conflict with, or
constitute a default (or an event which with notice or lapse of
time or both would become a default) in any respect under, or give
to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which
the Company or any of its Subsidiaries is a party, or (iii) result
in a violation of any law, rule, regulation, order, judgment or
decree (including, without limitation, foreign, federal and state
securities laws and regulations and the rules and regulations of
the OTCQB (the “Principal
Market”) and including all applicable foreign, federal
and state laws, rules and regulations applicable to the Company or
any of its Subsidiaries or by which any property or asset of the
Company or any of its Subsidiaries is bound or
affected.

 

(e)          Consents.
The Company is not required to obtain any consent from,
authorization or order of, or make any filing or registration with
(other than the filing with the SEC of the Registration Statement,
the Prospectus and any other filings as may be required by any
state securities agencies and such filings as are required by the
Principal Market), any Governmental Entity (as defined below) or
any regulatory or self-regulatory agency or any other Person in
order for it to execute, deliver or perform any of its obligations
under or contemplated by the Transaction Documents, in each case,
in accordance with the terms hereof or thereof. All consents,
authorizations, orders, filings and registrations which the Company
is required to obtain pursuant to the preceding sentence have been
or will be obtained or effected on or prior to the Closing Date,
and the Company is not aware of any facts or circumstances which
might prevent the Company from obtaining or effecting any of the
registration, application or filings contemplated by the
Transaction Documents. Except as set forth in the SEC Documents (as
defined herein), the Company is not in violation of the
requirements of the Principal Market and has no knowledge of any
facts or circumstances which could reasonably lead to delisting or
suspension of the Common Stock in the foreseeable future.
“Governmental
Entity” means any nation, state, county, city, town,
village, district, or other political jurisdiction of any nature,
federal, state, local, municipal, foreign, or other government,
governmental or quasi-governmental authority of any nature
(including any governmental agency, branch, department, official,
or entity and any court or other tribunal), multi-national
organization or body; or body exercising, or entitled to exercise,
any administrative, executive, judicial, legislative, police,
regulatory, or taxing authority or power of any nature or
instrumentality of any of the foregoing, including any entity or
enterprise owned or controlled by a government or a public
international organization or any of the foregoing.

 

 (f)           Acknowledgment
Regarding Buyer’s Purchase of Securities. The Company
acknowledges and agrees that each Buyer is acting solely in the
capacity of an arm’s length purchaser with respect to the
Transaction Documents and the transactions contemplated hereby and
thereby and that no Buyer is (i) an officer or director of the
Company or any of its Subsidiaries, (ii) an “affiliate”
(as defined in Rule 144 promulgated under the 1933 Act (or a
successor rule thereto) (collectively, “Rule 144”)) of the Company or any
of its Subsidiaries or (iii) to its knowledge, a “beneficial
owner” of more than 10% of the shares of Common Stock (as
defined for purposes of Rule 13d-3 of the 1934 Act). The Company
further acknowledges that no Buyer is acting as a financial advisor
or fiduciary of the Company or any of its Subsidiaries (or in any
similar capacity) with respect to the Transaction Documents and the
transactions contemplated hereby and thereby, and any advice given
by a Buyer or any of its representatives or agents in connection
with the Transaction Documents and the transactions contemplated
hereby and thereby is merely incidental to such Buyer’s
purchase of the Securities. The Company further represents to each
Buyer that the Company’s decision to enter into the
Transaction Documents has been based solely on the independent
evaluation by the Company and its representatives.

 

(g)          Placement
Agent’s Fees.
The Company shall be responsible for the payment of any placement
agent’s fees, financial advisory fees, or brokers’
commissions (other than for Persons engaged by any Buyer or its
investment advisor) relating to or arising out of the transactions
contemplated hereby, including, without limitation, placement agent
fees payable to the Lead Placement Agent and Co-Lead Placement
Agent in accordance with the Placement Agent Agreement. The Company
shall pay, and hold each Buyer harmless against, any liability,
loss or expense (including, without limitation, attorney's fees and
out-of-pocket expenses) arising in connection with any such claim.
The Company acknowledges that it has engaged the Lead Placement
Agent and Co-Lead Placement Agent in connection with the sale of
the Securities. Other than the Lead Placement Agent and the Co-Lead
Placement Agent, neither the Company nor any of its Subsidiaries
has engaged any placement agent or other agent in connection with
the offer or sale of the Securities.

 

(h)          No
Integrated Offering. None of the Company, its Subsidiaries
or any of their affiliates, nor any Person acting on their behalf
has, directly or indirectly, made any offers or sales of any
security or solicited any offers to buy any security, under
circumstances that would cause this offering of the Securities to
require approval of stockholders of the Company under any
applicable stockholder approval provisions, including, without
limitation, under the rules and regulations of any exchange or
automated quotation system on which any of the securities of the
Company are listed or designated for quotation. None of the
Company, its Subsidiaries, their affiliates nor any Person acting
on their behalf will take any action or steps that would cause the
offering of any of the Securities to be integrated with other
offerings of securities of the Company.

 

 (i)           Application
of Takeover Protections; Rights Agreement. The Company and
its board of directors have taken all necessary action, if any, in
order to render inapplicable any control share acquisition,
interested stockholder, business combination, poison pill
(including, without limitation, any distribution under a rights
agreement), stockholder rights plan or other similar anti-takeover
provision under the Articles of Incorporation, By-laws or other
organizational documents or the laws of the jurisdiction of its
incorporation or otherwise which is or could become applicable to
any Buyer as a result of the transactions contemplated by this
Agreement, including, without limitation, the Company’s
issuance of the Securities and any Buyer’s ownership of the
Securities. The Company and its board of directors have taken all
necessary action, if any, in order to render inapplicable any
stockholder rights plan or similar arrangement relating to
accumulations of beneficial ownership of shares of Common Stock or
a change in control of the Company or any of its
Subsidiaries.

 

(j)           SEC
Documents; Financial Statements. During the two (2) years
prior to the date hereof, the Company has timely filed all periodic
reports, schedules, forms, proxy statements, statements and other
documents required to be filed by it with the SEC pursuant to the
reporting requirements of the 1934 Act, provided that the Company
has filed all current reports required to be filed by it with the
SEC during the two (2) years prior to the date hereof, but that
some of such periodic reports were not filed on a timely basis (all
of the foregoing filed prior to the date hereof and all exhibits
and appendices included therein and financial statements, notes and
schedules thereto and documents incorporated by reference therein
being hereinafter referred to as the “SEC Documents”). The Company has
delivered or has made available to the Buyers or their respective
representatives true, correct and complete copies of each of the
SEC Documents not available on the EDGAR system. As of their
respective dates, the SEC Documents complied in all material
respects with the requirements of the 1934 Act and the rules and
regulations of the SEC promulgated thereunder applicable to the SEC
Documents, and none of the SEC Documents, at the time they were
filed with the SEC, 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. As of their respective dates, the financial statements
of the Company included in the SEC Documents complied in all
material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto as
in effect as of the time of filing. Such financial statements have
been prepared in accordance with generally accepted accounting
principles (“GAAP”), consistently applied,
during the periods involved (except (i) as may be otherwise
indicated in such financial statements or the notes thereto, or
(ii) in the case of unaudited interim statements, to the extent
they may exclude footnotes or may be condensed or summary
statements) and fairly present in all material respects the
financial position of the Company as of the dates thereof and the
results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end
audit adjustments which will not be material, either individually
or in the aggregate). The reserves, if any, established by the
Company or the lack of reserves, if applicable, are reasonable
based upon facts and circumstances known by the Company on the date
hereof and there are no loss contingencies that are required to be
accrued by the Statement of Financial Accounting Standard No. 5 of
the Financial Accounting Standards Board which are not provided for
by the Company in its financial statements or otherwise. No other
information provided by or on behalf of the Company to any of the
Buyers which is not included in the SEC Documents (including,
without limitation, information in the disclosure schedules to this
Agreement) contains any untrue statement of a material fact or
omits to state any material fact necessary in order to make the
statements therein not misleading, in the light of the circumstance
under which they are or were made. The Company is not currently
contemplating to amend or restate any of the financial statements
(including, without limitation, any notes or any letter of the
independent accountants of the Company with respect thereto)
included in the SEC Documents (the “Financial Statements”), nor is the
Company currently aware of facts or circumstances which would
require the Company to amend or restate any of the Financial
Statements, in each case, in order for any of the Financials
Statements to be in compliance with GAAP and the rules and
regulations of the SEC. The Company has not been informed by its
independent accountants that they recommend that the Company amend
or restate any of the Financial Statements or that there is any
need for the Company to amend or restate any of the Financial
Statements.

 

 (k)          Absence
of Certain Changes. Since the date of the Company’s
most recent audited financial statements contained in a Form 10-K,
there has been no material adverse change and no material adverse
development in the business, assets, liabilities, properties,
operations (including results thereof), condition (financial or
otherwise) or prospects of the Company or any of its Subsidiaries.
Since the date of the Company’s most recent audited financial
statements contained in a Form 10-K, neither the Company nor any of
its Subsidiaries has (i) declared or paid any dividends, (ii) sold
any assets, individually or in the aggregate, outside of the
ordinary course of business or (iii) made any capital expenditures,
individually or in the aggregate, outside of the ordinary course of
business. Neither the Company nor any of its Subsidiaries has taken
any steps to seek protection pursuant to any law or statute
relating to bankruptcy, insolvency, reorganization, receivership,
liquidation or winding up, nor does the Company or any Subsidiary
have any knowledge or reason to believe that any of their
respective creditors intend to initiate involuntary bankruptcy
proceedings or any actual knowledge of any fact which would
reasonably lead a creditor to do so. The Company and its
Subsidiaries, on a consolidated basis, upon receipt of proceeds
from this offering, will not be Insolvent (as defined below). For
purposes of this Section 3(k), “Insolvent” means, (i) with respect
to the Company and its Subsidiaries, on a consolidated basis, (A)
the present fair saleable value of the Company’s and its
Subsidiaries’ assets is less than the amount required to pay
the Company’s and its Subsidiaries’ total Indebtedness
(as defined below), (B) the Company and its Subsidiaries are unable
to pay their debts and liabilities, subordinated, contingent or
otherwise, as such debts and liabilities become absolute and
matured or (C) the Company and its Subsidiaries intend to incur or
believe that they will incur debts that would be beyond their
ability to pay as such debts mature; and (ii) with respect to the
Company and each Subsidiary, individually, (A) the present fair
saleable value of the Company’s or such Subsidiary’s
(as the case may be) assets is less than the amount required to pay
its respective total Indebtedness, (B) the Company or such
Subsidiary (as the case may be) is unable to pay its respective
debts and liabilities, subordinated, contingent or otherwise, as
such debts and liabilities become absolute and matured or (C) the
Company or such Subsidiary (as the case may be) intends to incur or
believes that it will incur debts that would be beyond its
respective ability to pay as such debts mature. Neither the Company
nor any of its Subsidiaries has engaged in any business or in any
transaction, and is not about to engage in any business or in any
transaction, for which the Company’s or such
Subsidiary’s remaining assets constitute unreasonably small
capital with which to conduct the business in which it is engaged
as such business is now conducted and is proposed to be
conducted.

 

3

 

 

 

 

 

(l)           No
Undisclosed Events, Liabilities, Developments or
Circumstances. No event, liability, development or
circumstance has occurred or exists, or is reasonably expected to
exist or occur with respect to the Company, any of its Subsidiaries
or any of their respective businesses, properties, liabilities,
prospects, operations (including results thereof) or condition
(financial or otherwise), that (i) would be required to be
disclosed by the Company under applicable securities laws on a
registration statement on Form S-1 filed with the SEC relating to
an issuance and sale by the Company of its Common Stock and which
has not been publicly announced, (ii) could have a material adverse
effect on any Buyer’s investment hereunder or (iii) could
have a Material Adverse Effect.

 

(m)         Conduct
of Business; Regulatory Permits. Neither the Company nor any
of its Subsidiaries is in violation of any term of or in default
under its Articles of Incorporation or By-laws or their
organizational charter, certificate of formation, memorandum of
association, articles of association, Articles of Incorporation or
certificate of incorporation or by-laws, respectively. Neither the
Company nor any of its Subsidiaries is in violation of any
judgment, decree or order or any statute, ordinance, rule or
regulation applicable to the Company or any of its Subsidiaries,
and neither the Company nor any of its Subsidiaries will conduct
its business in violation of any of the foregoing, except in all
cases for possible violations which could not, individually or in
the aggregate, have a Material Adverse Effect. Except as set forth
in the SEC Documents, without limiting the generality of the
foregoing, the Company is not in violation of any of the rules,
regulations or requirements of the Principal Market and has no
knowledge of any facts or circumstances that could reasonably lead
to delisting or suspension of the Common Stock by the Principal
Market in the foreseeable future. Except as set forth in the SEC
Documents, during the two years prior to the date hereof, (i) the
Common Stock has been listed or designated for quotation on the
Principal Market, (ii) trading in the Common Stock has not been
suspended by the SEC or the Principal Market and (iii) the Company
has received no communication, written or oral, from the SEC or the
Principal Market regarding the suspension or delisting of the
Common Stock from the Principal Market. The Company and each of its
Subsidiaries possess all certificates, authorizations and permits
issued by the appropriate regulatory authorities necessary to
conduct their respective businesses, except where the failure to
possess such certificates, authorizations or permits would not
have, individually or in the aggregate, a Material Adverse Effect,
and neither the Company nor any such Subsidiary has received any
notice of proceedings relating to the revocation or modification of
any such certificate, authorization or permit. There is no
agreement, commitment, judgment, injunction, order or decree
binding upon the Company or any of its Subsidiaries or to which the
Company or any of its Subsidiaries is a party which has or would
reasonably be expected to have the effect of prohibiting or
materially impairing any business practice of the Company or any of
its Subsidiaries, any acquisition of property by the Company or any
of its Subsidiaries or the conduct of business by the Company or
any of its Subsidiaries as currently conducted other than such
effects, individually or in the aggregate, which have not had and
would not reasonably be expected to have a Material Adverse Effect
on the Company or any of its Subsidiaries.

 

(n)              
Foreign Corrupt
Practices. Neither the Company, the Company’s
subsidiary or any director, officer, agent, employee, nor any other
person acting for or on behalf of the foregoing (individually and
collectively, a “Company
Affiliate”) have violated the U.S. Foreign Corrupt
Practices Act (the “FCPA”) or any other applicable
anti-bribery or anti-corruption laws, nor has any Company Affiliate
offered, paid, promised to pay, or authorized the payment of any
money, or offered, given, promised to give, or authorized the
giving of anything of value, to any officer, employee or any other
person acting in an official capacity for any Governmental Entity
to any political party or official thereof or to any candidate for
political office (individually and collectively, a
“Government
Official”) or to any person under circumstances where
such Company Affiliate knew or was aware of a high probability that
all or a portion of such money or thing of value would be offered,
given or promised, directly or indirectly, to any Government
Official, for the purpose of:

 

(i)                
(A) influencing any act or decision of such Government Official in
his/her official capacity, (B) inducing such Government Official to
do or omit to do any act in violation of his/her lawful duty, (C)
securing any improper advantage, or (D) inducing such Government
Official to influence or affect any act or decision of any
Governmental Entity, or

 

(ii)              
assisting the Company or its Subsidiaries in obtaining or retaining
business for or with, or directing business to, the Company or its
Subsidiaries.

 

(o)              
Sarbanes-Oxley Act.
The Company and each Subsidiary is in compliance with any and all
applicable requirements of the Sarbanes-Oxley Act of 2002, as
amended, and any and all applicable rules and regulations
promulgated by the SEC thereunder.

 

(p)              
Transactions With
Affiliates. Except as set forth in the Registration
Statement, since January 1, 2016, no current or former employee,
partner, director, officer or stockholder (direct or indirect) of
the Company or its Subsidiaries, or any associate, or, to the
knowledge of the Company, any affiliate of any thereof, or any
relative with a relationship no more remote than first cousin of
any of the foregoing, is presently, or has ever been, (i) a party
to any transaction with the Company or its Subsidiaries (including
any contract, agreement or other arrangement providing for the
furnishing of services by, or rental of real or personal property
from, or otherwise requiring payments to, any such director,
officer or stockholder or such associate or affiliate or relative
Subsidiaries (other than for ordinary course services as employees,
officers or directors of the Company or any of its Subsidiaries))
or (ii) the direct or indirect owner of an interest in any
corporation, firm, association or business organization which is a
competitor, supplier or customer of the Company or its Subsidiaries
(except for a passive investment (direct or indirect) in less than
5% of the common stock of a company whose securities are traded on
or quoted through a Trading Market (as defined below)), nor does
any such Person receive income from any source other than the
Company or its Subsidiaries which relates to the business of the
Company or its Subsidiaries or should properly accrue to the
Company or its Subsidiaries. Except as set forth in the
Registration Statement, no employee, officer, stockholder or
director of the Company or any of its Subsidiaries or member of his
or her immediate family is indebted to the Company or its
Subsidiaries, as the case may be, nor is the Company or any of its
Subsidiaries indebted (or committed to make loans or extend or
guarantee credit) to any of them, other than (i) for payment of
salary for services rendered, (ii) reimbursement for reasonable
expenses incurred on behalf of the Company, and (iii) for other
standard employee benefits made generally available to all
employees or executives (including stock option agreements
outstanding under any stock option plan approved by the Board of
Directors of the Company).

 

(q)          Equity
Capitalization.

 

(i)            Definitions: 

 

“Common Stock” means (x) the
Company’s shares of common stock, $0.001 par value per share,
and (y) any capital stock into which such common stock shall have
been changed or any share capital resulting from a reclassification
of such common stock.

 

(ii)           Authorized
and Outstanding Capital Stock. As of the date hereof, the
authorized capital stock of the Company consists of (A) 250,000,000
shares of Common Stock, of which, [ ] are issued and outstanding
and [ ] shares are reserved for issuance pursuant to Convertible
Securities (as defined below) (other than the Common Shares and the
Warrants) exercisable or exchangeable for, or convertible into,
shares of Common Stock. “Convertible Securities” means any
capital stock or other security of the Company that is at any time
and under any circumstances directly or indirectly convertible
into, exercisable or exchangeable for, or which otherwise entitles
the holder thereof to acquire, any capital stock or other security
of the Company (including, without limitation, Common
Stock).

 

(iii)          Valid
Issuance; Available Shares; Affiliates. All of such
outstanding shares are duly authorized and have been, or upon
issuance will be, validly issued and are fully paid and
nonassessable. The Registration Statement sets forth the number of
shares of Common Stock that are (A) reserved for issuance pursuant
to Convertible Securities (as defined below) (other than the
Warrants) and (B) that are, as of the date hereof, owned by Persons
who are “affiliates” (as defined in Rule 405 of the
1933 Act and calculated based on the assumption that only officers,
directors and holders of at least 10% of the Company’s issued
and outstanding Common Stock are “affiliates” without
conceding that any such Persons are “affiliates” for
purposes of federal securities laws) of the Company or any of its
Subsidiaries. To the Company’s knowledge, no Person owns 10%
or more of the Company’s issued and outstanding shares of
Common Stock (calculated based on the assumption that all
Convertible Securities (as defined below), whether or not presently
exercisable or convertible, have been fully exercised or
converted (as the case may be) taking account of any
limitations on exercise or conversion (including
“blockers”) contained therein without conceding that
such identified Person is a 10% stockholder for purposes of federal
securities laws).

 

 

4

 

 

 

 

 

(iv)          Existing
Securities; Obligations. Except as set forth in the
Registration Statement: (A) none of the Company’s or any
Subsidiary’s shares, interests or capital stock is subject to
preemptive rights or any other similar rights or Liens suffered or
permitted by the Company or any Subsidiary; (B) there are no
outstanding options, warrants, scrip, rights to subscribe to, calls
or commitments of any character whatsoever relating to, or
securities or rights convertible into, or exercisable or
exchangeable for, any shares, interests or capital stock of the
Company or any of its Subsidiaries, or contracts, commitments,
understandings or arrangements by which the Company or any of its
Subsidiaries is or may become bound to issue additional shares,
interests or capital stock of the Company or any of its
Subsidiaries or options, warrants, scrip, rights to subscribe to,
calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, or exercisable or
exchangeable for, any shares, interests or capital stock of the
Company or any of its Subsidiaries; (C) there are no agreements or
arrangements under which the Company or any of its Subsidiaries is
obligated to register the sale of any of their securities under the
1933 Act (except pursuant to this Agreement); (D) there are no
outstanding securities or instruments of the Company or any of its
Subsidiaries which contain any redemption or similar provisions,
and there are no contracts, commitments, understandings or
arrangements by which the Company or any of its Subsidiaries is or
may become bound to redeem a security of the Company or any of its
Subsidiaries; (E) there are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the
issuance of the Securities; and (F) neither the Company nor any
Subsidiary has any stock appreciation rights or “phantom
stock” plans or agreements or any similar plan or
agreement.

 

(v)           Organizational
Documents. The Company has submitted to the SEC true,
correct and complete copies of the Company’s Articles of
Incorporation, as amended and as in effect on the date hereof (the
“Articles of
Incorporation”), and the Company’s by-laws, as
amended and as in effect on the date hereof (the
“By-laws”), and
the terms of all Convertible Securities and the material rights of
the holders thereof in respect thereto, and the Buyer’s may
access such documents and terms through the SEC’s EDGAR
database.

 

(r)           Indebtedness
and Other Contracts. Neither the Company nor any of its
Subsidiaries, (i) except as set forth in the Registration
Statement, has any outstanding debt securities, notes, credit
agreements, credit facilities or other agreements, documents or
instruments evidencing Indebtedness of the Company or any of its
Subsidiaries or by which the Company or any of its Subsidiaries is
or may become bound, (ii) is a party to any contract, agreement or
instrument, the violation of which, or default under which, by the
other party(ies) to such contract, agreement or instrument could
reasonably be expected to result in a Material Adverse Effect,
(iii) has any financing statements securing obligations in any
amounts filed in connection with the Company or any of its
Subsidiaries; (iv) is in violation of any term of, or in default
under, any contract, agreement or instrument relating to any
Indebtedness, except where such violations and defaults would not
result, individually or in the aggregate, in a Material Adverse
Effect, or (v) is a party to any contract, agreement or instrument
relating to any Indebtedness, the performance of which, in the
judgment of the Company’s officers, has or is expected to
have a Material Adverse Effect. Neither the Company nor any of its
Subsidiaries have any liabilities or obligations required to be
disclosed in the SEC Documents which are not so disclosed in the
SEC Documents, other than those incurred in the ordinary course of
the Company’s or its Subsidiaries’ respective
businesses and which, individually or in the aggregate, do not or
could not have a Material Adverse Effect. For purposes of this
Agreement: (x) “Indebtedness” of any Person means,
without duplication (A) all indebtedness for borrowed money, (B)
all obligations issued, undertaken or assumed as the deferred
purchase price of property or services (including, without
limitation, “capital leases” in accordance with GAAP)
(other than trade payables entered into in the ordinary course of
business consistent with past practice), (C) all reimbursement or
payment obligations with respect to letters of credit, surety bonds
and other similar instruments, (D) all obligations evidenced by
notes, bonds, debentures or similar instruments, including
obligations so evidenced incurred in connection with the
acquisition of property, assets or businesses, (E) all indebtedness
created or arising under any conditional sale or other title
retention agreement, or incurred as financing, in either case with
respect to any property or assets acquired with the proceeds of
such indebtedness (even though the rights and remedies of the
seller or bank under such agreement in the event of default are
limited to repossession or sale of such property), (F) all monetary
obligations under any leasing or similar arrangement which, in
connection with GAAP, consistently applied for the periods covered
thereby, is classified as a capital lease, (G) all indebtedness
referred to in clauses (A) through (F) above secured by (or for
which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien upon or in any
property or assets (including accounts and contract rights) owned
by any Person, even though the Person which owns such assets or
property has not assumed or become liable for the payment of such
indebtedness, and (H) all Contingent Obligations in respect of
indebtedness or obligations of others of the kinds referred to in
clauses (A) through (G) above; (y) “Contingent Obligation” means, as
to any Person, any direct or indirect liability, contingent or
otherwise, of that Person with respect to any Indebtedness, lease,
dividend or other obligation of another Person if the primary
purpose or intent of the Person incurring such liability, or the
primary effect thereof, is to provide assurance to the obligee of
such liability that such liability will be paid or discharged, or
that any agreements relating thereto will be complied with, or that
the holders of such liability will be protected (in whole or in
part) against loss with respect thereto; and (z)
“Person” means
an individual, a limited liability company, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization,
any other entity and any Governmental Entity or any department or
agency thereof.

 

(s)          Litigation.
There is no action, suit, arbitration, proceeding, inquiry or
investigation before or by the Principal Market, any court, public
board, other Governmental Entity, self-regulatory organization or
body pending or, to the knowledge of the Company, threatened
against or affecting the Company or any of its Subsidiaries, the
Common Stock or any of the Company’s or its
Subsidiaries’ officers or directors, whether of a civil or
criminal nature or otherwise, in their capacities as such, except
as set forth in the Registration Statement. No director, officer or
employee of the Company or any of its subsidiaries has willfully
violated 18 U.S.C. §1519 or engaged in spoliation in
reasonable anticipation of litigation. Without limitation of the
foregoing, there has not been, and to the knowledge of the Company,
there is not pending or contemplated, any investigation by the SEC
involving the Company, any of its Subsidiaries or any current or
former director or officer of the Company or any of its
Subsidiaries. The SEC has not issued any stop order or other order
suspending the effectiveness of any registration statement filed by
the Company under the 1933 Act or the 1934 Act, including, without
limitation, the Registration Statement. After reasonable inquiry of
its employees, the Company is not aware of any fact which might
result in or form the basis for any such action, suit, arbitration,
investigation, inquiry or other proceeding. Neither the Company nor
any of its Subsidiaries is subject to any order, writ, judgment,
injunction, decree, determination or award of any Governmental
Entity.

 

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

 

(u)          Employee
Relations. Neither the Company nor any of its Subsidiaries
is a party to any collective bargaining agreement or employs any
member of a union. The Company and its Subsidiaries believe that
their relations with their employees are good. No executive officer
(as defined in Rule 501(f) promulgated under the 1933 Act) or other
key employee of the Company or any of its Subsidiaries has notified
the Company or any such Subsidiary that such officer intends to
leave the Company or any such Subsidiary or otherwise terminate
such officer’s employment with the Company or any such
Subsidiary. No executive officer or other key employee of the
Company or any of its Subsidiaries is, or is now expected to be, in
violation of any material term of any employment contract,
confidentiality, disclosure or proprietary information agreement,
non-competition agreement, or any other contract or agreement or
any restrictive covenant, and the continued employment of each such
executive officer or other key employee (as the case may be) 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 federal, state, local and
foreign laws and regulations respecting labor, employment and
employment practices and benefits, terms and conditions of
employment and wages and hours, except where failure to be in
compliance would not, either individually or in the aggregate,
reasonably be expected to result in a Material Adverse
Effect.

 

(v)          Title.

 

(i)            Real
Property. Each of the Company and its Subsidiaries holds
good title to all real property, leases in real property,
facilities or other interests in real property owned or held by the
Company or any of its Subsidiaries (the “Real Property”) owned by the
Company or any of its Subsidiaries (as applicable). The Real
Property is free and clear of all Liens and is not subject to any
rights of way, building use restrictions, exceptions, variances,
reservations, or limitations of any nature except for (a) Liens for
current taxes not yet due and (b) zoning laws and other land use
restrictions that do not impair the present or anticipated use of
the property subject thereto. Any Real Property held under lease by
the Company or any of its Subsidiaries are held by them under
valid, subsisting and enforceable leases with such exceptions as
are not material and do not interfere with the use made and
proposed to be made of such property and buildings by the Company
or any of its Subsidiaries.

 

(ii)           Fixtures
and Equipment. Each of the Company and its Subsidiaries (as
applicable) has good title to, or a valid leasehold interest in,
the tangible personal property, equipment, improvements, fixtures,
and other personal property and appurtenances that are used by the
Company or its Subsidiary in connection with the conduct of its
business (the “Fixtures and
Equipment”). The Fixtures and Equipment are
structurally sound, are in good operating condition and repair, are
adequate for the uses to which they are being put, are not in need
of maintenance or repairs except for ordinary, routine maintenance
and repairs and are sufficient for the conduct of the
Company’s and/or its Subsidiaries’ businesses (as
applicable) in the manner as conducted prior to the Closing. Each
of the Company and its Subsidiaries owns all of its Fixtures and
Equipment free and clear of all Liens except for (a) Liens for
current taxes not yet due and (b) zoning laws and other land use
restrictions that do not impair the present or anticipated use of
the property subject thereto.

 

 

5

 

 

 

 

(w)         Intellectual
Property Rights. The Company and its Subsidiaries own or
possess adequate rights or licenses to use all trademarks, trade
names, service marks, service mark registrations, service names,
original works of authorship, patents, patent rights, copyrights,
inventions, licenses, approvals, governmental authorizations, trade
secrets and other intellectual property rights and all applications
and registrations therefor (“Intellectual Property Rights”)
necessary to conduct their respective businesses as now conducted
and presently proposed to be conducted. Each of patents owned by
the Company or any of its Subsidiaries is listed in the
Registration Statement. Except as set forth in the Registration
Statement, none of the Company's Intellectual Property Rights have
expired or terminated or have been abandoned or are expected to
expire or terminate or are expected to be abandoned, within three
years from the date of this Agreement. The Company does not have
any knowledge of any infringement by the Company or its
Subsidiaries of Intellectual Property Rights of others. There is no
claim, action or proceeding being made or brought, or to the
knowledge of the Company or any of its Subsidiaries, being
threatened, against the Company or any of its Subsidiaries
regarding its Intellectual Property Rights. Neither the Company nor
any of its Subsidiaries is aware of any facts or circumstances
which might give rise to any of the foregoing infringements or
claims, actions or proceedings. The Company and its Subsidiaries
have taken reasonable security measures to protect the secrecy,
confidentiality and value of all of their Intellectual Property
Rights.

 

(x)           Environmental
Laws. (i) The Company and its Subsidiaries (A) are in
compliance with any and all Environmental Laws (as defined below),
(B) have received all permits, licenses or other approvals required
of them under applicable Environmental Laws to conduct their
respective businesses and (C) are in compliance with all terms and
conditions of any such permit, license or approval where, in each
of the foregoing clauses (A), (B) and (C), the failure to so comply
could be reasonably expected to have, individually or in the
aggregate, a Material Adverse Effect. The term “Environmental
Laws” means all federal, state, local or foreign laws
relating to pollution or protection of human health or the
environment (including, without limitation, ambient air, surface
water, groundwater, land surface or subsurface strata), including,
without limitation, 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.

 

(ii)           No
Hazardous Materials:

 

(A)       have
been disposed of or otherwise released from any Real Property (as
defined below) of the Company or any of its Subsidiaries in
violation of any Environmental Laws; or

 

(B)       are
present on, over, beneath, in or upon any Real Property or any
portion thereof in quantities that would constitute a violation of
any Environmental Laws. No prior use by the Company or any of its
Subsidiaries of any Real Property has occurred that violates any
Environmental Laws, which violation would have a material adverse
effect on the business of the Company or any of its
Subsidiaries.

 

(iii)          Neither
the Company nor any of its Subsidiaries knows of any other person
who or entity which has stored, treated, recycled, disposed of or
otherwise located any Hazardous Materials on any Real Property,
including, without limitation, such substances as asbestos and
polychlorinated biphenyls.

 

(iv)         None
of the Real Properties are on any federal or state
“Superfund” list or Liability Information System
(“CERCLIS”) list
or any state environmental agency list of sites under consideration
for CERCLIS, nor subject to any environmental related
Liens.

 

(y)          Subsidiary
Rights. The Company or one of its Subsidiaries has the
unrestricted right to vote, and (subject to limitations imposed by
applicable law) to receive dividends and distributions on, all
capital securities of its Subsidiaries as owned by the Company or
such Subsidiary.

 

(z)           Tax
Status. The Company and each of its Subsidiaries (i) has
timely made or filed all foreign, federal and state income and all
other tax returns, reports and declarations required by any
jurisdiction to which it is subject, (ii) has timely paid all taxes
and other governmental assessments and charges that are material in
amount, shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith and (iii)
has set aside on its books provision reasonably adequate for the
payment of all 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 and
its Subsidiaries know of no basis for any such claim. The Company
is not operated in such a manner as to qualify as a passive foreign
investment company, as defined in Section 1297 of the U.S. Internal
Revenue Code of 1986, as amended (the “Code”). The net operating loss
carryforwards (“NOLs”) for United States federal
income tax purposes of the consolidated group of which the Company
is the common parent, if any, shall not be adversely effected by
the transactions contemplated hereby. The transactions contemplated
hereby do not constitute an “ownership change” within
the meaning of Section 382 of the Code, thereby preserving the
Company’s ability to utilize such NOLs.

 

(aa)        Internal
Accounting and Disclosure Controls. The Company’s
statement in its Annual Report on Form 10-k for the year ended
November 30, 2016 that its internal control over financial
reporting was ineffective has not been revised. The Company’s
statement in its Quarterly Report on Form 10-q for the period ended
August 31, 2017 that its disclosure controls and procedures were
ineffective has not been revised. Neither the Company nor any of
its Subsidiaries has received any notice or correspondence from any
accountant, Governmental Entity or other Person relating to any
potential material weakness or significant deficiency in any part
of the internal controls over financial reporting of the Company or
any of its Subsidiaries.

 

(bb)       Off
Balance Sheet Arrangements. There is no transaction,
arrangement, or other relationship between the Company or any of
its Subsidiaries and an unconsolidated or other off balance sheet
entity that is required to be disclosed by the Company in its 1934
Act filings and is not so disclosed or that otherwise could be
reasonably likely to have a Material Adverse Effect.

 

(cc)        Investment
Company Status. The Company is not, and upon consummation of
the sale of the Securities will not be, an “investment
company,” an affiliate of an “investment
company,” a company controlled by an “investment
company” or an “affiliated person” of, or
“promoter” or “principal underwriter” for,
an “investment company” as such terms are defined in
the Investment Company Act of 1940, as amended.

 

(dd)       Acknowledgement
Regarding Buyers’ Trading Activity. It is understood
and acknowledged by the Company that (i) following the public
disclosure of the transactions contemplated by the Transaction
Documents, in accordance with the terms thereof, none of the Buyers
have been asked by the Company or any of its Subsidiaries to agree,
nor has any Buyer agreed with the Company or any of its
Subsidiaries, to desist from effecting any transactions in or with
respect to (including, without limitation, purchasing or selling,
long and/or short) any securities of the Company, or
“derivative” securities based on securities issued by
the Company or to hold any of the Securities for any specified term
(except as otherwise set forth in this Agreement); (ii) any Buyer,
and counterparties in “derivative” transactions to
which any such Buyer is a party, directly or indirectly, presently
may have a “short” position in the Common Stock which
was established prior to such Buyer’s knowledge of the
transactions contemplated by the Transaction Documents; and (iii)
each Buyer shall not be deemed to have any affiliation with or
control over any arm’s length counterparty in any
“derivative” transaction. The Company further
understands and acknowledges that following the public disclosure
of the transactions contemplated by the Transaction Documents
pursuant to the Press Release (as defined below) one or more Buyers
may engage in hedging and/or trading activities at various times
during the period that the Securities are outstanding, including,
without limitation, during the periods that the value and/or number
of the Warrant Shares deliverable with respect to the Warrants are
being determined and such hedging and/or trading activities, if
any, can reduce the value of the existing stockholders’
equity interest in the Company both at and after the time the
hedging and/or trading activities are being conducted. The Company
acknowledges that such aforementioned hedging and/or trading
activities do not constitute a breach of this Agreement, the
Warrants or any other Transaction Document or any of the documents
executed in connection herewith or therewith.

 

 

6

 

 

 

 

(ee)        Manipulation
of Price. Neither the Company nor any of its Subsidiaries
has, and, to the knowledge of the Company, no Person acting on
their behalf has, directly or indirectly, (i) taken any action
designed to cause or to result in the stabilization or manipulation
of the price of any security of the Company or any of its
Subsidiaries 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 (other than the
Lead Placement Agent and the Co-Lead Placement Agent), (iii) paid
or agreed to pay to any Person any compensation for soliciting
another to purchase any other securities of the Company or any of
its Subsidiaries or (iv) paid or agreed to pay any Person for
research services with respect to any securities of the Company or
any of its Subsidiaries.

 

(ff)         U.S.
Real Property Holding Corporation. Neither the Company nor
any of its Subsidiaries is, or has ever been, and so long as any of
the Securities are held by any of the Buyers, shall become, a U.S.
real property holding corporation within the meaning of Section 897
of the Code, and the Company and each Subsidiary shall so certify
upon any Buyer’s request.

 

(gg)       Registration
Eligibility. The Company is eligible to register the
issuance of the Securities by the Company using Form S-1
promulgated under the 1933 Act.

 

(hh)       Transfer
Taxes. On the Closing Date, all stock transfer or other
taxes (other than income or similar taxes) which are required to be
paid in connection with the issuance, sale and transfer of the
Common Shares and Warrants to be sold to each Buyer hereunder will
be, or will have been, fully paid or provided for by the Company,
and all laws imposing such taxes will be or will have been complied
with.

 

(ii)          Bank
Holding Company Act. Neither the Company nor any of its
Subsidiaries 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 (25%) 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.

 

(jj)          Illegal
or Unauthorized Payments; Political Contributions. Neither
the Company nor any of its Subsidiaries nor, to the best of the
Company’s knowledge (after reasonable inquiry of its officers
and directors), any of the officers, directors, employees, agents
or other representatives of the Company or any of its Subsidiaries
or any other business entity or enterprise with which the Company
or any Subsidiary is or has been affiliated or associated, has,
directly or indirectly, made or authorized any payment,
contribution or gift of money, property, or services, whether or
not in contravention of applicable law, (i) as a kickback or bribe
to any Person or (ii) to any political organization, or the holder
of or any aspirant to any elective or appointive public office
except for personal political contributions not involving the
direct or indirect use of funds of the Company or any of its
Subsidiaries.

 

(kk)        Money
Laundering. The Company and its Subsidiaries are in
compliance with, and have not previously violated, the USA Patriot
Act of 2001 and all other applicable U.S. and non-U.S. anti-money
laundering laws and regulations, including, without limitation, the
laws, regulations and Executive Orders and sanctions programs
administered by the U.S. Office of Foreign Assets Control,
including, but not limited, to (i) Executive Order 13224 of
September 23, 2001 entitled, “Blocking Property and
Prohibiting Transactions With Persons Who Commit, Threaten to
Commit, or Support Terrorism” (66 Fed. Reg. 49079 (2001));
and (ii) any regulations contained in 31 CFR, Subtitle B, Chapter
V.

 

(ll)          Management.
Except as set forth in the Registration Statement hereto, during
the past five year period, no current or former officer or director
or, to the knowledge of the Company, no current ten percent (10%)
or greater stockholder of the Company or any of its Subsidiaries
has been the subject of:

 

(i)            a
petition under bankruptcy laws or any other insolvency or
moratorium law or the appointment by a court of a receiver, fiscal
agent or similar officer for such Person, or any partnership in
which such person was a general partner at or within two years
before the filing of such petition or such appointment, or any
corporation or business association of which such person was an
executive officer at or within two years before the time of the
filing of such petition or such appointment;

 

(ii)           a
conviction in a criminal proceeding or a named subject of a pending
criminal proceeding (excluding traffic violations that do not
relate to driving while intoxicated or driving under the
influence);

 

(iii)          any
order, judgment or decree, not subsequently reversed, suspended or
vacated, of any court of competent jurisdiction, permanently or
temporarily enjoining any such person from, or otherwise limiting,
the following activities:

 

(1)          Acting
as a futures commission merchant, introducing broker, commodity
trading advisor, commodity pool operator, floor broker, leverage
transaction merchant, any other person regulated by the United
States Commodity Futures Trading Commission or an associated person
of any of the foregoing, or as an investment adviser, underwriter,
broker or dealer in securities, or as an affiliated person,
director or employee of any investment company, bank, savings and
loan association or insurance company, or engaging in or continuing
any conduct or practice in connection with such
activity;

 

(2)          Engaging
in any particular type of business practice; or

 

(3)          Engaging
in any activity in connection with the purchase or sale of any
security or commodity or in connection with any violation of
securities laws or commodities laws;

 

(iv)          any
order, judgment or decree, not subsequently reversed, suspended or
vacated, of any authority barring, suspending or otherwise limiting
for more than sixty (60) days the right of any such person to
engage in any activity described in the preceding sub paragraph, or
to be associated with persons engaged in any such
activity;

 

(v)           a
finding by a court of competent jurisdiction in a civil action or
by the SEC or other authority to have violated any securities law,
regulation or decree and the judgment in such civil action or
finding by the SEC or any other authority has not been subsequently
reversed, suspended or vacated; or

 

(vi)          a
finding by a court of competent jurisdiction in a civil action or
by the Commodity Futures Trading Commission to have violated any
federal commodities law, and the judgment in such civil action or
finding has not been subsequently reversed, suspended or
vacated.

 

(mm)     
Stock Option Plans.
Each stock option granted by the Company was granted (i) in
accordance with the terms of the applicable stock option plan of
the Company 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 policy or practice of the Company 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.

 

7

 

 

 

 

 

(nn)       No
Disagreements with Accountants and Lawyers. There are no
material disagreements of any kind presently existing, or
reasonably anticipated by the Company to arise, between the Company
and the accountants and lawyers formerly or presently employed by
the Company and the Company is current with respect to any fees
owed to its accountants and lawyers which could affect the
Company's ability to perform any of its obligations under any of
the Transaction Documents. In addition, on or prior to the date
hereof, the Company had discussions with its accountants about its
financial statements previously filed with the SEC. Based on those
discussions, the Company has no reason to believe that it will need
to restate any such financial statements or any part
thereof.

 

(oo)       No
Additional Agreements. The Company does not have any
agreement or understanding with any Buyer with respect to the
transactions contemplated by the Transaction Documents other than
as specified in the Transaction Documents.

 

(pp)       Public
Utility Holding Act None of the Company nor any of its
Subsidiaries is a “holding company,” or an
“affiliate” of a “holding company,” as such
terms are defined in the Public Utility Holding Act of
2005.

 

(qq)       Federal
Power Act. None of the Company nor any of its Subsidiaries
is subject to regulation as a “public utility” under
the Federal Power Act, as amended.

 

(rr)         Registration
Rights. No holder of securities of the Company has rights to
the registration of any securities of the Company because of the
filing of the Registration Statement or the issuance of the
Securities hereunder that could expose the Company to material
liability or any Buyer to any liability or that could impair the
Company’s ability to consummate the issuance and sale of the
Securities in the manner, and at the times, contemplated hereby,
which rights have not been waived by the holder thereof as of the
date hereof.

 

(ss)        Disclosure.
The Company confirms that neither it nor any other Person acting on
its behalf has provided any of the Buyers or their agents or
counsel with any information that constitutes or could reasonably
be expected to constitute material, non-public information
concerning the Company or any of its Subsidiaries, other than the
existence of the transactions contemplated by this Agreement and
the other Transaction Documents. The Company understands and
confirms that each of the Buyers will rely on the foregoing
representations in effecting transactions in securities of the
Company. All disclosure provided to the Buyers regarding the
Company and its Subsidiaries, their businesses and the transactions
contemplated hereby, including the schedules to this Agreement,
furnished by or on behalf of the Company or any of its Subsidiaries
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. All of
the written information furnished after the date hereof by or on
behalf of the Company or any of its Subsidiaries to each Buyer
pursuant to or in connection with this Agreement and the other
Transaction Documents, taken as a whole, will be true and correct
in all material respects as of the date on which such information
is so provided and will 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. Each
press release issued by the Company or any of its Subsidiaries
during the twelve (12) months preceding the date of this Agreement
did not at the time of release 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 are
made, not misleading. No event or circumstance has occurred or
information exists with respect to the Company or any of its
Subsidiaries or its or their business, properties, liabilities,
prospects, operations (including results thereof) or conditions
(financial or otherwise), which, under applicable law, rule or
regulation, requires public disclosure at or before the date hereof
or announcement by the Company but which has not been so publicly
disclosed. All financial projections and forecasts that have been
prepared by or on behalf of the Company or any of its Subsidiaries
and made available to you have been prepared in good faith based
upon reasonable assumptions and represented, at the time each such
financial projection or forecast was delivered to each Buyer, the
Company’s best estimate of future financial performance (it
being recognized that such financial projections or forecasts are
not to be viewed as facts and that the actual results during the
period or periods covered by any such financial projections or
forecasts may differ from the projected or forecasted results). The
Company acknowledges and agrees that no Buyer makes or has made any
representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in
Section 2.

 

	
 

	

4.

	

COVENANTS.

 

(a)          Best
Efforts. Each Buyer shall use its best efforts to timely
satisfy each of the covenants hereunder and conditions to be
satisfied by it as provided in Section 6 of this Agreement. The
Company shall use its best efforts to timely satisfy each of the
covenants hereunder and conditions to be satisfied by it as
provided in Section 7 of this Agreement.

 

(b)          Amendments
to the Registration Statement; Prospectus Supplements; Free Writing
Prospectuses.

 

(i)            Amendments
to the Registration Statement; Prospectus Supplements; Free Writing
Prospectuses. Except as provided in this Agreement and other
than periodic reports and current reports required to be filed
pursuant to the 1934 Act, the Company shall not file with the SEC
any amendment to the Registration Statement that relates to the
Buyer, this Agreement or the transactions contemplated hereby or
thereby or file with the SEC any supplement (each, a
“Prospectus
Supplement”) to the initial Prospectus included in the
Registration Statement at the time it was initially declared
effective by the SEC (the “Initial Prospectus”) that relates
to the Buyer, this Agreement or the transactions contemplated
hereby or thereby with respect to which (a) the Buyer shall not
previously have been advised, (b) the Company shall not have given
due consideration to any comments thereon received from the Buyer
or its counsel, or (c) the Buyer shall reasonably object after
being so advised, unless the Company reasonably has determined that
it is necessary to amend the Registration Statement or make any
supplement to the Prospectus to comply with the 1933 Act or any
other applicable law or regulation, in which case the Company shall
promptly (but in no event later than 24 hours) so inform the Buyer,
the Buyer shall be provided with a reasonable opportunity to review
and comment upon any disclosure relating to the Buyer and the
Company shall expeditiously furnish to the Buyer an electronic copy
thereof. In addition, for so long as, in the reasonable opinion of
counsel for the Buyer, the Prospectus (or in lieu thereof, the
notice referred to in Rule 173(a) under the 1933 Act) is required
to be delivered in connection with any acquisition or sale of
Securities by the Buyer, the Company shall not file the Initial
Prospectus or any Prospectus Supplement with respect to the
Securities without delivering or making available a copy of such
Prospectus (including each Prospectus Supplement in effect as of
such time, if any) to the Buyer promptly.

 

(ii)           The
Company has not made, and agrees that unless it obtains the prior
written consent of the Buyer it will not make, an offer relating to
the Securities that would constitute an “issuer free writing
prospectus” as defined in Rule 433 promulgated under the 1933
Act (an “Issuer Free Writing
Prospectus”) or that would otherwise constitute a
“free writing prospectus” as defined in Rule 405
promulgated under the 1933 Act (a “Free Writing Prospectus”) required
to be filed by the Company or the Buyer with the SEC or retained by
the Company or the Buyer under Rule 433 under the 1933 Act. The
Buyer has not made, and agrees that unless it obtains the prior
written consent of the Company it will not make, an offer relating
to the Securities that would constitute a Free Writing Prospectus
required to be filed by the Company with the SEC or retained by the
Company under Rule 433 under the 1933 Act. Any such Issuer Free
Writing Prospectus or other Free Writing Prospectus consented to by
the Buyer or the Company is referred to in this Agreement as a
“Permitted Free Writing
Prospectus.” The Company agrees that (x) it has
treated and will treat, as the case may be, each Permitted Free
Writing Prospectus as an Issuer Free Writing Prospectus and (y) it
has complied and will comply, as the case may be, with the
requirements of Rules 164 and 433 under the 1933 Act applicable to
any Permitted Free Writing Prospectus, including in respect of
timely filing with the SEC, legending and record
keeping.

 

(c)          Prospectus
Delivery. Immediately prior to execution of this Agreement,
the Company shall have delivered to the Buyer, and as soon as
practicable after execution of this Agreement the Company shall
file, the Prospectus with respect to the Securities to be issued on
the Closing Date, as required under, and in conformity with, the
1933 Act, including Rule 424(b) thereunder. Except as set out in
Section 4(b), the Company shall provide the Buyer a reasonable
opportunity to comment on a draft of each Prospectus Supplement and
any Issuer Free Writing Prospectus, if any, shall give due
consideration to all such comments and, subject to the provisions
of Section 4(b) hereof, shall deliver or make available to the
Buyer, without charge, an electronic copy of the Prospectus
(including any Prospectus Supplement and any Permitted Free Writing
Prospectus, if any) on the Closing Date. The Company consents to
the use of the Prospectus in accordance with the provisions of the
1933 Act and with the securities or “blue sky” laws of
the jurisdictions in which the Securities may be sold by the Buyer,
in connection with the offering and sale of the Securities and for
such period of time thereafter as the Prospectus (or in lieu
thereof, the notice referred to in Rule 173(a) under the 1933 Act)
is required by the 1933 Act to be delivered in connection with
sales of the Securities. If during such period of time any event
shall occur that in the judgment of the Company and its counsel is
required to be set forth in the Registration Statement or the
Prospectus or any Permitted Free Writing Prospectus or should be
set forth therein in order to make the statements made therein (in
the case of the Prospectus, in light of the circumstances under
which they were made) not misleading, or if it is necessary to
amend the Registration Statement or supplement or amend the
Prospectus or any Permitted Free Writing Prospectus to comply with
the 1933 Act or any other applicable law or regulation, the Company
shall forthwith prepare and, subject to Section 4(b) above, file
with the SEC an appropriate amendment to the Registration Statement
or Prospectus Supplement to the Prospectus (or supplement to the
Permitted Free Writing Prospectus) and shall expeditiously furnish
or make available to the Buyer an electronic copy
thereof.

 

 

 8

 

 

 

 

(d)          Stop
Orders. The Company shall advise the Buyer promptly (but in
no event later than 24 hours) and shall confirm such advice in
writing: (i) of the Company’s receipt of notice of any
request by the SEC for amendment of or a supplement to the
Registration Statement, the Prospectus, any Permitted Free Writing
Prospectus or for any additional information; (ii) of the
Company’s receipt of notice of the issuance by the SEC of any
stop order suspending the effectiveness of the Registration
Statement or prohibiting or suspending the use of the Prospectus or
any Prospectus Supplement, or of the suspension of qualification of
the Securities for offering or sale in any jurisdiction, or the
initiation or contemplated initiation of any proceeding for such
purpose; (iii) of the Company becoming aware of the happening of
any event, which makes any statement of a material fact made in the
Registration Statement, the Prospectus or any Permitted Free
Writing Prospectus untrue or which requires the making of any
additions to or changes to the statements then made in the
Registration Statement, the Prospectus or any Permitted Free
Writing Prospectus in order to state a material fact required by
the 1933 Act to be stated therein or necessary in order to make the
statements then made therein (in the case of the Prospectus, in
light of the circumstances under which they were made) not
misleading, or of the necessity to amend the Registration Statement
or supplement the Prospectus or any Permitted Free Writing
Prospectus to comply with the 1933 Act or any other law or (iv) if
at any time following the date hereof the Registration Statement is
not effective or is not otherwise available for the issuance of the
Securities or any Prospectus contained therein is not available for
use for any other reason. Thereafter, the Company shall promptly
notify such holders when the Registration Statement, the
Prospectus, any Permitted Free Writing Prospectus and/or any
amendment or supplement thereto, as applicable, is effective and
available for the issuance of the Securities. If at any time the
SEC shall issue any stop order suspending the effectiveness of the
Registration Statement or prohibiting or suspending the use of the
Prospectus or any Prospectus Supplement, the Company shall use best
efforts to obtain the withdrawal of such order at the earliest
possible time.

 

(e)          Blue
Sky. The Company shall, on or before the Closing Date, take
such action as the Company shall reasonably determine is necessary
in order to obtain an exemption for, or to, qualify the Securities
for sale to the Buyers at the Closing pursuant to this Agreement
under applicable securities or “Blue Sky” laws of the
states of the United States (or to obtain an exemption from such
qualification), and shall provide evidence of any such action so
taken to the Buyers on or prior to the Closing Date. Without
limiting any other obligation of the Company under this Agreement,
the Company shall timely make all filings and reports relating to
the offer and sale of the Securities required under all applicable
securities laws (including, without limitation, all applicable
federal securities laws and all applicable “Blue Sky”
laws), and the Company shall comply with all applicable foreign,
federal, state and local laws, statutes, rules, regulations and the
like relating to the offering and sale of the Securities to the
Buyers.

 

(f)           Reporting
Status. Until the date on which the Buyers shall have sold
all of the Securities (the “Reporting Period”), the Company
shall timely file all reports required to be filed with the SEC
pursuant to the 1934 Act, and the Company shall not terminate its
status as an issuer required to file reports under the 1934 Act
even if the 1934 Act or the rules and regulations thereunder would
no longer require or otherwise permit such
termination.

 

(g)         Use
of Proceeds. The Company will use the proceeds from the sale
of the Securities as described in the Prospectus, but not, directly
or indirectly, for (i) except as set forth in the Registration
Statement, the satisfaction of any indebtedness of the Company or
any of its Subsidiaries, (ii) the redemption or repurchase of any
securities of the Company or any of its Subsidiaries, or (iii) the
settlement of any outstanding litigation.

 

(h)          Financial
Information. The Company agrees to send the following to
each holder of Warrants (each, an “Investor”) during the Reporting
Period (i) unless the following are filed with the SEC through
EDGAR and are available to the public through the EDGAR system,
within one (1) Business Day after the filing thereof with the SEC,
a copy of its Annual Reports on Form 10-K and Quarterly Reports on
Form 10-Q, any interim reports or any consolidated balance sheets,
income statements, stockholders’ equity statements and/or
cash flow statements for any period other than annual, any Current
Reports on Form 8-K and any registration statements (other than on
Form S-8) or amendments filed pursuant to the 1933 Act, (ii) unless
the following are either filed with the SEC through EDGAR or are
otherwise widely disseminated via a recognized news release service
(such as PR Newswire), on the same day as the release thereof,
facsimile copies of all press releases issued by the Company or any
of its Subsidiaries and (iii) unless the following are filed with
the SEC through EDGAR, copies of any notices and other information
made available or given to the stockholders of the Company
generally, contemporaneously with the making available or giving
thereof to the stockholders.

 

(i)           Listing.
The Company shall promptly secure the listing or designation for
quotation (as the case may be) of all of the Underlying Securities
(as defined below) upon each national securities exchange and
automated quotation system, if any, upon which the Common Stock is
then listed or designated for quotation (as the case may be)
(subject to official notice of issuance) and shall maintain such
listing or designation for quotation (as the case may be) of all
Underlying Securities from time to time issuable under the terms of
the Transaction Documents on such national securities exchange or
automated quotation system. The Company shall maintain the Common
Stock’s listing or authorization for quotation (as the case
may be) on the Principal Market, the OTCQX, the OTCBB, The New York
Stock Exchange, the NYSE American, the Nasdaq Capital Market, the
Nasdaq Global Market or the Nasdaq Global Select Market (each, a
“Trading
Market”). Neither the Company nor any of its
Subsidiaries shall take any action which could be reasonably
expected to result in the delisting or suspension of the Common
Stock from all Trading Markets on which the Common Stock is listed
or quoted. The Company shall pay all fees and expenses in
connection with satisfying its obligations under this Section 4(i).
“Underlying
Securities” means the (i) the Common Shares, (ii) the
Warrant Shares and (iii) any capital stock of the Company issued or
issuable with respect to the Common Shares, the Warrant Shares, or
the Warrants, respectively, including, without limitation, (1) as a
result of any stock split, stock dividend, recapitalization,
exchange or similar event or otherwise and (2) shares of capital
stock of the Company into which the shares of Common Stock are
converted or exchanged and shares of capital stock of a Successor
Entity (as defined in the Warrants) into which the shares of Common
Stock are converted or exchanged, in each case, without regard to
any limitations on exercise of the Warrants.

 

(j)           Fees.
The Company shall be responsible for the payment of any placement
agent’s fees, financial advisory fees, transfer agent fees,
DTC fees or broker’s commissions (other than for Persons
engaged by any Buyer) relating to or arising out of the
transactions contemplated hereby (including, without limitation,
any fees or commissions payable to the Lead Placement Agent of the
Co-Lead Placement Agent, who are the Company’s sole placement
agents in connection with the transactions contemplated by this
Agreement). The Company shall pay, and hold each Buyer harmless
against, any liability, loss or expense (including, without
limitation, reasonable attorneys’ fees and out-of-pocket
expenses) arising in connection with any claim relating to any such
payment. Except as otherwise set forth in the Transaction
Documents, each party to this Agreement shall bear its own expenses
in connection with the sale of the Securities to the
Buyers.

 

(k)          Disclosure
of Transactions and Other Material Information.

 

(i)            Disclosure
of Transaction. The Company shall, on or before
9:30 a.m., New York time, on the first (1st) Business Day after
the date of this Agreement, issue a press release (the
“Press Release”)
reasonably acceptable to the Buyers disclosing all the material
terms of the transactions contemplated by the Transaction
Documents. On or before 9:30 a.m., New York time, on the first
(1st)
Business Day after the date of this Agreement, the Company shall
file a Current Report on Form 8-K describing all the material terms
of the transactions contemplated by the Transaction Documents in
the form required by the 1934 Act and attaching all the material
Transaction Documents (including, without limitation, this
Agreement (and all schedules to this Agreement), and the form of
the Warrants) (including all attachments, the “8-K Filing”). From and after the
filing of the Press Release, the Company shall have disclosed all
material, non-public information (if any) provided to any of the
Buyers 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 filing of the 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, affiliates, employees or agents, on
the one hand, and any of the Buyers or any of their affiliates, on
the other hand, shall terminate.

 

 (ii)           Limitations
on Disclosure. The Company shall not, and the Company shall
cause each of its Subsidiaries and each of its and their respective
officers, directors, employees and agents not to, provide any Buyer
with any material, non-public information regarding the Company or
any of its Subsidiaries from and after the date hereof without the
express prior written consent of such Buyer (which may be granted
or withheld in such Buyer’s sole discretion). In the event of
a breach of any of the foregoing covenants, or any of the covenants
or agreements contained in any other Transaction Document, by the
Company, any of its Subsidiaries, or any of its or their respective
officers, directors, employees and agents (as determined in the
reasonable good faith judgment of such Buyer), in addition to any
other remedy provided herein or in the Transaction Documents, such
Buyer shall have the right to make a public disclosure, in the form
of a press release, public advertisement or otherwise, of such
breach or such material, non-public information, as applicable,
without the prior approval by the Company, any of its Subsidiaries,
or any of its or their respective officers, directors, employees or
agents. No Buyer shall have any liability to the Company, any of
its Subsidiaries, or any of its or their respective officers,
directors, employees, affiliates, stockholders or agents, for any
such disclosure. To the extent that the Company delivers any
material, non-public information to a Buyer without such Buyer's
consent, the Company hereby covenants and agrees that such Buyer
shall not have any duty of confidentiality with respect to, or a
duty not to trade on the basis of, such material, non-public
information. Subject to the foregoing, neither the Company, its
Subsidiaries nor any Buyer shall issue any press releases or any
other public statements with respect to the transactions
contemplated hereby; provided, however, the Company shall be
entitled, without the prior approval of any Buyer, to make the
Press Release and any press release or other public disclosure with
respect to such transactions (i) in substantial conformity with the
8-K Filing and contemporaneously therewith and (ii) as is required
by applicable law and regulations (provided that in the case of
clause (i) each Buyer shall be consulted by the Company in
connection with any such press release or other public disclosure
prior to its release). Without the prior written consent of the
applicable Buyer (which may be granted or withheld in such
Buyer’s sole discretion), the Company shall not (and shall
cause each of its Subsidiaries and affiliates to not) disclose the
name of such Buyer in any filing, announcement, release or
otherwise. Notwithstanding anything contained in this Agreement to
the contrary and without implication that the contrary would
otherwise be true, the Company expressly acknowledges and agrees
that no Buyer shall have (unless expressly agreed to by a
particular Buyer after the date hereof in a written definitive and
binding agreement executed by the Company and such particular Buyer
(it being understood and agreed that no Buyer may bind any other
Buyer with respect thereto)), any duty of confidentiality with
respect to, or a duty not to trade on the basis of, any material,
non-public information regarding the Company or any of its
Subsidiaries.

 

9

 

 

 

 

(l)           Reservation
of Shares. So long as any of the Warrants remain
outstanding, the Company shall take all action necessary to at all
times have authorized, and reserved for the purpose of issuance, no
less than 100% of the maximum number of Warrant Shares issuable
upon exercise of all the Warrants then outstanding (without regard
to any limitations on the exercise of the Warrants set forth
therein) (collectively, the “Required Reserve Amount”);
provided that at no time shall the number of shares of Common Stock
reserved pursuant to this Section 4(l) be reduced other than
proportionally in connection with any exercise of the Warrants. If
at any time the number of shares of Common Stock authorized and
reserved for issuance is not sufficient to meet the Required
Reserve Amount, the Company will promptly take all corporate action
necessary to authorize and reserve a sufficient number of shares,
including, without limitation, calling a special meeting of
stockholders to authorize additional shares to meet the Company's
obligations pursuant to the Transaction Documents, in the case of
an insufficient number of authorized shares, obtain stockholder
approval of an increase in such authorized number of shares, and
voting the management shares of the Company in favor of an increase
in the authorized shares of the Company to ensure that the number
of authorized shares is sufficient to meet the Required Reserve
Amount.

 

 (m)         Conduct
of Business. The business of the Company and its
Subsidiaries shall not be conducted in violation of any law,
ordinance or regulation of any Governmental Entity, except where
such violations would not reasonably be expected to result, either
individually or in the aggregate, in a Material Adverse
Effect.

 

(n)          Reserved.

 

(o)          Passive
Foreign Investment Company. The Company shall conduct its
business, and shall cause its Subsidiaries to conduct their
respective businesses, in such a manner as will ensure that the
Company will not be deemed to constitute a passive foreign
investment company within the meaning of Section 1297 of the
Code.

 

(p)          Corporate
Existence. So long as any Buyer beneficially owns any
Warrants, the Company shall not be party to any Fundamental
Transaction (as defined in the Warrants) unless the Company is in
compliance with the applicable provisions governing Fundamental
Transactions set forth in the Warrants.

 

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

 

(r)           Regulation
M. The Company will not take any action prohibited by
Regulation M under the 1934 Act, in connection with the
distribution of the Securities contemplated hereby.

 

(s)          Closing
Documents. On or prior to fourteen (14) calendar days after
the Closing Date, the Company agrees to deliver, or cause to be
delivered, to each Buyer, the Placement Agent and Sichenzia Ross
Ference Kesner LLP a complete closing set of the executed
Transaction Documents, Securities and any other document required
to be delivered to any party pursuant to Section 7 hereof or
otherwise.

 

(t)           Buyer
Leak-Out.                                Each
Buyer agrees that from the date of this Agreement and ending at
4:00 pm (New York City time) on _________, 2018 (such period, the
“Restricted Period”), neither such Buyer, nor any
affiliate of such Buyer which (x) had or has knowledge of the
transactions contemplated by this Agreement, (y) has or shares
discretion relating to such Buyer’s investments or trading or
information concerning such Buyer’s investments, including in
respect of the Securities, or (z) is subject to such Buyer’s
review or input concerning such affiliate’s investments or
trading (together, the “Buyer’s Trading
Affiliates”), collectively, shall sell, dispose or otherwise
transfer, directly or indirectly, (including, without limitation,
any sales, short sales, swaps or any derivative transactions that
would be equivalent to any sales or short positions) on any Trading
Day during the Restricted Period (any such date, a “Date of
Determination”), shares of Common Stock, or shares of Common
Stock underlying any Convertible Securities, held by the Buyer on
the date hereof, including the Shares and the Warrant Shares
issuable upon exercise of the Warrants (collectively, the
“Restricted Securities”), in an amount more than __% of
the trading volume of Common Stock as reported by Bloomberg, LP for
the applicable Date of Determination (“Leak-Out
Percentage”); provided, that the foregoing restriction shall
not apply to any actual “long” (as defined in
Regulation SHO of the 1934 Act) sales by the Holder or any of the
Holder’s Trading Affiliates at a price greater than
$_________ (in each case, as adjusted for stock splits, stock
dividends, stock combinations, recapitalizations or other similar
events occurring after the date hereof).

 

 Notwithstanding
anything herein to the contrary, during the Restricted Period, the
Buyer may, directly or indirectly, sell or transfer all, or any
part, of any Restricted Securities to any Person (an
“Assignee”) in a transaction which does not need to be
reported on the consolidated tape on the Principal Market, without
complying with (or otherwise limited by) the restrictions set forth
in this Leak-Out Agreement; provided, that as a condition to any
such sale or transfer an authorized signatory of the Company and
such Assignee duly execute and deliver a leak-out agreement in the
form of this Section 4(t) (an “Assignee Agreement”, and
each such transfer a “Permitted Transfer”) and,
subsequent to a Permitted Transfer, sales of the Buyer and the
Buyer’s Trading Affiliates and all Assignees (other than any
such sales that constitute Permitted Transfers) shall be aggregated
for all purposes of this Section 4(t) and all Assignee
Agreements.

 

	
 

	

5.

	

REGISTER; TRANSFER AGENT INSTRUCTIONS; LEGEND.

 

(a)        
    Register. The Company shall
maintain at its principal executive offices (or such other office
or agency of the Company as it may designate by notice to each
holder of Securities), a register for the Common Shares and the
Warrants in which the Company shall record the name and address of
the Person in whose name the Common Shares and the Warrants have
been issued (including the name and address of each transferee),
the number of Common Shares held by such Person and the number of
Warrant Shares issuable upon exercise of the Warrants held by such
Person. The Company shall keep the register open and available at
all times during business hours for inspection of any Buyer or its
legal representatives.

 

 (b)          Transfer
Agent Instructions. The Company shall issue irrevocable
instructions to its Transfer Agent and any subsequent transfer
agent in a form acceptable to each of the Buyers (the
“Irrevocable Transfer Agent
Instructions”) to issue certificates or credit shares
to the applicable balance accounts at DTC, registered in the name
of each Buyer or its respective nominee(s), for the Common Shares
and the Warrant Shares in such amounts as specified from time to
time by each Buyer to the Company upon the exercise of the Warrants
(as the case may be). The Company represents and warrants that no
instruction other than the Irrevocable Transfer Agent Instructions
referred to in this Section 5(b) will be given by the Company
to its Transfer Agent with respect to the Securities, and that the
Securities shall otherwise be freely transferable on the books and
records of the Company, as applicable, to the extent provided in
this Agreement and the other Transaction Documents. If a Buyer
effects a sale, assignment or transfer of the Securities, the
Company shall permit the transfer and shall promptly instruct its
Transfer Agent to issue one or more certificates or credit shares
to the applicable balance accounts at DTC in such name and in such
denominations as specified by such Buyer to effect such sale,
transfer or assignment. The Company acknowledges that a breach by
it of its obligations hereunder will cause irreparable harm to a
Buyer. Accordingly, the Company acknowledges that the remedy at law
for a breach of its obligations under this Section 5(b) will
be inadequate and agrees, in the event of a breach or threatened
breach by the Company of the provisions of this Section 5(b),
that a Buyer shall be entitled, in addition to all other available
remedies, to an order and/or injunction restraining any breach and
requiring immediate issuance and transfer, without the necessity of
showing economic loss and without any bond or other security being
required. The Company shall cause its counsel to issue each legal
opinion referred to in the Irrevocable Transfer Agent Instructions
to the Transfer Agent as follows: (i) at the Closing with respect
to the Common Shares, (ii) upon each exercise of the Warrants
(unless such issuance covered by a prior legal opinion previously
delivered to the Transfer Agent), and (iii) on each date a
registration statement with respect to the issuance or resale of
any of the Securities is declared effective by the SEC. Any fees
(with respect to the Transfer Agent, counsel to the Company or
otherwise) associated with the issuance of such opinions or the
removal of any legends on any of the Securities shall be borne by
the Company.

 

 

10

 

 

 

 

(c)          Legends.
Certificates and any other instruments evidencing the Common Shares
shall not bear any restrictive or other legend. For so long as a
Registration Statement is effective for the Warrant Shares, or as
long as there is an exemption from registration of the resale of
the Warrant Shares under the 1933 Act, certificates and any other
instruments evidencing the Warrant Shares shall not bear any
restrictive or other legend.

 

(d)          FAST
Compliance. While any Warrants remain outstanding, the
Company shall maintain a transfer agent that participates in the
DTC Fast Automated Securities Transfer Program.

 

	
 

	

6.

	

CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL.

 

The
obligation of the Company hereunder to issue and sell the Common
Shares and the related Warrants to each Buyer at the Closing is
subject to the satisfaction, at or before the Closing Date, of each
of the following conditions, provided that these conditions are for
the Company’s sole benefit and may be waived by the Company
at any time in its sole discretion by providing each Buyer with
prior written notice thereof:

 

(a)          Such
Buyer shall have executed each of the other Transaction Documents
to which it is a party and delivered the same to the
Company.

 

(b)          Such
Buyer and each other Buyer shall have delivered to the Company the
Purchase Price for the Common Shares and the related Warrants being
purchased by such Buyer at the Closing by wire transfer of
immediately available funds in accordance with the Flow of Funds
Letter.

 

 

(c)          The
representations and warranties of such Buyer shall be true and
correct in all material respects as of the date when made and as of
the Closing Date as though originally made at that time (except for
representations and warranties that speak as of a specific date,
which shall be true and correct as of such specific date), and such
Buyer shall have performed, satisfied and complied in all material
respects with the covenants, agreements and conditions required by
this Agreement to be performed, satisfied or complied with by such
Buyer at or prior to the Closing Date.

 

	
 

	

7.

	

CONDITIONS TO EACH BUYER’S OBLIGATION TO
PURCHASE.

 

The
obligation of each Buyer hereunder to purchase its Common Shares
and its related Warrants at the Closing is subject to the
satisfaction, at or before the Closing Date, of each of the
following conditions, provided that these conditions are for each
Buyer’s sole benefit and may be waived by such Buyer at any
time in its sole discretion by providing the Company with prior
written notice thereof:

 

(a)          The
Company shall have duly executed and delivered to such Buyer each
of the Transaction Documents and the Company shall have duly
executed and delivered to such Buyer (x) such aggregate number of
Common Shares set forth across from such Buyer’s name in
column (3) of the Schedule of Buyers, and (y) Warrants (initially
for such aggregate number of Warrant Shares as is set forth across
from such Buyer’s name in column (4) of the Schedule of
Buyers), in each case, as being purchased by such Buyer at the
Closing pursuant to this Agreement.

 

(b)          Such
Buyer, the Lead Placement Agent and the Co-Lead Placement Agent
shall have received the opinion of Ortoli Rosenstadt LLP, the
Company’s counsel, dated as of the Closing Date, in the form
acceptable to such Buyer.

 

(c)          The
Company shall have delivered to such Buyer a copy of the
Irrevocable Transfer Agent Instructions, in the form acceptable to
such Buyer, which instructions shall have been delivered to and
acknowledged in writing by the Company’s transfer
agent.

 

(d)          The
Company shall have delivered to such Buyer a certificate evidencing
the formation and good standing of the Company in such
entity’s jurisdiction of formation issued by the Secretary of
State (or comparable office) of such jurisdiction of formation as
of a date within twenty (20) days of the Closing Date.

 

(e)          The
Company shall have delivered to such Buyer a certificate evidencing
the Company’s qualification as a foreign corporation and good
standing issued by the Secretary of State (or comparable office) of
each jurisdiction in which the Company conducts business and is
required to so qualify, as of a date within twenty (20) days of the
Closing Date.

 

(f)           The
Company shall have delivered to such Buyer a certified copy of the
Articles of Incorporation as certified by the Nevada Secretary of
State within twenty (20) days of the Closing Date.

 

(g)          The
Company shall have delivered to such Buyer a certificate, in the
form acceptable to such Buyer, executed by the Chief Executive
Officer of the Company and dated as of the Closing Date, as to (i)
the resolutions consistent with Section 3(b) as adopted by the
Company’s board of directors in a form reasonably acceptable
to such Buyer, (ii) the Articles of Incorporation of the Company,
(iii) the By-laws of the Company, each as in effect at the
Closing, (iv) stating the matter in Section 7(h) and (v) as to such
other matters as may be reasonably requested by such Buyer in the
form acceptable to such Buyer.

 

(h)          Each
and every representation and warranty of the Company shall be true
and correct as of the date when made and as of the Closing Date as
though originally made at that time (except for representations and
warranties that speak as of a specific date, which shall be true
and correct as of such specific date) and the Company shall have
performed, satisfied and complied in all respects with the
covenants, agreements and conditions required to be performed,
satisfied or complied with by the Company at or prior to the
Closing Date.

 

 (i)           The
Company shall have delivered to such Buyer a letter from the
Company’s transfer agent certifying the number of shares of
Common Stock outstanding on the Closing Date immediately prior to
the Closing.

 

(j)           The
Common Stock (A) shall be designated for quotation or listed (as
applicable) on the Principal Market and (B) shall not have been
suspended, as of the Closing Date, by the SEC or the Principal
Market from trading on the Principal Market.

 

 

11

 

 

 

 

(k)          The
Company shall have obtained all governmental, regulatory or third
party consents and approvals, if any, necessary for the sale of the
Securities, including without limitation, those required by the
Principal Market, if any.

 

(l)           No
statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or
endorsed by any court or Governmental Entity of competent
jurisdiction that prohibits the consummation of any of the
transactions contemplated by the Transaction
Documents.

 

(m)         Since
the date of execution of this Agreement, no event or series of
events shall have occurred that reasonably would have or result in
a Material Adverse Effect.

 

(n)          Reserved.

 

(o)          Such
Buyer shall have received a letter on the letterhead of the
Company, duly executed by the Chief Executive Officer of the
Company, setting forth the wire amounts of each Buyer and the wire
transfer instructions of the Company (the “Flow of Funds
Letter”).

 

(p)          From
the date hereof to the Closing Date, (i) trading in the Common
Stock shall not have been suspended by the SEC or the Principal
Market (except for any suspension of trading of limited duration
agreed to by the Company, which suspension shall be terminated
prior to the Closing), and, (ii) 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 the Principal 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 each Buyer, makes it
impracticable or inadvisable to purchase the Securities at the
Closing

 

(q)          The
Registration Statement shall be effective and available for the
issuance and sale of the Securities hereunder and the Company shall
have delivered to such Buyer the Prospectus as required
thereunder.

 

(r)           The
Company and its Subsidiaries shall have delivered to such Buyer
such other documents, instruments or certificates relating to the
transactions contemplated by this Agreement as such Buyer or its
counsel may reasonably request. 

 

	
 

	

8.

	

TERMINATION.

 

In the
event that the Closing shall not have occurred with respect to a
Buyer within five (5) days of the date hereof, then such Buyer
shall have the right to terminate its obligations under this
Agreement with respect to itself at any time on or after the close
of business on such date without liability of such Buyer to any
other party; provided, however, (i) the right to terminate this
Agreement under this Section 8 shall not be available to such
Buyer if the failure of the transactions contemplated by this
Agreement to have been consummated by such date is the result of
such Buyer’s breach of this Agreement and (ii) the
abandonment of the sale and purchase of the Common Shares and the
Warrants shall be applicable only to such Buyer providing such
written notice, provided further that no such termination shall
affect any obligation of the Company under this Agreement to
reimburse such Buyer for the expenses described in
Section 4(j) above. Nothing contained in this Section 8
shall be deemed to release any party from any liability for any
breach by such party of the terms and provisions of this Agreement
or the other Transaction Documents or to impair the right of any
party to compel specific performance by any other party of its
obligations under this Agreement or the other Transaction
Documents.

 

	
 

	

9.

	

MISCELLANEOUS.

 

(a)          Governing
Law; Jurisdiction; Jury Trial.
All questions concerning the construction, validity, enforcement
and interpretation of this Agreement shall be governed by the
internal laws of the State of New York, without giving effect to
any choice of law or conflict of law provision or rule (whether of
the State of New York or any other jurisdictions) that would cause
the application of the laws of any jurisdictions other than the
State of New York. The Company and each Buyer hereby irrevocably
submit 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 under any of the other Transaction Documents or with any
transaction contemplated hereby or thereby, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of
any such court, that such suit, action or proceeding is brought in
an inconvenient forum or that the venue of such suit, action or
proceeding is improper. Each party hereby irrevocably waives
personal service of process and consents to process being served in
any such suit, action or proceeding by mailing a copy thereof to
such party at the address for such notices to it under this
Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained
herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law. Nothing contained herein
shall be deemed or operate to preclude any Buyer from bringing suit
or taking other legal action against the Company in any other
jurisdiction to enforce a judgment or other court ruling in favor
of such Buyer. EACH PARTY HEREBY IRREVOCABLY
WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY
TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR UNDER ANY
OTHER TRANSACTION DOCUMENT OR IN CONNECTION WITH OR ARISING OUT OF
THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY OR THEREBY. 

 

(b)          Counterparts.
This Agreement may be executed in two or more identical
counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been
signed by each party and delivered to the other party. In the event
that any signature is delivered by facsimile transmission or by an
e-mail which contains a portable document format (.pdf) file of an
executed signature page, such signature page 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 signature page were an original thereof.

 

(c)          Headings;
Gender. The headings of this Agreement are for convenience
of reference and shall not form part of, or affect the
interpretation of, this Agreement. Unless the context clearly
indicates otherwise, each pronoun herein shall be deemed to include
the masculine, feminine, neuter, singular and plural forms thereof.
The terms “including,” “includes,”
“include” and words of like import shall be construed
broadly as if followed by the words “without
limitation.” The terms “herein,”
“hereunder,” “hereof” and words of like
import refer to this entire Agreement instead of just the provision
in which they are found.

 

12

 

 

 

 

(d)          Severability;
Maximum Payment Amounts. If any provision of this Agreement
is prohibited by law or otherwise determined to be invalid or
unenforceable by a court of competent jurisdiction, the provision
that would otherwise be prohibited, invalid or unenforceable shall
be deemed amended to apply to the broadest extent that it would be
valid and enforceable, and the invalidity or unenforceability of
such provision shall not affect the validity of the remaining
provisions of this Agreement so long as this Agreement as so
modified continues to express, without material change, the
original intentions of the parties as to the subject matter hereof
and the prohibited nature, invalidity or unenforceability of the
provision(s) in question does not substantially impair the
respective expectations or reciprocal obligations of the parties or
the practical realization of the benefits that would otherwise be
conferred upon the parties. The parties will endeavor in good faith
negotiations to replace the prohibited, invalid or unenforceable
provision(s) with a valid provision(s), the effect of which comes
as close as possible to that of the prohibited, invalid or
unenforceable provision(s). Notwithstanding anything to the
contrary contained in this Agreement or any other Transaction
Document (and without implication that the following is required or
applicable), it is the intention of the parties that in no event
shall amounts and value paid by the Company and/or any of its
Subsidiaries (as the case may be), or payable to or received by any
of the Buyers, under the Transaction Documents (including without
limitation, any amounts that would be characterized as
“interest” under applicable law) exceed amounts
permitted under any applicable law. Accordingly, if any obligation
to pay, payment made to any Buyer, or collection by any Buyer
pursuant the Transaction Documents is finally judicially determined
to be contrary to any such applicable law, such obligation to pay,
payment or collection shall be deemed to have been made by mutual
mistake of such Buyer, the Company and its Subsidiaries and such
amount shall be deemed to have been adjusted with retroactive
effect to the maximum amount or rate of interest, as the case may
be, as would not be so prohibited by the applicable law. Such
adjustment shall be effected, to the extent necessary, by reducing
or refunding, at the option of such Buyer, the amount of interest
or any other amounts which would constitute unlawful amounts
required to be paid or actually paid to such Buyer under the
Transaction Documents. For greater certainty, to the extent that
any interest, charges, fees, expenses or other amounts required to
be paid to or received by such Buyer under any of the Transaction
Documents or related thereto are held to be within the meaning of
“interest” or another applicable term to otherwise be
violative of applicable law, such amounts shall be pro-rated over
the period of time to which they relate.

 

 (e)          Entire
Agreement; Amendments. This Agreement, the other Transaction
Documents and the schedules and exhibits attached hereto and
thereto and the instruments referenced herein and therein supersede
all other prior oral or written agreements between the Buyers, the
Company, its Subsidiaries, their affiliates and Persons acting on
their behalf, including, without limitation, any transactions by
any Buyer with respect to Common Stock or the Securities, and the
other matters contained herein and therein, and this Agreement, the
other Transaction Documents, the schedules and exhibits attached
hereto and thereto and the instruments referenced herein and
therein contain the entire understanding of the parties solely with
respect to the matters covered herein and therein; provided,
however, nothing contained in this Agreement or any other
Transaction Document shall (or shall be deemed to) (i) have any
effect on any agreements any Buyer has entered into with, or any
instruments any Buyer has received from, the Company or any of its
Subsidiaries prior to the date hereof with respect to any prior
investment made by such Buyer in the Company or (ii) waive, alter,
modify or amend in any respect any obligations of the Company or
any of its Subsidiaries, or any rights of or benefits to any Buyer
or any other Person, in any agreement entered into prior to the
date hereof between or among the Company and/or any of its
Subsidiaries and any Buyer, or any instruments any Buyer received
from the Company and/or any of its Subsidiaries prior to the date
hereof, and all such agreements and instruments shall continue in
full force and effect. Except as specifically set forth herein or
therein, neither the Company nor any Buyer makes any
representation, warranty, covenant or undertaking with respect to
such matters. For clarification purposes, the Recitals are part of
this Agreement. No provision of this Agreement may be amended other
than by an instrument in writing signed by the Company and the
Required Holders (as defined below), and any amendment to any
provision of this Agreement made in conformity with the provisions
of this Section 9(e) shall be binding on all Buyers and
holders of Securities, as applicable, provided that no such
amendment shall be effective to the extent that it (A) applies to
less than all of the holders of the Securities then outstanding or
(B) imposes any obligation or liability on any Buyer without such
Buyer’s prior written consent (which may be granted or
withheld in such Buyer’s sole discretion); provided further
that any such amendment or waiver that materially and adversely
affects the rights of the Placement Agent shall require the prior
written consent of the Placement Agent. No waiver shall be
effective unless it is in writing and signed by an authorized
representative of the waiving party, provided that the Required
Holders may waive any provision of this Agreement, and any waiver
of any provision of this Agreement made in conformity with the
provisions of this Section 9(e) shall be binding on all Buyers
and holders of Securities, as applicable, provided that no such
waiver shall be effective to the extent that it (1) applies to less
than all of the holders of the Securities then outstanding (unless
a party gives a waiver as to itself only) or (2) imposes any
obligation or liability on any Buyer without such Buyer’s
prior written consent (which may be granted or withheld in such
Buyer’s sole discretion). No consideration (other than
reimbursement of legal fees) shall be offered or paid to any Person
to amend or consent to a waiver or modification of any provision of
any of the Transaction Documents unless the same consideration also
is offered to all of the parties to the Transaction Documents, all
holders of the Common Shares, or all holders of the Warrants (as
the case may be). From the date hereof and while any Warrants are
outstanding, the Company shall not be permitted to receive any
consideration from a Buyer or a holder of Warrants that is not
otherwise contemplated by the Transaction Documents in order to,
directly or indirectly, induce the Company or any Subsidiary (i) to
treat such Buyer or holder of Warrants in a manner that is more
favorable than to other similarly situated Buyers or holders of
Warrants, as applicable, or (ii) to treat any Buyer(s) or holder(s)
of Warrants in a manner that is less favorable than the Buyer or
holder of Warrants that is paying such consideration; provided,
however, that the determination of whether a Buyer has been treated
more or less favorably than another Buyer shall disregard any
securities of the Company purchased or sold by any Buyer. The
Company has not, directly or indirectly, made any agreements with
any Buyers relating to the terms or conditions of the transactions
contemplated by the Transaction Documents except as set forth in
the Transaction Documents. Without limiting the foregoing, the
Company confirms that, except as set forth in this Agreement, no
Buyer has made any commitment or promise or has any other
obligation to provide any financing to the Company, any Subsidiary
or otherwise. As a material inducement for each Buyer to enter into
this Agreement, the Company expressly acknowledges and agrees that
(x) no due diligence or other investigation or inquiry conducted by
a Buyer, any of its advisors or any of its representatives shall
affect such Buyer’s right to rely on, or shall modify or
qualify in any manner or be an exception to any of, the
Company’s representations and warranties contained in this
Agreement or any other Transaction Document and (y) unless a
provision of this Agreement or any other Transaction Document is
expressly preceded by the phrase “except as disclosed in the
SEC Documents,” nothing contained in any of the SEC Documents
shall affect such Buyer’s right to rely on, or shall modify
or qualify in any manner or be an exception to any of, the
Company’s representations and warranties contained in this
Agreement or any other Transaction Document. “Required Holders” means (I) prior
to the Closing Date, Buyers entitled to purchase, in the aggregate,
at least a majority of the number of Common Shares at the Closing
and (II) on or after the Closing Date, holders of, in the
aggregate, at least a majority of the Underlying Securities as of
such time (excluding any Underlying Securities held by the Company
or any of its Subsidiaries as of such time) issued or issuable
hereunder or pursuant to the Warrants. 

 

(f)           Notices.
Any notices, consents, waivers or other communications required or
permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered: (i) upon
receipt, when delivered personally; (ii) upon receipt, when sent by
facsimile (provided confirmation of transmission is mechanically or
electronically generated and kept on file by the sending party) or
electronic mail (provided that such sent email is kept on file
(whether electronically or otherwise) by the sending party and the
sending party does not receive an automatically generated message
from the recipient's email server that such e-mail could not be
delivered to such recipient); or (iii) one (1) Business Day after
deposit with an overnight courier service with next day delivery
specified, in each case, properly addressed to the party to receive
the same. The addresses, facsimile numbers and e-mail addresses for
such communications shall be:

 

If to
the Company:

 

Q
BioMed Inc.

c/o
Ortoli Rosenstadt LLP

501
Madison Avenue, New York NY 11238

Telephone:
212-588-0022

Facsimile:
212-826-9307

Attention: Denis
Corin

E-Mail:
dcorin@qbiomed.com

 

With a
copy (for informational purposes only) to:

 

 

Ortoli
Rosenstadt LLP

501
Madison Avenue, New York NY 11238

Telephone:
212-588-0022

Facsimile:
212-826-9307

Attention: William
Rosenstadt

E-Mail:
wsr@ortolirosenstadt.com

 

 

 

If to
the Transfer Agent:

 

VStock
Transfer, LLC

18
Lafayette Place

Woodmere, New York
11598

Phone:
(212) 828-8436 Ext. 123

Facsimile: (646)
536-3179

 

 

13

 

 

 

 

 

If to a
Buyer, to its address, e-mail address and facsimile number set
forth on the Schedule of Buyers, with copies to such Buyer’s
representatives as set forth on the Schedule of
Buyers.

 

If to
the Placement Agent:

 

Roth
Capital Partners, LLC

888 San
Clemente Drive

Newport
Beach, CA 92660

Facsimile: (949)
720-7215

Attention:
Aaron M. Gurewitz

E-mail:
agurewitz@roth.com

 

With a
copy (for informational purposes only) to:

 

Sichenzia Ross
Ference Kesner LLP

 

1185
Avenue of the Americas, 37th Floor

 

New
York, NY 10036

 

Telephone:
(212) 930-9700

 

Facsimile:
(212) 930-9725

 

Attention:
Gregory Sichenzia, Esq.

 

E-mail:
gsichenzia@srfkllp.com

 

or, in
each case, to such other address, e-mail address and/or facsimile
number and/or to the attention of such other Person as the
recipient party has specified by written notice given to each other
party five (5) days prior to the effectiveness of such change.
Written confirmation of receipt (A) given by the recipient of such
notice, consent, waiver or other communication, (B) mechanically or
electronically generated by the sender’s facsimile machine or
e-mail containing the time, date, recipient facsimile number and,
with respect to each facsimile transmission, an image of the first
page of such transmission or (C) provided by an overnight courier
service shall be rebuttable evidence of personal service, receipt
by facsimile or receipt from an overnight courier service in
accordance with clause (i), (ii) or (iii) above,
respectively.

 

 (g)          Successors
and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties and their respective successors and
assigns, including any purchasers of any of the Warrants (but
excluding any purchasers of Underlying Securities, unless pursuant
to a written assignment by such Buyer). The Company shall not
assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Required Holders,
including, without limitation, by way of a Fundamental Transaction
(as defined in the Warrants) (unless the Company is in compliance
with the applicable provisions governing Fundamental Transactions
set forth in the Warrants). A Buyer may assign some or all of its
rights hereunder in connection with any transfer of any of its
Securities without the consent of the Company, in which event such
assignee shall be deemed to be a Buyer hereunder with respect to
such assigned rights.

 

(h)          No
Third Party Beneficiaries. This Agreement is intended for
the benefit of the parties hereto and their respective permitted
successors and assigns, and is not for the benefit of, nor may any
provision hereof be enforced by, any other Person, other than (i)
the Indemnitees referred to in Section 9(m) and (ii) the
Placement Agent shall be a third party beneficiary of this Section
9(h) and Sections 1(e), 2(e), 2(f), 3(g), 3(ee), 4(j), 4(s), 7(b),
9(e) and 9(i).

 

(i)           Reliance
by the Placement Agent. Each party agrees and acknowledges
that the Placement Agent may rely on the representations,
warranties, agreements and covenants of the Company contained in
this Agreement and may rely on the representations and warranties
of the respective Buyers contained in this Agreement as if such
representations, warranties, agreements, and covenants, as
applicable, were made directly to the Placement Agent. The parties
further agree that the Placement Agent may rely on or, if the
Placement Agent so requests, be specifically named as an addressee
of, the legal opinions to be delivered pursuant to Section 7(b) of
this Agreement.

 

(j)           Exculpation
of Placement Agent. Each party hereto agrees for the express
benefit of each of the Placement Agent, their affiliates and
representatives that:

 

(i)            Neither
the Placement Agent nor any of its affiliates or any of its
representatives (1) has any duties or obligations other than those
specifically set forth herein or in the Engagement Letter; (2)
shall be liable for any improper payment made in accordance with
the information provided by the Company; (3) makes any
representation or warranty, or has any responsibilities as to the
validity, accuracy, value or genuineness of any information,
certificates or documentation delivered by or on behalf of the
Company pursuant to this Agreement or the Transaction Documents or
in connection with any of the transactions contemplated hereby; or
(4) shall be liable (x) for any action taken, suffered or omitted
by any of them in good faith and reasonably believed to be
authorized or within the discretion or rights or powers conferred
upon it by this Agreement or any Transaction Document or (y) for
anything which any of them may do or refrain from doing in
connection with this Agreement or any Transaction Document, except
for such party's own gross negligence, willful misconduct or bad
faith.

 

(ii)           The
Placement Agent, and its affiliates and representatives shall be
entitled to (1) rely on, and shall be protected in acting upon, any
certificate, instrument, opinion, notice, letter or any other
document or security delivered to any of them by or on behalf of
the Company, and (2) be indemnified by the Company for acting as
Placement Agent hereunder pursuant the indemnification provisions
set forth in the Engagement Letter.

 

(k)          Survival.
The representations, warranties, agreements and covenants shall
survive the Closing. Each Buyer shall be responsible only for its
own representations, warranties, agreements and covenants
hereunder.

 

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

 

 

14

 

 

 

 

(m)         Indemnification.

 

(i)            In
consideration of each Buyer’s execution and delivery of the
Transaction Documents and acquiring the Securities thereunder and
in addition to all of the Company’s other obligations under
the Transaction Documents, the Company shall defend, protect,
indemnify and hold harmless each Buyer and each holder of any
Securities and all of their stockholders, partners, members,
officers, directors, employees and direct or indirect investors and
any of the foregoing Persons’ agents or other representatives
(including, without limitation, those retained in connection with
the transactions contemplated by this Agreement) (collectively, the
“Indemnitees”)
from and against any and all actions, causes of action, suits,
claims, losses, costs, penalties, fees, liabilities and damages,
and expenses in connection therewith (irrespective of whether any
such Indemnitee is a party to the action for which indemnification
hereunder is sought), and including reasonable attorneys’
fees and disbursements (the “Indemnified Liabilities”),
incurred by any Indemnitee as a result of, or arising out of, or
relating to (i) any misrepresentation or breach of any
representation or warranty made by the Company or any Subsidiary in
any of the Transaction Documents, (ii) any breach of any covenant,
agreement or obligation of the Company or any Subsidiary contained
in any of the Transaction Documents or (iii) any cause of action,
suit, proceeding or claim brought or made against such Indemnitee
by a third party (including for these purposes a derivative action
brought on behalf of the Company or any Subsidiary) or which
otherwise involves such Indemnitee that arises out of or results
from (A) the execution, delivery, performance or enforcement of any
of the Transaction Documents, (B) any transaction financed or to be
financed in whole or in part, directly or indirectly, with the
proceeds of the issuance of the Securities, (C) any disclosure
properly made by such Buyer pursuant to Section 4(k), or (D)
the status of such Buyer or holder of the Securities either as an
investor in the Company pursuant to the transactions contemplated
by the Transaction Documents or as a party to this Agreement
(including, without limitation, as a party in interest or otherwise
in any action or proceeding for injunctive or other equitable
relief). To the extent that the foregoing undertaking by the
Company may be unenforceable for any reason, the Company shall make
the maximum contribution to the payment and satisfaction of each of
the Indemnified Liabilities which is permissible under applicable
law.

 

(ii)           Promptly
after receipt by an Indemnitee under this Section 9(m) of notice of
the commencement of any action or proceeding (including any
governmental action or proceeding) involving an Indemnified
Liability, such Indemnitee shall, if a claim in respect thereof is
to be made against the Company under this Section 9(m), deliver to
the Company a written notice of the commencement thereof, and the
Company shall have the right to participate in, and, to the extent
the Company so desires, to assume control of the defense thereof
with counsel mutually satisfactory to the Company and the
Indemnitee; provided, however, that an Indemnitee shall have the
right to retain its own counsel with the fees and expenses of such
counsel to be paid by the Company if: (A) the Company has agreed in
writing to pay such fees and expenses; (B) the Company shall have
failed promptly to assume the defense of such Indemnified Liability
and to employ counsel reasonably satisfactory to such Indemnitee in
any such Indemnified Liability; or (C) the named parties to any
such Indemnified Liability (including any impleaded parties)
include both such Indemnitee and the Company, and such Indemnitee
shall have been advised by counsel that a conflict of interest is
likely to exist if the same counsel were to represent such
Indemnitee and the Company (in which case, if such Indemnitee
notifies the Company in writing that it elects to employ separate
counsel at the expense of the Company, then the Company shall not
have the right to assume the defense thereof and such counsel shall
be at the expense of the Company), provided further, that in the
case of clause (C) above the Company shall not be responsible for
the reasonable fees and expenses of more than one (1) separate
legal counsel for the Indemnitees. The Indemnitee shall reasonably
cooperate with the Company in connection with any negotiation or
defense of any such action or Indemnified Liability by the Company
and shall furnish to the Company all information reasonably
available to the Indemnitee which relates to such action or
Indemnified Liability. The Company shall keep the Indemnitee
reasonably apprised at all times as to the status of the defense or
any settlement negotiations with respect thereto. The Company shall
not be liable for any settlement of any action, claim or proceeding
effected without its prior written consent, provided, however, that
the Company shall not unreasonably withhold, delay or condition its
consent. The Company shall not, without the prior written consent
of the Indemnitee, consent to entry of any judgment or enter into
any settlement or other compromise which does not include as an
unconditional term thereof the giving by the claimant or plaintiff
to such Indemnitee of a release from all liability in respect to
such Indemnified Liability or litigation, and such settlement shall
not include any admission as to fault on the part of the
Indemnitee. Following indemnification as provided for hereunder,
the Company shall be subrogated to all rights of the Indemnitee
with respect to all third parties, firms or corporations relating
to the matter for which indemnification has been made. The failure
to deliver written notice to the Company within a reasonable time
of the commencement of any such action shall not relieve the
Company of any liability to the Indemnitee under this Section 9(m),
except to the extent that the Company is materially and adversely
prejudiced in its ability to defend such action.

 

 (iii)          The
indemnification required by this Section 9(m) shall be made by
periodic payments of the amount thereof during the course of the
investigation or defense, within ten (10) days after bills are
received or Indemnified Liabilities are incurred.

 

(iv)          The
indemnity agreement contained herein shall be in addition to (A)
any cause of action or similar right of the Indemnitee against the
Company or others, and (B) any liabilities the Company may be
subject to pursuant to the law.

 

(n)          Construction.
The language used in this Agreement will be deemed to be the
language chosen by the parties to express their mutual intent, and
no rules of strict construction will be applied against any party.
No specific representation or warranty shall limit the generality
or applicability of a more general representation or warranty. Each
and every reference to share prices, shares of Common Stock and any
other numbers in this Agreement that relate to the Common Stock
shall be automatically adjusted for any stock splits, stock
dividends, stock combinations, recapitalizations or other similar
transactions that occur with respect to the Common Stock after the
date of this Agreement. Notwithstanding anything in this Agreement
to the contrary, for the avoidance of doubt, nothing contained
herein shall constitute a representation or warranty against, or a
prohibition of, any actions with respect to the borrowing of,
arrangement to borrow, identification of the availability of,
and/or securing of, securities of the Company in order for such
Buyer (or its broker or other financial representative) to effect
short sales or similar transactions in the future.

 

(o)          Remedies.
Each Buyer and in the event of assignment by Buyer of its rights
and obligations hereunder, each holder of Securities, shall have
all rights and remedies set forth in the Transaction Documents and
all rights and remedies which such holders have been granted at any
time under any other agreement or contract and all of the rights
which such holders have under any law. Any Person having any rights
under any provision of this Agreement shall be entitled to enforce
such rights specifically (without posting a bond or other
security), to recover damages by reason of any breach of any
provision of this Agreement and to exercise all other rights
granted by law. Furthermore, the Company recognizes that in the
event that it or any Subsidiary fails to perform, observe, or
discharge any or all of its or such Subsidiary’s (as the case
may be) obligations under the Transaction Documents, any remedy at
law would inadequate relief to the Buyers. The Company therefore
agrees that the Buyers shall be entitled to specific performance
and/or temporary, preliminary and permanent injunctive or other
equitable relief from any court of competent jurisdiction in any
such case without the necessity of proving actual damages and
without posting a bond or other security. The remedies provided in
this Agreement and the other Transaction Documents shall be
cumulative and in addition to all other remedies available under
this Agreement and the other Transaction Documents, at law or in
equity (including a decree of specific performance and/or other
injunctive relief).

 

(p)          Withdrawal
Right. Notwithstanding anything to the contrary contained in
(and without limiting any similar provisions of) the Transaction
Documents, whenever any Buyer exercises a right, election, demand
or option under a Transaction Document and the Company or any
Subsidiary does not timely perform its related obligations within
the periods therein provided, then such Buyer may rescind or
withdraw, in its sole discretion from time to time upon written
notice to the Company or such Subsidiary (as the case may be), any
relevant notice, demand or election in whole or in part without
prejudice to its future actions and rights.

 

(q)          Payment
Set Aside; Currency. To the extent that the Company makes a
payment or payments to any Buyer hereunder or pursuant to any of
the other Transaction Documents or any of the Buyers enforce or
exercise their rights hereunder or 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, foreign, 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. Unless otherwise
expressly indicated, all dollar amounts referred to in this
Agreement and the other Transaction Documents are in United States
Dollars (“U.S.
Dollars”), and all amounts owing under this Agreement
and all other Transaction Documents shall be paid in U.S. Dollars.
All amounts denominated in other currencies (if any) shall be
converted into the U.S. Dollar equivalent amount in accordance with
the Exchange Rate on the date of calculation. “Exchange Rate” means, in relation
to any amount of currency to be converted into U.S. Dollars
pursuant to this Agreement, the U.S. Dollar exchange rate as
published in the Wall Street Journal on the relevant date of
calculation.

 

 (r)           Judgment
Currency.

 

(i)            If
for the purpose of obtaining or enforcing judgment against the
Company in connection with this Agreement or any other Transaction
Document in any court in any jurisdiction it becomes necessary to
convert into any other currency (such other currency being
hereinafter in this Section 9(r) referred to as the
“Judgment
Currency”) an amount due in US Dollars under this
Agreement, the conversion shall be made at the Exchange Rate
prevailing on the Trading Day (as defined in the Warrants)
immediately preceding:

 

(1)          the
date actual payment of the amount due, in the case of any
proceeding in the courts of New York or in the courts of any other
jurisdiction that will give effect to such conversion being made on
such date: or

 

(2)          the
date on which the foreign court determines, in the case of any
proceeding in the courts of any other jurisdiction (the date as of
which such conversion is made pursuant to Section 9(r)(i)(1)
being hereinafter referred to as the “Judgment Conversion
Date”).

 

(ii)           If
in the case of any proceeding in the court of any jurisdiction
referred to in Section 9(r)(i)(1) above, there is a change in
the Exchange Rate prevailing between the Judgment Conversion Date
and the date of actual payment of the amount due, the applicable
party shall pay such adjusted amount as may be necessary to ensure
that the amount paid in the Judgment Currency, when converted at
the Exchange Rate prevailing on the date of payment, will produce
the amount of US Dollars which could have been purchased with the
amount of Judgment Currency stipulated in the judgment or judicial
order at the Exchange Rate prevailing on the Judgment Conversion
Date.

 

(iii)          Any
amount due from the Company under this provision shall be due as a
separate debt and shall not be affected by judgment being obtained
for any other amounts due under or in respect of this Agreement or
any other Transaction Document.

 

(s)          Independent
Nature of Buyers’ Obligations and Rights. The
obligations of each Buyer under the Transaction Documents are
several and not joint with the obligations of any other Buyer, and
no Buyer shall be responsible in any way for the performance of the
obligations of any other Buyer under any Transaction Document.
Nothing contained herein or in any other Transaction Document, and
no action taken by any Buyer pursuant hereto or thereto, shall be
deemed to constitute the Buyers as, and the Company acknowledges
that the Buyers do not so constitute, a partnership, an
association, a joint venture or any other kind of group or entity,
or create a presumption that the Buyers are in any way acting in
concert or as a group or entity, and the Company shall not assert
any such claim with respect to such obligations or the transactions
contemplated by the Transaction Documents or any matters, and the
Company acknowledges that the Buyers are not acting in concert or
as a group, and the Company shall not assert any such claim, with
respect to such obligations or the transactions contemplated by the
Transaction Documents. The decision of each Buyer to purchase
Securities pursuant to the Transaction Documents has been made by
such Buyer independently of any other Buyer. Each Buyer
acknowledges that no other Buyer has acted as agent for such Buyer
in connection with such Buyer making its investment hereunder and
that no other Buyer will be acting as agent of such Buyer in
connection with monitoring such Buyer’s investment in the
Securities or enforcing its rights under the Transaction Documents.
The Company and each Buyer confirms that each Buyer has
independently participated with the Company and its Subsidiaries in
the negotiation of the transaction contemplated hereby with the
advice of its own counsel and advisors. Each Buyer shall be
entitled to independently protect and enforce its rights,
including, without limitation, the rights arising out of this
Agreement or out of any other Transaction Documents, and it shall
not be necessary for any other Buyer to be joined as an additional
party in any proceeding for such purpose. The use of a single
agreement to effectuate the purchase and sale of the Securities
contemplated hereby was solely in the control of the Company, not
the action or decision of any Buyer, and was done solely for the
convenience of the Company and its Subsidiaries and not because it
was required or requested to do so by any Buyer. It is expressly
understood and agreed that each provision contained in this
Agreement and in each other Transaction Document is between the
Company, each Subsidiary and a Buyer, solely, and not between the
Company, its Subsidiaries and the Buyers collectively and not
between and among the Buyers.

 

[signature
pages follow]

 

15

 

 

 

 

 

 

IN WITNESS WHEREOF, each Buyer and the
Company have caused their respective signature page to this
Agreement to be duly executed as of the date first written
above.

 

	
 

	

COMPANY:

	
 

	
 

	
 

	
 

	
 

	

Q BIOMED INC.

	
 

	
 

	
 

	
 

	
 

	

By: 

	

    

	
 

	
 

	

Name:Title:

 

	
 

	
 

	
 

 

 
16

 

 

 

 

 

 

 

IN WITNESS WHEREOF, each Buyer and the
Company have caused their respective signature page to this
Agreement to be duly executed as of the date first written
above.

 

	
 

	

BUYER:

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

By: 

	

    

	
 

	
 

	

Name:Title:

 

 

☐
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. 

 

 17

 

 

 

 

	
 

	
 

	
 

 

 

 

SCHEDULE OF BUYERS 

 

	
 

	

(1)

	
 

	
 

	
 

	

(2)

	
 

	
 

	
 

	

(3)

	
 

	
 

	
 

	
 

	
 

	
 

	

(4)

	
 

	
 

	
 

	

(5)

	
 

	
 

	
 

	

(6)

	
 

	

(7)

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

Buyer

	
 

	
 

	
 

	

Address and Facsimile Number

	
 

	
 

	
 

	

AggregateNumber ofCommon Shares

	
 

	
 

	
 

	
 

	
 

	
 

	

AggregateNumber of Warrant Shares

	
 

	
 

	
 

	

Purchase Price

	
 

	
 

	
 

	

Legal Representative’sAddress and Facsimile
Number

	
 

	

Social Security, Tax ID or Other Identification Number

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

 

 
18

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