Document:

Exhibit
10.1

 

AT
THE MARKET OFFERING AGREEMENT

 

August
__, 2021

 

Ladenburg
Thalmann & Co. Inc.

277
Park Avenue, 26th Floor

New
York, NY 10172

 

Ladies
and Gentlemen:

 

Hancock
Jaffe Laboratories, Inc., a Delaware corporation (the “Company”), confirms its agreement (this “Agreement”)
with Ladenburg Thalmann & Co. Inc. (the “Manager”) as follows:

 

1.
Definitions. The terms that follow, when used in this Agreement and any Terms Agreement, shall have the meanings indicated.

 

“Accountants”
shall have the meaning ascribed to such term in Section 4(m).

 

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

 

“Action”
shall have the meaning ascribed to such term in Section 3(q).

 

“Affiliate”
shall have the meaning ascribed to such term in Section 3(p).

 

“Applicable
Time” shall mean, with respect to any Shares, the time of sale of such Shares pursuant to this Agreement or any relevant Terms
Agreement.

 

“Base
Prospectus” shall mean the base prospectus contained in the Registration Statement at the Execution Time.

 

“Board”
shall have the meaning ascribed to such term in Section 2(b)(iii).

 

“Broker
Fee” shall have the meaning ascribed to such term in Section 2(b)(v).

 

“Business
Day” shall mean any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized
or required by law to remain closed, provided, however, for clarification, commercial banks shall not be deemed to be authorized
or required by law to remain closed due to “stay at home”, “shelter-in-place”, “non-essential employee”
or any other similar orders or restrictions or the closure of any physical branch locations at the direction of any governmental authority
so long as the electronic funds transfer systems (including for wire transfers) of commercial banks in The City of New York generally
are open for use by customers on such day.

 

    	 

    	 

    

 

“Commission”
shall mean the United States Securities and Exchange Commission.

 

“Common
Stock” shall have the meaning ascribed to such term in Section 2.

 

“Common
Stock Equivalents” shall have the meaning ascribed to such term in Section 3(g).

 

“Company
Counsel” shall have the meaning ascribed to such term in Section 4(l).

 

“DTC”
shall have the meaning ascribed to such term in Section 2(b)(vii).

 

“Effective
Date” shall mean each date and time that the Registration Statement and any post-effective amendment or amendments thereto
became or becomes effective.

 

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

 

“Execution
Time” shall mean the date and time that this Agreement is executed and delivered by the parties hereto.

 

“Free
Writing Prospectus” shall mean a free writing prospectus, as defined in Rule 405.

 

“GAAP”
shall have the meaning ascribed to such term in Section 3(n).

 

“Incorporated
Documents” shall mean the documents or portions thereof filed with the Commission on or prior to the Effective Date that are
incorporated by reference in the Registration Statement or the Prospectus and any documents or portions thereof filed with the Commission
after the Effective Date that are deemed to be incorporated by reference in the Registration Statement or the Prospectus.

 

“Intellectual
Property Rights” shall have the meaning ascribed to such term in Section 3(v).

 

“Issuer
Free Writing Prospectus” shall mean an issuer free writing prospectus, as defined in Rule 433.

 

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“Lien”
shall mean a lien, charge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.

 

“Losses”
shall have the meaning ascribed to such term in Section 7(d).

 

“Material
Adverse Effect” shall have the meaning ascribed to such term in Section 3(b).

 

“Material
Permits” shall have the meaning ascribed to such term in Section 3(t).

 

“Net
Proceeds” shall have the meaning ascribed to such term in Section 2(b)(v).

 

“Permitted
Free Writing Prospectus” shall have the meaning ascribed to such term in Section 4(g).

 

“Placement”
shall have the meaning ascribed to such term in Section 2(c).

 

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

 

“Prospectus”
shall mean the Base Prospectus, as supplemented by the most recently filed Prospectus Supplement (if any).

 

“Prospectus
Supplement” shall mean each prospectus supplement relating to the Shares prepared and filed pursuant to Rule 424(b) from time
to time.

 

“Registration
Statement” shall mean the shelf registration statement (File Number 333-237592) on Form S-3, including exhibits and financial
statements, the Base Prospectus and any prospectus supplement relating to the Shares that is filed with the Commission pursuant to Rule
424(b) and deemed part of such registration statement pursuant to Rule 430B, as amended on each Effective Date and, in the event any
post-effective amendment thereto becomes effective, shall also mean such registration statement as so amended. Any reference herein to
the Registration Statement, the Base Prospectus, the Prospectus Supplement, the Prospectus or any amendment or supplement thereto shall
be deemed to refer to and include the Incorporated Documents

 

“Representation
Date” shall have the meaning ascribed to such term in Section 4(k).

 

“Required
Approvals” shall have the meaning ascribed to such term in Section 3(e).

 

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“Rule
158”, “Rule 163”, “Rule 164”, “Rule 172”, “Rule 173”,
“Rule 405”, “Rule 415”, “Rule 424”, “Rule 430B” and “Rule
433” refer to such rules under the Act.

 

“Sales
Notice” shall have the meaning ascribed to such term in Section 2(b)(i).

 

“SEC
Reports” shall have the meaning ascribed to such term in Section 3(m).

 

“Settlement
Date” shall have the meaning ascribed to such term in Section 2(b)(vii).

 

“Subsidiary”
means any direct or indirect subsidiary of the Company hereafter formed or acquired.

 

“Terms
Agreement” shall have the meaning ascribed to such term in Section 2(a).

 

“Time
of Delivery” shall have the meaning ascribed to such term in Section 2(c).

 

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

 

“Trading
Market” means Nasdaq Capital Market.

 

2.
Sale and Delivery of Shares. The Company proposes to issue and sell through or to the Manager, as sales agent and/or principal,
up to $25,000,000 of shares (the “Shares”) of the Company’s common stock, $0.0001 par value per share (“Common
Stock”), from time to time during the term of this Agreement and on the terms set forth herein; provided, however,
that in no event shall the Company issue or sell through the Manager such number of Shares that (a) exceeds the number or dollar
amount of shares of Common Stock registered on the Registration Statement, pursuant to which the offering is being made, (b) exceeds
the number of authorized but unissued shares of Common Stock (less the number of shares of Common Stock issuable upon exercise, conversion
or exchange of any outstanding securities of the Company or otherwise reserved from the Company’s authorized capital stock), or
(c) would cause the Company or the offering of the Shares to not satisfy the eligibility and transaction requirements for use of Form
S-3 (including, if applicable, General Instruction I.B.6 of Registration Statement on Form S-3 (the lesser of (a), (b) and (c), the “Maximum
Amount”)).

 

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(a)
Appointment of Manager as Selling Agent; Terms Agreement. For purposes of selling the Shares through the Manager, the Company
hereby appoints the Manager as exclusive agent of the Company for the purpose of selling the Shares of the Company pursuant to this Agreement
and the Manager agrees to use its commercially reasonable efforts to sell the Shares on the terms and subject to the conditions stated
herein. The Company agrees that, whenever it determines to sell the Shares directly to the Manager as principal, it will enter into a
separate agreement (each, a “Terms Agreement”) in substantially the form of Annex I hereto, relating to such
sale in accordance with Section 2 of this Agreement.

 

(b)
Agent Sales. Subject to the terms and conditions and in reliance upon the representations and warranties herein set forth, the
Company will issue and agrees to sell Shares from time to time through the Manager, acting as sales agent, and the Manager agrees to
use its commercially reasonable efforts to sell, as sales agent for the Company, on the following terms:

 

(i)
The Shares are to be sold on a daily basis or otherwise as shall be agreed to by the Company and the Manager on any day that (A) is a
Trading Day, (B) the Company has instructed the Manager by telephone (confirmed promptly by electronic mail) to make such sales (“Sales
Notice”) and (C) the Company has satisfied its obligations under Section 6 of this Agreement. The Company will designate the
maximum amount of the Shares to be sold by the Manager daily (subject to the limitations set forth in Section 2(d)) and the minimum price
per Share at which such Shares may be sold. Subject to the terms and conditions hereof, the Manager shall use its commercially reasonable
efforts to sell on a particular day all of the Shares designated for the sale by the Company on such day. The gross sales price of the
Shares sold under this Section 2(b) shall be the market price for the shares of Common Stock sold by the Manager under this Section 2(b)
on the Trading Market at the time of sale of such Shares.

 

(ii)
The Company acknowledges and agrees that (A) there can be no assurance that the Manager will be successful in selling the Shares, (B)
the Manager will incur no liability or obligation to the Company or any other person or entity if it does not sell the Shares for any
reason other than a failure by the Manager to use its commercially reasonable efforts consistent with its normal trading and sales practices
and applicable law and regulations to sell such Shares as required under this Agreement, and (C) the Manager shall be under no obligation
to purchase Shares on a principal basis pursuant to this Agreement, except as otherwise specifically agreed by the Manager and the Company
pursuant to a Terms Agreement.

 

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(iii)
The Company shall not authorize the issuance and sale of, and the Manager shall not be obligated to use its commercially reasonable efforts
to sell, any Share at a price lower than the minimum price therefor designated from time to time by the Company’s Board of Directors
(the “Board”), or a duly authorized committee thereof, or such duly authorized officers of the Company, and notified
to the Manager in writing (including by electronic mail). The Company or the Manager may, upon notice to the other party hereto by telephone
(confirmed promptly by electronic mail), suspend the offering of the Shares for any reason and at any time; provided, however,
that such suspension or termination shall not affect or impair the parties’ respective obligations with respect to the Shares sold
hereunder prior to the giving of such notice.

 

(iv)
The Manager may sell Shares by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415
under the Act, including without limitation sales made directly on the Trading Market, on any other existing trading market for the Common
Stock or to or through a market maker. The Manager may also sell Shares in privately negotiated transactions, provided that the Manager
receives the Company’s prior written approval (which such written approval may be in the form of electronic mail) for any sales
in privately negotiated transactions and if so provided in the “Plan of Distribution” section of the Prospectus Supplement.

 

(v)
The compensation to the Manager for sales of the Shares under this Section 2(b) shall be a placement fee of 3% of the gross sales price
of the Shares sold pursuant to this Section 2(b) (“Broker Fee”). The foregoing rate of compensation shall not apply
when the Manager acts as principal, in which case the Company may sell Shares to the Manager as principal at a price agreed upon at the
relevant Applicable Time pursuant to a Terms Agreement. The remaining proceeds, after deduction of the Broker Fee and deduction of any
transaction fees imposed by any clearing firm, execution broker, or governmental or self-regulatory organization in respect of such sales,
shall constitute the net proceeds to the Company for such Shares (the “Net Proceeds”).

 

(vi)
The Manager shall provide written confirmation (which may be by facsimile or electronic mail) to the Company following the close of trading
on the Trading Market each day in which the Shares are sold under this Section 2(b) setting forth the number of the Shares sold on such
day, the aggregate gross sales proceeds and the Net Proceeds to the Company, and the compensation payable by the Company to the Manager
with respect to such sales.

 

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(vii)
Settlement for sales of the Shares pursuant to this Section 3(a) will occur at 10:00 a.m. (Eastern Time), or at such time as the Company
and the Manager may mutually agree, on the second business day following the date on which such sales are made (each such day, a “Settlement
Date”). On or before the Trading Day prior to each Settlement Date, the Company will, or will cause its transfer agent to,
electronically transfer the Shares being sold by crediting the Manager’s or its designee’s account (provided that the Manager
shall have given the Company written notice of such designee at least one Trading Day prior to the Settlement Date) at The Depository
Trust Company (“DTC”) through its Deposit and Withdrawal at Custodian System or by such other means of delivery as
may be mutually agreed upon by the parties hereto which Shares in all cases shall be freely tradable, transferable, registered shares
in good deliverable form. On each Settlement Date, the Manager will deliver the related Net Proceeds in same day funds to an account
designated by the Company. The Company agrees that, if the Company, or its transfer agent (if applicable), defaults in its obligation
to deliver duly authorized Shares on a Settlement Date, in addition to and in no way limiting the rights and obligations set forth in
Section 7 hereto, the Company will (i) hold the Manager harmless against any loss, claim, damage, or reasonable, documented expense (including
reasonable and documented legal fees and expenses), as incurred, arising out of or in connection with such default by the Company, and
(ii) pay to the Manager any commission, discount or other compensation to which the Manager would otherwise have been entitled absent
such default.

 

(viii)
At each Applicable Time, Settlement Date, and Representation Date, the Company shall be deemed to have affirmed each representation and
warranty contained in this Agreement as if such representation and warranty were made as of such date, modified as necessary to relate
to the Registration Statement and the Prospectus as amended as of such date. Any obligation of the Manager to use its commercially reasonable
efforts to sell the Shares on behalf of the Company shall be subject to the continuing accuracy of the representations and warranties
of the Company herein, to the performance by the Company of its obligations hereunder and to the continuing satisfaction of the additional
conditions specified in Section 6 of this Agreement.

 

(ix)
If the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of
shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other
securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other
similar transaction) (a “Distribution” and the record date for the determination of stockholders entitled to receive
the Distribution, the “Record Date”), the Company hereby covenants that, in connection with any sales of Shares pursuant
to a Sales Notice on the Record Date, the Company covenants and agrees that the Company shall issue and deliver such Shares to the Manager
on the Record Date and the Record Date shall be the Settlement Date and the Company shall cover any additional costs of the Manager in
connection with the delivery of Shares on the Record Date.

 

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(c)
Term Sales. If the Company wishes to sell the Shares pursuant to this Agreement but other than as set forth in Section 2(b) of
this Agreement (each, a “Placement”), the Company will notify the Manager of the proposed terms of such Placement.
If the Manager, acting as principal, wishes to accept such proposed terms (which it may decline to do for any reason in its sole discretion)
or, following discussions with the Company wishes to accept amended terms, the Manager and the Company will enter into a Terms Agreement
setting forth the terms of such Placement. The terms set forth in a Terms Agreement will not be binding on the Company or the Manager
unless and until the Company and the Manager have each executed such Terms Agreement accepting all of the terms of such Terms Agreement.
In the event of a conflict between the terms of this Agreement and the terms of a Terms Agreement, the terms of such Terms Agreement
will control. A Terms Agreement may also specify certain provisions relating to the reoffering of such Shares by the Manager. The commitment
of the Manager to purchase the Shares pursuant to any Terms Agreement shall be deemed to have been made on the basis of the representations
and warranties of the Company herein contained and shall be subject to the terms and conditions herein set forth. Each Terms Agreement
shall specify the number of the Shares to be purchased by the Manager pursuant thereto, the price to be paid to the Company for such
Shares, any provisions relating to rights of, and default by, underwriters acting together with the Manager in the reoffering of the
Shares, and the time and date (each such time and date being referred to herein as a “Time of Delivery”) and place
of delivery of and payment for such Shares. Such Terms Agreement shall also specify any requirements for opinions of counsel, accountants’
letters and officers’ certificates pursuant to Section 6 of this Agreement and any other information or documents required by the
Manager. For the avoidance of any doubt, this Section 2(c) does not convey any right of first refusal onto the Manager or any other rights
with respect to any other offerings of the Shares outside of this Agreement.

 

(d)
Maximum Number of Shares. Under no circumstances shall the Company cause or request the offer or sale of any Shares if, after
giving effect to the sale of such Shares, the aggregate amount of Shares sold pursuant to this Agreement would exceed the lesser of (A)
together with all sales of Shares under this Agreement, the Maximum Amount, (B) the amount available for offer and sale under the currently
effective Registration Statement and (C) the amount authorized from time to time to be issued and sold under this Agreement by the Board,
a duly authorized committee thereof or a duly authorized executive committee, and notified to the Manager in writing (which may be in
the form of electronic mail). Under no circumstances shall the Company cause or request the offer or sale of any Shares pursuant to this
Agreement at a price lower than the minimum price authorized from time to time by the Board, a duly authorized committee thereof or a
duly authorized executive officer, and notified to the Manager in writing (which may be in the form of electronic mail). Further, under
no circumstances shall the Company cause or permit the aggregate offering amount of Shares sold pursuant to this Agreement to exceed
the Maximum Amount.

 

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(e)
Regulation M Notice. Unless the exceptive provisions set forth in Rule 101(c)(1) of Regulation M under the Exchange Act are satisfied
with respect to the Shares, if required under Regulation M, the Company shall give the Manager at least one Business Day’s prior
notice of its intent to sell any Shares in order to allow the Manager time to comply with Regulation M.

 

3.
Representations and Warranties. The Company represents and warrants to, and agrees with, the Manager at the Execution Time and
on each such time the following representations and warranties are repeated or deemed to be made pursuant to this Agreement, as set forth
below or in the Registration Statement, the Prospectus or the Incorporated Documents.

 

(a)
Subsidiaries. All of the direct and indirect subsidiaries (individually, a “Subsidiary”) of the Company are
set forth in the SEC Reports. The Company owns, directly or indirectly, all of the capital stock or other equity interests of each Subsidiary
free and clear of any Liens and all of the issued and outstanding shares of capital stock of each Subsidiary are validly issued and are
fully paid, non-assessable and free of preemptive and similar rights to subscribe for or purchase securities. If the Company has no Subsidiaries,
all other references to the Subsidiaries or any of them in this Agreement or any other documents or agreements executed in connection
with the transactions contemplated hereunder shall be disregarded.

 

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

 

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(c)
Authorization and Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the
transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder. The execution and delivery of this
Agreement by the Company and the consummation by it of the transactions contemplated hereby have been duly authorized by all necessary
action on the part of the Company and no further action is required by the Company, the Board or its stockholders in connection herewith
other than in connection with the Required Approvals. This Agreement has been duly executed and delivered by the Company and constitutes
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.

 

(d)
No Conflicts. The execution, delivery and performance by the Company of this Agreement, the issuance and sale of the Shares and
the consummation by it of the transactions contemplated hereby 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, anti-dilution or similar adjustments, 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.

 

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(e)
Filings, Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of, give any
notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other
“Person” (defined as 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,
including the Trading Market) in connection with the execution, delivery and performance by the Company of this Agreement, other than
(i) the filings required by this Agreement, (ii) the filing with the Commission of the Prospectus Supplement, (iii) the filing of application(s)
to and approval by the Trading Market for the listing of the Shares for trading thereon in the time and manner required thereby, and
(iv) such filings as are required to be made under applicable state securities laws and the rules and regulations of the Financial Industry
Regulatory Authority, Inc. (“FINRA”) (collectively, the “Required Approvals”).

 

(f)
Issuance of Shares. The Shares are duly authorized and, when issued and paid for in accordance with this Agreement, will be duly
and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company. The Company has reserved from its
duly authorized capital stock the maximum number of shares of Common Stock issuable pursuant to this Agreement based on the price per
share of Common Stock on the Trading Market as of the date that this representation is made. The issuance by the Company of the Shares
has been registered under the Act and all of the Shares are freely transferable and tradable by the purchasers thereof without restriction
(other than any restrictions arising solely from an act or omission of such a purchaser). The Shares are being issued pursuant to the
Registration Statement and the issuance of the Shares has been registered by the Company under the Act. The “Plan of Distribution”
section within the Registration Statement permits the issuance and sale of the Shares as contemplated by this Agreement. Upon receipt
of the Shares, the purchasers of such Shares will have good and marketable title to such Shares and the Shares will be freely tradable
on the Trading Market.

 

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(g)
Capitalization. The capitalization of the Company is as set forth in the SEC Reports. The Company has not issued any capital stock
since its most recently filed periodic report under the Exchange Act, other than pursuant to the exercise of employee stock options under
the Company’s stock option plans, the issuance of shares of Common Stock to employees pursuant to the Company’s employee
stock purchase plan and pursuant to the conversion or exercise of securities exercisable, exchangeable or convertible into 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. Except (i) pursuant to the Company’s stock option plans and (ii) pursuant to agreements or instruments
filed as exhibits to Incorporated Documents, there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments
of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or
giving any Person any right to subscribe for or acquire, any shares of Common Stock or the capital stock of any Subsidiary, or contracts,
commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to issue additional shares
of Common Stock or Common Stock Equivalents or the capital stock of any Subsidiary. The issuance and sale of the Shares will not obligate
the Company or any Subsidiary to issue shares of Common Stock or other securities to any Person. Except as set forth in the SEC Reports,
the Registration Statement or the Prospectus, there are no outstanding securities or instruments of the Company or any Subsidiary with
any provision that adjusts the exercise, conversion, exchange or reset price of such security or instrument upon an issuance of securities
by the Company or any Subsidiary. There are no outstanding securities or instruments of the Company or any Subsidiary that contain any
redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by which the Company or any
Subsidiary is or may become bound to redeem a security of the Company or such Subsidiary. The Company does not have any stock appreciation
rights or “phantom stock” plans or agreements or any similar plan or agreement. All of the outstanding shares of capital
stock of the Company are duly authorized, validly issued, fully paid and nonassessable, have been issued in compliance with all federal
and state securities laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights to
subscribe for or purchase securities. No further approval or authorization of any stockholder, the Board of Directors or others is required
for the issuance and sale of the Shares. There are no stockholders agreements, voting agreements or other similar agreements with respect
to the Company’s capital stock to which the Company is a party or, to the knowledge of the Company, between or among any of the
Company’s stockholders.

 

(h)
Registration Statement. The Company meets the requirements for use of Form S-3 under the Act and has prepared and filed with the
Commission the Registration Statement, including a related Base Prospectus, for registration under the Act of the offering and sale of
the Shares. Such Registration Statement is effective and available for the offer and sale of the Shares as of the date hereof. As filed,
the Prospectus contains all information required by the Act and the rules thereunder, and, except to the extent the Manager shall agree
in writing to a modification, shall be in all substantive respects in the form furnished to the Manager prior to the Execution Time or
prior to any such time this representation is repeated or deemed to be made. The Registration Statement, at the Execution Time, each
such time this representation is repeated or deemed to be made, and at all times during which a prospectus is required by the Act to
be delivered (whether physically or through compliance with Rule 172, 173 or any similar rule) in connection with any offer or sale of
the Shares, meets the requirements set forth in Rule 415(a)(1)(x). The initial Effective Date of the Registration Statement was not earlier
than the date three years before the Execution Time. The Company meets the transaction requirements with respect to the aggregate market
value of securities being sold pursuant to this offering and during the twelve (12) months prior to this offering, as set forth in General
Instruction I.B.6 of Form S-3.

 

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(i)
Accuracy of Incorporated Documents. The Incorporated Documents, when they were filed with the Commission, conformed in all material
respects to the requirements of the Exchange Act and the rules thereunder, and none of the Incorporated 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, in light of the circumstances under which they were made not misleading; and any further documents so filed and incorporated
by reference in the Registration Statement, the Base Prospectus, the Prospectus Supplement or the Prospectus, when such documents are
filed with the Commission, will conform in all material respects to the requirements of the Exchange Act and the rules thereunder, as
applicable, and will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not misleading.

 

(j)
Ineligible Issuer. (i) 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)) of the Shares and (ii) as of the Execution Time and on each
such time this representation is repeated or deemed to be made (with such date being used as the determination date for purposes of this
clause (ii)), the Company was not and is not an Ineligible Issuer (as defined in Rule 405), without taking account of any determination
by the Commission pursuant to Rule 405 that it is not necessary that the Company be considered an Ineligible Issuer.

 

(k)
Free Writing Prospectus. The Company is eligible to use Issuer Free Writing Prospectuses. Each Issuer Free Writing Prospectus,
if any, does not include any information the substance of which conflicts with the information contained in the Registration Statement,
including any Incorporated Documents and any prospectus supplement deemed to be a part thereof that has not been superseded or modified;
and each Issuer Free Writing Prospectus does not contain any untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The foregoing
sentence does not apply to statements in or omissions from any Issuer Free Writing Prospectus based upon and in conformity with written
information furnished to the Company by the Manager specifically for use therein. Any Issuer Free Writing Prospectus that the Company
is required to file pursuant to Rule 433(d) has been, or will be, filed with the Commission in accordance with the requirements of the
Act and the rules thereunder. Each Issuer Free Writing Prospectus that the Company has filed, or is required to file, pursuant to Rule
433(d) or that was prepared by or behalf of or used by the Company complies or will comply in all material respects with the requirements
of the Act and the rules thereunder. The Company will not, without the prior consent of the Manager, prepare, use or refer to, any Issuer
Free Writing Prospectuses.

 

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(l)
Proceedings Related to Registration Statement. The Registration Statement is not the subject of a pending proceeding or examination
under Section 8(d) or 8(e) of the Act, and the Company is not the subject of a pending proceeding under Section 8A of the Act in connection
with the offering of the Shares. The Company has not received any notice that the Commission has issued or intends to issue a stop-order
with respect to the Registration Statement or that the Commission 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.

 

(m)
SEC Reports. The Company has complied in all material respects with requirements to file all reports, schedules, forms, statements
and other documents required to be filed by it under the Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof,
for the two years preceding the date hereof (or such shorter period as the Company was required by law to file such material) (the foregoing
materials, including the exhibits thereto and documents incorporated by reference therein, being collectively referred to herein as the
“SEC Reports”) on a timely basis or has received a valid extension of such time of filing and has filed any such SEC
Reports prior to the expiration of any such extension. As of their respective dates, the SEC Reports complied in all material respects
with the requirements of the Act and the Exchange Act, as applicable, and none of the SEC Reports, when filed, included an 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 agreements and documents described in the Registration
Statement, the Prospectus, the Prospectus Supplement and the SEC Reports conform to the descriptions thereof contained therein and there
are no agreements or other documents required by the Securities Act and the rules and regulations thereunder to be described in the Registration
Statement, the Prospectus, the Prospectus Supplement or the SEC Reports or to be filed with the Commission as exhibits to the Registration
Statement, that have not been so described or filed. Each agreement or other instrument (however characterized or described) to which
the Company is a party or by which it is or may be bound or affected and (i) that is referred to in the Registration Statement, the Prospectus,
the Prospectus Supplement or the SEC Reports, or (ii) is material to the Company’s business, has been duly authorized and validly
executed by the Company, is in full force and effect in all material respects and is enforceable against the Company and, to the Company’s
knowledge, the other parties thereto, in accordance with its terms, except (x) as such enforceability maybe limited by bankruptcy, insolvency,
reorganization or similar laws affecting creditors’ rights generally, (y) as enforceability of any indemnification or contribution
provision may be limited under the federal and state securities laws, and (z) that the remedy of specific performance and injunctive
and other forms of equitable relief may be subject to the equitable defenses and to the discretion of the court before which any proceeding
therefore may be brought. None of such agreements or instruments has been assigned by the Company, and neither the Company nor, to the
best of the Company’s knowledge, any other party is in default thereunder and, to the best of the Company’s knowledge, no
event has occurred that, with the lapse of time or the giving of notice, or both, would constitute a default thereunder. To the best
of the Company’s knowledge, performance by the Company of the material provisions of such agreements or instruments will not result
in a violation of any existing applicable law, rule, regulation, judgment, order or decree of any governmental agency or court, domestic
or foreign, having jurisdiction over the Company or any of its assets or businesses, including, without limitation, those relating to
environmental laws and regulations.

 

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

 

(o)
Accountants. The Company’s accountants are Marcum LLP. To the knowledge of the Company, such accountants, which the Company
expects will express their opinion with respect to the financial statements to be included in the Company’s next Annual Report
on Form 10-K, are a registered public accounting firm as required by the Act.

 

(p)
Material Adverse Events. 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 Company’s financial statements pursuant to GAAP or required
to be 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” (defined as 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 144 under the Act), 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 Shares contemplated by this Agreement, no event, liability, fact, circumstance,
occurrence or development has occurred or exists or is reasonably expected to occur or exist with respect to the Company or its Subsidiaries
or their respective businesses, properties, operations, assets or financial condition that would be required to be disclosed by the Company
under applicable securities laws at the time this representation is made or deemed made that has not been publicly disclosed at least
1 Trading Day prior to the date that this representation is made. Unless otherwise disclosed in a SEC Report filed prior to the date
hereof, the Company has not: (i) issued any securities or incurred any liability or obligation, direct or contingent, for borrowed money;
or (ii) declared or paid any dividend or made any other distribution on or in respect to its capital stock.

 

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(q)
Litigation. Except as set forth in the SEC Reports, there is no action, suit, inquiry, notice of violation, proceeding or investigation
pending or, to the knowledge of the Company, threatened against or affecting the Company, any Subsidiary or any of their respective properties
before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign)
(collectively, an “Action”). None of the Actions in the SEC Reports (i) adversely affects or challenges the legality,
validity or enforceability of this Agreement or the Shares or (ii) could, if there were an unfavorable decision, have or reasonably be
expected to result in a Material Adverse Effect. Neither the Company nor any Subsidiary, nor, to the knowledge of the Company, any director
or officer thereof, is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities
laws or a claim of breach of fiduciary duty. There has not been, and to the knowledge of the Company, there is not pending or contemplated,
any investigation by the Commission involving the Company or any current 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.

 

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

 

    	16

    	 

    

 

(s)
No Existing Defaults. 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), nor
has the Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture,
loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound
(whether or not such default or violation has been waived), (ii) is in violation of any judgment, order or decree of any court, arbitrator
or governmental body, or (iii) is or has been in violation of any statute, rule or regulation of any governmental authority, including
without limitation all foreign, federal, state and local laws relating to taxes, environmental protection, occupational health and safety,
product quality and safety and employment and labor matters, except in each case as could not have or reasonably be expected to result
in a Material Adverse Effect.

 

(t)
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 (each, a “Material
Permit”), and neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation or modification
of any Material Permit. The disclosures in the Registration Statement concerning the effects of Federal, State, local and all foreign
regulation on the Company’s business as currently contemplated are correct in all material respects.

 

(u)
Title to Assets. The Company and the Subsidiaries have good and marketable title in fee simple to, or have valid and marketable
rights to lease or otherwise use, all real property and all personal property (excluding the Intellectual Property Rights, which are
covered in Section 3(v)) owned by them that is material to the business of the Company and the Subsidiaries, in each case free and clear
of all Liens, except for (i) Liens as do not materially affect the value of such property and do not materially interfere with the use
made and proposed to be made of such property by the Company and the Subsidiaries and (ii) Liens for the payment of federal, state or
other taxes, for which appropriate reserves have been made in accordance with GAAP, and the payment of which is neither delinquent nor
subject to penalties. Any real property and facilities held under lease by the Company and the Subsidiaries are held by them under valid,
subsisting and enforceable leases with which the Company and the Subsidiaries are in compliance, except where failure to be in compliance
could not reasonably be expected to have a Material Adverse Effect.

 

    	17

    	 

    

 

(v)
Intellectual Property. 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 necessary or required for use in connection with their respective businesses as described in the SEC Reports and which
the failure to do so could have a Material Adverse Effect (collectively, the “Intellectual Property Rights”). None
of, and neither the Company nor any Subsidiary has received a notice (written or otherwise) that any of, the Intellectual Property Rights
has expired, terminated or been abandoned, or is expected to expire or terminate or be abandoned, within two (2) years from the date
of this Agreement. Neither the Company nor any Subsidiary has received, since the date of the latest audited financial statements included
within the SEC Reports, a written notice of a claim or otherwise has any knowledge that the Intellectual Property Rights violate or infringe
upon the rights of any Person except as could not have or reasonably be expected to not have a Material Adverse Effect. To the knowledge
of the Company, all such Intellectual Property Rights are enforceable and there is no existing infringement by another Person of any
of the Intellectual Property Rights. The Company and its Subsidiaries have taken reasonable security measures to protect the secrecy,
confidentiality and value of all of their intellectual properties, except where failure to do so could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

 

(w)
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.

 

(x)
Affiliate Transactions. 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.

 

    	18

    	 

    

 

(y)
Sarbanes Oxley; Internal Accounting Controls. The Company and the Subsidiaries are in compliance in all material respects with
any and all applicable requirements of the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and any and all applicable
rules and regulations promulgated by the Commission thereunder that are effective as of the date hereof. The Company and the Subsidiaries
maintain a system of internal accounting controls sufficient to provide reasonable assurance that: (i) transactions are executed in accordance
with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with
management’s general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets
at reasonable intervals and appropriate action is taken with respect to any differences. The Company and the Subsidiaries have established
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and the Subsidiaries and
designed such disclosure controls and procedures to ensure that information required to be disclosed by the Company in the reports it
files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s
rules and forms. The Company’s certifying officers have evaluated the effectiveness of the disclosure controls and procedures of
the Company and the Subsidiaries as of the end of the period covered by the most recently filed periodic report under the Exchange Act
(such date, the “Evaluation Date”). The Company presented in its most recently filed periodic report under the Exchange
Act the conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures based on their evaluations
as of the Evaluation Date. As disclosed in the SEC Reports, the Company’s certifying officers concluded that a material weakness
in the Company’s internal control over financial reporting with regard to its failure to record an associated derivative liability
on a timely basis existed 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.

 

(z)
Finder’s Fees. Other than payments to be made to the Manager, no brokerage or finder’s fees or commissions are or
will be payable by the Company or any Subsidiary or Affiliate of 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 Manager
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 3(z) that may be due in connection with the transactions contemplated by this Agreement.

 

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(aa)
No Other Sales Agency Agreement. The Company has not entered into any other sales agency agreements or other similar arrangements
with any agent or any other representative in respect of at the market offerings of the Shares.

 

(bb)
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 Shares, (ii) sold, bid for, purchased, or paid any compensation for soliciting purchases of, any of
the Shares 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 Manager in connection with the placement of the
Shares.

 

(cc)
Listing and Maintenance Requirements. The issuance and sale of the Shares as contemplated in this Agreement does not contravene
the rules and regulations of the Trading Market. 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 Registration Statement, the Base Prospectus, any Prospectus Supplement or the Prospectus,
the Company has not, in the 12 months preceding the date hereof, received notice from any Trading Market on which the Common Stock is
or has been listed or quoted to the effect that the Company is not in compliance with the listing or maintenance requirements of such
Trading Market. The Company is, and has no reason to believe that it will not in the foreseeable future continue to be, in compliance
with all such listing and maintenance requirements. The Common Stock is currently eligible for electronic transfer through the Depository
Trust Company or another established clearing corporation and the Company is current in payment of the fees of the Depository Trust Company
(or such other established clearing corporation) in connection with such electronic transfer.

 

(dd)
Application of Takeover Protections. Except as set forth in the Registration Statement, the Base Prospectus, any Prospectus Supplement
or the Prospectus, the Company and its Board have taken all necessary action, if any, in order to render inapplicable any control share
acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision
under the Company’s Certificate of Incorporation (or similar charter documents) or the laws of its state of incorporation that
is or could become applicable to the purchasers of the Shares.

 

(ee)
Investment Company. The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Shares, 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 currently intends to conduct its business in a manner so that it will not become subject to the Investment Company Act of
1940, as amended.

 

    	20

    	 

    

 

(ff)
Solvency. Based on the consolidated financial condition of the Company as of the Effective Date, (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 the date hereof. The SEC Reports sets forth as of the
date hereof all outstanding secured and unsecured Indebtedness of the Company or any Subsidiary, or for which the Company or any Subsidiary
has commitments. For the purposes of this Agreement, “Indebtedness” means (x) any liabilities for borrowed money or
amounts owed in excess of $50,000 (other than trade accounts payable incurred in the ordinary course of business), (y) all guaranties,
endorsements and other contingent obligations in respect of indebtedness of others, whether or not the same are or should be reflected
in the Company’s consolidated balance sheet (or the notes thereto), except guaranties by endorsement of negotiable instruments
for deposit or collection or similar transactions in the ordinary course of business; and (z) the present value of any lease payments
in excess of $50,000 due under leases required to be capitalized in accordance with GAAP. Neither the Company nor any Subsidiary is in
default with respect to any Indebtedness.

 

(gg)
Tax Status. Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result in a
Material Adverse Effect, the Company and its Subsidiaries each (i) has made or filed all United States federal, state and local income
and all foreign income and franchise tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii)
has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such
returns, reports and declarations and (iii) has set aside on its books provision reasonably adequate for the payment of all material
taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material
amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company or of any Subsidiary know of no
basis for any such claim. The provisions for taxes payable, if any, shown on the financial statements filed with or as part of the Registration
Statement 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. The term “taxes” mean all federal, state, local, foreign, and other net income, gross
income, gross receipts, sales, use, ad valorem, transfer, franchise, profits, license, lease, service, service use, withholding, payroll,
employment, excise, severance, stamp, occupation, premium, property, windfall profits, customs, duties or other taxes, fees, assessments,
or charges of any kind whatsoever, together with any interest and any penalties, additions to tax, or additional amounts with respect
thereto. The term “returns” means all returns, declarations, reports, statements, and other documents required to be filed
in respect to taxes.

 

    	21

    	 

    

 

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

 

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(ii)
Foreign Corrupt Practices. Neither the Company nor any Subsidiary, nor to the knowledge of the Company or any Subsidiary, any
agent or other person acting on behalf of the Company or any Subsidiary, has (i) directly or indirectly, used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful
payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate
funds, (iii) failed to disclose fully any contribution made by the Company or any Subsidiary (or made by any person acting on its behalf
of which the Company is aware) which is in violation of law, or (iv) violated in any material respect any provision of FCPA. The Company
has taken reasonable steps to ensure that its accounting controls and procedures are sufficient to cause the Company to comply in all
material respects with the Foreign Corrupt Practices Act of 1977, as amended.

 

(jj)
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.

 

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

 

    	23

    	 

    

 

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

 

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

 

(pp)
FINRA Member Shareholders. To the Company’s knowledge, there are no affiliations with any FINRA member firm among the Company’s
officers, directors or any five percent (5%) or greater stockholder of the Company, except as set forth in the Registration Statement,
the Base Prospectus, any Prospectus Supplement or the Prospectus.

 

    	24

    	 

    

 

4.
Agreements. The Company agrees with the Manager that:

 

(a)
Right to Review Amendments and Supplements to Registration Statement and Prospectus. During any period when the delivery of a
prospectus relating to the Shares is required (including in circumstances where such requirement may be satisfied pursuant to Rule 172,
173 or any similar rule) to be delivered under the Act in connection with the offering or the sale of Shares, the Company will not file
any amendment to the Registration Statement or supplement (including any Prospectus Supplement) to the Base Prospectus unless the Company
has furnished to the Manager a copy for its review prior to filing and will not file any such proposed amendment or supplement to which
the Manager reasonably objects. The Company has properly completed the Prospectus, in a form approved by the Manager, and filed such
Prospectus, as amended at the Execution Time, with the Commission pursuant to the applicable paragraph of Rule 424(b) by the Execution
Time and will cause any supplement to the Prospectus to be properly completed, in a form approved by the Manager, and will file such
supplement with the Commission pursuant to the applicable paragraph of Rule 424(b) within the time period prescribed thereby and will
provide evidence reasonably satisfactory to the Manager of such timely filing. The Company will promptly advise the Manager (i) when
the Prospectus, and any supplement thereto, shall have been filed (if required) with the Commission pursuant to Rule 424(b), (ii) when,
during any period when the delivery of a prospectus (whether physically or through compliance with Rule 172, 173 or any similar rule)
is required under the Act in connection with the offering or sale of the Shares, any amendment to the Registration Statement shall have
been filed or become effective (other than any annual report of the Company filed pursuant to Section 13(a) or 15(d) of the Exchange
Act), (iii) of any request by the Commission or its staff for any amendment of the Registration Statement, or for any supplement to the
Prospectus or for any additional information, (iv) of the issuance by the Commission of any stop order suspending the effectiveness of
the Registration Statement or of any notice objecting to its use or the institution or threatening of any proceeding for that purpose
and (v) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Shares for sale
in any jurisdiction or the institution or threatening of any proceeding for such purpose. The Company will use its best efforts to prevent
the issuance of any such stop order or the occurrence of any such suspension or objection to the use of the Registration Statement and,
upon such issuance, occurrence or notice of objection, to obtain as soon as possible the withdrawal of such stop order or relief from
such occurrence or objection, including, if necessary, by filing an amendment to the Registration Statement or a new registration statement
and using its best efforts to have such amendment or new registration statement declared effective as soon as practicable.

 

(b)
Subsequent Events. If, at any time on or after an Applicable Time but prior to the related Settlement Date, any event occurs as
a result of which the Registration Statement or Prospectus would include any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein in the light of the circumstances under which they were made or the circumstances
then prevailing not misleading, the Company will (i) notify promptly the Manager so that any use of the Registration Statement or Prospectus
may cease until such are amended or supplemented; (ii) amend or supplement the Registration Statement or Prospectus to correct such statement
or omission; and (iii) supply any amendment or supplement to the Manager in such quantities as the Manager may reasonably request.

 

    	25

    	 

    

 

(c)
Notification of Subsequent Filings. During any period when the delivery of a prospectus relating to the Shares is required (including
in circumstances where such requirement may be satisfied pursuant to Rule 172, 173 or any similar rule) to be delivered under the Act,
any event occurs as a result of which the Prospectus as then supplemented would include any untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein in the light of the circumstances under which they were made not
misleading, or if it shall be necessary to amend the Registration Statement, file a new registration statement or supplement the Prospectus
to comply with the Act or the Exchange Act or the respective rules thereunder, including in connection with use or delivery of the Prospectus,
the Company promptly will (i) notify the Manager of any such event, (ii) subject to Section 4(a), prepare and file with the Commission
an amendment or supplement or new registration statement which will correct such statement or omission or effect such compliance, (iii)
use its best efforts to have any amendment to the Registration Statement or new registration statement declared effective as soon as
practicable in order to avoid any disruption in use of the Prospectus and (iv) supply any supplemented Prospectus to the Manager in such
quantities as the Manager may reasonably request.

 

(d)
Earnings Statements. As soon as practicable, the Company will make generally available to its security holders and to the Manager
an earnings statement or statements of the Company and its Subsidiaries which will satisfy the provisions of Section 11(a) of the Act
and Rule 158.

 

(e)
Delivery of Registration Statement. Upon the request of the Manager, the Company will furnish to the Manager and counsel for the
Manager, without charge, signed copies of the Registration Statement (including exhibits thereto) and, so long as delivery of a prospectus
by the Manager or dealer may be required by the Act (including in circumstances where such requirement may be satisfied pursuant to Rule
172, 173 or any similar rule), as many copies of the Prospectus and each Issuer Free Writing Prospectus and any supplement thereto as
the Manager may reasonably request. The Company will pay the expenses of printing or other production of all documents relating to the
offering.

 

(f)
Qualification of Shares. The Company will arrange, if necessary, for the qualification of the Shares for sale under the laws of
such jurisdictions as the Manager may designate and will maintain such qualifications in effect so long as required for the distribution
of the Shares; provided that in no event shall the Company be obligated to qualify to do business in any jurisdiction where it is not
now so qualified or to take any action that would subject it to service of process in suits, other than those arising out of the offering
or sale of the Shares, in any jurisdiction where it is not now so subject.

 

    	26

    	 

    

 

(g)
Free Writing Prospectus. The Company agrees that, unless it has or shall have obtained the prior written consent of the Manager,
and the Manager agrees with the Company that, unless it has or shall have obtained, as the case may be, the prior written consent of
the Company, it has not made and will not make any offer relating to the Shares that would constitute an Issuer Free Writing Prospectus
or that would otherwise constitute a “free writing prospectus” (as defined in Rule 405) required to be filed by the Company
with the Commission or retained by the Company under Rule 433. Any such free writing prospectus consented to by the Manager or the Company
is hereinafter referred to as a “Permitted Free Writing Prospectus.” The Company agrees that (i) it has treated and
will treat, as the case may be, each Permitted Free Writing Prospectus as an Issuer Free Writing Prospectus and (ii) it has complied
and will comply, as the case may be, with the requirements of Rules 164 and 433 applicable to any Permitted Free Writing Prospectus,
including in respect of timely filing with the Commission, legending and record keeping.

 

(h)
Subsequent Equity Issuances. At any time that there is an active Sales Notice and until such time that such Sales Notice has been
withdrawn and, if any sales were made by the Manager pursuant to such Sales Notice, such Shares have been delivered by the Company to
the Manager, neither the Company nor any Subsidiary will offer, sell, issue, contract to sell, contract to issue or otherwise dispose
of, directly or indirectly, any other shares of Common Stock or any Common Stock Equivalents (other than the Shares) during the term
of this Agreement without the prior written consent of the Manager (not to be unreasonably withheld) (i) without giving the Manager at
least three Business Days’ prior written notice specifying the nature of the proposed transaction and the date of such proposed
transaction and (ii) unless the Manager suspends acting under this Agreement for such period of time requested by the Company or as deemed
appropriate by the Manager in light of the proposed transaction; provided, however, that the Company may issue and sell
Common Stock pursuant to any employee stock option plan, stock ownership plan or dividend reinvestment plan of the Company in effect
at the Execution Time and, with as much notice as reasonably practicable, the Company may issue Common Stock issuable upon the conversion
or exercise of Common Stock Equivalents outstanding.

 

(i)
Market Manipulation. Until the termination of this Agreement, the Company will not take, directly or indirectly, any action designed
to or that would constitute or that might reasonably be expected to cause or result in, under the Exchange Act or otherwise, stabilization
or manipulation in violation of the Act, Exchange Act or the rules and regulations thereunder of the price of any security of the Company
to facilitate the sale or resale of the Shares or otherwise violate any provision of Regulation M under the Exchange Act.

 

    	27

    	 

    

 

(j)
Notification of Incorrect Certificate. The Company will, at any time during the term of this Agreement, as supplemented from time
to time, advise the Manager immediately after it shall have received notice or obtained knowledge thereof, of any information or fact
that would alter or affect any opinion, certificate, letter and other document provided to the Manager pursuant to Section 6 herein.

 

(k)
Certification of Accuracy of Disclosure. Upon commencement of the offering of the Shares under this Agreement (and upon the recommencement
of the offering of the Shares under this Agreement following the termination of a suspension of sales hereunder lasting more than 30
Trading Days), and each time that (i) the Registration Statement or Prospectus shall be amended or supplemented, other than by means
of Incorporated Documents, (ii) the Company files its Annual Report on Form 10-K under the Exchange Act, (iii) the Company files its
quarterly reports on Form 10-Q under the Exchange Act, (iv) the Company files a Current Report on Form 8-K containing amended financial
information (other than information that is furnished and not filed), if the Manager reasonably determines that the information in such
Form 8-K is material, or (v) the Shares are delivered to the Manager as principal at the Time of Delivery pursuant to a Terms Agreement
(such commencement or recommencement date and each such date referred to in (i), (ii), (iii), (iv) and (v) above, a “Representation
Date”), unless waived by the Manager, the Company shall furnish or cause to be furnished to the Manager forthwith a certificate
dated and delivered on the Representation Date, in form reasonably satisfactory to the Manager to the effect that the statements contained
in the certificate referred to in Section 6 of this Agreement which were last furnished to the Manager are true and correct at the Representation
Date, as though made at and as of such date (except that such statements shall be deemed to relate to the Registration Statement and
the Prospectus as amended and supplemented to such date) or, in lieu of such certificate, a certificate of the same tenor as the certificate
referred to in said Section 6, modified as necessary to relate to the Registration Statement and the Prospectus as amended and supplemented
to the date of delivery of such certificate.

 

(l)
Bring Down Opinions; Negative Assurance. At each Representation Date, unless waived by the Manager, the Company shall furnish
or cause to be furnished forthwith to the Manager and to counsel to the Manager a written opinion of counsel to the Company (“Company
Counsel”) addressed to the Manager and dated and delivered on such Representation Date, in form and substance reasonably satisfactory
to the Manager, including a negative assurance representation.

 

(m)
Auditor Bring Down “Comfort” Letter. At each Representation Date, unless waived by the Manager, the Company shall
cause (1) the Company’s auditors (the “Accountants”), or other independent accountants satisfactory to the Manager
forthwith to furnish the Manager a letter, and (2) the Chief Financial Officer of the Company forthwith to furnish the Manager a certificate,
in each case dated on such Representation Date, in form satisfactory to the Manager, of the same tenor as the letters and certificate
referred to in Section 6 of this Agreement but modified to relate to the Registration Statement and the Prospectus, as amended and supplemented
to the date of such letters and certificate.

 

    	28

    	 

    

 

(n)
Due Diligence Session. Upon commencement of the offering of the Shares under this Agreement (and upon the recommencement of the
offering of the Shares under this Agreement following the termination of a suspension of sales hereunder lasting more than 30 Trading
Days), and at each Representation Date, the Company will conduct a due diligence session, in form and substance, reasonably satisfactory
to the Manager, which shall include representatives of management and Accountants. The Company shall cooperate timely with any reasonable
due diligence request from or review conducted by the Manager or its agents from time to time in connection with the transactions contemplated
by this Agreement, including, without limitation, providing information and available documents and access to appropriate corporate officers
and the Company’s agents during regular business hours, and timely furnishing or causing to be furnished such certificates, letters
and opinions from the Company, its officers and its agents, as the Manager may reasonably request. The Company shall reimburse the Manager
for Manager’s counsel’s time in each such due diligence update session, up to a maximum of $3,000 per update, with such reimbursement
commencing with the update in the third quarter of 2021, plus any incidental expense incurred by the Manager in connection therewith.

 

(o)
Acknowledgment of Trading. The Company consents to the Manager trading in the Common Stock for the Manager’s own account
and for the account of its clients at the same time as sales of the Shares occur pursuant to this Agreement or pursuant to a Terms Agreement.

 

(p)
Disclosure of Shares Sold. The Company will disclose in its Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q, as
applicable, the number of Shares sold through the Manager under this Agreement, the Net Proceeds to the Company and the compensation
paid by the Company with respect to sales of Shares pursuant to this Agreement during the relevant quarter; and, if required by any subsequent
change in Commission policy or request, more frequently by means of a Current Report on Form 8-K or a further Prospectus Supplement.

 

(q)
Rescission Right. If to the knowledge of the Company, the conditions set forth in Section 6 shall not have been satisfied as of
the applicable Settlement Date, the Company will offer to any person who has agreed to purchase Shares from the Company as the result
of an offer to purchase solicited by the Manager the right to refuse to purchase and pay for such Shares.

 

    	29

    	 

    

 

(r)
Bring Down of Representations and Warranties. Each acceptance by the Company of an offer to purchase the Shares hereunder, and
each execution and delivery by the Company of a Terms Agreement, shall be deemed to be an affirmation to the Manager that the representations
and warranties of the Company contained in or made pursuant to this Agreement are true and correct in all material respects as of the
date of such acceptance or of such Terms Agreement as though made at and as of such date, and an undertaking that such representations
and warranties will be true and correct as of the Settlement Date for the Shares relating to such acceptance or as of the Time of Delivery
relating to such sale, as the case may be, as though made at and as of such date (except that such representations and warranties shall
be deemed to relate to the Registration Statement and the Prospectus as amended and supplemented relating to such Shares).

 

(s)
Reservation of Shares. The Company shall ensure that there are at all times sufficient shares of Common Stock to provide for the
issuance, free of any preemptive rights, out of its authorized but unissued shares of Common Stock or shares of Common Stock held in
treasury, of the maximum aggregate number of Shares included in any Sales Notice pursuant to the terms of this Agreement. The Company
will use its commercially reasonable efforts to cause the Shares to be listed for trading on the Trading Market and to maintain such
listing.

 

(t)
Obligation Under Exchange Act. During any period when the delivery of a prospectus relating to the Shares is required (including
in circumstances where such requirement may be satisfied pursuant to Rule 172, 173 or any similar rule) to be delivered under the Act,
the Company will file all documents required to be filed with the Commission pursuant to the Exchange Act within the time periods required
by the Exchange Act and the regulations thereunder.

 

(u)
DTC Facility. The Company shall cooperate with Manager and use its reasonable efforts to permit the Shares to be eligible for
clearance and settlement through the facilities of DTC.

 

(v)
Use of Proceeds. The Company will apply the Net Proceeds from the sale of the Shares in the manner set forth in the Prospectus.

 

(w)
Filing of Prospectus Supplement. In the event any sales are made pursuant to this Agreement which are not made in “at the
market” offerings as defined in Rule 415, including, without limitation, any Placement pursuant to a Terms Agreement, the Company
shall file a Prospectus Supplement describing the terms of such transaction, the amount of Shares sold, the price thereof, the Manager’s
compensation, and such other information as may be required pursuant to Rule 424 and Rule 430B, as applicable, within the time required
by Rule 424.

 

    	30

    	 

    

 

(x)
Additional Registration Statement. To the extent that the Registration Statement is not available for the sales of the Shares
as contemplated by this Agreement, the Company shall file a new registration statement with respect to any additional shares of Common
Stock necessary to complete such sales of the Shares and shall cause such registration statement to become effective as promptly as practicable.
After the effectiveness of any such registration statement, all references to “Registration Statement” included in
this Agreement shall be deemed to include such new registration statement, including all documents incorporated by reference therein
pursuant to Item 12 of Form S-3, and all references to “Base Prospectus” included in this Agreement shall be deemed
to include the final form of prospectus, including all documents incorporated therein by reference, included in any such registration
statement at the time such registration statement became effective.

 

5.
Payment of Expenses. The Company agrees to pay the costs and expenses incident to the performance of its obligations under this
Agreement, whether or not the transactions contemplated hereby are consummated, including without limitation: (i) the preparation, printing
or reproduction and filing with the Commission of the Registration Statement (including financial statements and exhibits thereto), the
Prospectus and each Issuer Free Writing Prospectus, and each amendment or supplement to any of them; (ii) the printing (or reproduction)
and delivery (including postage, air freight charges and charges for counting and packaging) of such copies of the Registration Statement,
the Prospectus, and each Issuer Free Writing Prospectus, and all amendments or supplements to any of them, as may, in each case, be reasonably
requested for use in connection with the offering and sale of the Shares; (iii) the preparation, printing, authentication, issuance and
delivery of certificates for the Shares, including any stamp or transfer taxes in connection with the original issuance and sale of the
Shares; (iv) the printing (or reproduction) and delivery of this Agreement, any blue sky memorandum and all other agreements or documents
printed (or reproduced) and delivered in connection with the offering of the Shares; (v) the registration of the Shares under the Exchange
Act, if applicable, and the listing of the Shares on the Trading Market; (vi) any registration or qualification of the Shares for offer
and sale under the securities or blue sky laws of the several states (including filing fees and the reasonable fees and expenses of counsel
for the Manager relating to such registration and qualification); (vii) the transportation and other expenses incurred by or on behalf
of Company representatives in connection with presentations to prospective purchasers of the Shares; (viii) the fees and expenses of
the Company’s accountants and the fees and expenses of counsel (including local and special counsel) for the Company; (ix) the
filing fee under FINRA Rule 5110; (x) the reasonable fees and expenses of the Manager’s counsel, not to exceed $75,000 (excluding
any periodic due diligence fees provided for under Section 4(n)), which shall be paid on or before the Execution Time; (xi) and all other
costs and expenses incident to the performance by the Company of its obligations hereunder.

 

    	31

    	 

    

 

6.
Conditions to the Obligations of the Manager. The obligations of the Manager under this Agreement and any Terms Agreement shall
be subject to (i) the accuracy of the representations and warranties on the part of the Company contained herein as of the Execution
Time, each Representation Date, and as of each Applicable Time, Settlement Date and Time of Delivery, (ii) the performance by the Company
of its obligations hereunder and (iii) the following additional conditions:

 

(a)
Filing of Prospectus Supplement. The Prospectus, and any supplement thereto, required by Rule 424 to be filed with the Commission
have been filed in the manner and within the time period required by Rule 424(b) with respect to any sale of Shares; each Prospectus
Supplement shall have been filed in the manner required by Rule 424(b) within the time period required hereunder and under the Act; any
other material required to be filed by the Company pursuant to Rule 433(d) under the Act, shall have been filed with the Commission within
the applicable time periods prescribed for such filings by Rule 433; and no stop order suspending the effectiveness of the Registration
Statement or any notice objecting to its use shall have been issued and no proceedings for that purpose shall have been instituted or
threatened.

 

(b)
Delivery of Opinion. The Company shall have caused the Company Counsel to furnish to the Manager, requested by the Manager and
upon reasonable advance notice in connection with any offering of the Shares, its opinion and negative assurance statement, dated as
of such date and addressed to the Manager in form and substance acceptable to the Manager.

 

(c)
Delivery of Officer’s Certificate. The Company shall have furnished or caused to be furnished to the Manager, to the extent
requested by the Manager and upon reasonable advance notice in connection with any offering of the Shares, a certificate of the Company
signed by the Chief Executive Officer or the President and the principal financial or accounting officer of the Company, dated as of
such date, to the effect that the signers of such certificate have carefully examined the Registration Statement, the Prospectus, any
Prospectus Supplement and any documents incorporated by reference therein and any supplements or amendments thereto and this Agreement
and that:

 

(i)
the representations and warranties of the Company in this Agreement are true and correct on and as of such date with the same effect
as if made on such 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 date;

 

(ii)
no stop order suspending the effectiveness of the Registration Statement or any notice objecting to its use has been issued and no proceedings
for that purpose have been instituted or, to the Company’s knowledge, threatened; and

 

(iii)
since the date of the most recent financial statements included in the Registration Statement, the Prospectus and the Incorporated Documents,
there has been no Material Adverse Effect on the condition (financial or otherwise), earnings, business or properties of the Company
and its subsidiaries, taken as a whole, whether or not arising from transactions in the ordinary course of business, except as set forth
in or contemplated in the Registration Statement and the Prospectus.

 

    	32

    	 

    

 

(d)
Delivery of Accountants’ “Comfort” Letter. The Company shall have requested and caused the Accountants to have
furnished to the Manager letters (which may refer to letters previously delivered to the Manager), dated as of such date, in form and
substance satisfactory to the Manager, confirming that they are independent accountants within the meaning of the Act and the Exchange
Act and the respective applicable rules and regulations adopted by the Commission thereunder and that they have performed a review of
any unaudited interim financial information of the Company included or incorporated by reference in the Registration Statement and the
Prospectus and provide customary “comfort” as to such review in form and substance satisfactory to the Manager.

 

(e)
No Material Adverse Event. Since the respective dates as of which information is disclosed in the Registration Statement, the
Prospectus and the Incorporated Documents, except as otherwise stated therein, there shall not have been (i) any change or decrease in
previously reported results specified in the letter or letters referred to in paragraph (d) of this Section 6 or (ii) any Material Adverse
Effect, except as set forth in or contemplated in the Registration Statement, the Prospectus and the Incorporated Documents (exclusive
of any amendment or supplement thereto) the effect of which, in any case referred to in clause (i) or (ii) above, is, in the sole judgment
of the Manager, so material and adverse as to make it impractical or inadvisable to proceed with the offering or delivery of the Shares
as contemplated by the Registration Statement (exclusive of any amendment thereof), the Incorporated Documents and the Prospectus (exclusive
of any amendment or supplement thereto).

 

(f)
Payment of All Fees. The Company shall have paid the required Commission filing fees relating to the Shares within the time period
required by Rule 456(b)(1)(i) of the Act without regard to the proviso therein and otherwise in accordance with Rules 456(b) and 457(r)
of the Act and, if applicable, shall have updated the “Calculation of Registration Fee” table in accordance with Rule 456(b)(1)(ii)
either in a post-effective amendment to the Registration Statement or on the cover page of a prospectus filed pursuant to Rule 424(b).

 

(g)
No FINRA Objections. FINRA shall not have raised any objection with respect to the fairness and reasonableness of the terms and
arrangements under this Agreement.

 

(h)
Shares Listed on Trading Market. The Shares shall have been listed and admitted and authorized for trading on the Trading Market,
and satisfactory evidence of such actions shall have been provided to the Manager.

 

(i)
Other Assurances. Prior to each Settlement Date and Time of Delivery, as applicable, the Company shall have furnished to the Manager
such further information, certificates and documents as the Manager may reasonably request.

 

    	33

    	 

    

 

If
any of the conditions specified in this Section 6 shall not have been fulfilled when and as provided in this Agreement, or if any of
the opinions and certificates mentioned above or elsewhere in this Agreement shall not be reasonably satisfactory in form and substance
to the Manager and counsel for the Manager, this Agreement and all obligations of the Manager hereunder may be canceled at, or at any
time prior to, any Settlement Date or Time of Delivery, as applicable, by the Manager. Notice of such cancellation shall be given to
the Company in writing or by telephone or facsimile confirmed in writing.

 

The
documents required to be delivered by this Section 6 shall be delivered to Sheppard, Mullin, Richter & Hampton LLP, counsel for the
Manager, by electronic delivery or to their offices at 30 Rockefeller Plaza, New York, New York 10112, on each such date as provided
in this Agreement.

 

7.
Indemnification and Contribution.

 

(a)
Indemnification by Company. The Company agrees to indemnify and hold harmless the Manager, the directors, officers, employees
and agents of the Manager and each person who controls the Manager within the meaning of either the Act or the Exchange Act against any
and all losses, claims, damages or liabilities, joint or several, to which they or any of them may become subject under the Act, the
Exchange Act or other Federal or state statutory law or regulation, at common law or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement for the registration of the Shares as originally filed or in any amendment thereof, or in
the Base Prospectus, any Prospectus Supplement, the Prospectus, any Issuer Free Writing Prospectus, or in any amendment thereof or supplement
thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading or result from or relate to any breach of any of the representations, warranties,
covenants or agreements made by the Company in this Agreement, and agrees to reimburse each such indemnified party for any legal or other
expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the Company will not be liable in any such case to the extent that any such loss, claim, damage
or liability arises out of or is based upon any such untrue statement or alleged untrue statement or omission or alleged omission made
therein in reliance upon and in conformity with written information furnished to the Company by the Manager specifically for inclusion
therein. This indemnity agreement will be in addition to any liability that the Company may otherwise have.

 

    	34

    	 

    

 

(b)
Indemnification by Manager. The Manager agrees to indemnify and hold harmless the Company, each of its directors, each of its
officers who signs the Registration Statement, and each person who controls the Company within the meaning of either the Act or the Exchange
Act, to the same extent as the foregoing indemnity from the Company to the Manager, but only with reference to written information relating
to the Manager furnished to the Company by the Manager specifically for inclusion in the documents referred to in the foregoing indemnity;
provided, however, that in no case shall the Manager be responsible for any amount in excess of the Broker Fee applicable
to the Shares and paid hereunder. This indemnity agreement will be in addition to any liability which the Manager may otherwise have.

 

(c)
Indemnification Procedures. Promptly after receipt by an indemnified party under this Section 7 of notice of the commencement
of any action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section
7, notify the indemnifying party in writing of the commencement thereof; but the failure so to notify the indemnifying party (i) will
not relieve it from liability under paragraph (a) or (b) above unless and to the extent it did not otherwise learn of such action and
such failure results in the forfeiture by the indemnifying party of substantial rights and defenses and (ii) will not, in any event,
relieve the indemnifying party from any obligations to any indemnified party other than the indemnification obligation provided in paragraph
(a) or (b) above. The indemnifying party shall be entitled to appoint counsel of the indemnifying party’s choice at the indemnifying
party’s expense to represent the indemnified party in any action for which indemnification is sought (in which case the indemnifying
party shall not thereafter be responsible for the fees and expenses of any separate counsel retained by the indemnified party or parties
except as set forth below); provided, however, that such counsel shall be reasonably satisfactory to the indemnified party.
Notwithstanding the indemnifying party’s election to appoint counsel to represent the indemnified party in an action, the indemnified
party shall have the right to employ separate counsel (including local counsel), and the indemnifying party shall bear the reasonable
fees, costs and expenses of such separate counsel if (i) the use of counsel chosen by the indemnifying party to represent the indemnified
party would present such counsel with a conflict of interest, (ii) the actual or potential defendants in, or targets of, any such action
include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may
be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying
party, (iii) the indemnifying party shall not have employed counsel reasonably satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of the institution of such action or (iv) the indemnifying party shall authorize
the indemnified party to employ separate counsel at the expense of the indemnifying party. An indemnifying party will not, without the
prior written consent of the indemnified parties, settle or compromise or consent to the entry of any judgment with respect to any pending
or threatened claim, action, suit or proceeding in respect of which indemnification or contribution may be sought hereunder (whether
or not the indemnified parties are actual or potential parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability arising out of such claim, action, suit or proceeding.

 

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(d)
Contribution. In the event that the indemnity provided in paragraph (a), (b) or (c) of this Section 7 is unavailable to or insufficient
to hold harmless an indemnified party for any reason, the Company and the Manager agree to contribute to the aggregate losses, claims,
damages and liabilities (including legal or other expenses reasonably incurred in connection with investigating or defending the same)
(collectively “Losses”) to which the Company and the Manager may be subject in such proportion as is appropriate to
reflect the relative benefits received by the Company on the one hand and by the Manager on the other from the offering of the Shares;
provided, however, that in no case shall the Manager be responsible for any amount in excess of the Broker Fee applicable
to the Shares and paid hereunder. If the allocation provided by the immediately preceding sentence is unavailable for any reason, the
Company and the Manager severally shall contribute in such proportion as is appropriate to reflect not only such relative benefits but
also the relative fault of the Company on the one hand and of the Manager on the other in connection with the statements or omissions
which resulted in such Losses as well as any other relevant equitable considerations. Benefits received by the Company shall be deemed
to be equal to the total net proceeds from the offering (before deducting expenses) received by it, and benefits received by the Manager
shall be deemed to be equal to the Broker Fee applicable to the Shares and paid hereunder as determined by this Agreement. Relative fault
shall be determined by reference to, among other things, whether any untrue or any alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information provided by the Company on the one hand or the Manager on
the other, the intent of the parties and their relative knowledge, access to information and opportunity to correct or prevent such untrue
statement or omission. The Company and the Manager agree that it would not be just and equitable if contribution were determined by pro
rata allocation or any other method of allocation which does not take account of the equitable considerations referred to above. Notwithstanding
the provisions of this paragraph (d), no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section
7, each person who controls the Manager within the meaning of either the Act or the Exchange Act and each director, officer, employee
and agent of the Manager shall have the same rights to contribution as the Manager, and each person who controls the Company within the
meaning of either the Act or the Exchange Act, each officer of the Company who shall have signed the Registration Statement and each
director of the Company shall have the same rights to contribution as the Company, subject in each case to the applicable terms and conditions
of this paragraph (d).

 

    	36

    	 

    

 

8.
Termination.

 

(a)
The Company shall have the right, by giving written notice as hereinafter specified, to terminate the provisions of this Agreement relating
to the solicitation of offers to purchase the Shares in its sole discretion at any time upon five (5) Business Days’ prior written
notice. Any such termination shall be without liability of any party to any other party except that (i) with respect to any pending sale,
through the Manager for the Company, the obligations of the Company, including in respect of compensation of the Manager, shall remain
in full force and effect notwithstanding the termination and (ii) the provisions of Sections 5, 6, 7, 8, 9, 10, 12 and 14 of this Agreement
shall remain in full force and effect notwithstanding such termination.

 

(b)
The Manager shall have the right, by giving written notice as hereinafter specified, to terminate the provisions of this Agreement relating
to the solicitation of offers to purchase the Shares in its sole discretion at any time. Any such termination shall be without liability
of any party to any other party except that the provisions of Sections 5, 6, 7, 8, 9, 10, 12 and 14 of this Agreement shall remain in
full force and effect notwithstanding such termination.

 

(c)
This Agreement shall remain in full force and effect until the earlier of August __, 2023 and such date that this Agreement is terminated
pursuant to Sections 8(a) or (b) above or otherwise by mutual agreement of the parties, provided that any such termination by mutual
agreement shall in all cases be deemed to provide that Sections 5, 6, 7, 8, 9, 10, 12 and 14 shall remain in full force and effect.

 

(d)
Any termination of this Agreement shall be effective on the date specified in such notice of termination, provided that such termination
shall not be effective until the close of business on the date of receipt of such notice by the Manager or the Company, as the case may
be. If such termination shall occur prior to the Settlement Date or Time of Delivery for any sale of the Shares, such sale of the Shares
shall settle in accordance with the provisions of Section 2(b) of this Agreement.

 

(e)
In the case of any purchase of Shares by the Manager pursuant to a Terms Agreement, the obligations of the Manager pursuant to such Terms
Agreement shall be subject to termination, in the absolute discretion of the Manager, by prompt oral notice given to the Company prior
to the Time of Delivery relating to such Shares, if any, and confirmed promptly by facsimile or electronic mail, if since the time of
execution of the Terms Agreement and prior to such delivery and payment, (i) trading in the Common Stock shall have been suspended by
the Commission or the Trading Market or trading in securities generally on the Trading Market shall have been suspended or limited or
minimum prices shall have been established on such exchange, (ii) a banking moratorium shall have been declared either by Federal or
New York State authorities or (iii) there shall have occurred any outbreak or escalation of hostilities, declaration by the United States
of a national emergency or war, or other calamity or crisis the effect of which on financial markets is such as to make it, in the sole
judgment of the Manager, impractical or inadvisable to proceed with the offering or delivery of the Shares as contemplated by the Prospectus
(exclusive of any amendment or supplement thereto).

 

    	37

    	 

    

 

9.
Representations and Indemnities to Survive. The respective agreements, representations, warranties, indemnities and other statements
of the Company or its officers and of the Manager set forth in or made pursuant to this Agreement will remain in full force and effect,
regardless of any investigation made by the Manager or the Company or any of the officers, directors, employees, agents or controlling
persons referred to in Section 7, and will survive delivery of and payment for the Shares.

 

10.
Notices. All communications hereunder will be in writing and effective only on receipt, and will be mailed, delivered, e-mailed
or facsimiled to the addresses of the Company and the Manager, respectively, set forth on the signature page hereto.

 

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

 

12.
No Fiduciary Duty. The Company hereby acknowledges that (a) the purchase and sale of the Shares pursuant to this Agreement is
an arm’s-length commercial transaction between the Company, on the one hand, and the Manager and any affiliate through which it
may be acting, on the other, (b) the Manager is acting solely as sales agent and/or principal in connection with the purchase and sale
of the Company’s securities and not as a fiduciary of the Company and (c) the Company’s engagement of the Manager in connection
with the offering and the process leading up to the offering is as independent contractors and not in any other capacity. Furthermore,
the Company agrees that it is solely responsible for making its own judgments in connection with the offering (irrespective of whether
the Manager has advised or is currently advising the Company on related or other matters). The Company agrees that it will not claim
that the Manager has rendered advisory services of any nature or respect, or owe an agency, fiduciary or similar duty to the Company,
in connection with such transaction or the process leading thereto.

 

13.
Integration. This Agreement and any Terms Agreement supersede all prior agreements and understandings (whether written or oral)
between the Company and the Manager with respect to the subject matter hereof. Notwithstanding anything herein to the contrary, the Investment
Banking Agreement dated June 16, 2020 between the Company and the Manager and the Investment Banking Agreement dated August 2, 2021 between
the Company and the Manager shall each continue to be effective and the terms therein, including but not limited to Section 4 and Section
5 with respect to any future offerings, shall continue to survive and be enforceable by the Manager, in accordance with its respective
terms.

 

    	38

    	 

    

 

14.
Amendments; Waivers. No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument
signed, in the case of an amendment, by the Company and the Manager. No waiver of any default with respect to any provision, condition
or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver
of any other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder
in any manner impair the exercise of any such right.

 

15.
Applicable Law. This Agreement and any Terms Agreement will be governed by and construed in accordance with the laws of the State
of New York applicable to contracts made and to be performed within the State of New York. Each of the Company and the Manager: (i) agrees
that any legal suit, action or proceeding arising out of or relating to this Agreement 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 Company and the Manager 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 Manager mailed by certified mail to the Manager’s address shall be deemed in every respect effective service
process upon the Manager, in any such suit, action or proceeding. 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.

 

16.
Waiver of Jury Trial. The Company hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right
to trial by jury in any legal proceeding arising out of or relating to this Agreement, any Terms Agreement or the transactions contemplated
hereby or thereby. 

 

17.
Counterparts. This Agreement and any Terms Agreement may be signed in one or more counterparts, each of which shall constitute
an original and all of which together shall constitute one and the same agreement, which may be delivered by facsimile or in .pdf file
via e-mail.

 

18.
Headings. The section headings used in this Agreement and any Terms Agreement are for convenience only and shall not affect the
construction hereof.

 

***************************

 

    	39

    	 

    

 

If
the foregoing is in accordance with your understanding of our agreement, please sign and return to us the enclosed duplicate hereof,
whereupon this letter and your acceptance shall represent a binding agreement among the Company and the Manager.

 

Very
truly yours,

 

	HANCOCK
    JAFFE LABORATORIES, inc.	Address
    for Notice:

 

	By:	 	 	70
    Doppler
	Name:	 	 	Irvine,
    California 92618

    

	Title:	 	 	Email:

    Fax:

 

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

 

Ellenoff
Grossman & Schole LLP

1345
Avenue of the Americas, 11th Floor

New
York, New York 10105

Attn:
Barry I. Grossman, Esq.

Telephone:
(212) 370-1300

 

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

 

	LADENBURG
    THALMANN & CO. INC.	Address
    for Notice:

 

	By:		 	277
    Park Avenue, 26th Floor
	Name:	 	 	New
    York, NY 10172
	Title:	 	 	Email:
	 	 	 	Fax:

 

    	40

    	 

    

 

Form
of Terms Agreement

ANNEX
I 

HANCOCK
JAFFE LABORATORIES, INC., INC.

TERMS
AGREEMENT

 

Dear
Sirs:

 

Hancock
Jaffe Laboratories, Inc., Inc. (the “Company”) proposes, subject to the terms and conditions stated herein and in
the At The Market Offering Agreement, dated August __, 2021 (the “At The Market Offering Agreement”), between the
Company and Ladenburg Thalmann & Co. Inc. (“Manager”), to issue and sell to Manager the securities specified in
the Schedule I hereto (the “Purchased Shares”).

 

Each
of the provisions of the At The Market Offering Agreement not specifically related to the solicitation by the Manager, as agent of the
Company, of offers to purchase securities is incorporated herein by reference in its entirety, and shall be deemed to be part of this
Terms Agreement to the same extent as if such provisions had been set forth in full herein. Each of the representations and warranties
set forth therein shall be deemed to have been made at and as of the date of this Terms Agreement and the Time of Delivery, except that
each representation and warranty in Section 3 of the At The Market Offering Agreement which makes reference to the Prospectus (as therein
defined) shall be deemed to be a representation and warranty as of the date of the At The Market Offering Agreement in relation to the
Prospectus, and also a representation and warranty as of the date of this Terms Agreement and the Time of Delivery in relation to the
Prospectus as amended and supplemented to relate to the Purchased Shares.

 

An
amendment to the Registration Statement (as defined in the At The Market Offering Agreement), or a supplement to the Prospectus, as the
case may be, relating to the Purchased Shares, in the form heretofore delivered to the Manager is now proposed to be filed with the Securities
and Exchange Commission.

 

Subject
to the terms and conditions set forth herein and in the At The Market Offering Agreement which are incorporated herein by reference,
the Company agrees to issue and sell to the Manager and the latter agrees to purchase from the Company the number of shares of the Purchased
Shares at the time and place and at the purchase price set forth in the Schedule I hereto.

    	41

    	 

    

 

If
the foregoing is in accordance with your understanding, please sign and return to us a counterpart hereof, whereupon this Terms Agreement,
including those provisions of the At The Market Offering Agreement incorporated herein by reference, shall constitute a binding agreement
between the Manager and the Company.

 

	HANCOCK
    JAFFE LABORATORIES, inc.	 

 

	By:		 
	Name:	 	 
	Title:	 	 

 

ACCEPTED
as of the date first written above.

 

	LADENBURG
    THALMANN & CO. INC.	 

 

	By:		 
	Name:	 	 
	Title:	 	 

 

    	42Exhibit 4.1

 

Execution Version 

 

WARRANT AGREEMENT

 

AVISTA PUBLIC ACQUISITION CORP. II

 

and

 

CONTINENTAL STOCK TRANSFER & TRUST COMPANY

 

Dated August 9, 2021

 

THIS WARRANT AGREEMENT (this “Agreement”),
dated August 9, 2021, is by and between Avista Public Acquisition Corp. II, a Cayman Islands exempted company (the “Company”),
and Continental Stock Transfer & Trust Company, a New York corporation, as warrant agent (in such capacity, the “Warrant
Agent”).

 

WHEREAS, on August 9, 2021, the Company entered
into that certain Private Placement Warrants Purchase Agreement, with Avista Acquisition LP II, a Cayman Islands exempted limited partnership
(the “Sponsor”), pursuant to which the Sponsor will purchase an aggregate of 4,000,000 warrants (or up to 4,400,000
warrants if the underwriters in the Public Offering (defined below) exercise their Over-allotment Option (as defined below) in full) simultaneously
with the closing of the Offering (and the closing of the Over-allotment Option, if applicable), bearing the legend set forth in Exhibit
B hereto (the “Private Placement Warrants”) at a purchase price of $1.50 per Private Placement Warrant.
Each Private Placement Warrant entitles the holder thereof to purchase one Ordinary Share (as defined below) at a price of $11.50 per
share, subject to adjustment as described herein; and

 

WHEREAS, on August 9, 2021, the Company entered
into a Forward Purchase Agreement (the “Forward Purchase Agreement”) with the Sponsor pursuant to which the
Sponsor will be issued Forward Purchase Warrants, bearing the legend set forth in Exhibit C hereto (the “Forward Purchase
Warrants”) in a private placement transaction to occur concurrently with the closing of the Company’s initial Business
Combination (as defined below); and

 

WHEREAS, in order to finance the Company’s
transaction costs in connection with an intended initial merger, share exchange, asset acquisition, share purchase, reorganization or
similar business combination, involving the Company and one or more businesses (a “Business Combination”), the
Sponsor or an affiliate of the Sponsor or certain of the Company’s officers and directors may, but are not obligated to, loan the
Company funds as the Company may require, of which up to $2,000,000 of such loans may be convertible into up to an additional 1,333,333
Private Placement Warrants at a price of $1.50 per Private Placement Warrant; and

 

WHEREAS, the Company is engaged in an initial public
offering (the “Offering”) of units of the Company’s equity securities, each such unit comprised of one
Ordinary Share and one-third of one Public Warrant (as defined below) (the “Units”) and, in connection therewith,
has determined to issue and deliver up to 7,666,667 redeemable warrants (including up to 1,000,000 redeemable warrants subject to the
Over-allotment Option) to public investors in the Offering (the “Public Warrants” and, together with the Private
Placement Warrants and the Forward Purchase Warrants, the “Warrants”). Each whole Warrant entitles the holder
thereof to purchase one Class A ordinary share of the Company, par value $0.0001 per share (“Ordinary Shares”),
for $11.50 per share, subject to adjustment as described herein. Only whole Warrants are exercisable. A holder of the Public Warrants
will not be able to exercise any fraction of a Warrant; and

 

WHEREAS, the Company has filed with the Securities
and Exchange Commission (the “Commission”) registration statement on Form S-1, File No. 333-257177, and a
prospectus (the “Prospectus”), for the registration, under the Securities Act of 1933, as amended (the “Securities
Act”), of the Units, the Public Warrants and the Ordinary Shares included in the Units; and

 

WHEREAS, the Company desires the Warrant Agent
to act on behalf of the Company, and the Warrant Agent is willing to so act, in connection with the issuance, registration, transfer,
exchange, redemption and exercise of the Warrants; and

 

     

     

    

 

WHEREAS, the Company desires to provide for the
form and provisions of the Warrants, the terms upon which they shall be issued and exercised, and the respective rights, limitation of
rights, and immunities of the Company, the Warrant Agent and the holders of the Warrants; and

 

WHEREAS, all acts and things have been done and
performed which are necessary to make the Warrants, when executed on behalf of the Company and countersigned by or on behalf of the Warrant
Agent (if a physical certificate is issued), as provided herein, the valid, binding and legal obligations of the Company, and to authorize
the execution and delivery of this Agreement.

 

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

 

1.
Appointment of Warrant Agent. The Company hereby appoints the Warrant Agent to act as agent for the Company for the Warrants,
and the Warrant Agent hereby accepts such appointment and agrees to perform the same in accordance with the terms and conditions set forth
in this Agreement.

 

2.
Warrants.

 

2.1. Form of Warrant. Each Warrant shall initially
be issued in registered form only.

 

2.2. Effect of Countersignature. If a physical
certificate is issued, unless and until countersigned by the Warrant Agent pursuant to this Agreement, a certificated Warrant shall be
invalid and of no effect and may not be exercised by the holder thereof.

 

2.3. Registration.

 

2.3.1. Warrant Register. The Warrant Agent
shall maintain books (the “Warrant Register”), for the registration of original issuance and the registration
of transfer of the Warrants. Upon the initial issuance of the Warrants in book-entry form, the Warrant Agent shall issue and register
the Warrants in the names of the respective holders thereof in such denominations and otherwise in accordance with instructions delivered
to the Warrant Agent by the Company. Ownership of beneficial interests in the Public Warrants shall be shown on, and the transfer of such
ownership shall be effected through, records maintained by institutions that have accounts with The Depository Trust Company (the “Depositary”)
(such institution, with respect to a Warrant in its account, a “Participant”).

 

If the Depositary subsequently ceases to make its
book-entry settlement system available for the Public Warrants, the Company may instruct the Warrant Agent regarding making other arrangements
for book-entry settlement. In the event that the Public Warrants are not eligible for, or it is no longer necessary to have the Public
Warrants available in, book-entry form, the Warrant Agent shall provide written instructions to the Depositary to deliver to the Warrant
Agent for cancellation each book-entry Public Warrant, and the Company shall instruct the Warrant Agent to deliver to the Depositary definitive
certificates in physical form evidencing such Warrants (“Definitive Warrant Certificates”) which shall be in
the form annexed hereto as Exhibit A.

 

Physical certificates, if issued, shall be signed
by, or bear the facsimile signature of, the Chairman of the Board, Chief Executive Officer, President, Chief Financial Officer or other
principal officer of the Company. In the event the person whose facsimile signature has been placed upon any Warrant shall have ceased
to serve in the capacity in which such person signed the Warrant before such Warrant is issued, it may be issued with the same effect
as if he or she had not ceased to be such at the date of issuance.

 

2.3.2. Registered Holder. Prior to due presentment
for registration of transfer of any Warrant, the Company and the Warrant Agent may deem and treat the person in whose name such Warrant
is registered in the Warrant Register (the “Registered Holder”) as the absolute owner of such Warrant and of
each Warrant represented thereby, for the purpose of any exercise thereof, and for all other purposes, and neither the Company nor the
Warrant Agent shall be affected by any notice to the contrary.

 

    2

     

    

 

2.4. Detachability of Warrants. The Ordinary
Shares and Public Warrants comprising the Units shall begin separate trading on the 52nd day following the date of the Prospectus or,
if such 52nd day is not on a day, other than a Saturday, Sunday or federal holiday, on which banks in New York City are generally open
for normal business (a “Business Day”), then on the immediately succeeding Business Day following such date,
or earlier (the “Detachment Date”) with the consent of Credit Suisse Securities (USA) LLC, but in no event shall
the Ordinary Shares and the Public Warrants comprising the Units be separately traded until (A) the Company has filed a Current Report
on Form 8-K with the Commission containing an audited balance sheet reflecting the receipt by the Company of the gross proceeds of the
Offering, including the proceeds then received by the Company from the exercise by the underwriters of their right to purchase additional
Units in the Offering (the “Over-allotment Option”), if the Over-allotment Option is exercised prior to the
filing of the Current Report on Form 8-K, and (B) the Company issues a press release announcing when such separate trading shall begin.

 

2.5. Fractional Warrants. The Company shall
not issue fractional Warrants other than as part of the Units, each of which is comprised of one Ordinary Share and one-half of one whole
Public Warrant. If, upon the detachment of Public Warrants from the Units or otherwise, a holder of Warrants would be entitled to receive
a fractional Warrant, the Company shall round down to the nearest whole number the number of Warrants to be issued to such holder. Only
whole Warrants may be exercised.

 

2.6. Private Placement Warrants and Forward Purchase
Warrants.

 

2.6.1. Private Placement Warrants. The Private
Placement Warrants and Forward Purchase Warrants shall be identical to the Public Warrants, except that so long as they are held by the
Sponsor or any of its Permitted Transferees (as defined below) the Private Placement Warrants and Forward Purchase Warrants, including
the Ordinary Shares issuable upon exercise of the Private Placement Warrants and Forward Purchase Warrants, may not be transferred, assigned
or sold until thirty (30) days after the completion by the Company of an initial Business Combination=; provided, however, that, the Private
Placement Warrants and Forward Purchase Warrants and any Ordinary Shares issued upon exercise of the Private Placement Warrants and Forward
Purchase Warrants may be transferred by the holders thereof:

 

(a)                
to the Company’s officers or directors, any affiliates or family members of any of the Company’s officers or directors,
any members or partners of the Sponsor or their affiliates, any affiliates of the Sponsor, or any employees of such affiliates;

 

(b)               
in the case of an individual, by gift to a member of one of the individual’s immediate family or to a trust, the beneficiary
of which is a member of the individual’s immediate family, an affiliate of such person or to a charitable organization;

 

(c)                
in the case of an individual, by virtue of laws of descent and distribution upon death of the individual;

 

(d)               
in the case of an individual, pursuant to a qualified domestic relations order;

 

(e)                
by private sales or transfers made in connection with any forward purchase agreement or similar agreement or in connection with
the consummation of the Company’s Business Combination at prices no greater than the price at which the Private Placement Warrants
or Ordinary Shares, as applicable, were originally purchased;

 

(f)                 
by virtue of the Sponsor’s organizational documents upon liquidation or dissolution of the Sponsor;

 

(g)               
to the Company for no value for cancellation in connection with the consummation of the Company’s initial Business Combination;

 

(h)               
in the event of the Company’s liquidation prior to the completion of its initial Business Combination;

 

    3

     

    

 

(i)                 
 with respect to Forward Purchase Warrants, such transferees as described in the Forward Purchase Agreement; or

 

(j)                 
in the event of the Company’s completion of a liquidation, merger, share exchange or other similar transaction which results
in all of the public shareholders having the right to exchange their Ordinary Shares for cash, securities or other property subsequent
to the completion of the Company’s initial Business Combination;

 

provided, however, that, in the case of clauses (a) through
(f), these permitted transferees (the “Permitted Transferees”) must enter into a written agreement with the
Company agreeing to be bound by the transfer restrictions in this Agreement.

 

2.6.2. Forward Purchase Warrants. Each of
the Forward Purchase Warrants shall be identical to the Private Placement Warrants.

 

3.
Terms and Exercise of Warrants.

 

3.1. Warrant Price. Each whole Warrant shall
entitle the Registered Holder thereof, subject to the provisions of such Warrant and of this Agreement, to purchase from the Company the
number of Ordinary Shares stated therein, at the price of $11.50 per share, subject to the adjustments provided in Section 4 hereof
and in the last sentence of this Section 3.1. The term “Warrant Price” as used in this Agreement shall
mean the price per share (including in cash or by payment of Warrants pursuant to a “cashless exercise,” to the extent permitted
hereunder) described in the prior sentence at which Ordinary Shares may be purchased at the time a Warrant is exercised. The Company in
its sole discretion may lower the Warrant Price at any time prior to the Expiration Date (as defined below) for a period of not less than
fifteen Business Days (unless otherwise required by the Commission, any national securities exchange on which the Warrants are listed
or applicable law); provided that the Company shall provide at least five (5) days’ prior written notice of such reduction to Registered
Holders of the Warrants; and provided further, that any such reduction shall be identical among all of the Warrants.

 

3.2. Duration of Warrants. A Warrant may be
exercised only during the period (the “Exercise Period”) (A) commencing the date that is thirty (30) days after
the first date on which the Company completes a Business Combination, and (B) terminating at the earliest to occur of (x) 5:00 p.m., New
York City time on the date that is five (5) years after the date on which the Company completes its initial Business Combination, (y)
the liquidation of the Company in accordance with the Company’s amended and restated memorandum and articles of association, as
amended from time to time, if the Company fails to complete a Business Combination, and (z) with respect to a redemption pursuant to Section
6.1 hereof, 5:00 p.m., New York City time on the Redemption Date (as defined below) as provided in Section 6.3 hereof (the
 “Expiration Date”); provided, however, that the exercise of any Warrant shall be subject to the satisfaction
of any applicable conditions, as set forth in subsection 3.3.2 below, with respect to an effective registration statement or a
valid exemption therefrom being available. Except with respect to the right to receive the Redemption Price (as defined below) in the
event of a redemption (as set forth in Section 6 hereof), each Warrant not exercised on or before the Expiration Date shall become
void, and all rights thereunder and all rights in respect thereof under this Agreement shall cease at 5:00 p.m. New York City time on
the Expiration Date. The Company in its sole discretion may extend the duration of the Warrants by delaying the Expiration Date; provided
that the Company shall provide at least twenty (20) days prior written notice of any such extension to Registered Holders of the Warrants
and, provided further that any such extension shall be identical in duration among all the Warrants.

 

    4

     

    

 

3.3. Exercise of Warrants.

 

3.3.1. Payment. Subject to the
provisions of the Warrant and this Agreement, a Warrant may be exercised by the Registered Holder thereof by delivering to the
Warrant Agent at its corporate trust department (i) the Definitive Warrant Certificate evidencing the Warrants to be exercised, or,
in the case of a Warrant represented by a book-entry, the Warrants to be exercised (the “Book-Entry
Warrants”) on the records of the Depositary to an account of the Warrant Agent at the Depositary designated for such
purposes in writing by the Warrant Agent to the Depositary from time to time, (ii) an election to purchase (“Election to
Purchase”) any Ordinary Shares pursuant to the exercise of a Warrant, properly completed and executed by the
Registered Holder on the reverse of the Definitive Warrant Certificate or, in the case of a Book-Entry Warrant, properly delivered
by the Participant in accordance with the Depositary’s procedures, and (iii) the payment in full of the Warrant Price for each
Ordinary Share as to which the Warrant is exercised and any and all applicable taxes due in connection with the exercise of the
Warrant, the exchange of the Warrant for the Ordinary Shares and the issuance of such Ordinary Shares, as follows:

 

(a)                
in lawful money of the United States, in good certified check or wire payable to the order of the Warrant Agent or wire transfers;
or

 

(b)               
as provided in Section 7.4 hereof.

 

3.3.2. Issuance of Ordinary Shares on Exercise.
As soon as practicable after the exercise of any Warrant and the clearance of the funds in payment of the Warrant Price (if payment is
pursuant to subsection 3.3.1(a)), the Company shall issue to the Registered Holder of such Warrant a book-entry position or certificate,
as applicable, for the number of Ordinary Shares to which he, she or it is entitled, registered in such name or names as may be directed
by him, her or it on the register of members of the Company, and if such Warrant shall not have been exercised in full, a new book-entry
position or countersigned Warrant, as applicable, for the number of shares as to which such Warrant shall not have been exercised. Notwithstanding
the foregoing, the Company shall not be obligated to deliver any Ordinary Shares pursuant to the exercise of a Warrant and shall have
no obligation to settle such Warrant exercise unless a registration statement under the Securities Act with respect to the Ordinary Shares
underlying the Public Warrants is then effective and a prospectus relating thereto is current, subject to the Company’s satisfying
its obligations under Section 7.4 or a valid exemption from registration is available. No Warrant shall be exercisable and the
Company shall not be obligated to issue Ordinary Shares upon exercise of a Warrant unless the Ordinary Shares issuable upon such Warrant
exercise have been registered, qualified or deemed to be exempt from registration or qualification under the securities laws of the state
of residence of the Registered Holder of the Warrants. Subject to Section 4.6 of this Agreement, a Registered Holder of Warrants
may exercise its Warrants only for a whole number of Ordinary Shares. The Company may require holders of Warrants to settle the Warrant
on a “cashless basis” pursuant to Section 7.4. If, by reason of any exercise of Warrants on a “cashless basis”,
the holder of any Warrant would be entitled, upon the exercise of such Warrant, to receive a fractional interest in an Ordinary Share,
the Company shall round down to the nearest whole number, the number of Ordinary Shares to be issued to such holder.

 

3.3.3. Valid Issuance. All Ordinary Shares
issued upon the proper exercise of a Warrant in conformity with this Agreement shall be validly issued, fully paid and nonassessable.

 

3.3.4. Date of Issuance. Each person in
whose name any book-entry position or certificate, as applicable, for Ordinary Shares is issued and who is registered in the register
of members of the Company shall for all purposes be deemed to have become the holder of record of such Ordinary Shares on the date on
which the Warrant, or book-entry position representing such Warrant, was surrendered and payment of the Warrant Price was made, irrespective
of the date of delivery of such certificate in the case of a certificated Warrant, except that, if the date of such surrender and payment
is a date when the register of members of the Company or book-entry system of the Warrant Agent are closed, such person shall be deemed
to have become the holder of such shares at the close of business on the next succeeding date on which the share transfer books or book-entry
system are open.

 

    5

     

    

 

3.3.5. Maximum Percentage. A holder of
a Warrant may notify the Company in writing in the event it elects to be subject to the provisions contained in this subsection
3.3.5; however, no holder of a Warrant shall be subject to this subsection 3.3.5 unless he, she or it makes such
election. If the election is made by a holder, the Warrant Agent shall not effect the exercise of the holder’s Warrant, and
such holder shall not have the right to exercise such Warrant, to the extent that after giving effect to such exercise, such person
(together with such person’s affiliates), to the Warrant Agent’s actual knowledge, would beneficially own in excess of
9.8% (the “Maximum Percentage”) of the Ordinary Shares outstanding immediately after giving effect to such
exercise. For purposes of the foregoing sentence, the aggregate number of Ordinary Shares beneficially owned by such person and its
affiliates shall include the number of Ordinary Shares issuable upon exercise of the Warrant with respect to which the determination
of such sentence is being made, but shall exclude Ordinary Shares that would be issuable upon (x) exercise of the remaining,
unexercised portion of the Warrant beneficially owned by such person and its affiliates and (y) exercise or conversion of the
unexercised or unconverted portion of any other securities of the Company beneficially owned by such person and its affiliates
(including, without limitation, any convertible notes or convertible preferred shares or warrants) subject to a limitation on
conversion or exercise analogous to the limitation contained herein. Except as set forth in the preceding sentence, for purposes of
this paragraph, beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”). For purposes of the Warrant, in determining the number of outstanding
Ordinary Shares, the holder may rely on the number of outstanding Ordinary Shares as reflected in (1) the Company’s most
recent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K or other public filing with the
Commission as the case may be, (2) a more recent public announcement by the Company or (3) any other notice by the Company or
Continental Stock Transfer & Trust Company, as transfer agent (in such capacity, the “Transfer
Agent”), setting forth the number of Ordinary Shares outstanding. For any reason at any time, upon the written request
of the holder of the Warrant, the Company shall, within two (2) Business Days, confirm orally and in writing to such holder the
number of Ordinary Shares then outstanding. In any case, the number of issued and outstanding Ordinary Shares shall be determined
after giving effect to the conversion or exercise of equity securities of the Company by the holder and its affiliates since the
date as of which such number of issued and outstanding Ordinary Shares was reported. By written notice to the Company, the holder of
a Warrant may from time to time increase or decrease the Maximum Percentage applicable to such holder to any other percentage
specified in such notice; provided, however, that any such increase shall not be effective until the sixty-first
(61st) day after such notice is delivered to the Company.

 

4.
Adjustments.

 

4.1. Share Capitalizations.

 

4.1.1. Sub-Divisions. If after the date
hereof, and subject to the provisions of Section 4.6 below, the number of issued and outstanding Ordinary Shares is increased by
a capitalization or share dividend of Ordinary Shares, or by a sub-division of Ordinary Shares or other similar event, then, on the effective
date of such share capitalization, sub-division or similar event, the number of Ordinary Shares issuable on exercise of each Warrant shall
be increased in proportion to such increase in the issued and outstanding Ordinary Shares. A rights offering made to all or substantially
all holders of Ordinary Shares entitling holders to purchase Ordinary Shares at a price less than the “Historical Fair Market Value”
(as defined below) shall be deemed a capitalization of a number of Ordinary Shares equal to the product of (i) the number of Ordinary
Shares actually sold in such rights offering (or issuable under any other equity securities sold in such rights offering that are convertible
into or exercisable for the Ordinary Shares) multiplied by (ii) one (1) minus the quotient of (x) the price per Ordinary Share paid in
such rights offering divided by (y) the Historical Fair Market Value. For purposes of this subsection 4.1.1, (i) if the rights
offering is for securities convertible into or exercisable for Ordinary Shares, in determining the price payable for Ordinary Shares,
there shall be taken into account any consideration received for such rights, as well as any additional amount payable upon exercise or
conversion and (ii) “Historical Fair Market Value” means the volume weighted average price of the Ordinary Shares
during the ten (10) trading day period ending on the trading day prior to the first date on which the Ordinary Shares trade on the applicable
exchange or in the applicable market, regular way, without the right to receive such rights. No Ordinary Shares shall be issued at less
than their par value.

 

4.1.2. Extraordinary Dividends. If the
Company, at any time while the Warrants are outstanding and unexpired, pays to all or substantially all of the holders of the
Ordinary Shares a dividend or make a distribution in cash, securities or other assets on account of such Ordinary Shares (or other
shares into which the Warrants are convertible), other than (a) as described in subsection 4.1.1 above, (b) Ordinary Cash
Dividends (as defined below), (c) to satisfy the redemption rights of the holders of the Ordinary Shares in connection with a
proposed initial Business Combination, (d) to satisfy the redemption rights of the holders of the Ordinary Shares in connection with
a shareholder vote to amend the Company’s amended and restated memorandum and articles of association (i) to modify the
substance or timing of the Company’s obligation to provide holders of Ordinary Shares the right to have their shares redeemed
in connection with the Company’s initial Business Combination or to redeem 100% of the Company’s public shares if it
does not complete its initial Business Combination within the time period required by the Company’s amended and restated
memorandum and articles of association, as amended from time to time, or (ii) with respect to any other provision relating to the
rights of holders of Ordinary Shares, (e) as a result of the repurchase of Ordinary Shares by the Company if a proposed initial
Business Combination is presented to the shareholders of the Company for approval or (f) in connection with the redemption of public
shares upon the failure of the Company to complete its initial Business Combination and any subsequent distribution of its assets
upon its liquidation (any such non-excluded event being referred to herein as an “Extraordinary
Dividend”), then the Warrant Price shall be decreased, effective immediately after the effective date of such
Extraordinary Dividend, by the amount of cash and/or the fair market value (as determined by the Company’s board of directors
(the “Board”), in good faith) of any securities or other assets paid on each Ordinary Share in respect of
such Extraordinary Dividend. For purposes of this subsection 4.1.2, “Ordinary Cash Dividends” means
any cash dividend or cash distribution which, when combined on a per share basis, with the per share amounts of all other cash
dividends and cash distributions paid on the Ordinary Shares during the 365-day period ending on the date of declaration of such
dividend or distribution to the extent it does not exceed $0.50 (which amount shall be adjusted to appropriately reflect any of the
events referred to in other subsections of this Section 4 and excluding cash dividends or cash distributions that resulted in
an adjustment to the Warrant Price or to the number of Ordinary Shares issuable on exercise of each Warrant).

 

    6

     

    

 

4.2. Aggregation of Shares. If after the date
hereof, and subject to the provisions of Section 4.6 hereof, the number of issued and outstanding Ordinary Shares is decreased
by a consolidation, combination, reverse share split or reclassification of Ordinary Shares or other similar event, then, on the effective
date of such consolidation, combination, reverse share split, reclassification or similar event, the number of Ordinary Shares issuable
on exercise of each Warrant shall be decreased in proportion to such decrease in issued and outstanding Ordinary Shares.

 

4.3. Adjustments in Exercise Price. Whenever
the number of Ordinary Shares purchasable upon the exercise of the Warrants is adjusted, as provided in subsection 4.1.1 or Section
4.2 above, the Warrant Price shall be adjusted (to the nearest cent) by multiplying such Warrant Price immediately prior to such adjustment
by a fraction (x) the numerator of which shall be the number of Ordinary Shares purchasable upon the exercise of the Warrants immediately
prior to such adjustment, and (y) the denominator of which shall be the number of Ordinary Shares so purchasable immediately thereafter.

 

4.4. Raising of the Capital in Connection with
the Initial Business Combination. If (x) the Company issues additional Ordinary Shares or equity-linked securities for capital raising
purposes in connection with the closing of its initial Business Combination at an issue price or effective issue price of less than $9.20
per Ordinary Share (with such issue price or effective issue price to be determined in good faith by the Board and, in the case of any
such issuance to the Sponsor or its affiliates, without taking into account any Class B ordinary shares, par value $0.0001 per share,
of the Company held by the Sponsor or such affiliates, as applicable, prior to such issuance) (the “Newly Issued Price”),
(y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available
for the funding of the Company’s initial Business Combination on the date of the completion of the Company’s initial Business
Combination (net of redemptions), and (z) the volume-weighted average trading price of Ordinary Shares during the twenty (20) trading
day period starting on the trading day prior to the day on which the Company consummates its initial Business Combination (such price,
the “Market Value”) is below $9.20 per share, the Warrant Price shall be adjusted (to the nearest cent) to be
equal to 115% of the higher of the Market Value and the Newly Issued Price, the $18.00 per share redemption trigger price described in
Section 6.1 shall be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued
Price.

 

4.5. Replacement of Securities upon
Reorganization, etc. In case of any reclassification or reorganization of the issued and outstanding Ordinary Shares (other than
a change under Section 4.1 or Section 4.2 hereof or that solely affects the par value of such Ordinary Shares), or in
the case of any merger or consolidation of the Company with or into another corporation (other than a consolidation or merger in
which the Company is the continuing corporation and that does not result in any reclassification or reorganization of the issued and
outstanding Ordinary Shares), or in the case of any sale or conveyance to another corporation or entity of the assets or other
property of the Company as an entirety or substantially as an entirety in connection with which the Company is dissolved, the
holders of the Warrants shall thereafter have the right to purchase and receive, upon the basis and upon the terms and conditions
specified in the Warrants and in lieu of the Ordinary Shares of the Company immediately theretofore purchasable and receivable upon
the exercise of the rights represented thereby, the kind and amount of shares or stock or other securities or property (including
cash) receivable upon such reclassification, reorganization, merger or consolidation, or upon a dissolution following any such sale
or transfer, that the holder of the Warrants would have received if such holder had exercised his, her or its Warrant(s) immediately
prior to such event (the “Alternative Issuance”); provided, however, that if the holders of the Ordinary
Shares were entitled to exercise a right of election as to the kind or amount of securities, cash or other assets receivable upon
such consolidation or merger, then the kind and amount of securities, cash or other assets constituting the Alternative Issuance for
which each Warrant shall become exercisable shall be deemed to be the weighted average of the kind and amount received per share by
the holders of the Ordinary Shares in such consolidation or merger that affirmatively make such election. If any reclassification or
reorganization also results in a change in Ordinary Shares covered by subsection 4.1.1, then such adjustment shall be made
pursuant to subsection 4.1.1 or Sections 4.2, 4.3 and this Section 4.4. The provisions of this Section
4.4 shall similarly apply to successive reclassifications, reorganizations, mergers or consolidations, sales or other transfers.
In no event shall the Warrant Price be reduced to less than the par value per share issuable upon exercise of such Warrant.

 

    7

     

    

 

4.6. Notices of Changes in Warrant. Upon every
adjustment of the Warrant Price or the number of shares issuable upon exercise of a Warrant, the Company shall give written notice thereof
to the Warrant Agent, which notice shall state the Warrant Price resulting from such adjustment and the increase or decrease, if any,
in the number of shares purchasable at such price upon the exercise of a Warrant, setting forth in reasonable detail the method of calculation
and the facts upon which such calculation is based. Upon the occurrence of any event specified in Sections 4.1, 4.2, 4.3,
4.4 or 4.5, the Company shall give written notice of the occurrence of such event to each holder of a Warrant, at the last
address set forth for such holder in the Warrant Register, of the record date or the effective date of the event. Failure to give such
notice, or any defect therein, shall not affect the legality or validity of such event.

 

4.7. No Fractional Shares. Notwithstanding
any provision contained in this Agreement to the contrary, the Company shall not issue fractional shares upon the exercise of Warrants.
If, by reason of any adjustment made pursuant to this Section 4, the holder of any Warrant would be entitled, upon the exercise
of such Warrant, to receive a fractional interest in a share, the Company shall, upon such exercise, round down to the nearest whole number
the number of Ordinary Shares to be issued to such holder.

 

4.8. Form of Warrant. The form of Warrant
need not be changed because of any adjustment pursuant to this Section 4, and Warrants issued after such adjustment may state the
same Warrant Price and the same number of shares as is stated in the Warrants initially issued pursuant to this Agreement; provided, however,
that the Company may at any time in its sole discretion make any change in the form of Warrant that the Company may deem appropriate and
that does not affect the substance thereof, and any Warrant thereafter issued or countersigned, whether in exchange or substitution for
an outstanding Warrant or otherwise, may be in the form as so changed.

 

5.
Transfer and Exchange of Warrants.

 

5.1. Registration of Transfer. The Warrant
Agent shall register the transfer, from time to time, of any outstanding Warrant upon the Warrant Register, upon surrender of such Warrant
for transfer, in the case of a certificated Warrant, properly endorsed with signatures properly guaranteed and accompanied by appropriate
instructions for transfer. Upon any such transfer, a new Warrant representing an equal aggregate number of Warrants shall be issued and
the old Warrant shall be cancelled by the Warrant Agent. In the case of certificated Warrants, the Warrants so cancelled shall be delivered
by the Warrant Agent to the Company from time to time upon request.

 

5.2. Procedure for Surrender of
Warrants. Warrants may be surrendered to the Warrant Agent, together with a written request for exchange or transfer, and
thereupon the Warrant Agent shall issue in exchange therefor one or more new Warrants as requested by the Registered Holder of the
Warrants so surrendered, representing an equal aggregate number of Warrants; provided, however, that except as otherwise provided
herein or with respect to any Book-Entry Warrant, each Book-Entry Warrant may be transferred only in whole and only to the
Depositary, to another nominee of the Depositary, to a successor depository, or to a nominee of a successor depository; provided
further, however that in the event that a Warrant surrendered for transfer bears a restrictive legend (as in the case of
the Private Placement Warrants and Forward Purchase Warrants), the Warrant Agent shall not cancel such Warrant and issue new
Warrants in exchange thereof until the Warrant Agent has received an opinion of counsel for the Company stating that such transfer
may be made and indicating whether the new Warrants must also bear a restrictive legend.

 

    8

     

    

 

5.3. Fractional Warrants. The Warrant Agent
shall not be required to effect any registration of transfer or exchange which shall result in the issuance of a warrant certificate or
book-entry position for a fraction of a warrant, except as part of the Units.

 

5.4. Service Charges. No service charge shall
be made for any exchange or registration of transfer of Warrants.

 

5.5. Warrant Execution and Countersignature.
The Warrant Agent is hereby authorized to countersign and to deliver, in accordance with the terms of this Agreement, the Warrants required
to be issued pursuant to the provisions of this Section 5, and the Company, whenever required by the Warrant Agent, shall supply
the Warrant Agent with Warrants duly executed on behalf of the Company for such purpose.

 

5.6. Transfer of Warrants. Prior to the Detachment
Date, the Public Warrants may be transferred or exchanged only together with the Unit in which such Warrant is included, and only for
the purpose of effecting, or in conjunction with, a transfer or exchange of such Unit. Furthermore, each transfer of a Unit on the register
relating to such Units shall operate also to transfer the Warrants included in such Unit. Notwithstanding the foregoing, the provisions
of this Section 5.6 shall have no effect on any transfer of Warrants on and after the Detachment Date.

 

6.
Redemption.

 

6.1. Redemption of Warrants. Not less than
all of the outstanding Warrants may be redeemed, at the option of the Company, at any time during the Exercise Period, at the office of
the Warrant Agent, upon notice to the Registered Holders of the Warrants, as described in Section 6.3 below, at a Redemption Price
of $0.01 per Warrant, provided that (a) the Reference Value equals or exceeds $18.00 per share (subject to adjustment in compliance with
Section 4 hereof) and (b) there is an effective registration statement covering the issuance of the Ordinary Shares issuable upon
exercise of the Warrants, and a current prospectus relating thereto, available throughout the 30-day Redemption Period (as defined in
Section 6.3 below) or the Company has elected to require the exercise of Warrants on a “cashless basis” pursuant to
Section 7.4; provided, however, that if and when the Public Warrants become redeemable by the Company, the Company may not
exercise such redemption right if the issuance of shares of Common Stock upon exercise of the Public Warrants is not exempt from registration
or qualification under applicable state blue sky laws or the Company is unable to effect such registration or qualification.

 

6.2. [Reserved].

 

6.3. Date Fixed for, and Notice of, Redemption;
Redemption Price; Reference Value. In the event that the Company elects to redeem the Warrants pursuant to Sections 6.1, the
Company shall fix a date for the redemption (the “Redemption Date”). Notice of redemption shall be mailed by
first class mail, postage prepaid, by the Company not less than thirty (30) days prior to the Redemption Date (the “30-day
Redemption Period”) to the Registered Holders of the Warrants to be redeemed at their last addresses as they shall appear
on the registration books. Any notice mailed in the manner herein provided shall be conclusively presumed to have been duly given whether
or not the Registered Holder received such notice. As used in this Agreement, (a) “Redemption Price” shall mean
the price per Warrant at which any Warrants are redeemed pursuant to Sections 6.1 and (b) “Reference Value”
shall mean the last reported sales price of the Ordinary Shares for any twenty (20) trading days within the thirty (30) trading-day period
ending on the third trading day prior to the date on which notice of the redemption is given.

 

6.4. Exercise After Notice of
Redemption. The Warrants may be exercised at any time after notice of redemption shall have been given by the Company pursuant
to Section 6.3 hereof and prior to the Redemption Date. On and after the Redemption Date, the record holder of the Warrants
shall have no further rights except to receive, upon surrender of the Warrants, the Redemption Price.

 

    9

     

    

 

7.
Other Provisions Relating to Rights of Holders of Warrants.

 

7.1. No Rights as Shareholder. A Warrant does
not entitle the Registered Holder thereof to any of the rights of a shareholder of the Company, including, without limitation, the right
to receive dividends, or other distributions, exercise any preemptive rights to vote or to consent or to receive notice as shareholders
in respect of the meetings of shareholders or the election of directors of the Company or any other matter.

 

7.2. Lost, Stolen, Mutilated, or Destroyed Warrants.
If any Warrant is lost, stolen, mutilated, or destroyed, the Company and the Warrant Agent may on such terms as to indemnity or otherwise
as they may in their discretion impose (which shall, in the case of a mutilated Warrant, include the surrender thereof), issue a new Warrant
of like denomination, tenor, and date as the Warrant so lost, stolen, mutilated, or destroyed. Any such new Warrant shall constitute a
substitute contractual obligation of the Company, whether or not the allegedly lost, stolen, mutilated, or destroyed Warrant shall be
at any time enforceable by anyone.

 

7.3. Reservation of Ordinary Shares. The Company
shall at all times reserve and keep available a number of its authorized but unissued Ordinary Shares that shall be sufficient to permit
the exercise in full of all outstanding Warrants issued pursuant to this Agreement.

 

7.4. Registration of Ordinary Shares; Cashless
Exercise at Company’s Option.

 

7.4.1. Registration of the Ordinary Shares.
The Company agrees that as soon as practicable, but in no event later than twenty (20) Business Days after the closing of its initial
Business Combination, it shall use its commercially reasonable efforts to file with the Commission a registration statement for the registration,
under the Securities Act, of the Ordinary Shares issuable upon exercise of the Warrants. The Company shall use its commercially reasonable
efforts to cause the same to become effective within sixty (60) Business Days following the closing of its initial Business Combination
and to maintain the effectiveness of such registration statement, and a current prospectus relating thereto, until the expiration or redemption
of the Warrants in accordance with the provisions of this Agreement. If any such registration statement has not been declared effective
by the sixtieth (60th) Business Day following the closing of the Business Combination, holders of the Warrants shall have the right, during
the period beginning on the sixty-first (61st) Business Day after the closing of the Business Combination and ending upon such registration
statement being declared effective by the Commission, and during any other period when the Company shall fail to have maintained an effective
registration statement covering the issuance of the Ordinary Shares issuable upon exercise of the Warrants, to exercise such Warrants
on a “cashless basis,” by exchanging the Warrants (in accordance with Section 3(a)(9) of the Securities Act or another exemption)
for that number of Ordinary Shares equal to the the quotient obtained by dividing (x) the product of the number of Ordinary Shares underlying
the Warrants, multiplied by the excess of the “Fair Market Value” (as defined below) less the Warrant Price by (y) the Fair
Market Value. Solely for purposes of this subsection 7.4.1, “Fair Market Value” shall mean the volume-weighted
average price of the Ordinary Shares as reported during the ten (10) trading day period ending on the trading day prior to the date that
notice of exercise is received by the Warrant Agent from the holder of such Warrants or its securities broker or intermediary. The date
that notice of “cashless exercise” is received by the Warrant Agent shall be conclusively determined by the Warrant Agent.
In connection with the “cashless exercise” of a Public Warrant, the Company shall, upon request, provide the Warrant Agent
with an opinion of counsel for the Company (which shall be an outside law firm with securities law experience) stating that (i) the exercise
of the Warrants on a “cashless basis” in accordance with this subsection 7.4.1 is not required to be registered under
the Securities Act and (ii) the Ordinary Shares issued upon such exercise shall be freely tradable under United States federal securities
laws by anyone who is not an affiliate (as such term is defined in Rule 144 under the Securities Act) of the Company and, accordingly,
shall not be required to bear a restrictive legend. Except as provided in subsection 7.4.2, for the avoidance of doubt, unless
and until all of the Warrants have been exercised or have expired, the Company shall continue to be obligated to comply with its registration
obligations under the first three sentences of this subsection 7.4.1.

 

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7.4.2. Cashless Exercise at
Company’s Option. If the Ordinary Shares are at the time of any exercise of a Warrant not listed on a national securities
exchange such that they satisfy the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the
Company may, at its option, (i) require holders of Warrants who exercise Warrants to exercise such Public Warrants on a
 “cashless basis” in accordance with Section 3(a)(9) of the Securities Act as described in subsection 7.4.1 and
(ii) in the event the Company so elects, the Company shall (x) not be required to file or maintain in effect a registration
statement for the registration, under the Securities Act, of the Ordinary Shares issuable upon exercise of the Warrants,
notwithstanding anything in this Agreement to the contrary, and (y) use its commercially reasonable efforts to register or qualify
for sale the Ordinary Shares issuable upon exercise of the Warrant under applicable blue sky laws to the extent an exemption is not
available.

 

8.
Concerning the Warrant Agent and Other Matters.

 

8.1. Payment of Taxes. The Company shall from
time to time promptly pay all taxes and charges that may be imposed upon the Company or the Warrant Agent in respect of the issuance or
delivery of Ordinary Shares upon the exercise of the Warrants, but the Company shall not be obligated to pay any transfer taxes in respect
of the Warrants or such shares.

 

8.2. Resignation, Consolidation, or Merger of
Warrant Agent.

 

8.2.1. Appointment of Successor Warrant Agent.
The Warrant Agent, or any successor to it hereafter appointed, may resign its duties and be discharged from all further duties and liabilities
hereunder after giving sixty (60) days’ notice in writing to the Company. If the office of the Warrant Agent becomes vacant by resignation
or incapacity to act or otherwise, the Company shall appoint in writing a successor Warrant Agent in place of the Warrant Agent. If the
Company shall fail to make such appointment within a period of thirty (30) days after it has been notified in writing of such resignation
or incapacity by the Warrant Agent or by the holder of a Warrant (who shall, with such notice, submit his, her or its Warrant for inspection
by the Company), then the holder of any Warrant may apply to the Supreme Court of the State of New York for the County of New York for
the appointment of a successor Warrant Agent at the Company’s cost. Any successor Warrant Agent, whether appointed by the Company
or by such court, shall be a corporation or other entity organized and existing under the laws of the State of New York, in good standing
and having its principal office in the United States of America, and authorized under such laws to exercise corporate trust powers and
subject to supervision or examination by federal or state authority. After appointment, any successor Warrant Agent shall be vested with
all the authority, powers, rights, immunities, duties, and obligations of its predecessor Warrant Agent with like effect as if originally
named as Warrant Agent hereunder, without any further act or deed; but if for any reason it becomes necessary or appropriate, the predecessor
Warrant Agent shall execute and deliver, at the expense of the Company, an instrument transferring to such successor Warrant Agent all
the authority, powers, and rights of such predecessor Warrant Agent hereunder; and upon request of any successor Warrant Agent the Company
shall make, execute, acknowledge, and deliver any and all instruments in writing for more fully and effectually vesting in and confirming
to such successor Warrant Agent all such authority, powers, rights, immunities, duties, and obligations.

 

8.2.2. Notice of Successor Warrant Agent.
In the event a successor Warrant Agent shall be appointed, the Company shall give notice thereof to the predecessor Warrant Agent and
the Transfer Agent for the Ordinary Shares not later than the effective date of any such appointment.

 

8.2.3. Merger or Consolidation of Warrant Agent.
Any entity into which the Warrant Agent may be merged or with which it may be consolidated or any entity resulting from any merger or
consolidation to which the Warrant Agent shall be a party shall be the successor Warrant Agent under this Agreement without any further
act.

 

8.3. Fees and Expenses of Warrant Agent.

 

8.3.1. Remuneration. The Company agrees
to pay the Warrant Agent reasonable remuneration for its services as such Warrant Agent hereunder and shall, pursuant to its obligations
under this Agreement, reimburse the Warrant Agent upon demand for all expenditures that the Warrant Agent may reasonably incur in the
execution of its duties hereunder.

 

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8.3.2. Further Assurances. The Company agrees
to perform, execute, acknowledge, and deliver or cause to be performed, executed, acknowledged, and delivered all such further and other
acts, instruments, and assurances as may reasonably be required by the Warrant Agent for the carrying out or performing of the provisions
of this Agreement.

 

8.4. Liability of Warrant Agent.

 

8.4.1. Reliance on Company Statement. Whenever
in the performance of its duties under this Agreement, the Warrant Agent shall deem it necessary or desirable that any fact or matter
be proved or established by the Company prior to taking or suffering any action hereunder, such fact or matter (unless other evidence
in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a statement signed by
the Chief Executive Officer, the President, the Chief Financial Officer or the Chairman of the Board of the Company and delivered to the
Warrant Agent. The Warrant Agent may rely upon such statement for any action taken or suffered in good faith by it pursuant to the provisions
of this Agreement.

 

8.4.2. Indemnity. The Warrant Agent shall
be liable hereunder only for its own gross negligence, willful misconduct, fraud or bad faith. The Company agrees to indemnify the Warrant
Agent and save it harmless against any and all liabilities, including judgments, out-of-pocket costs and reasonable outside counsel fees,
for anything done or omitted by the Warrant Agent in the execution of this Agreement, except as a result of the Warrant Agent’s
gross negligence, willful misconduct, fraud or bad faith.

 

8.4.3. Exclusions. The Warrant Agent shall
have no responsibility with respect to the validity of this Agreement or with respect to the validity or execution of any Warrant (except
its countersignature thereof). The Warrant Agent shall not be responsible for any breach by the Company of any covenant or condition contained
in this Agreement or in any Warrant. The Warrant Agent shall not be responsible to make any adjustments required under the provisions
of Section 4 hereof or responsible for the manner, method, or amount of any such adjustment or the ascertaining of the existence
of facts that would require any such adjustment; nor shall it by any act hereunder be deemed to make any representation or warranty as
to the authorization or reservation of any Ordinary Shares to be issued pursuant to this Agreement or any Warrant or as to whether any
Ordinary Shares shall, when issued, be valid and fully paid and nonassessable.

 

8.5. Acceptance of Agency. The Warrant Agent
hereby accepts the agency established by this Agreement and agrees to perform the same upon the terms and conditions herein set forth
and among other things, shall account promptly to the Company with respect to Warrants exercised and concurrently account for, and pay
to the Company, all monies received by the Warrant Agent for the purchase of Ordinary Shares through the exercise of the Warrants.

 

8.6. Waiver. The Warrant Agent has no right
of set-off or any other right, title, interest or claim of any kind (“Claim”) in, or to any distribution of,
the Trust Account (as defined in that certain Investment Management Trust Agreement, dated as of the date hereof, by and between the Company
and Continental Stock Transfer & Trust Company as trustee thereunder) and hereby agrees not to seek recourse, reimbursement, payment
or satisfaction for any Claim against the Trust Account for any reason whatsoever. The Warrant Agent hereby waives any and all Claims
against the Trust Account and any and all rights to seek access to the Trust Account.

 

9.
Miscellaneous Provisions.

 

9.1. Successors. All the covenants and provisions
of this Agreement by or for the benefit of the Company or the Warrant Agent shall bind and inure to the benefit of their respective successors
and assigns.

 

9.2. Notices. Any notice, statement or demand
authorized by this Agreement to be given or made by the Warrant Agent or by the holder of any Warrant to or on the Company shall be sufficiently
given when so delivered if by hand or overnight delivery or if sent by certified mail or private courier service within five (5) days
after deposit of such notice, postage prepaid, addressed (until another address is filed in writing by the Company with the Warrant Agent),
as follows:

 

    12

     

    

 

Avista Public Acquisition Corp. II

65 East 55th Street, 18th Floor

New York, New York 10022

Attention: Benjamin Silbert

 

with a copy to:

 

Weil, Gotshal & Manges LLP

767 Fifth Avenue

New York, New York 10153

	Attention: 	Alexander D. Lynch, Esq.
	 	Faiza N. Rahman, Esq.

 

Any notice, statement or demand authorized by this Agreement to be
given or made by the holder of any Warrant or by the Company to or on the Warrant Agent shall be sufficiently given when so delivered
if by hand or overnight delivery or if sent by certified mail or private courier service within five (5) days after deposit of such notice,
postage prepaid, addressed (until another address is filed in writing by the Warrant Agent with the Company), as follows:

 

Continental Stock Transfer & Trust Company

One State Street, 30th Floor

New York, NY 10004

Attention: Compliance Department

 

9.3. Applicable Law and Exclusive Forum. The
validity, interpretation, and performance of this Agreement and of the Warrants shall be governed in all respects by the laws of the State
of New York. Subject to applicable law, the Company hereby agrees that any action, proceeding or claim against it arising out of or relating
in any way to this Agreement shall be brought and enforced in the courts of the State of New York or the United States District Court
for the Southern District of New York, and irrevocably submits to such jurisdiction, which jurisdiction shall be exclusive forum for any
such action, proceeding or claim. The Company hereby waives any objection to such exclusive jurisdiction and that such courts represent
an inconvenient forum. Notwithstanding the foregoing, the provisions of this paragraph will not apply to suits brought to enforce any
liability or duty created by the Exchange Act or any other claim for which the federal district courts of the United States of America
are the sole and exclusive forum.

 

Any person or entity purchasing or otherwise acquiring
any interest in the Warrants shall be deemed to have notice of and to have consented to the forum provisions in this Section 9.3.
If any action, the subject matter of which is within the scope the forum provisions above, is filed in a court other than a court located
within the State of New York or the United States District Court for the Southern District of New York (a “foreign action”)
in the name of any warrant holder, such warrant holder shall be deemed to have consented to: (x) the personal jurisdiction of the state
and federal courts located within the State of New York or the United States District Court for the Southern District of New York in connection
with any action brought in any such court to enforce the forum provisions (an “enforcement action”), and (y)
having service of process made upon such warrant holder in any such enforcement action by service upon such warrant holder’s counsel
in the foreign action as agent for such warrant holder.

 

9.4. Persons Having Rights under this Agreement.
Nothing in this Agreement shall be construed to confer upon, or give to, any person, corporation or other entity other than the parties
hereto and the Registered Holders of the Warrants any right, remedy, or claim under or by reason of this Agreement or of any covenant,
condition, stipulation, promise, or agreement hereof. All covenants, conditions, stipulations, promises, and agreements contained in this
Agreement shall be for the sole and exclusive benefit of the parties hereto and their successors and assigns and of the Registered Holders
of the Warrants.

 

9.5. Examination of the Warrant
Agreement. A copy of this Agreement shall be available at all reasonable times at the office of the Warrant Agent in the United
States of America, for inspection by the Registered Holder of any Warrant. The Warrant Agent may require any such holder to submit
such holder’s Warrant for inspection by the Warrant Agent.

 

    13

     

    

 

9.6. Counterparts. This Agreement may be executed
in any number of original or facsimile counterparts and each of such counterparts shall for all purposes be deemed to be an original,
and all such counterparts shall together constitute but one and the same instrument.

 

9.7. Effect of Headings. The section headings
herein are for convenience only and are not part of this Agreement and shall not affect the interpretation thereof.

 

9.8. Amendments. This Agreement may be amended
by the parties hereto without the consent of any Registered Holder for the purpose of (i) curing any ambiguity or to correct any mistake,
including to conform the provisions hereof to the description of the terms of the Warrants and this Agreement set forth in the Prospectus,
or defective provision contained herein or, (ii) making any amendments that are necessary in the good faith determination of the Board
(taking into account then existing market precedents for initial public offerings of special purpose acquisition companies underwritten
by bulge bracket investment banks) to allow for the Warrants to continue to be classified as equity in the Company’s financial statements;
provided that no such amendment shall increase the Warrant Price, shorten the Exercise Period or will, in the aggregate, materially affect
the legal rights of Registered Holders of the then-outstanding Public Warrants under this Agreement, (iii) removing or reducing the Company’s
ability to redeem the Warrants or (iv) adding or changing any provisions with respect to matters or questions arising under this Agreement
as the parties may deem necessary or desirable and that the parties deem shall not adversely affect the rights of the Registered Holders
under this Agreement, provided that in the case of this clause (iv) the approval by the Registered Holders of at least 50% of the then-outstanding
Public Warrants is required to make any change that adversely affects the legal rights of the Registered Holders of the Public Warrants
under this Agreement. The Company may amend the terms of the Public Warrants in a manner adverse to a Registered Holder if holders of
at least 50% of the then-outstanding Public Warrants approve of such amendment and, solely with respect to any amendment to the terms
of the Private Placement Warrants or Forward Purchase Warrants or any provision of this Agreement with respect to the Private Placement
Warrants or Forward Purchase Warrants, 50% of the number of the then outstanding Private Placement Warrants or Forward Purchase Warrants;
provided that this Agreement may be amended by the parties hereto with the vote or written consent of Registered Holders of at least 50%
of the then outstanding Private Placement Warrants or Forward Purchase Warrants without the consent of any other Registered Holder to
provide that the Private Placement Warrants or Forward Purchase Warrants (a) will remain Private Placement Warrants or Forward Purchase
Warrants, as applicable, when transferred to any party, including parties that are not Permitted Transferees, or (b) have the same terms
as the Public Warrants, subject to any applicable contractual restrictions or securities law restrictions. Notwithstanding the foregoing,
the Company may lower the Warrant Price or extend the duration of the Exercise Period pursuant to Sections 3.1 and 3.2,
respectively, without the consent of the Registered Holders.

 

9.9. Severability. This Agreement shall be
deemed severable, and the invalidity or unenforceability of any term or provision hereof shall not affect the validity or enforceability
of this Agreement or of any other term or provision hereof. Furthermore, in lieu of any such invalid or unenforceable term or provision,
the parties hereto intend that there shall be added as a part of this Agreement a provision as similar in terms to such invalid or unenforceable
provision as may be possible and be valid and enforceable.

 

Exhibit A — Form of Warrant Certificate

 

Exhibit B Legend — Private Placement Warrants

 

Exhibit C Legend — Forward Purchase Warrants

 

    14

     

    

 

IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed as of the date first above written.

 

 

	 	AVISTA PUBLIC ACQUISITION CORP. II
	 	 
	 	 
	 	By:	
 /s/ John Cafasso
	 	 	Name:	John Cafasso
	 	 	Title:   	Chief Financial Officer
	 	 
	 	 
	 	CONTINENTAL STOCK TRANSFER & TRUST COMPANY, as Warrant Agent
	 	 
	 	 
	 	By:	
 /s/ Margaret B.Lloyd
	 	 	Name:	Margaret B.Lloyd
	 	 	Title:	Vice President

 

    15

     

    

 

EXHIBIT A

 

[FACE]

 

Number

 

Warrants

 

THIS WARRANT SHALL BE VOID IF NOT EXERCISED
PRIOR TO

THE EXPIRATION OF THE EXERCISE PERIOD PROVIDED FOR

IN THE WARRANT AGREEMENT DESCRIBED BELOW

 

Avista Public Acquisition Corp. II

Incorporated Under the Laws of the Cayman Islands

 

CUSIP [●]

 

Warrant Certificate

 

This Warrant Certificate certifies that
[ ], or registered assigns, is the registered holder of [               ]
warrant(s) (the “Warrants” and each, a “Warrant”) to purchase Class A ordinary shares,
$0.0001 par value (“Ordinary Shares”), of Avista Public Acquisition Corp. II, a Cayman Islands exempted company
(the “Company”). Each Warrant entitles the holder, upon exercise during the period set forth in the Warrant
Agreement referred to below, to receive from the Company that number of fully paid and nonassessable Ordinary Shares as set forth below,
at the exercise price (the “Exercise Price”) as determined pursuant to the Warrant Agreement, payable in lawful
money (or through “cashless exercise” as provided for in the Warrant Agreement) of the United States of America
upon surrender of this Warrant Certificate and payment of the Exercise Price at the office or agency of the Warrant Agent referred to
below, subject to the conditions set forth herein and in the Warrant Agreement. Defined terms used in this Warrant Certificate but not
defined herein shall have the meanings given to them in the Warrant Agreement.

 

Each whole Warrant is initially exercisable for
one fully paid and non-assessable Ordinary Share. Fractional shares shall not be issued upon exercise of any Warrant. If, upon the exercise
of Warrants, a holder would be entitled to receive a fractional interest in an Ordinary Share, the Company shall, upon exercise, round
down to the nearest whole number the number of Ordinary Shares to be issued to the Warrant holder. The number of Ordinary Shares issuable
upon exercise of the Warrants is subject to adjustment upon the occurrence of certain events as set forth in the Warrant Agreement.

 

The initial Exercise Price per one Ordinary Share
for any Warrant is equal to $11.50 per share. The Exercise Price is subject to adjustment upon the occurrence of certain events as set
forth in the Warrant Agreement.

 

Subject to the conditions set forth in the Warrant
Agreement, the Warrants may be exercised only during the Exercise Period and to the extent not exercised by the end of such Exercise Period,
such Warrants shall become void. The Warrants may be redeemed, subject to certain conditions, as set forth in the Warrant Agreement.

 

Reference is hereby made to the further provisions
of this Warrant Certificate set forth on the reverse hereof and such further provisions shall for all purposes have the same effect as
though fully set forth at this place.

 

This Warrant Certificate shall not be valid unless
countersigned by the Warrant Agent, as such term is used in the Warrant Agreement. This Warrant Certificate shall be governed by and construed
in accordance with the internal laws of the State of New York.

 

    A-1

     

    

 

	 	AVISTA PUBLIC ACQUISITION CORP. II
	 	 
	 	By:	
    
	 	 	Name:
	 	 	Title:   
	 	 
	 	CONTINENTAL STOCK TRANSFER & TRUST COMPANY, AS WARRANT AGENT
	 	 
	 	By:	
    
	 	 	Name:
	 	 	Title:
	 	 

 

    A-2

     

    

 

[Form of Warrant Certificate]

 

[Reverse]

 

The Warrants evidenced by this Warrant Certificate
are part of a duly authorized issue of Warrants entitling the holder on exercise to receive [ ] Ordinary Shares and are issued or to be
issued pursuant to a Warrant Agreement dated as of , 2021 (the “Warrant Agreement”), duly executed and delivered
by the Company to Continental Stock Transfer & Trust Company, a New York corporation, as warrant agent (the “Warrant Agent”),
which Warrant Agreement is hereby incorporated by reference in and made a part of this instrument and is hereby referred to for a description
of the rights, limitation of rights, obligations, duties and immunities thereunder of the Warrant Agent, the Company and the holders (the
words “holders” or “holder” meaning the Registered Holders or Registered Holder, respectively)
of the Warrants. A copy of the Warrant Agreement may be obtained by the holder hereof upon written request to the Company. Defined terms
used in this Warrant Certificate but not defined herein shall have the meanings given to them in the Warrant Agreement.

 

Warrants may be exercised at any time during the
Exercise Period set forth in the Warrant Agreement. The holder of Warrants evidenced by this Warrant Certificate may exercise them by
surrendering this Warrant Certificate, with the form of Election to Purchase set forth hereon properly completed and executed, together
with payment of the Exercise Price as specified in the Warrant Agreement (or through “cashless exercise” as provided
for in the Warrant Agreement) at the principal corporate trust office of the Warrant Agent. In the event that upon any exercise of Warrants
evidenced hereby the number of Warrants exercised shall be less than the total number of Warrants evidenced hereby, there shall be issued
to the holder hereof or his, her or its assignee, a new Warrant Certificate evidencing the number of Warrants not exercised.

 

Notwithstanding anything else in this Warrant Certificate
or the Warrant Agreement, no Warrant may be exercised unless at the time of exercise (i) a registration statement covering the issuance
of the Ordinary Shares to be issued upon exercise is effective under the Securities Act and (ii) a prospectus thereunder relating to the
Ordinary Shares is current, except through “cashless exercise” as provided for in the Warrant Agreement.

 

The Warrant Agreement provides that upon the occurrence
of certain events the number of Ordinary Shares issuable upon exercise of the Warrants set forth on the face hereof may, subject to certain
conditions, be adjusted. If, upon exercise of a Warrant, the holder thereof would be entitled to receive a fractional interest in an Ordinary
Share, the Company shall, upon exercise, round down to the nearest whole number of Ordinary Shares to be issued to the holder of the Warrant.

 

Warrant Certificates, when surrendered at the principal
corporate trust office of the Warrant Agent by the Registered Holder thereof in person or by legal representative or attorney duly authorized
in writing, may be exchanged, in the manner and subject to the limitations provided in the Warrant Agreement, but without payment of any
service charge, for another Warrant Certificate or Warrant Certificates of like tenor evidencing in the aggregate a like number of Warrants.

 

Upon due presentation for registration of transfer
of this Warrant Certificate at the office of the Warrant Agent a new Warrant Certificate or Warrant Certificates of like tenor and evidencing
in the aggregate a like number of Warrants shall be issued to the transferee(s) in exchange for this Warrant Certificate, subject to the
limitations provided in the Warrant Agreement, without charge except for any tax or other governmental charge imposed in connection therewith.

 

The Company and the Warrant Agent may deem and
treat the Registered Holder(s) hereof as the absolute owner(s) of this Warrant Certificate (notwithstanding any notation of ownership
or other writing hereon made by anyone), for the purpose of any exercise hereof, of any distribution to the holder(s) hereof, and for
all other purposes, and neither the Company nor the Warrant Agent shall be affected by any notice to the contrary. Neither the Warrants
nor this Warrant Certificate entitles any holder hereof to any rights of a shareholder of the Company.

 

    A-3

     

    

 

Election to Purchase

 

(To Be Executed Upon Exercise of Warrant)

 

The undersigned hereby irrevocably elects to exercise
the right, represented by this Warrant Certificate, to receive [               ]
Ordinary Shares and herewith tenders payment for such Ordinary Shares to the order of Avista Public Acquisition Corp. II (the “Company”)
in the amount of $[               ] in accordance with the
terms hereof. The undersigned requests that a certificate for such Ordinary Shares be registered in the name of [               ],
whose address is [               ] and that such Ordinary Shares
be delivered to [               ] whose address is [               ].
If said [               ] number of Ordinary Shares is less
than all of the Ordinary Shares purchasable hereunder, the undersigned requests that a new Warrant Certificate representing the remaining
balance of such Ordinary Shares be registered in the name of [               ],
whose address is [               ] and that such Warrant Certificate
be delivered to [               ], whose address is [               ].

 

In the event that the Warrant is to be exercised
on a “cashless” basis pursuant to Section 7.4 of the Warrant Agreement, the number of Ordinary Shares that this Warrant
is exercisable for shall be determined in accordance with Section 7.4 of the Warrant Agreement.

 

In the event that the Warrant may be exercised,
to the extent allowed by the Warrant Agreement, through cashless exercise (i) the number of Ordinary Shares that this Warrant is exercisable
for would be determined in accordance with the relevant section of the Warrant Agreement which allows for such cashless exercise and (ii)
the holder hereof shall complete the following: The undersigned hereby irrevocably elects to exercise the right, represented by this Warrant
Certificate, through the cashless exercise provisions of the Warrant Agreement, to receive Ordinary Shares. If said number of shares is
less than all of the Ordinary Shares purchasable hereunder (after giving effect to the cashless exercise), the undersigned requests that
a new Warrant Certificate representing the remaining balance of such Ordinary Shares be registered in the name of [               ],
whose address is [               ] and that such Warrant Certificate
be delivered to [               ], whose address is [               ].

 

[Signature Page Follows]

 

    A-4

     

    

 

Date: [               ],
20

 

	 	

	 	(Signature)
	 	

	 	

	 	(Address)
	 	 
	 	

	 	(Tax Identification Number)

 

	Signature Guaranteed:	 
	 	 
	
	 

 

 

THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM,
PURSUANT TO S.E.C. RULE 17Ad-15 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED).

 

    A-5

     

    

 

EXHIBIT B

 

PRIVATE PLACEMENT WARRANTS LEGEND

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED OR OTHERWISE DISPOSED
OF UNLESS REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY APPLICABLE STATE SECURITIES LAWS OR AN EXEMPTION FROM REGISTRATION
IS AVAILABLE. IN ADDITION, SUBJECT TO ANY ADDITIONAL LIMITATIONS ON TRANSFER DESCRIBED IN THE LETTER AGREEMENT BY AND AMONG AVISTA PUBLIC
ACQUISITION CORP. II (THE “COMPANY”), AVISTA ACQUISITION LP II AND THE OTHER PARTIES THERETO, THE SECURITIES
REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD OR TRANSFERRED PRIOR TO THE DATE THAT IS THIRTY (30) DAYS AFTER THE DATE UPON WHICH THE
COMPANY COMPLETES ITS INITIAL BUSINESS COMBINATION (AS DEFINED IN THE RECITALS OF THE WARRANT AGREEMENT REFERRED TO HEREIN) EXCEPT TO
A PERMITTED TRANSFEREE (AS DEFINED IN SECTION 2 OF THE WARRANT AGREEMENT) WHO AGREES IN WRITING WITH THE COMPANY TO BE SUBJECT
TO SUCH TRANSFER PROVISIONS.

 

SECURITIES EVIDENCED BY THIS CERTIFICATE AND CLASS A ORDINARY SHARES
OF THE COMPANY ISSUED UPON EXERCISE OF SUCH SECURITIES SHALL BE ENTITLED TO REGISTRATION RIGHTS UNDER A REGISTRATION AND SHAREHOLDER RIGHTS
AGREEMENT TO BE EXECUTED BY THE COMPANY.

 

NO. [ ] WARRANT

 

    B-1

     

    

 

EXHIBIT C

 

FORWARD PURCHASE WARRANTS LEGEND

 

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION, AND MAY NOT BE TRANSFERRED IN VIOLATION
OF SUCH ACT AND LAWS. THE SALE, PLEDGE, HYPOTHECATION, OR TRANSFER OF THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO THE TERMS AND CONDITIONS
OF A CERTAIN FORWARD PURCHASE AGREEMENT BY AND BETWEEN THE HOLDER AND THE COMPANY. COPIES OF SUCH AGREEMENT MAY BE OBTAINED UPON WRITTEN
REQUEST TO THE SECRETARY OF THE COMPANY. IN ADDITION, SUBJECT TO ANY ADDITIONAL LIMITATIONS ON TRANSFER DESCRIBED IN THE AGREEMENT BY
AND AMONG AVISTA PUBLIC ACQUISITION CORP. II (THE “COMPANY”) AND THE FORWARD PURCHASER PARTY THERETO, THE SECURITIES REPRESENTED
BY THIS CERTIFICATE MAY NOT BE SOLD OR TRANSFERRED PRIOR TO THE DATE THAT IS THIRTY (30) DAYS AFTER THE DATE UPON WHICH THE COMPANY COMPLETES
ITS INITIAL BUSINESS COMBINATION EXCEPT TO A PERMITTED TRANSFEREE WHO AGREES IN WRITING WITH THE COMPANY TO BE SUBJECT TO SUCH TRANSFER
PROVISIONS. SECURITIES EVIDENCED BY THIS CERTIFICATE AND ORDINARY SHARES OF THE COMPANY ISSUED UPON EXERCISE OF SUCH SECURITIES SHALL
BE ENTITLED TO REGISTRATION RIGHTS UNDER A REGISTRATION RIGHTS AGREEMENT TO BE EXECUTED BY THE COMPANY.

 

NO. [ ] WARRANT

 

    C-1

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