Document:

EX-10.41

 Exhibit 10.41 

FORM OF SECURITIES PURCHASE AGREEMENT 

This Securities Purchase Agreement (this “Agreement”) is dated as of January     , 2014, between OXiGENE,
Inc., a Delaware corporation (the “Company”), and each purchaser identified on the signature pages hereto (each, including its successors and assigns, a “Purchaser” and collectively, the
“Purchasers”). 
 WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to an effective
registration statement under the Securities Act of 1933, as amended (the “Securities Act”), the Company desires to issue and sell to each Purchaser, and each Purchaser, severally and not jointly, desires to purchase from the
Company, securities of the Company as more fully described in this Agreement. 
 NOW, THEREFORE, IN CONSIDERATION of the mutual covenants
contained in this Agreement, and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the Company and each Purchaser agree as follows: 

ARTICLE I. 
 DEFINITIONS

 1.1 Definitions. In addition to the terms defined elsewhere in this Agreement, the following terms have the meanings set forth
in this Section 1.1: 
 “Acquiring Person” shall have the meaning ascribed to such term in
Section 4.7. 
 “Action” shall have the meaning ascribed to such term in Section 3.1(j). 

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

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

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

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

“Closing Date” means the Trading Day on which all of the Transaction Documents have been executed and
delivered by the applicable parties thereto, and all 

 
conditions precedent to (i) the Purchasers’ obligations to pay the Subscription Amount and (ii) the Company’s obligations to deliver the Securities, in each case, have been
satisfied or waived, but in no event later than the third Trading Day following the date hereof. 

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

“Common Stock” means the common stock of the Company, par value $0.01 per share, and any other class of
securities into which such securities may hereafter be reclassified or changed. 
 “Common Stock
Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other
instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock. 

“Company Counsel” means Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., with offices located at One
Financial Center, Boston, MA 02111. 
 “Disclosure Schedules” shall have the meaning ascribed to such term
in Section 3.1. 
 “EGS” means Ellenoff Grossman & Schole LLP, with offices located at 1345
Avenue of the Americas, New York, New York 10105-0302. 
 “Escrow Agent” means Signature Bank, a New York
State chartered bank, with offices at 261 Madison Avenue, New York, New York 10016. 
 “Escrow Agreement”
means the escrow agreement entered into prior to the date hereof, by and among the Company, the Escrow Agent and H.C. Wainwright & Co. (“HCW”) pursuant to which the Purchasers shall deposit Subscription Amounts with the
Escrow Agent to be applied to the transactions contemplated hereunder. 
 “Evaluation Date” shall have the
meaning ascribed to such term in Section 3.1(r). 
 “Exchange Act” means the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder. 
 “Exempt Issuance” means the
issuance of (a) shares of Common Stock or options to employees, officers or directors of the Company pursuant to any stock or option plan duly adopted for such purpose, by a majority of the non-employee members of the Board of Directors or a
majority of the members of a committee of non-employee directors established for such purpose, (b) securities upon the exercise or exchange of or conversion of any Securities issued hereunder and/or other securities exercisable or exchangeable
for or convertible into shares of Common Stock issued and outstanding on the date of this Agreement, provided that such securities have not been amended since the 

  
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date of this Agreement to increase the number of such securities or to decrease the exercise price, exchange price or conversion price of such securities and (c) securities issued pursuant
to acquisitions or strategic transactions approved by a majority of the disinterested directors of the Company, provided that any such issuance shall only be to a Person (or to the equityholders of a Person) which is, itself or through its
subsidiaries, an operating company or an owner of an asset in a business synergistic with the business of the Company and shall provide to the Company additional benefits in addition to the investment of funds, but shall not include a transaction in
which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities. 

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

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

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

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

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

“Liens” means a lien, charge, pledge, security interest, encumbrance, right of first refusal, preemptive right
or other restriction. 
 “Material Adverse Effect” shall have the meaning assigned to such term in
Section 3.1(b). 
 “Material Permits” shall have the meaning ascribed to such term in
Section 3.1(m). 
 “Maximum Rate” shall have the meaning ascribed to such term in Section 5.17.

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

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

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

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

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

“Prospectus Supplement” means the Final Prospectus and any supplement to the Prospectus complying with Rules
430A and/or 424(b) of the Securities Act that is filed with the Commission and delivered by the Company to each Purchaser at the Closing. 

“Purchaser Party” shall have the meaning ascribed to such term in Section 4.10. 

“Registration Statement” means the effective registration statement with the Commission file
No. 333-190464 which registers the sale of the Warrants and Underlying Shares. 
 “Required Approvals”
shall have the meaning ascribed to such term in Section 3.1(e). 
 “Required Minimum” means, as of any
date, the maximum aggregate number of shares of Common Stock then issued or potentially issuable in the future pursuant to the Transaction Documents, including any Underlying Shares issuable upon exercise in full of all Warrants, ignoring any
exercise limits set forth therein. 
 “Rule 144” means Rule 144 promulgated by the Commission pursuant to
the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule. 

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

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

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

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder. 
 “Shares” means the shares of Common Stock issued or issuable to each Purchaser pursuant to
this Agreement. 
 “Short Sales” means all “short sales” as defined in Rule 200 of Regulation SHO
under the Exchange Act (but shall not be deemed to include the location and/or reservation of borrowable shares of Common Stock). 

  
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 “Subscription Amount” shall mean, as to each Purchaser, the
aggregate amount to be paid for the Securities purchased hereunder as specified below such Purchaser’s name on the signature page of this Agreement and next to the heading “Subscription Amount,” in United States dollars and in
immediately available funds. 
 “Subsidiary” means any subsidiary of the Company as set forth on Schedule
3.1(a) and shall, where applicable, also include any direct or indirect subsidiary of the Company formed or acquired after the date hereof. 

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

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

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

“Transfer Agent” means American Stock Transfer & Trust Company, the current transfer agent of the
Company, with a mailing address of 59 Maiden Lane, New York, New York and a facsimile number of 718-236-4588, and any successor transfer agent of the Company. 

“Underlying Shares” means the Shares and the shares of Common Stock issued and issuable upon exercise of the
Warrants. 
 “Variable Rate Transaction” shall have the meaning ascribed to such term in
Section 4.13(b). 
 “VWAP” means, for any date, the price determined by the first of the following
clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common
Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if the OTC Bulletin Board is not a Trading Market, the volume weighted average
price of the Common Stock for such date (or the nearest preceding date) on the OTC Bulletin Board, (c) if the Common Stock is not then listed or quoted for trading on the OTC Bulletin Board and if prices for the Common Stock are then reported
in the “Pink Sheets” published by Pink OTC Markets, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other
cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Purchasers of a majority in interest of the Securities then outstanding and reasonably acceptable to the Company, the
fees and expenses of which shall be paid by the Company. 

  
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 “Warrants” means, collectively, the Common Stock purchase
warrants delivered to the Purchasers at Closing in accordance with Section 2.2(a) hereof, which Warrants shall be exercisable immediately and have a term of exercise equal to 5 years, in the form of Exhibit B attached hereto. 

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

ARTICLE II. 
 PURCHASE
AND SALE 
 2.1 Closing. On the Closing Date, upon the terms and subject to the conditions set forth herein, substantially
concurrent with the execution and delivery of this Agreement by the parties hereto, the Company agrees to sell, and the Purchasers, severally and not jointly, agree to purchase, up to an aggregate of
$        ,000,000 of Shares and Warrants. Each Purchaser shall deliver to the Escrow Agent, via wire transfer or a certified check, immediately available funds equal to such Purchaser’s Subscription
Amount as set forth on the signature page hereto executed by such Purchaser and the Company shall deliver to each Purchaser its respective Shares and a Warrant as determined pursuant to Section 2.2(a), and the Company and each Purchaser shall
deliver the other items set forth in Section 2.2 deliverable at the Closing. Upon satisfaction of the covenants and conditions set forth in Sections 2.2 and 2.3, the Closing shall occur at the offices of EGS or such other location as the
parties shall mutually agree. 
 2.2 Deliveries. 

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

(i) this Agreement duly executed by the Company; 

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

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

 (iv) a Warrant registered in the name of such Purchaser to purchase up to a number of shares of Common Stock equal to
    % of such Purchaser’s Subscription Amount divided by $        , with an exercise price equal to $        , subject to adjustment therein
(such Warrant certificate may be delivered within three Trading Days of the Closing Date); and 
 (v) the Prospectus and
Prospectus Supplement (which may be delivered in accordance with Rule 172 under the Securities Act). 

  
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 (b) On or prior to the Closing Date, each Purchaser shall deliver or cause to be
delivered to the Company or the Escrow Agent, as applicable, the following: 
 (i) this Agreement duly executed by such
Purchaser; and 
 (ii) to the Escrow Agent, such Purchaser’s Subscription Amount by wire transfer to the account
specified in the Escrow Agreement. 
 2.3 Closing Conditions. 

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

 (i) the accuracy in all material respects on the Closing Date of the representations and warranties of the Purchasers
contained herein (unless as of a specific date therein in which case they shall be accurate as of such date); 
 (ii) all
obligations, covenants and agreements of each Purchaser required to be performed at or prior to the Closing Date shall have been performed; 

(iii) the Company shall have received verbal and or written Nasdaq approval; and 

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

(b) The respective obligations of the Purchasers hereunder in connection with the Closing are subject to the following
conditions being met: 
 (i) the accuracy in all material respects when made and on the Closing Date of the representations
and warranties of the Company contained herein (unless as of a specific date therein); 
 (ii) all obligations, covenants and
agreements of the Company required to be performed at or prior to the Closing Date shall have been performed, including verbal and or written Nasdaq approval; 

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

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

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

REPRESENTATIONS AND WARRANTIES 

3.1 Representations and Warranties of the Company. Except as set forth in the Disclosure Schedules, which Disclosure Schedules shall be
deemed a part hereof and shall qualify any representation or otherwise made herein to the extent of the disclosure contained in the corresponding section of the Disclosure Schedules, the Company hereby makes the following representations and
warranties to each Purchaser: 
 (a) Subsidiaries. All of the direct and indirect subsidiaries of the Company are set
forth on Schedule 3.1(a). The Company owns, directly or indirectly, all of the capital stock or other equity interests of each Subsidiary free and clear of any Liens, and all of the issued and outstanding shares of capital stock of each
Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights to subscribe for or purchase securities. If the Company has no subsidiaries, all other references to the Subsidiaries or any of them in the
Transaction Documents shall be disregarded. 
 (b) Organization and Qualification. The Company and each of the
Subsidiaries is an entity duly incorporated or otherwise organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization, with the requisite power and authority to own and use its properties
and assets and to carry on its business as currently conducted. Neither the Company nor any Subsidiary is in violation nor default of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or
charter documents. Each of the Company and the Subsidiaries is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned
by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not have or reasonably be expected to result in: (i) a material adverse effect on the legality, validity or
enforceability of any Transaction Document, (ii) a material adverse 

  
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effect on the results of operations, assets, business, prospects or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse
effect on the Company’s ability to perform in any material respect on a timely basis its obligations under any Transaction Document (any of (i), (ii) or (iii), a “Material Adverse Effect”) and no Proceeding has been
instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification. 

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

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

  
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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 in connection with the execution, delivery and
performance by the Company of the Transaction Documents, other than: (i) the filings required pursuant to Section 4.6 of this Agreement, (ii) the filing with the Commission of the Prospectus Supplement, and (iii) the notice
and/or application(s) to each applicable Trading Market for the issuance and sale of the Shares and Warrant Shares and the listing of the Underlying Shares for trading thereon in the time and manner required thereby (collectively, the
“Required Approvals”). 
 (f) Issuance of the Securities; Registration. The Securities are duly
authorized and, when issued and paid for in accordance with the applicable Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company. The Underlying Shares, when issued
in accordance with the terms of the Transaction Documents, will be validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company. The Company has reserved from its duly authorized capital stock a number of shares
of Common Stock for issuance of the Underlying Shares at least equal to the Required Minimum on the date hereof. The Company has prepared and filed the Registration Statement in conformity with the requirements of the Securities Act, which became
effective on             , 2014 (the “Effective Date”), including the Prospectus, and such amendments and supplements thereto as may have been required to the date of this
Agreement. The Registration Statement is effective under the Securities Act and no stop order preventing or suspending the effectiveness of the Registration Statement or suspending or preventing the use of the Prospectus has been issued by the
Commission and no proceedings for that purpose have been instituted or, to the knowledge of the Company, are threatened by the Commission. The Company shall file the Prospectus with the Commission pursuant to Rules 430A and 424(b). At the time the
Registration Statement and any amendments thereto became effective, at the date of this Agreement and at the Closing Date, the Registration Statement and any amendments thereto conformed and will conform in all material respects to the requirements
of the Securities Act and did not and will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading; and the Prospectus and any
amendments or supplements thereto, at time the Prospectus or any amendment or supplement thereto was issued and at the Closing Date, conformed and will conform in all material respects to the requirements of the Securities Act and did not and will
not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. 

(g) Capitalization. The capitalization of the Company is as set forth on Schedule 3.1(g), which Schedule
3.1(g) shall also include the number of shares of 

  
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Common Stock owned beneficially, and of record, by Affiliates of the Company as of the date hereof. The Company has not issued any capital stock since its most recently filed periodic report
under the Exchange Act, other than pursuant to the exercise of employee stock options under the Company’s stock option plans, the issuance of shares of Common Stock to employees pursuant to the Company’s employee stock purchase plans and
pursuant to the conversion and/or exercise of Common Stock Equivalents outstanding as of the date of the most recently filed periodic report under the Exchange Act. No Person has any right of first refusal, preemptive right, right of participation,
or any similar right to participate in the transactions contemplated by the Transaction Documents. Except as set forth on Schedule 3.1(g) and a result of the purchase and sale of the Securities, there are no outstanding options, warrants,
scrip rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire any
shares of Common Stock, or 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. The issuance and sale of the
Securities will not obligate the Company to issue shares of Common Stock or other securities to any Person (other than the Purchasers) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or
reset price under any of such securities. 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 applicable federal and state
securities laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities. No further approval or authorization of any stockholder, the Board of Directors or
others is required for the issuance and sale of the Securities. There are no stockholders agreements, voting agreements or other similar agreements with respect to the Company’s capital stock to which the Company is a party or, to the knowledge
of the Company, between or among any of the Company’s stockholders. 
 (h) SEC Reports; Financial Statements. The
Company has filed all reports, schedules, forms, statements and other documents required to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding
the date hereof (or such shorter period as the Company was required by law or regulation to file such material) (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, together with the Prospectus
and the Prospectus Supplement, being collectively referred to herein as the “SEC Reports”) on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any
such extension. As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable, and none of the SEC Reports, when filed, contained any untrue statement
of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The Company has never been an
issuer subject to Rule 144(i) under the Securities Act. The financial statements of the Company included in the SEC Reports 

  
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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. 

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

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

  
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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. 
 (k) Labor Relations. No
material labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees of the Company, which could reasonably be expected to result in a Material Adverse Effect. None of the Company’s or its
Subsidiaries’ employees is a member of a union that relates to such employee’s relationship with the Company or such Subsidiary, and neither the Company nor any of its Subsidiaries is a party to a collective bargaining agreement, and the
Company and its Subsidiaries believe that their relationships with their employees are good. 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 applicable U.S. federal, state, local and
foreign laws and regulations relating to employment and employment practices, terms and conditions of employment and wages and hours, except where the failure to be in compliance could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect. 
 (l) Compliance. Neither the Company nor any Subsidiary: (i) is in default
under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor has the Company or any Subsidiary received notice of a
claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or
violation has been waived), (ii) is in violation of any judgment, decree or order of any court, arbitrator or other governmental authority or (iii) is or has been in violation of any statute, rule, ordinance or regulation of any
governmental authority, including without limitation all foreign, federal, state and local laws relating to taxes, environmental protection, occupational health and safety, product quality and safety and employment and labor matters, except in each
case as could not have or reasonably be expected to result in a Material Adverse Effect. 
 (m) Regulatory Permits.
The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses as described in the SEC Reports,
except where the failure to possess such permits could not reasonably be expected to result in a Material Adverse Effect (“Material Permits”), and neither the Company nor any Subsidiary has received any notice of proceedings
relating to the revocation or modification of any Material Permit. 

  
 13 

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

(o) 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 as described in the SEC Reports as necessary or required for use
in connection with their respective businesses and which the failure to so have could have a Material Adverse Effect (collectively, the “Intellectual Property Rights”). None of, and neither the Company nor any Subsidiary has
received a notice (written or otherwise) that any of, the Intellectual Property Rights has expired, terminated or been abandoned, or is expected to expire or terminate or be abandoned, within two (2) years from the date of this Agreement.
Neither the Company nor any Subsidiary has received, since the date of the latest audited financial statements included within the SEC Reports, a written notice of a claim or otherwise has any knowledge that the 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. 

(p) Insurance. The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against
such losses and risks and in such amounts as are prudent and customary in the businesses in which the Company and the Subsidiaries are engaged, including, but not limited to, directors and officers insurance coverage at least equal to the aggregate
Subscription Amount. Neither the Company nor any Subsidiary has been notified 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. 
 (q) Transactions With Affiliates and Employees.
Except as set forth in the SEC Reports, none of the officers or directors of the Company or any Subsidiary and, to 

  
 14 

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

(s) Certain Fees. Except as set forth in the Prospectus Supplement, no brokerage or finder’s fees or commissions
are or will be payable by the Company or any Subsidiary to any broker, financial advisor or consultant, finder, placement agent, 

  
 15 

 
investment banker, bank or other Person with respect to the transactions contemplated by the Transaction Documents. The Purchasers shall have no obligation with respect to any fees or with
respect to any claims made by or on behalf of other Persons for fees of a type contemplated in this Section that may be due in connection with the transactions contemplated by the Transaction Documents. 

(t) Investment Company. The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the
Securities, will not be or be an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as amended. The Company shall conduct its business in a manner so that it will not become an “investment
company” subject to registration under the Investment Company Act of 1940, as amended. 
 (u) Registration
Rights. No Person has any right to cause the Company or any Subsidiary to effect the registration under the Securities Act of any securities of the Company or any Subsidiary. 

(v) Listing and Maintenance Requirements. The Common Stock is registered pursuant to Section 12(b) or 12(g) of the
Exchange Act, and the Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act nor has the Company received any notification that the
Commission is contemplating terminating such registration. The Company has not, in the 12 months preceding the date hereof, received notice from any Trading Market on which the Common Stock is or has been listed or quoted to the effect that the
Company is not in compliance with the listing or maintenance requirements of such Trading Market. The Company is, and has no reason to believe that it will not in the foreseeable future continue to be, in compliance with all such listing and
maintenance requirements. The Common Stock is currently eligible for electronic transfer through the Depository Trust Company or another established clearing corporation and the Company is current in payment of the fees to the Depository Trust
Company (or such other established clearing corporation) in connection with such electronic transfer. 
 (w) Application
of Takeover Protections. The Company and the Board of Directors have taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights
agreement) or other similar anti-takeover provision under the Company’s certificate of incorporation (or similar charter documents) or the laws of its state of incorporation that is or could become
applicable to the Purchasers as a result of the Purchasers and the Company fulfilling their obligations or exercising their rights under the Transaction Documents, including without limitation as a result of the Company’s issuance of the
Securities and the Purchasers’ ownership of the Securities. 
 (x) Disclosure. Except with respect to the
material terms and conditions of the transactions contemplated by the Transaction Documents, the Company confirms that neither it nor any other Person acting on its behalf has provided any of the Purchasers or

  
 16 

 
their agents or counsel with any information that it believes constitutes or might constitute material, non-public information. The Company understands and confirms that the Purchasers will rely
on the foregoing representation in effecting transactions in securities of the Company. All of the disclosure furnished by or on behalf of the Company to the Purchasers regarding the Company and its Subsidiaries, their respective businesses and the
transactions contemplated hereby, including the Disclosure Schedules to this Agreement, is true and correct and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements
made therein, in light of the circumstances under which they were made, not misleading. The Company acknowledges and agrees that no Purchaser makes or has made any representations or warranties with respect to the transactions contemplated hereby
other than those specifically set forth in Section 3.2 hereof. 
 (y) No Integrated Offering. Assuming the
accuracy of the Purchasers’ representations and warranties set forth in Section 3.2, neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers or sales of any
security or solicited any offers to buy any security, under circumstances that would cause this offering of the Securities to be integrated with prior offerings by the Company for purposes of any applicable shareholder approval provisions of any
Trading Market on which any of the securities of the Company are listed or designated. 
 (z) Solvency. Based on the
consolidated financial condition of the Company as of the Closing Date, after giving effect to the receipt by the Company of the proceeds from the sale of the Securities hereunder: (i) the fair saleable value of the Company’s assets
exceeds the amount that will be required to be paid on or in respect of the Company’s existing debts and other liabilities (including known contingent liabilities) as they mature, (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 Closing Date. 
 (aa) 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 

  
 17 

 
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. 
 (bb) 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. 
 (cc) Accountants. The Company’s
accounting firm is Ernst & Young LLP. To the knowledge and belief of the Company, such accounting firm: (i) is a registered public accounting firm as required by the Exchange Act and (ii) shall express its opinion with respect to
the financial statements to be included in the Company’s Annual Report for the fiscal year ending December 31, 2013. 

(dd) No Disagreements with Accountants and Lawyers. There are no disagreements of any kind presently existing, or
reasonably anticipated by the Company to arise, between the Company and the accountants and lawyers formerly or presently employed by the Company and, except as set forth on Schedule 3.1(dd), the Company is current with respect to any fees
owed to its accountants and lawyers which could affect the Company’s ability to perform any of its obligations under any of the Transaction Documents. 

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

  
 18 

 (ff) Acknowledgment Regarding Purchaser’s Trading Activity. Anything
in this Agreement or elsewhere herein to the contrary notwithstanding (except for Sections 3.2(e) and 4.15 hereof), it is understood and acknowledged by the Company that: (i) none of the Purchasers has been asked by the Company to agree, nor
has any Purchaser agreed, to desist from purchasing or selling, long and/or short, securities of the Company, or “derivative” securities based on securities issued by the Company or to hold the Securities for any specified term,
(ii) past or future open market or other transactions by any Purchaser, specifically including, without limitation, Short Sales or “derivative” transactions, before or after the closing of this or future private placement
transactions, may negatively impact the market price of the Company’s publicly-traded securities, (iii) any Purchaser, and counter-parties in “derivative” transactions to which any such Purchaser is a party, directly or
indirectly, may presently have a “short” position in the Common Stock and (iv) each Purchaser shall not be deemed to have any affiliation with or control over any arm’s length counter-party in any “derivative”
transaction. The Company further understands and acknowledges that (y) one or more Purchasers may engage in hedging activities at various times during the period that the Securities are outstanding, including, without limitation, during the
periods that the value of the Underlying Shares deliverable with respect to Securities are being determined, and (z) such hedging activities (if any) could reduce the value of the existing stockholders’ equity interests in the Company at
and after the time that the hedging activities are being conducted. The Company acknowledges that such aforementioned hedging activities do not constitute a breach of any of the Transaction Documents. 

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

(hh) FDA. As to each product subject to the jurisdiction of the U.S. Food and Drug Administration
(“FDA”) under the Federal Food, Drug and Cosmetic Act, as amended, and the regulations thereunder (“FDCA”) that is 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. Except as set forth on Schedule 3.1(hh), there is no pending,
completed or, to the Company’s knowledge, threatened, 

  
 19 

 
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. 

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

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

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

  
 20 

 (ll) Bank Holding Company Act. Neither the Company nor any of its
Subsidiaries or Affiliates is subject to the Bank Holding Company Act of 1956, as amended (the “BHCA”) and to regulation by the Board of Governors of the Federal Reserve System (the “Federal Reserve”). Neither the
Company nor any of its Subsidiaries or Affiliates owns or controls, directly or indirectly, five percent (5%) or more of the outstanding shares of any class of voting securities or twenty-five percent or more of the total equity of a bank or
any entity that is subject to the BHCA and to regulation by the Federal Reserve. Neither the Company nor any of its Subsidiaries or Affiliates exercises a controlling influence over the management or policies of a bank or any entity that is subject
to the BHCA and to regulation by the Federal Reserve. 
 (mm) Money Laundering. The operations of the Company and its
Subsidiaries are and have been conducted at all times in compliance with applicable financial record-keeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, applicable money laundering statutes
and applicable rules and regulations thereunder (collectively, the “Money Laundering Laws”), and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company
and any Subsidiary with respect to the Money Laundering Laws is pending or, to the knowledge of the Company or any Subsidiary, threatened. 

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

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

(b) Understandings or Arrangements. Such Purchaser is acquiring the Securities as principal for its own account and has
no direct or indirect arrangement or 

  
 21 

 
understandings with any other persons to distribute or regarding the distribution of such Securities (this representation and warranty not limiting such Purchaser’s right to sell the
Securities in compliance with applicable federal and state securities laws). Such Purchaser is acquiring the Securities hereunder in the ordinary course of its business. 

(c) Experience of Such Purchaser. Such Purchaser, either alone or together with its representatives, has such knowledge,
sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Securities, and has so evaluated the merits and risks of such investment. Such Purchaser is
able to bear the economic risk of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment. Such Purchaser and its advisors, if any, have been furnished with all materials relating to the
business, financial condition and results of operations of the Company, and materials relating to the offer and sale of the Securities, that have been requested by such Purchaser or its advisors, if any. Such Purchaser acknowledges and understands
that its investment in the Securities involves a significant degree of risk. 
 (d) Access to Information. Such
Purchaser acknowledges that it has had the opportunity to review the Transaction Documents (including all exhibits and schedules thereto) and the SEC Reports and has been afforded (i) the opportunity to ask such questions as it has deemed
necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions of the offering of the Shares and the merits and risks of investing in the Shares; (ii) access to information about the Company and
its financial condition, results of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment; and (iii) the opportunity to obtain such additional information that the Company possesses or can
acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment. Such Purchaser acknowledges and agrees that neither the Placement Agent nor any Affiliate of the Placement
Agent has provided such Purchaser with any information or advice with respect to the Securities nor is such information or advice necessary or desired. Neither the Placement Agent nor any Affiliate has made or makes any representation as to the
Company or the quality of the Securities and the Placement Agent and any Affiliate may have acquired non-public information with respect to the Company which such Purchaser agrees need not be provided to it. In connection with the issuance of
the Securities to such Purchaser, neither the Placement Agent nor any of its Affiliates has acted as a financial advisor or fiduciary to such Purchaser. 

(e) Certain Transactions and Confidentiality. Other than consummating the transactions contemplated hereunder, such
Purchaser has not directly or indirectly, nor has any Person acting on behalf of or pursuant to any understanding with such Purchaser, 

  
 22 

 
executed any purchases or sales, including Short Sales, of the securities of the Company during the period commencing as of the time that such Purchaser first received a term sheet (written
or oral) from the Company or any other Person representing the Company setting forth the material pricing terms of the transactions contemplated hereunder and ending immediately prior to the execution hereof. Notwithstanding the foregoing, in the
case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such Purchaser’s assets and the portfolio managers have no direct knowledge of the investment decisions made by the
portfolio managers managing other portions of such Purchaser’s assets, the representation set forth above shall only apply with respect to the portion of assets managed by the portfolio manager that made the investment decision to purchase the
Securities covered by this Agreement. Notwithstanding the foregoing, for avoidance of doubt, nothing contained herein shall constitute a representation or warranty, or preclude any actions, with respect to the identification of the availability of,
or securing of, available shares to borrow in order to effect Short Sales or similar transactions in the future. 
 The Company acknowledges and agrees that
the representations contained in Section 3.2 shall not modify, amend or affect such Purchaser’s right to rely on the Company’s representations and warranties contained in this Agreement or any representations and warranties contained
in any other Transaction Document or any other document or instrument executed and/or delivered in connection with this Agreement or the consummation of the transaction contemplated hereby. 

ARTICLE IV. 
 OTHER
AGREEMENTS OF THE PARTIES 
 4.1 Underlying Shares. The Shares and Warrants shall be issued free of legends. If all or any
portion of a Warrant is exercised at a time when there is an effective registration statement to cover the issuance or resale of the Warrant Shares or if the Warrant is exercised via cashless exercise, the Warrant Shares issued pursuant to any such
exercise shall be issued free of all legends. If at any time following the date hereof the Registration Statement (or any subsequent registration statement registering the sale or resale of the Warrant Shares) is not effective or is not otherwise
available for the sale or resale of the Warrant Shares, the Company shall immediately notify the holders of the Warrants in writing that such registration statement is not then effective and thereafter shall promptly notify such holders when the
registration statement is effective again and available for the sale or resale of the Warrant Shares (it being understood and agreed that the foregoing shall not limit the ability of the Company to issue, or any Purchaser to sell, any of the Warrant
Shares in compliance with applicable federal and state securities laws). The Company shall use its commercially reasonable efforts to keep a registration statement (including the Registration Statement) registering the issuance or resale of the
Warrant Shares effective during the term of the Warrants. 
 4.2 Acknowledgment of Dilution. The Company acknowledges that the
issuance of the Securities may result in dilution of the outstanding shares of Common Stock, which dilution may be substantial under certain market conditions. The Company further acknowledges that its obligations under the Transaction Documents,
including, without limitation, its obligation to issue the Underlying Shares pursuant to the Transaction Documents, are unconditional and 

  
 23 

 
absolute and not subject to any right of set off, counterclaim, delay or reduction, regardless of the effect of any such dilution or any claim the Company may have against any Purchaser and
regardless of the dilutive effect that such issuance may have on the ownership of the other stockholders of the Company. 
 4.3
Furnishing of Information. Until no Purchaser owns Securities, the Company covenants to maintain the registration of the Common Stock under Section 12(b) or 12(g) of the Exchange Act and to timely file (or obtain extensions in respect
thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to the Exchange Act even if the Company is not then subject to the reporting requirements of the Exchange Act. 

4.4 Integration. The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security
(as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Securities for purposes of the rules and regulations of any Trading Market such that it would require shareholder approval prior to the
closing of such other transaction unless shareholder approval is obtained before the closing of such subsequent transaction. 
 4.5
Exercise Procedures. The form of Notice of Exercise included in the Warrants sets forth the totality of the procedures required of the Purchasers in order to exercise the Warrants. No additional legal opinion, other information or
instructions shall be required of the Purchasers to exercise their Warrants. Without limiting the preceding sentences, no ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or
notarization) of any Notice of Exercise be required in order to exercise the Warrants. The Company shall honor exercises of the Warrants and shall deliver Underlying Shares in accordance with the terms, conditions and time periods set forth in the
Transaction Documents. 
 4.6 Securities Laws Disclosure; Publicity. The Company shall, by 9:00 a.m. (New York City time) on the
Trading Day immediately following the date hereof, file a Current Report on Form 8-K and press release disclosing the material terms of the transactions contemplated hereby, including the Transaction Documents as exhibits thereto. From and after the
issuance of such press release, the Company represents to the Purchasers that it shall have publicly disclosed all material, non-public information delivered to any of the Purchasers by the Company or any of its Subsidiaries, or any of their
respective officers, directors, employees or agents in connection with the transactions contemplated by the Transaction Documents. The Company and each Purchaser shall consult with each other in issuing any other press releases with respect to the
transactions contemplated hereby, and neither the Company nor any Purchaser shall issue any such press release nor otherwise make any such public statement without the prior consent of the Company, with respect to any press release of any Purchaser,
or without the prior consent of each Purchaser, with respect to any press release of the Company, which consent shall not unreasonably be withheld or delayed, except if such disclosure is required by law, in which case the disclosing party shall
promptly provide the other party with prior notice of such public statement or communication. Notwithstanding the foregoing, the Company shall not publicly disclose the name of any Purchaser, or include the name of any Purchaser in any filing with
the 

  
 24 

 
Commission or any regulatory agency or Trading Market, without the prior written consent of such Purchaser, except: (a) as required by federal securities law in connection with the filing of
final Transaction Documents with the Commission and (b) to the extent such disclosure is required by law or Trading Market regulations, in which case the Company shall provide the Purchasers with prior notice of such disclosure permitted under
this clause (b). 
 4.7 Shareholder Rights Plan. No claim will be made or enforced by the Company or, with the consent of the
Company, any other Person, that any Purchaser is an “Acquiring Person” under any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or similar anti-takeover plan or
arrangement in effect or hereafter adopted by the Company, or that any Purchaser could be deemed to trigger the provisions of any such plan or arrangement, by virtue of receiving Securities under the Transaction Documents or under any other
agreement between the Company and the Purchasers. 
 4.8 Non-Public Information. The Company covenants and agrees that neither it,
nor any other Person acting on its behalf, will provide any Purchaser or its agents or counsel with any information that the Company believes constitutes material non-public information, unless prior thereto such Purchaser shall have entered into a
written agreement with the Company regarding the confidentiality and use of such information. The Company understands and confirms that each Purchaser shall be relying on the foregoing covenant in effecting transactions in securities of the Company.

 4.9 Use of Proceeds. Except as set forth on Schedule 4.9 attached hereto, the Company shall use the net proceeds from the
sale of the Securities hereunder for working capital purposes and shall not use such proceeds: (a) for the satisfaction of any portion of the Company’s debt (other than payment of trade payables in the ordinary course of the Company’s
business and prior practices), (b) for the redemption of any Common Stock or Common Stock Equivalents, (c) for the settlement of any outstanding litigation or (d) in violation of FCPA or OFAC regulations. 

4.10 Indemnification of Purchasers. Subject to the provisions of this Section 4.10, the Company will indemnify and hold each
Purchaser and its directors, officers, shareholders, members, partners, employees and agents (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title), each
Person who controls such Purchaser (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders, agents, members, partners or employees (and any other Persons with a
functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title) of such controlling persons (each, a “Purchaser Party”) harmless from any and all losses, liabilities,
obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such Purchaser Party may suffer or incur as a
result of or relating to (a) any breach of any of the representations, warranties, covenants or agreements made by the Company in this Agreement or in the other Transaction Documents or (b) any action instituted against the Purchaser
Parties in any capacity, or any of them or their respective Affiliates, by any stockholder of the Company who is not an Affiliate of such Purchaser Party, with respect to any of the transactions 

  
 25 

 
contemplated by the Transaction Documents (unless such action is based upon a breach of such Purchaser Party’s representations, warranties or covenants under the Transaction Documents or any
agreements or understandings such Purchaser Party may have with any such stockholder or any violations by such Purchaser Party of state or federal securities laws or any conduct by such Purchaser Party which constitutes fraud, gross negligence,
willful misconduct or malfeasance). If any action shall be brought against any Purchaser Party in respect of which indemnity may be sought pursuant to this Agreement, such Purchaser Party shall promptly notify the Company in writing, and the Company
shall have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to the Purchaser Party. Any Purchaser Party shall have the right to employ separate counsel in any such action and participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of such Purchaser Party except to the extent that (i) the employment thereof has been specifically authorized by the Company in writing, (ii) the Company has failed
after a reasonable period of time to assume such defense and to employ counsel or (iii) in such action there is, in the reasonable opinion of counsel, a material conflict on any material issue between the position of the Company and the
position of such Purchaser Party, in which case the Company shall be responsible for the reasonable fees and expenses of no more than one such separate counsel. The Company will not be liable to any Purchaser Party under this Agreement (y) for
any settlement by a Purchaser Party effected without the Company’s prior written consent, which shall not be unreasonably withheld or delayed; or (z) to the extent, but only to the extent that a loss, claim, damage or liability is
attributable to any Purchaser Party’s breach of any of the representations, warranties, covenants or agreements made by such Purchaser Party in this Agreement or in the other Transaction Documents. The indemnification required by this
Section 4.10 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or are incurred. The indemnity agreements contained herein shall be in addition to any cause
of action or similar right of any Purchaser Party against the Company or others and any liabilities the Company may be subject to pursuant to law. 

4.11 Reservation and Listing of Securities. 

(a) The Company shall maintain a reserve from its duly authorized shares of Common Stock for issuance pursuant to the
Transaction Documents in such amount as may then be required to fulfill its obligations in full under the Transaction Documents. 

(b) If, on any date, the number of authorized but unissued (and otherwise unreserved) shares of Common Stock is less than 130%
of (i) the Required Minimum on such date, minus (ii) the number of shares of Common Stock previously issued pursuant to the Transaction Documents, then the Board of Directors shall use commercially reasonable efforts to amend the
Company’s certificate or articles of incorporation to increase the number of authorized but unissued shares of Common Stock to at least the Required Minimum at such time (minus the number of shares of Common Stock previously issued pursuant to
the Transaction Documents), as soon as possible and in any event not later than the 75th day after such date; provided that the Company will not be required at any time to authorize a number of
shares of Common Stock greater than the maximum remaining number of shares of Common Stock that could possibly be issued after such time pursuant to the Transaction Documents. 

  
 26 

 (c) The Company shall, if applicable: (i) in the time and manner required by
the principal Trading Market, prepare and file with such Trading Market an additional shares listing application covering a number of shares of Common Stock at least equal to the Required Minimum on the date of such application, (ii) take all
steps necessary to cause such shares of Common Stock to be approved for listing or quotation on such Trading Market as soon as possible thereafter, (iii) provide to the Purchasers evidence of such listing or quotation and (iv) maintain the
listing or quotation of such Common Stock on any date at least equal to the Required Minimum on such date on such Trading Market or another Trading Market. 

4.12 [RESERVED] 
 4.13
Subsequent Equity Sales. 
 (a) From the date hereof until          days after
the Closing Date, neither the Company nor any Subsidiary shall issue, enter into any agreement to issue or announce the issuance or proposed issuance of any shares of Common Stock or Common Stock Equivalents. 

(b) From the date hereof until the date that is
                    , the Company shall be prohibited from effecting or entering into an agreement to effect any issuance by the Company or any of
its Subsidiaries of Common Stock or Common Stock Equivalents (or a combination of units thereof) involving a Variable Rate Transaction. “Variable Rate Transaction” means a transaction in which the Company (i) issues or sells
any debt or equity securities that are convertible into, exchangeable or exercisable for, or include the right to receive, additional shares of Common Stock either (A) at a conversion price, exercise price or exchange rate or other price that
is based upon, and/or varies with, the trading prices of or quotations for the shares of Common Stock at any time after the initial issuance of such debt or equity securities or (B) with a conversion, exercise or exchange price that is subject
to being reset at some future date after the initial issuance of such debt or equity security or upon the occurrence of specified or contingent events directly or indirectly related to the business of the Company or the market for the Common Stock
or (ii) enters into any agreement, including, but not limited to, an equity line of credit, whereby the Company may issue securities at a future determined price. For purposes of clarity, a Variable Rate Transaction shall include any drawdown
on any existing or future at-the-market facility or equity line agreement of the Company. Any Purchaser shall be entitled to obtain injunctive relief against the Company to preclude any such issuance, which remedy shall be in addition to any right
to collect damages. 
 (c) Notwithstanding the foregoing, this Section 4.13 shall not apply in respect of an Exempt
Issuance, except that no Variable Rate Transaction shall be an Exempt Issuance. 
 4.14 Equal Treatment of Purchasers. No
consideration (including any modification of any Transaction Document) shall be offered or paid to any Person to amend or consent to a 

  
 27 

 
waiver or modification of any provision of this Agreement unless the same consideration is also offered to all of the parties to this Agreement. For clarification purposes, this provision
constitutes a separate right granted to each Purchaser by the Company and negotiated separately by each Purchaser, and is intended for the Company to treat the Purchasers as a class and shall not in any way be construed as the Purchasers acting in
concert or as a group with respect to the purchase, disposition or voting of Securities or otherwise. 
 4.15 Certain Transactions and
Confidentiality. Each Purchaser, severally and not jointly with the other Purchasers, covenants that neither it, nor any Affiliate acting on its behalf or pursuant to any understanding with it will execute any purchases or sales, including Short
Sales, of any of the Company’s securities during the period commencing with the execution of this Agreement and ending at such time that the transactions contemplated by this Agreement are first publicly announced pursuant to the initial press
release as described in Section 4.6. Each Purchaser, severally and not jointly with the other Purchasers, covenants that until such time as the transactions contemplated by this Agreement are publicly disclosed by the Company pursuant to
the initial press release as described in Section 4.6, such Purchaser will maintain the confidentiality of the existence and terms of this transaction and the information included in the Transaction Documents and the Disclosure Schedules.
Notwithstanding the foregoing, and notwithstanding anything contained in this Agreement to the contrary, the Company expressly acknowledges and agrees that (i) no Purchaser makes any representation, warranty or covenant hereby that it will not
engage in effecting transactions in any securities of the Company after the time that the transactions contemplated by this Agreement are first publicly announced pursuant to the initial press release as described in Section 4.6, (ii) no
Purchaser shall be restricted or prohibited from effecting any transactions in any securities of the Company in accordance with applicable securities laws from and after the time that the transactions contemplated by this Agreement are first
publicly announced pursuant to the initial press release as described in Section 4.6 and (iii) no Purchaser shall have any duty of confidentiality to the Company or its Subsidiaries after the issuance of the initial press release as
described in Section 4.6. Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such Purchaser’s assets and the portfolio
managers have no direct knowledge of the investment decisions made by the portfolio managers managing other portions of such Purchaser’s assets, the covenant set forth above shall only apply with respect to the portion of assets managed by the
portfolio manager that made the investment decision to purchase the Securities covered by this Agreement. 
 4.16 Capital Changes.
Until the one year anniversary of the Closing Date, the Company shall not undertake a reverse or forward stock split or reclassification of the Common Stock without the prior written consent of a majority in interest of the Purchasers (based on
initial Subscription Amounts hereunder), provided that this Section 4.16 shall not apply solely in connection with any reverse stock split that is conducted in order to meet or maintain compliance with the listing standards of any Trading
Market 

  
 28 

 ARTICLE V. 

MISCELLANEOUS 
 5.1
Termination. This Agreement may be terminated by any Purchaser, as to such Purchaser’s obligations hereunder only and without any effect whatsoever on the obligations between the Company and the other Purchasers, by written notice
to the other parties, if the Closing has not been consummated on or before             , 2014; provided, however, that such termination will not affect the right of any party
to sue for any breach by any other party (or parties). 
 5.2 Fees and Expenses. Except as expressly set forth in the Transaction
Documents to the contrary, each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and
performance of this Agreement. The Company shall pay all Transfer Agent fees (including, without limitation, any fees required for same-day processing of any instruction letter delivered by the Company and any conversion or exercise notice delivered
by a Purchaser), stamp taxes and other taxes and duties levied in connection with the delivery of any Securities to the Purchasers. 
 5.3
Entire Agreement. The Transaction Documents, together with the exhibits and schedules thereto, the Prospectus and the Prospectus Supplement, contain the entire understanding of the parties with respect to the subject matter hereof and thereof
and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules. 

5.4 Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in
writing and shall be deemed given and effective on the earliest of: (a) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto at or prior to
5:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto on a
day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the second (2nd) Trading Day following the date of mailing, if sent by U.S. nationally
recognized overnight courier service or (d) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as set forth on the signature pages attached hereto. 

5.5 Amendments; Waivers. No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument
signed, in the case of an amendment, by the Company and majority in interest of the Purchasers (based on initial Subscription Amounts hereunder) or, in the case of a waiver, by the party against whom enforcement of any such waived provision is
sought. 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. 

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

  
 29 

 5.7 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit
of the parties and their successors and permitted assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of each Purchaser (other than by merger). Any Purchaser may assign any or
all of its rights under this Agreement to any Person to whom such Purchaser assigns or transfers any Securities, provided that such transferee agrees in writing to be bound, with respect to the transferred Securities, by the provisions of the
Transaction Documents that apply to the “Purchasers.” 
 5.8 No Third-Party Beneficiaries. HCW shall be third party
beneficiaries with respect to the representations and warranties of the Purchasers in Section 3.2 hereof. This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the
benefit of, nor may any provision hereof be enforced by, any other Person, except as otherwise set forth in Section 4.10 and this Section 5.8. 

5.9 Governing Law. All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents
shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations,
enforcement and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or
agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of
Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding.
Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any
right to serve process in any other manner permitted by law. If either party shall commence an action, suit or proceeding to enforce any provisions of the Transaction Documents, then, in addition to the obligations of the Company under
Section 4.10, the prevailing party in such action, suit or proceeding shall be reimbursed by the other party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of
such action or proceeding. 
 5.10 Survival. The representations and warranties contained herein shall survive the Closing and the
delivery of the Securities. 
 5.11 Execution. This Agreement may be executed in two or more counterparts, all of which when taken
together shall be considered one and the same agreement and shall become 

  
 30 

 
effective when counterparts have been signed by each party and delivered to each other party, it being understood that the parties need not sign the same counterpart. In the event that any
signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the
same force and effect as if such facsimile or “.pdf” signature page were an original thereof. 
 5.12 Severability. If any
term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain
in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as
that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including
any of such that may be hereafter declared invalid, illegal, void or unenforceable. 
 5.13 Rescission and Withdrawal Right.
Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) any of the other Transaction Documents, whenever any Purchaser exercises a right, election, demand or option under a Transaction Document and the
Company does not timely perform its related obligations within the periods therein provided, then such Purchaser may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand or
election in whole or in part without prejudice to its future actions and rights; provided, however, that in the case of a rescission of an exercise of a Warrant, the applicable Purchaser shall be required to return any shares of Common
Stock subject to any such rescinded exercise notice concurrently with the return to such Purchaser of the aggregate exercise price paid to the Company for such shares and the restoration of such Purchaser’s right to acquire such shares pursuant
to such Purchaser’s Warrant (including, issuance of a replacement warrant certificate evidencing such restored right). 
 5.14
Replacement of Securities. If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in
the case of mutilation), or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction. The applicant for a new certificate or
instrument under such circumstances shall also pay any reasonable third-party costs (including customary indemnity) associated with the issuance of such replacement Securities. 

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

  
 31 

 5.16 Payment Set Aside. To the extent that the Company makes a payment or payments to any
Purchaser pursuant to any Transaction Document or a Purchaser enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other Person under any law (including, without limitation, any bankruptcy
law, state or federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such enforcement or setoff had not occurred. 
 5.17 Usury. To the extent it may lawfully do so, the
Company hereby agrees not to insist upon or plead or in any manner whatsoever claim, and will resist any and all efforts to be compelled to take the benefit or advantage of, usury laws wherever enacted, now or at any time hereafter in force, in
connection with any claim, action or proceeding that may be brought by any Purchaser in order to enforce any right or remedy under any Transaction Document. Notwithstanding any provision to the contrary contained in any Transaction Document, it is
expressly agreed and provided that the total liability of the Company under the Transaction Documents for payments in the nature of interest shall not exceed the maximum lawful rate authorized under applicable law (the “Maximum
Rate”), and, without limiting the foregoing, in no event shall any rate of interest or default interest, or both of them, when aggregated with any other sums in the nature of interest that the Company may be obligated to pay under the
Transaction Documents exceed such Maximum Rate. It is agreed that if the maximum contract rate of interest allowed by law and applicable to the Transaction Documents is increased or decreased by statute or any official governmental action subsequent
to the date hereof, the new maximum contract rate of interest allowed by law will be the Maximum Rate applicable to the Transaction Documents from the effective date thereof forward, unless such application is precluded by applicable law. If under
any circumstances whatsoever, interest in excess of the Maximum Rate is paid by the Company to any Purchaser with respect to indebtedness evidenced by the Transaction Documents, such excess shall be applied by such Purchaser to the unpaid principal
balance of any such indebtedness or be refunded to the Company, the manner of handling such excess to be at such Purchaser’s election. 

5.18 Independent Nature of Purchasers’ Obligations and Rights. The obligations of each Purchaser under any Transaction Document
are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance or non-performance of the obligations of any other Purchaser under any Transaction Document. Nothing
contained herein or in any other Transaction Document, and no action taken by any Purchaser pursuant hereto or thereto, shall be deemed to constitute the Purchasers as a partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Purchasers are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents. Each Purchaser shall be entitled to independently protect and
enforce its rights, including, without limitation, the rights arising 

  
 32 

 
out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Purchaser to be joined as an additional party in any proceeding for such purpose. Each
Purchaser has been represented by its own separate legal counsel in its review and negotiation of the Transaction Documents. For reasons of administrative convenience only, each Purchaser and its respective counsel have chosen to communicate with
the Company through EGS. EGS does not represent any of the Purchasers and only represents HCW. The Company has elected to provide all Purchasers with the same terms and Transaction Documents for the convenience of the Company and not because it was
required or requested to do so by any of the Purchasers. 
 5.19 Liquidated Damages. The Company’s obligations to pay any
partial liquidated damages or other amounts owing under the Transaction Documents is a continuing obligation of the Company and shall not terminate until all unpaid partial liquidated damages and other amounts have been paid notwithstanding the fact
that the instrument or security pursuant to which such partial liquidated damages or other amounts are due and payable shall have been canceled. 

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

5.21 Construction. The parties agree that each of them and/or their respective counsel have reviewed and had an opportunity to revise
the Transaction Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of the Transaction Documents or any amendments
thereto. In addition, each and every reference to share prices and shares of Common Stock in any Transaction Document shall be subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar
transactions of the Common Stock that occur after the date of this Agreement. 
 5.22 WAIVER OF JURY TRIAL. IN ANY ACTION,
SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY
WAIVES FOREVER TRIAL BY JURY. 
 (Signature Pages Follow) 

  
 33 

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

							
	OXIGENE, INC.	 		 	Address for Notice:
				
	By:	 	  
	 		 	Fax:
		 	Name:	 		 	
		 	Title:	 		 	
	With a copy to (which shall not constitute notice):	 		 	

 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK 

SIGNATURE PAGE FOR PURCHASER FOLLOWS] 

  
 34 

 [PURCHASER SIGNATURE PAGES TO OXGN SECURITIES PURCHASE AGREEMENT] 

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

Signature of Authorized Signatory of Purchaser:
                                         
                            

Name of Authorized Signatory:
                                         
                                         
           
 Title of Authorized Signatory:
                                         
                                         
           
 Email Address of Authorized Signatory:
                                         
                                         
               
 Facsimile Number of Authorized Signatory:
                                         
                                         
                   
 Address for Notice to Purchaser: 

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

Subscription Amount: $             

Shares:              

Warrant Shares:              

EIN Number:
                                        

  ̈ Notwithstanding anything contained in this Agreement to the contrary, by checking this box (i) the
obligations of the above-signed to purchase the securities set forth in this Agreement to be purchased from the Company by the above-signed, and the obligations of the Company to sell such securities to the above-signed, shall be unconditional and
all conditions to Closing shall be disregarded, (ii) the Closing shall occur on the third (3rd) Trading Day following the date of this Agreement and (iii) any condition to Closing
contemplated by this Agreement (but prior to being disregarded by clause (i) above) that required delivery by the Company or the above-signed of any agreement, instrument, certificate or the like or purchase price (as applicable) shall no
longer be a condition and shall instead be an unconditional obligation of the Company or the above-signed (as applicable) to deliver such agreement, instrument, certificate or the like or purchase price (as applicable) to such other party on the
Closing Date. 
 [SIGNATURE PAGES CONTINUE] 

  
 35exhibit_10-52.htm

Exhibit 10.52

 

Services and License Agreement

 

This Services and License Agreement (“Agreement”), dated as of November 11, 2013 (the “Effective Date”), is made and entered into by Invention Development Management Company, L.L.C., a Delaware limited liability company, acting on behalf of itself and its Affiliates (“IDMC”) and Visualant, Inc., a Nevada corporation (“Visualant”).

 

The parties hereby agree as follows:

 

	
1.

	
Definitions

 

For purposes of this Agreement, in addition to the capitalized terms defined elsewhere in this Agreement, the following terms shall have the meanings ascribed to them below:

 

	
  

	
1.1.

	
“Affiliate” means with respect to any party, any entity that is Controlled by, under common Control with or Controls such party.

 

	
  

	
1.2.

	
“Agreement Term” has the meaning set forth in 9.1(b).

 

	
  

	
1.3.

	
“Application Development Services” has the meaning set forth in Section 2.1(a).

 

	
  

	
1.4.

	
“Claims” means claims, suits, and legal actions by any third party.

 

	
  

	
1.5.

	
“Commissions” has the meaning set forth in Section 4.2.

 

	
  

	
1.6.

	
“Confidential Information” means any trade secret or other information of the disclosing party that is not generally available to the public, whether of a technical, business or other nature (including, without limitation, information relating to the disclosing party's technology, software, products, services, designs, methodologies, business plans, finances, marketing plans, customers, prospects or other affairs), that is disclosed to the receiving party during the Term and that the receiving party knows or has reason to know is confidential, proprietary or trade secret information of the disclosing party. Confidential Information also includes any information that has been made available to the disclosing party by third parties that the disclosing party is obligated to keep confidential. Confidential Information does not include any information that: (a) is or was acquired by the receiving party from a third party and is not subject to an unexpired obligation to such third party restricting the receiving party's use or disclosure thereof; (b) is independently developed by the receiving party without reliance upon or use of any of the Confidential Information; or (c) is or has become generally publicly available through no fault or action of the receiving party.

 

	
  

	
1.7.

	
“Confidential Materials” means any document, diskette, tape, writing or other tangible item or storage medium of any description that contains any Confidential Information, whether in printed, handwritten, coded, magnetic or other form and whether delivered by the party disclosing the Confidential Information or made by the party that received the Confidential Information.

 

	
  

	
1.8.

	
“Control” means possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of an entity, whether through the ownership of voting security, contract or otherwise.

 

	
  

	
1.9.

	
“ChromaID Development Kit” means the development kit, which includes a scanner, PC host software application, Scanhead API, and C sample code, that Visualant released in 2013.

 

	
  

	
1.10.

	
 “Exclusive IP License” means the license of the Licensed IP set forth in Section 3.1.

 

	
  

	
1.11.

	
“Fully-Diluted Shares” means the total number of Shares outstanding, assuming the exercise or conversion of all securities convertible into Shares, such securities including but not limited to warrants and options.

 

  

1

  

	 	
1.12.

	
“Field of Use” means identification, authentication and diagnostics using a plurality of bands of electromagnetic energy (e.g., Light Emitting Diode (LED), laser) and at least one sensor (e.g., Photodiode, charge coupled device (CCD), complementary metal oxide semiconductor (CMOS) device, charge plate).

 

	
  

	
1.13.

	
“Global Business Development Services” has the meaning set forth in Section 2.2(a).

 

	
  

	
1.14.

	
“IDMC Introduced Company” means a company that (a) Visualant, at its sole discretion, has provided IDMC written authorization to contact regarding a Potential Opportunity; (b) is introduced to Visualant by IDMC in writing or in person regarding a Potential Opportunity; and (c) within twenty-four (24) months after the introduction to Visualant by IDMC, enters into a written agreement with Visualant obligating that company to make any payments or potential payments to Visualant.

 

	
  

	
1.15.

	
“IDMC Report” has the meaning set forth in Section 5.2.

 

	
  

	
1.16.

	
“IDMC Reporting Period” has the meaning set forth in Section 5.2.

 

	
  

	
1.17.

	
“IDMC Technology” means technical information, know-how, processes, procedures, compositions, devices, methods, formulae, materials, protocols, techniques, software, designs, drawings or data created by IDMC while performing the Application Development Services, which may not (a) be claimed in the Patents or Patent Applications but are necessary for practicing the Patents or Patent Applications, (b) have resulted from, or are useful in the practice of, the inventions or discoveries described in the Patents or Patent Applications.

 

	
  

	
1.18.

	
“Improvements” means any patented or patentable addition, modification or substitution of an invention claimed in the Licensed IP that (a) would be infringed by the practice of an invention claimed in the Licensed IP or (b) if not for the Exclusive IP License would infringe one or more claims of the Licensed IP.

 

	
  

	
1.19.

	
“Indemnitee” means a party and its Affiliates and their respective directors, officers, managers, employees and agents, and the successors, assigns, and heirs of the foregoing.

 

	
  

	
1.20.

	
“Invention” means the subject matter of an Invention Disclosure.

 

	
  

	
1.21.

	
“Invention Disclosure” has the meaning set forth in 2.1(a)(1).

 

	
  

	
1.22.

	
“Inventor” has the meaning set forth in 2.1(a)(1).

 

	
  

	
1.23.

	
“Knowledge” means with regard to a party’s representation and warranty in this Agreement qualified by knowledge, a party's knowledge after engaging in reasonable inquiry and investigation.

 

	
  

	
1.24.

	
“License Fee” has the meaning set forth in Section 5.1.

 

	
  

	
1.25.

	
“License Term” has the meaning set forth in Section 9.1(b).

 

	
  

	
1.26.

	
“Licensed IP” means the Patent Applications, IDMC Technology, and Patents, which cover the Inventions selected for patenting pursuant to Section 2.1(b)(4).

 

	
  

	
1.27.

	
“Licensing Revenue” means all gross revenue recognized under GAAP received by Visualant in consideration for the grant of a license of Visualant IP or a sublicense of Licensed IP to a third party.

 

	
  

	
1.28.

	
“Nonexclusive License” means the license of Visualant IP set forth in Section 3.4.

 

	
  

	
1.29.

	
“Nonrecurring Engineering Fee” or “NRE Fee” means the one-time cost to research and develop new inventions.

 

	
  

	
1.30.

	
“Option to License” has the meaning set forth in Section 3.2.

 

  

2

  

	 	
1.31.

	
“Patents” means all patents, utility models, design patents, design registrations, certificates of invention, and other governmental grants or exclusive rights of any kind issued or granted by any government in the world to an inventor or applicant for the protection of inventions or industrial designs anywhere in the world claiming an Invention, or any portion thereof.

 

	
  

	
1.32.

	
“Patent Applications” means applications for Patents for an Invention, including, without limitation, all reissues, divisionals, renewals, provisionals, re-examinations, extensions, continuations and continuations-in-part, and requests for continuing examinations.

 

	
  

	
1.33.

	
“Person” means an individual, firm, corporation, partnership, association, limited liability company, trust or any other entity.

 

	
  

	
1.34.

	
“Potential Opportunity” has the meaning set forth in 2.2(a)(2).

 

	
  

	
1.35.

	
“Revenue Allocation” has the meaning set forth in Exhibit B.

 

	
  

	
1.36.

	
“Royalty Products” means the specific uses, products, processes, and services (a) that, if made, used, imported, offered for sale, sold, distributed, or otherwise disposed of by Visualant in the absence of this Agreement would infringe, whether directly or through inducement of or contribution to infringement by another, at least one claim of a Patent included in the Licensed IP, (b) that use or incorporate inventions disclosed or claimed in any Patent Applications included in the Licensed IP, or (c) that otherwise use or incorporate the IDMC Technology included in the Licensed IP.

 

	
  

	
1.37.

	
“Royalty Product Revenue” means the gross revenue recognized under GAAP that Visualant received from the sale or other disposition of Royalty Products.

 

	
  

	
1.38.

	
“Royalties” has the meaning set forth in Section 4.3.

 

	
  

	
1.39.

	
“Sales Revenue” means the gross revenue recognized under GAAP that Visualant received from the sale or other disposition of Visualant’s products including Royalty Products.

 

	
  

	
1.40.

	
“Services” has the meaning set forth in Section 2.

 

	
  

	
1.41.

	
“Shares” means the common shares in the capital of Visualant.

 

	
  

	
1.42.

	
“Squid Development Kit” means the development kit that Visualant plans to release subsequent to the release of the ChromaID Development Kit.

 

	
  

	
1.43.

	
“Useful IP” means, other than the Licensed IP, the Patent Applications and Patents that relate to spectroscopy and are (a) owned by or licensed by IDMC as of the Effective Date or (b) developed, generated, or otherwise acquired by IDMC after the Effective Date; but for both (a) and (b) only to the extent that IDMC has the ability to grant Visualant a nonexclusive license without (i) breaching any obligation to any third party, (ii) having to acquire additional licensing or patent rights from any third party, and (iii) paying any additional consideration to any third party to grant the nonexclusive license. The determination of whether any particular Patent Application or Patent is within the scope of Useful IP shall be made by IDMC in its sole and absolute discretion.

 

	
  

	
1.44.

	
“Visualant Technology” means technical information, know-how, processes, procedures, compositions, devices, methods, formulae, materials, protocols, techniques, software, designs, drawings or data created by Visualant for the enablement or development of the Licensed IP.

 

	
  

	
1.45.

	
“Visualant IP” means intellectual property owned by Visualant, including Improvements made by Visualant.

 

	
  

	
1.46.

	
“Warrant” has the meaning set forth in Section 4.1.

 

  

3

  

 

	
2.

	
Services

 

	
  

	
2.1.

	
Application Development

 

	
  

	
(a)

	
Subject to Section 2.1(b), IDMC shall provide the following services (“Application Development Services”) to Visualant:

 

	
  

	
(1)

	
Identify and engage at least twenty (20) pre-qualified inventors (“Inventors”) for a term of sixty (60) days to develop new applications of the ChromaID Development Kit and submit invention disclosures for such applications (“Invention Disclosures”) to IDMC;

 

	
  

	
(2)

	
Review the Invention Disclosures with Visualant;

 

	
  

	
(3)

	
Upon Visualant’s review and input, prepare and file at least ten (10) U.S. Patent Applications and corresponding PCT Patent Applications to protect the Inventions selected by IDMC; and

 

	
  

	
(4)

	
Pay an NRE fee of up to five thousand U.S. dollars ($5,000) to each Inventor named on the Patent Applications.

 

	
  

	
(b)

	
To support IDMC’s efforts in providing the Application Development Services, Visualant shall

 

	
  

	
(1)

	
Provide IDMC with a ChromaID Development Kit for each Inventor at no cost;

 

	
  

	
(2)

	
Provide technical support to each Inventor, as needed, at no cost;

 

	
  

	
(3)

	
Review Invention Disclosures with IDMC;

 

	
  

	
(4)

	
Provide input to assist IDMC in selecting Inventions and preparing and filing Patent Applications; and

 

	
  

	
(5)

	
Delay the selling of the ChromaID Development Kits for one hundred forty (140) days after providing the ChromaID Development Kits to IDMC, except that Visualant may sell the Development Kits to a mutually agreed upon list of not more than ten (10) other entities, to be set out in a separate side letter to this Agreement.

 

	
  

	
(c)

	
Visualant hereby grants IDMC an exclusive option to provide Application Development Services to Visualant for the Squid Development Kit for twelve (12) months from the Effective Date. Visualant shall delay selling the Squid Development Kit to other parties for one hundred eighty (180) days after providing the Squid Development Kits to IDMC.

 

	
  

	
2.2.

	
Global Business Development

 

	
  

	
(a)

	
Subject to Section 2.2(b) below, IDMC may provide the following services (“Global Business Development Services”) to Visualant:

 

	
  

	
(1)

	
Present Visualant IP and Licensed IP, if applicable, to potential customers, licensees, and distributors in markets or geographies not being pursued by Visualant;

 

	
  

	
(2)

	
Introduce Visualant to a potential customer, licensee, or distributor for the purpose of identifying and closing a license, sale, or distribution deal or other monetization event (“Potential Opportunity”);

 

	
  

	
(3)

	
Upon written request of Visualant, take the lead in any negotiation;

 

  

4

  

	
  

	
(b)

	
Upon written request of IDMC, Visualant, in its sole discretion, shall provide IDMC with authorization to contact a potential customer, licensee, or distributor.

 

	
  

	
2.3.

	
Independent Contractor

 

	
  

	
(a)

	
IDMC is an independent contractor and not an employee or agent of Visualant. This Agreement does not create an agency, joint venture, partnership, or employment relationship.

 

	
  

	
(b)

	
This Agreement does not authorize IDMC to enter into contracts on Visualant’s behalf. IDMC shall make clear to third parties that IDMC is an independent contractor of Visualant and has no authority to take any action (except as permitted in this Agreement) on behalf of Visualant or bind Visualant to any agreement.

 

	
3.

	
License of Intellectual Property

 

	
  

	
3.1.

	
Exclusive IP License to Visualant. Subject to the terms of this Agreement, IDMC hereby grants and will grant to Visualant a worldwide, nontransferable, exclusive license to the Licensed IP, during the Term, and solely within the Field of Use to (a) make, have made, use, import, sell and offer for sale products and services; (b) make Improvements; and (c) grant sublicenses of any and all of the foregoing rights (including the right to grant further sublicenses). Visualant shall deliver to IDMC a true and correct copy of each and every such sublicense agreement entered into by Visualant within thirty (30) days after execution thereof, and shall promptly advise IDMC in writing of any modification (and supply same) or termination of each such sublicense agreement. Any such sublicense granted under this Agreement must be in accordance with and subject to the terms, conditions and limitations of this Agreement.

 

	
  

	
3.2.

	
Nonexclusive Option. Subject to the terms of this Agreement, IDMC hereby grants and will grant to Visualant a nonexclusive and nontransferrable option to acquire a worldwide, nontransferrable, nonexclusive license to the Useful IP within the Field of Use to (a) make, have made, use, import, sell and offer to sell products and services and (b) grant sublicenses to any and all of the foregoing rights (“Option to License”). The Option to License may be exercised for up to two (2) years from the Effective Date. Any nonexclusive license granted upon the exercise of the Option to License will be subject to mutually acceptable terms and conditions to be negotiated between the parties.

 

	
  

	
3.3.

	
Reserved Rights. Nothing contained in this Agreement will be construed as conferring any rights by implication, estoppel or otherwise, under any intellectual property rights other than the rights expressly granted in this Agreement with respect to the Licensed IP. All rights not expressly granted in this Agreement are reserved by the respective parties, including right in any Visualant IP existing or created in the future. Subject to the Exclusive IP License, as between the parties, IDMC retains all of its right, title and interest to the Licensed IP.

 

	
  

	
3.4.

	
Nonexclusive License to IDMC.

 

	
  

	
(a)

	
Visualant hereby grants and will grant to IDMC a nonexclusive, worldwide, fully paid up,  nontransferable, sublicenseable, perpetual license to the Visualant IP, solely outside the Field of Use to (a) make, have made, use, import, sell and offer for sale products and services and (b) grant sublicenses of any and all of the foregoing rights (including the right to grant further sublicenses).

 

	
  

	
(b)

	
Visualant hereby grants and will grant to IDMC a nonexclusive, worldwide, fully paid up, royalty-free, nontransferable, nonsublicenseable, perpetual license to access and use Visualant Technology solely for the purpose of marketing sublicenses to the Visualant IP to third parties.

 

	
  

	
3.5.

	
No Opposition to Intellectual Property. Visualant shall not (i) take any action to oppose, challenge or dispute the validity, enforceability, or scope of any Patent Applications or Patents included in the Licensed IP or (ii) use or authorize any third party to use any Licensed IP in any manner whatsoever other than as expressly permitted pursuant to this Agreement. IDMC agrees that, during the Agreement Term, neither IDMC nor any of its subsidiaries will (i) take any action to oppose, challenge or dispute the validity, enforceability, or scope of the Improvements or (ii) use or authorize any third party to use any Improvement in any manner whatsoever other than as expressly permitted pursuant to this Agreement.

 

  

5

  

 

	
  

	
3.6.

	
Commercialization. Visualant shall use commercially reasonable efforts to develop viable commercial uses of the Licensed IP and to sublicense Licensed IP to other parties for the purpose of those parties making and selling Royalty Products. Such commercially reasonable efforts include technical development and customer collaboration regarding Royalty Products in order to advance the technology toward commercialization and monetization through sub-licensing by Visualant.

 

	
4.

	
Compensation to IDMC

 

	
  

	
4.1.

	
Warrant. As consideration for the Exclusive IP License and Application Development Services, Visualant shall issue to IDMC the equivalent of five percent (5%) of the Fully Diluted Shares of Visualant’s common stock in the form of warrants with a strike price of twenty U.S. cents ($0.20) per Share at the Effective Date (“Warrant”) pursuant to the Warrant to Purchase Common Stock, attached to this Agreement as Exhibit A, within 30 days of the Effective Date. As of October 11, 2013, this represented 14,575,286 warrants of common stock.

 

	
  

	
4.2.

	
Commissions. As consideration for the Global Business Development Services, Visualant shall pay IDMC the following commissions (“Commissions”):

 

	
  

	
(a)

	
Ten percent (10%) of the Licensing Revenue from any IDMC Introduced Company,

 

	
  

	
(b)

	
An additional ten percent (10%), for a total of twenty percent (20%), of the Licensing Revenue from any IDMC Introduced Company if IDMC negotiates the agreement between Visualant and the IDMC Introduced Company; and

 

	
  

	
(c)

	
Five percent (5%) of the Sales Revenue from any IDMC Introduced Company.

 

	
  

	
4.3.

	
Royalties. As consideration for the Exclusive IP License and other rights granted in this Agreement, Visualant shall pay IDMC a royalty of five percent (5%) of Royalty Product Revenue (“Royalties”). For clarity, IDMC is entitled to receive both Royalties and Commissions pursuant to 4.2(c) when Visualant receives Royalty Product Revenue from an IDMC Introduced Company.

 

	
  

	
4.4.

	
Payment Dates. Visualant shall compute Commissions and Royalties payments based on Sales Revenue and Royalty Product Revenue, respectively, that Visualant receives in a calendar quarter, with the calendar quarter ending on the last day of the months of March, June, September, and December. Within thirty (30) days after the end of each such calendar quarter period (“Payment Dates”), Visualant shall pay to IDMC all amounts, if any, owed for such period.

 

	
  

	
4.5.

	
Payment Mechanics. Visualant shall make all payments to IDMC under this Agreement in United States Dollars. Where Visualant has recognized gross revenues in currency other than United States Dollars, Visualant shall compute the payments based upon the foreign exchange rate existing at the time the gross revenue is recorded as published in The Wall Street Journal. Payments will be made by wire transfer to the account specified by IDMC from time to time in a written notice to Visualant.

 

	
  

	
4.6.

	
Taxes. All payments under the Agreement will be made free of all taxes or other withholding and without any deduction, offset, setoff or other charge. Without limiting the foregoing, Visualant may not reduce the amounts payable by any taxes, fees, or other charges imposed on the remittance of royalties or any other amounts payable under this Agreement. Notwithstanding the above, each party shall be responsible for its own income taxes and any gross receipts, sales, use, excise, import, export, value-added or other taxes that may be imposed on such party as a result of the transactions contemplated by the Agreement.

 

	
  

	
4.7.

	
Reports. Visualant shall submit a written report of its Licensing Revenue, Sales Revenue, and Royalty Product Revenue (the “Report”) on a quarterly basis on the Payment Dates. Visualant shall include in the Report the name of each party from which Licensing Revenue, Sales Revenue, or Royalty Product Revenue was received, the total amount received from each such party, and a computation of the amount owed for the applicable quarter. If no amount is owed, the Report will so state. Visualant shall have an officer of Visualant or a designee of the officer certify the Report to be correct. Visualant shall send the Report to IDMC as set forth in Section 10.2 and email a copy of the Report to accountsreceivable@intven.com.

 

  

6

  

 

	
  

	
4.8.

	
Late Charges. Visualant will pay a late charge on any overdue amounts calculated at the rate of one percent (1%) per month, accrued daily from the date due until paid. If such rate exceeds the maximum legal rate in the jurisdiction where a claim therefor is being asserted, the rate will be reduced to such maximum legal rate. The right to late charges under this Agreement will be in addition to any other rights that IDMC may have that are conferred by operation of law or in equity.

 

	
  

	
4.9.

	
Audit.

 

	
  

	
(a)

	
The receipt or acceptance by IDMC of any payment will not prevent IDMC from subsequently challenging the validity or accuracy of the payment. Visualant shall keep and maintain true and complete books and records in sufficient detail to enable all amounts payable to IDMC under this Agreement to be accurately determined. Visualant shall maintain its books and records for at least five (5) years after the end of the calendar year to which they pertain.

 

	
  

	
(b)

	
IDMC or its Affiliates shall have the right to have a reputable independent certified public accountant or other qualified auditor acceptable to Visualant, which acceptance may not be unreasonably withheld or delayed, inspect and audit Visualant books and records relating to Licensing Revenue, Sales Revenue, and Royalty Product Revenue to verify Visualant’s compliance with the terms and conditions of Section 4.2 and Section 4.3. IDMC or its Affiliates shall provide Visualant no less than thirty (30) days prior written notice of an audit request and such audit shall take place during Visualant’s normal business hours and not occur more frequently than once in any twelve (12) month period. Visualant may make its books and records available for audit by such independent accountant or auditor subject to a reasonable nondisclosure agreement between Visualant and the accountant or auditor that prohibits disclosure other than disclosures that are necessary to substantiate any finding of noncompliance with Section 4.2 and Section 4.3.

 

	
  

	
(c)

	
If an audit conducted in accordance with this Section 4.9 uncovers any underpayment, Visualant shall promptly remit to IDMC the amounts owed to IDMC plus interest equal to the lesser of (i) prime rate as published in The Wall Street Journal on the date full payment of the amounts owed to IDMC was made plus two percent (2%) or (ii) the highest interest rate allowed by law. If the underpayment exceeds five percent (5%) of the amounts that would otherwise have been due during any twelve (12) month consecutive period that is audited, then Visualant shall also reimburse IDMC for its reasonable, out-of-pocket expenses incurred for conducting the audit. Any underpayment and interest, if any, owed to IDMC shall be paid within thirty (30) business days following delivery of the auditor’s report and any failure to provide such payment shall be deemed a material breach of this Agreement. If the audit reveals any overpayment, then IDMC shall credit the amount overpaid against Visualant's future payments to IDMC or if the Term has expired, IDMC shall pay Visualant such overpaid amount within thirty (30) business days following the delivery of the auditor’s report; provided that Visualant shall also reimburse IDMC for its reasonable, out-of-pocket expenses incurred for conducting the audit.

 

	
5.

	
Compensation to Visualant

 

	
  

	
5.1.

	
License Fee. As consideration for the Nonexclusive License, IDMC shall pay Visualant a license fee of five percent (5%) of Revenue Allocation (the “License Fee”) subject to the terms of Exhibit B.

 

	
  

	
5.2.

	
Reports. On an annual basis, IDMC will provide to Visualant a report reasonably detailing Revenue Allocation with respect to Visualant IP (the “IDMC Report”) for the preceding twelve (12) month period (each, an “IDMC Reporting Period”) when there has been Revenue with respect to Visualant IP in such IDMC Reporting Period. IDMC Reports shall be sent pursuant to Section 10.2.

 

  

7

  

	 	
5.3.

	
Payment. IDMC shall pay the License Fee at the same time IDMC submits the IDMC Report to Visualant. IDMC shall make all payments to Visualant under this Section in United States Dollars. Payments will be made by wire transfer to the account specified by Visualant from time to time in a written notice to IDMC.

 

	
  

	
5.4.

	
Taxes. All payments under the Agreement will be made free of all taxes or other withholding and without any deduction, offset, setoff or other charge. Without limiting the foregoing, IDMC may not reduce the amounts payable by any taxes, fees, or other charges imposed on the remittance of royalties or any other amounts payable under this Agreement. Notwithstanding the above, each party shall be responsible for its own income taxes and any gross receipts, sales, use, excise, import, export, value-added or other taxes that may be imposed on such party as a result of the transactions contemplated by the Agreement.

 

	
6.

	
Confidentiality

 

	
  

	
6.1.

	
Terms of the Agreement. Neither party shall disclose the terms of this Agreement to any third party without the prior written consent of the other nondisclosing party, except: (a) to attorneys, auditors, or other advisors, provided that appropriate and reasonable confidentiality arrangements are established with such attorneys, auditors, or advisors; (b) to surviving entities, in the event of a sale or merger of such party; (c) to actual or potential equity or debt investors in such party, provided appropriate and reasonable confidentiality arrangements are established with the investors; (d) to its banks, investors, and other current and prospective financing sources of such party or its Affiliates; or (e) as may be necessary in the opinion of legal counsel to comply with the requirements of judicial process, any law, government order, or regulation. Notwithstanding the foregoing, any party may disclose the existence of the Agreement to any third party.

 

	
  

	
6.2.

	
Confidential Treatment.

 

	
  

	
(a)

	
Any Confidential Information and Confidential Materials exchanged by the parties are made available to the receiving party solely for the purpose of conducting the on-going business relationship between the parties and in the case of Confidential Information and Confidential Materials that are subject to any licenses or other rights granted under this Agreement, for the purpose of exercising such licenses and other rights in accordance with the other terms and conditions of this Agreement. The receiving party will not use, disclose, disseminate or distribute any Confidential Information or Confidential Materials for any other purpose without the prior written consent of disclosing party. Notwithstanding the foregoing, the receiving party may, subject to Section 6.2(b), disclose Confidential Information and Confidential Materials to any proposed or actual licensee, sublicensee, distributors, or customers of the receiving party in connection with the marketing and negotiation activities described in this Agreement. Without limitation of the foregoing, the receiving party shall not use nor permit the use of any Confidential Information or Confidential Materials to design, develop, provide or market any product or service that would compete with any product or service of the disclosing party. For clarity, the foregoing agreement not to compete does not limit or restrict the licenses and other grants set forth in this Agreement.

 

	
  

	
(b)

	
The receiving party will protect any Confidential Information and Confidential Materials from any unauthorized use, disclosure, copying, dissemination or distribution. Without limitation of the foregoing, the receiving party will: (i) make the Confidential Information and Confidential Materials available only to those of its employees, agents and other representatives who have a need to know the same for the purpose specified in Section 6.2(a) who have been informed that the Confidential Information and Confidential Materials belong to the disclosing party and are subject to this Agreement, and who have agreed or are otherwise obligated to comply with this Agreement; (ii) not disclose the Confidential Information to any third party except as permitted in Section 6.2(a); (iii) make or copy the Confidential Materials only as reasonably required for the purpose specified in Section 6.2(a); (iv) not deliver, distribute, display, demonstrate or otherwise make available the Confidential Materials to any third party except as provided in clause (i) above; (v) not reverse engineer, decompile or disassemble any computer program included in such Confidential Materials; except to the extent permitted by law; and (vi) not remove or obliterate markings (if any) on Confidential Information or Confidential materials indicating its proprietary or confidential nature.

 

  

8

  

	 	
(c) 

	
Notwithstanding Section 6.2(b), the receiving party may disclose or produce any Confidential Information or Confidential Materials if and to the extent required by any discovery request, subpoena, court order or governmental action, provided that, to the extent permitted by applicable law, the receiving party gives the disclosing party reasonable advance notice of the same (e.g., so as to afford the disclosing party a reasonable opportunity to appear, object and obtain a protective order or other appropriate relief regarding such disclosure).

 

	
  

	
6.3.

	
Ownership and Rights.

 

	
  

	
(a)

	
All Confidential Information and Confidential Materials exchanged in accordance with Section 6.2 are and remain the property of the disclosing party or its third party suppliers or licensors. Section 6.2 will not be interpreted or construed as granting any license or other right under any patent, copyright, trademark, trade secret or other proprietary right.

 

	
  

	
(b)

	
The receiving party will hold all Confidential Information and Confidential Materials in trust for the disclosing party and will promptly permanently erase, destroy them or deliver them to the disclosing party upon the earlier of the disclosing party's request or when they are no longer needed for the purpose described in Section 6.2. Upon the disclosing party's request, the receiving party will certify in writing its permanent erasure or destruction of such Confidential Materials; provided, however, that the receiving party (a) shall be permitted to retain one (1) copy of such Confidential Materials in its archival files solely for the purposes of verifying compliance with the terms of this Agreement, and (b) shall not be required to erase or destroy computer files stored securely by the receiving party or its affiliates that are created during automatic system backups.

 

	
7.

	
Representations, Warranties and Covenants

 

	
  

	
7.1.

	
IDMC. IDMC represents and warrants as of the Effective Date and covenants as follows:

 

	
  

	
(a)

	
IDMC is a limited liability company duly organized, validly existing, and in good standing under the laws of the state of Delaware, and has the requisite power to enter into and perform its obligations under this Agreement;

 

	
  

	
(b)

	
the execution, delivery, and performance of this Agreement have been duly and validly authorized by IDMC and do not require the consent or approval of any Person under any agreement, license, or other document to which IDMC is a party or by which IDMC is bound other than any consents or approvals which shall have been obtained on or prior to the Effective Date;

 

	
  

	
(c)

	
IDMC is not a party to any agreements or obligations inconsistent with this Agreement;

 

	
  

	
(d)

	
the execution, delivery, and performance of this Agreement by IDMC will not conflict with, result in any violation of or default under (with or without notice or lapse of time, or both), give rise to a right of termination, cancellation, or acceleration of any obligation or to loss of a material benefit under, or to the creation of a lien, pledge, security interest, charge, or other encumbrance on assets under (i) any provision of the governing instruments of IDMC or (ii) any loan or credit agreement, note, bond, mortgage, indenture, contract, lease, or other agreement or instrument, permit, concession, franchise, license, judgment, order, decree, statute, law, ordinance, rule, or regulation applicable to IDMC or its properties or assets;

 

	
  

	
(e)

	
this Agreement constitutes a valid and legally binding obligation of IDMC, enforceable against IDMC in accordance with the terms of this Agreement, except to the extent that enforceability may be limited by the effect of (i) any applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally, and (ii) general equitable principles, regardless of whether such enforceability is considered in a proceeding at law or in equity;

 

	
  

	
(f)

	
IDMC shall obtain all rights necessary to grant Visualant the Exclusive License;

 

	
  

	
(g)

	
IDMC shall only transfer, assign, or exclusively license the Licensed IP subject to the Exclusive License; and

 

  

9

  

	
  

	
(h)

	
IDMC shall only sublicense Visualant IP pursuant to the Nonexclusive License.

 

	
  

	
7.2.

	
Visualant. Visualant represents and warrants as of the Effective Date and covenants as follows:

 

	
  

	
(a)

	
Visualant is a public company duly organized, validly existing, and in good standing under the laws of State of Nevada and has the requisite power to enter into and perform its obligations under this Agreement;

 

	
  

	
(b)

	
the execution, delivery, and performance of this Agreement have been duly and validly authorized by Visualant and do not require the consent or approval of any Person, under any agreement, license, or other document to which Visualant is a party or by which Visualant is bound other than any consents or approvals which shall have been obtained on or prior to the Effective Date;

 

	
  

	
(c)

	
Visualant is not a party to any agreements or obligations inconsistent with this Agreement and the execution, delivery, and performance of this Agreement by Visualant will not conflict with or result in any violation of, or default under (with or without notice or lapse of time, or both), or give rise to a right of termination, cancellation, or acceleration of any obligation or to loss of a material benefit under, or the creation of a lien, pledge, security interest, charge, or other encumbrance on assets under (i) any provision of the governing instruments of Visualant, or (ii) any loan or credit agreement, note, bond, mortgage, indenture, contract, lease, or other agreement or instrument, permit, concession, franchise, license, judgment, order, decree, statute, law, ordinance, rule, or regulation applicable to Visualant or its properties or assets;

 

	
  

	
(d)

	
this Agreement constitutes a valid and legally binding obligation of Visualant, enforceable against Visualant in accordance with the terms of this Agreement, except to the extent that enforceability may be limited by the effect of (i) any applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally, and (ii) general equitable principles, regardless of whether such enforceability is considered in a proceeding at law or in equity;

 

	
  

	
(e)

	
the Warrants are duly authorized and validly issued;

 

	
  

	
(f)

	
Visualant owns the Visualant IP licensed to IDMC pursuant to the Nonexclusive License and have maintained relevant documents substantiating the same;

 

	
  

	
(g)

	
Visualant has the right to grant the Nonexclusive License to IDMC;

 

	
  

	
(h)

	
Visualant shall only transfer, assign, or license Visualant IP subject to the Nonexclusive License; and

 

	
  

	
(i)

	
Visualant shall comply with all applicable laws and rules in exercising the Exclusive IP License and other rights granted and assigned to it under this Agreement.

 

	
  

	
7.3.

	
Disclaimer. The parties acknowledge and agree that, other than the representations and warranties set forth in Sections 7.1 and 7.2, there are no other representations or warranties made by any party. VISUALANT ACKNOWLEDGES THAT IDMC MAKES NO REPRESENTATION OR WARRANTY (EXPRESS, IMPLIED OR STATUTORY) REGARDING THE LICENSED IP AND EXPRESSLY DISCLAIMS ALL SUCH REPRESENTATIONS AND WARRANTIES. WITHOUT LIMITATION, IDMC GIVES VISUALANT NO ASSURANCE, REPRESENTATION OR WARRANTY (A) REGARDING PATENTABILITY, VALIDITY, ENFORCEABILITY OR SCOPE, OF THE LICENSED IP; (B) THAT THE LICENSED IP WILL NOT BE FOUND INVALID, UNPATENTABLE OR UNENFORCEABLE IN THE FUTURE FOR ANY REASON IN ANY ADMINISTRATIVE, ARBITRATION, JUDICIAL OR OTHER PROCEEDING; AND (C) THAT USE OR PRACTICE OF THE LICENSED IP OR ANYTHING MADE, USED, SOLD OR OTHERWISE DISTRIBUTED OR DISPOSED OF UNDER ANY OF THE LICENSED IP IS OR WILL BE FREE FROM INFRINGEMENT OF ANY OTHER PATENTS OR OTHER INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES, EVEN IF IDMC HAS BEEN MADE AWARE OF SUCH INFRINGEMENT.

 

  

10

  

 

	
8.

	
Continuing Obligations

 

	
  

	
8.1.

	
Patent Marking. Visualant will mark any product, and prominently indicate for any service, method or process, covered by this Agreement and at least one claim of any Patents included in any Licensed IP with the patent number(s) of the applicable Patents in a manner that complies with the marking requirements set forth in 35 U.S.C. § 287(a), as amended from time to time, and any other similar laws in other jurisdictions.

 

	
  

	
8.2.

	
Prosecution and Maintenance of Licensed IP. Visualant shall, without any further compensation, cooperate fully and comply with all reasonable requests made by IDMC in furtherance of preparation, filing, prosecution, maintenance, or enforcement of the Licensed IP.

 

	
  

	
8.3.

	
Assignment; Abandonment. IDMC may at its sole discretion assign any Licensed IP to another party provided that such party is subject to the obligations undertaken by IDMC pursuant to this Agreement with respect to the Patent Right. IDMC may at any time abandon its preparation, filing, prosecution, or maintenance of any Patent or Patent Application or any claim thereof that is part of the Patents licensed under this Agreement; provided that IDMC will provide Visualant thirty (30) days’ prior written notice of the abandonment.

 

	
  

	
8.4.

	
Patent Office and Other Similar Proceedings. Each party shall promptly give the other party notice upon becoming aware of any request for, filing or institution of any proceeding before a patent office, administrative body or court, seeking to protest, oppose, cancel, re-examine, declare an interference proceeding, initiate a conflict proceeding or other process affecting the scope, ownership, validity or term of the Licensed IP. As between the parties, IDMC shall have the right, at IDMC’s discretion, to conduct or defend such proceeding, if such proceeding involves the Licensed IP.

 

	
  

	
8.5.

	
Enforcement and Defense by IDMC. Each party shall promptly give the other party notice upon becoming aware of any instance of infringement of any Licensed IP. IDMC shall have the right, at its discretion, but not the obligation, to initiate, direct, conduct and settle any infringement action or validity defense relating to the Licensed IP.

 

	
  

	
8.6.

	
Indemnification.

 

	
  

	
(a)

	
Visualant will defend, indemnify and hold harmless the IDMC Indemnitees against any and all Claims, based upon any theory of liability (including warranty, strict liability, negligence or tort, and regardless of any factual basis), arising out of the exercise of the Exclusive IP License or any other rights granted under this Agreement with respect to the Licensed IP by Visualant or any sublicensee, all subject to the following:

 

	
  

	
(1)

	
IDMC Indemnitees will give Visualant written notice of the Claim, which any IDMC Indemnitee desires Visualant to defend, indemnify and hold harmless under this Agreement promptly after any IDMC Indemnitee receives notice thereof along with sufficient information for Visualant to identify the Claim. IDMC Indemnitees will cooperate and provide such assistance (including testimony and access to documentation within the possession or control of any IDMC Indemnitee) as Visualant may reasonably request in connection with Visualant’s defense, settlement and satisfaction of the Claim; provided that Visualant will pay or reimburse all of the costs and expenses reasonably incurred by IDMC Indemnitees to provide any such cooperation and assistance in accordance with Visualant’s request.

 

	
  

	
(2)

	
As part of Visualant’s obligation to defend, indemnify and hold harmless IDMC Indemnitees, Visualant will pay any and all (i) costs and expenses reasonably incurred by Visualant in connection with the defense, settlement or satisfaction of any Claim (including any amounts agreed to by Visualant in settlement of the Claim) and (ii) amounts required by any judgment or order of any court to be paid by IDMC Indemnitees as damages or other relief based upon the Claim; provided that IDMC Indemnitees have complied with their obligations under Section 8.6(a)(1) with respect to the Claim.

 

  

11

  

	
  

	
(3)

	
In no event will Visualant be required to pay an aggregate amount under Section 8.6(a)(2) exceeding the aggregate Royalties and Commissions Visualant paid to IDMC under this Agreement as of the time such payments must be satisfied.

 

	
  

	
(b)

	
IDMC will defend, indemnify and hold harmless the Visualant Indemnitees against any and all Claims arising from a breach of the representations and warranties made by IDMC to Visualant pursuant to Section 7.1, subject to the following:

 

	
  

	
(1)

	
Visualant Indemnitees will give IDMC written notice of the Claim which any Visualant Indemnitee desires IDMC to defend, indemnify and hold harmless under this Agreement promptly after any Visualant Indemnitee receive notice thereof along with sufficient information for IDMC to identify the Claim. Visualant Indemnitees will cooperate and provide such assistance (including testimony and access to documentation within the possession or control of any Visualant Indemnitee) as IDMC may reasonably request in connection with IDMC’s defense, settlement and satisfaction of the Claim; provided that IDMC will pay or reimburse all of the costs and expenses reasonably incurred by Visualant Indemnitees to provide any such cooperation and assistance in accordance with IDMC’s request.

 

	
  

	
(2)

	
As part of IDMC’s obligation to defend, indemnify, and hold harmless Visualant Indemnitees, IDMC will pay any and all (i) costs and expenses reasonably incurred by IDMC in connection with the defense, settlement, or satisfaction of the Claim (including any amounts agreed to by IDMC in settlement of the Claim) and (ii) amounts required by any judgment or order of any court to be paid by Visualant Indemnitees as damages or other relief based upon the Claim; provided that Visualant Indemnitees have complied with their obligations under Section 8.6(b)(1) with respect to the Claim.

 

	
  

	
(3)

	
In no event will IDMC be required to pay an aggregate amount under Section 8.6(b)(2) exceeding the aggregate Royalties and Commissions that have been paid to IDMC under this Agreement as of the time such payments must be satisfied.

 

	
9.

	
Term and Termination

 

	
  

	
9.1.

	
Term.

 

	
  

	
(a)

	
License Term. The term of the Exclusive IP License and the Nonexclusive IP License (the “License Term”) commences on the Effective Date and, subject to earlier termination pursuant to Section 9.2, terminates when all claims of the Patents expire or are held in valid or unenforceable by a court of competent jurisdiction from which no appeal can be taken.

 

	
  

	
(b)

	
Agreement Term. The term of the Agreement (the Agreement Term”) commences on the Effective Date until either party terminates this Agreement. Either party may terminate this Agreement for convenience at any time following the fifth anniversary of the Effective Date by providing at least ninety (90) days’ prior written notice to the other party, provided, however, that the Exclusive IP License, the Nonexclusive IP License, the obligation to pay License Fee, Commissions, and Royalties, and the audit rights in Section 4.9 shall survive termination or expiration of the Agreement.

 

	
  

	
9.2.

	
Termination. The License shall terminate immediately  and automatically if any of the following occurs: (a) an insolvency, receivership or bankruptcy proceeding (voluntary or involuntary) is instituted with respect to Visualant and such proceeding is not abandoned or dismissed within one hundred twenty (120) days of institution; (b) Visualant effects an assignment for the benefit of creditors; (c) Visualant dissolves (voluntarily or involuntarily) or liquidates; or (d) Visualant otherwise materially breaches this Agreement, which breach is not cured within ninety (90) days after written notice thereof from IDMC.

 

	
  

	
9.3.

	
Effect of Termination. If this Agreement is terminated for any reason while any sublicense granted by Visualant or by IDMC is in effect, each sub-licensee that has such a sublicense will have a one hundred eighty (180) day grace period (following the effective date of the termination of this Agreement) to complete orders in process and to sell or otherwise dispose of any products containing any of the Licensed IP.

 

  

12

  

 

	
  

	
9.4.

	
Survival. All obligations of a continuing nature including, without limitation, those set forth in Sections 4, 5, 9, and 10 will survive any termination of this Agreement or expiration of the Term.

 

	
  

	
9.5.

	
Reversion. Upon the occurrence of a termination or expiration pursuant to Section 9.2 and subject to Section 9.3, all of Visualant’s right, title and interest in, to and under the Exclusive IP License shall automatically be assigned by Visualant to IDMC. Visualant or its successor in interest shall, promptly upon the written request of IDMC, execute and deliver to IDMC or its designee such instruments and agreements as IDMC may reasonably request in order to confirm such transfer of Visualant’s right, title and interest in, to and under the Exclusive IP License to IDMC.

 

	
10.

	
Miscellaneous

 

	
  

	
10.1.

	
Limitation of Liability. IN NO EVENT SHALL ANY PARTY BE LIABLE TO THE OTHER PARTY FOR INDIRECT DAMAGES, INCLUDING ANY LOST PROFITS OR OTHER INCIDENTAL OR CONSEQUENTIAL, EXEMPLARY OR SPECIAL DAMAGES, HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY ARISING OUT OF THIS AGREEMENT, INCLUDING THE USE OR INABILITY TO USE ANY LICENSED IP, EVEN IF SUCH PARTY OR ITS REPRESENTATIVES HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. THIS SECTION 10.1 WILL NOT APPLY TO ANY DAMAGES ARISING OUT OF EITHER PARTY'S (a) WILLFUL MISCONDUCT (WHICH, FOR THE AVOIDANCE OF DOUBT, INCLUDES SUCH PARTY'S WILLFUL BREACH OF ANY OF ITS EXPRESS OBLIGATIONS UNDER THIS AGREEMENT, EXCEPT TO THE EXTENT THAT SUCH PARTY IS REASONABLY RELYING ON THE ADVICE OF ITS LEGAL COUNSEL) OR GROSS NEGLIGENCE WITH RESPECT TO THIS AGREEMENT; OR (b) FRAUD. THE PARTIES ACKNOWLEDGE THAT THESE EXCLUSIONS OF POTENTIAL DAMAGES WERE AN ESSENTIAL ELEMENT IN SETTING CONSIDERATION UNDER THIS AGREEMENT. FURTHER, IN NO EVENT WILL IDMC’S AGGREGATE LIABILITY UNDER THIS AGREEMENT OR WITH REGARD TO THE LICENSED IP LICENSE EXCEEDS THE AMOUNT VISUALANT PAID TO IDMC UNDER THIS AGREEMENT AT THE TIME SUCH LIABILITY MUST BE SATISFIED.

 

	
  

	
10.2.

	
Notices. Except as otherwise approved by the parties or stated elsewhere in this Agreement, all notices, requests, consents, approvals and communications called for by this Agreement shall be in writing and, if properly addressed to the recipient in the manner required by this Section 10.2, shall be deemed for purposes of this Agreement to have been given, delivered and received: (i) on the date of actual receipt if delivered personally to the recipient; (ii) three (3) business days after mailing by first class mail, postage prepaid; (iii) on the date of transmission by email or facsimile, provided that acknowledgement or receipt is received by the sender; or (iv) one (1) business day after deposit with a reputable overnight courier service. A writing will be deemed to be properly addressed, if addressed to the applicable party as follows, or to such other address or addresses as the addressee previously may have specified by written notice to the other parties in the manner contemplated by this Section 10.2:

 

	
If to Visualant: Ron Erickson

Visualant, Inc.

500 Union Street, Suite 420

Seattle, WA 98101 USA

Facsimile: (206) 826-0951

Email: ron@visualant.net

	
If to IDMC: Chris Alliegro

Invention Development Management Company, LLC

3150 139th Ave. SE, Building 4

Bellevue, WA 98005 USA

Facsimile: (425) 467-2350

Email: Notice-US@intven.com

 

	
  

	
10.3.

	
Headings and Title. The section headings and titles in this Agreement are for convenience of reference only. They do not form part of this Agreement and shall in no way affect its interpretation.

 

	
  

	
10.4.

	
Amendments and Waiver. No amendment to this Agreement shall be effective unless it is in writing and executed by all parties. Waiver by any party of any provision of this Agreement shall not be construed as a waiver of any other provision, nor shall it be construed as a waiver of any provision with respect to any other past, present, or future event or circumstance.

 

  

13

  

 

	
  

	
10.5.

	
Press Release. In connection with this Agreement, the parties will collaborate in good faith in a joint press release regarding this Agreement

 

	
  

	
10.6.

	
No Agency. The relationship of the parties hereto with respect to the matters contained herein is that of independent contractors, and nothing contained herein shall be deemed to create any relationship of agency, joint venture, or partnership. No party hereto shall have the power to commit, contract for, or otherwise obligate the other in any manner whatsoever as a result of this Agreement.

 

	
  

	
10.7.

	
Severability. If any provision in this Agreement is held to be invalid or unenforceable, the remainder of this Agreement will have full force and effect, and the invalid or unenforceable provision will be modified or partially enforced, to the maximum extent permitted to effectuate the original intent of the parties.

 

	
  

	
10.8.

	
Entire Agreement. This Agreement sets forth the entire understanding between the parties related to the subject matter hereof and supersedes all prior negotiations, correspondence, understandings, and agreements among the parties with respect to the subject matter hereof.

 

	
  

	
10.9.

	
Governing Law; Jurisdiction; Venue. This Agreement and any action arising hereunder shall be construed in accordance with and be governed by the laws of the State of Washington, without regard to the conflicts of law provisions thereof. Each party irrevocably agrees that any legal action, suit or proceeding brought by it in any way arising out of this Agreement must be brought solely and exclusively in the United States District Court for the Western District of Washington, United States of America, unless such court does not have jurisdiction, in which case such legal action, suit or proceeding must be brought solely and exclusively in the state court sitting in King County, Washington, United States of America.

 

	 	
10.10.

	
Counterparts. This Agreement may be executed in any number of counterparts by the different parties in   separate counterparts, each of which when so executed and delivered shall be deemed an original, but all of which shall together constitute one and the same instrument.

 

	 	
10.11.

	
Construction; Terms. All parties to this Agreement have cooperated in the drafting and preparation of   this Agreement. This Agreement shall be interpreted reasonably and fairly in accordance with its terms without consideration or weight being given to the Agreement or any portion hereof having been drafted by a party or its counsel. Terms defined in a given number, tense, or form shall have the corresponding meaning when used in this Agreement with initial capitals in another number, tense, or form. “Includes” or “including” shall not be deemed limited by the specific enumeration of items, but shall be deemed without limitation. The term “or” is not exclusive. Unless the context clearly intends to the contrary, words singular or plural in number shall be deemed to include the other and pronouns having a masculine or feminine gender shall be deemed to include the other.

 

	 	
10.12.

	
Consent. Each party’s execution of this Agreement shall act as its consent to the arrangements and transactions contemplated hereby.

 

  

14

  

IN WITNESS WHEREOF, the undersigned have executed this Services and License Agreement effective as of the Effective Date.

 

 

	
VISUALANT, INC.

 

 

 

By: /s/ Ronald P. Erickson

Name: Ronald P. Erickson

 

Title: CEO

	
INVENTION DEVELOPMENT MANAGEMENT COMPANY, L.L.C., on behalf of itself and its Affiliates (as defined above)

 

 

By: /s/ Chris Alliegro

Name: Chris Alliegro

 

Title: Executive Vice President

 

 

 

 

 

 

 

Signature Page to Services and License Agreement

 

  

15

  

EXHIBIT A

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND, ACCORDINGLY, MAY NOT BE TRANSFERRED UNLESS (I) SUCH SECURITIES HAVE BEEN REGISTERED FOR SALE PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED, (II) SUCH SECURITIES MAY BE SOLD PURSUANT TO RULE 144, OR (III) THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT THAT SUCH TRANSFER MAY LAWFULLY BE MADE WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

PURSUANT TO THE TERMS OF SECTION 1 OF THIS WARRANT, ALL OR A PORTION OF THIS WARRANT MAY HAVE BEEN EXERCISED, AND THEREFORE THE ACTUAL NUMBER OF WARRANT SHARES REPRESENTED BY THIS WARRANT MAY BE LESS THAN THE AMOUNT SET FORTH ON THE FACE HEREOF.

VISUALANT, INCORPORATED

Warrant To Purchase Common Stock

Warrant No.:1

Number of Shares of Common Stock: 14,575,286

Date of Issuance: November 11, 2013 (“Issuance Date”)

Visualant, Incorporated, a Nevada corporation (the “Company”), hereby certifies that, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Invention Development Management Company, L.L.C, a Delaware limited liability company, the registered holder hereof or its permitted assigns (the “Holder”), is entitled, subject to the terms set forth below, to purchase from the Company, at the Exercise Price (as defined below) then in effect, upon surrender of this Warrant to Purchase Common Stock (including any Warrants to Purchase Common Stock issued in exchange, transfer or replacement hereof, the “Warrant”), at any time or times on or after Exercisability Date (as defined below), but not after 11:59 p.m., New York time, on the Expiration Date (as defined below), 14,575,286 fully paid nonassessable shares of Common Stock (as defined below) (the “Warrant Shares”).  Except as otherwise defined herein, capitalized terms in this Warrant shall have the meanings set forth in Section 15.  EXERCISE OF WARRANT.

 

 

 

 

 

 

 

  

1

  

(a)      Mechanics of Exercise.  Subject to the terms and conditions hereof, this Warrant may be exercised by the Holder on any day on or after the Exercisability Date, in whole or in part (but not as to fractional shares), by (i) delivery of a written notice, in the form attached hereto as Exhibit A (the “Exercise Notice”), of the Holder’s election to exercise this Warrant and (ii) if both (A) the Holder is not electing a Cashless Exercise (as defined below) pursuant to Section 1(d) of this Warrant and (B) a registration statement registering the issuance of the Warrant Shares under the Securities Act of 1933, as amended (the “Securities Act”), is effective and available for the issuance of the Warrant Shares, or an exemption from registration under the Securities Act is available for the issuance of the Warrant Shares, payment to the Company of an amount equal to the applicable Exercise Price multiplied by the number of Warrant Shares as to which this Warrant is being exercised (the “Aggregate Exercise Price”) in cash or wire transfer of immediately available funds (a “Cash Exercise”) (the items under (i) and (ii) above, the “Exercise Delivery Documents”).  The Holder shall not be required to surrender this Warrant in order to effect an exercise hereunder; provided, however, that in the event that this Warrant is exercised in full or for the remaining unexercised portion hereof, the Holder shall deliver this Warrant to the Company for cancellation within a reasonable time after such exercise.  On or before the first Trading Day following the date on which the Company has received the Exercise Delivery Documents (the date upon which the Company has received all of the Exercise Delivery Documents, the “Exercise Date”), the Company shall transmit by facsimile or e-mail transmission an acknowledgment of confirmation of receipt of the Exercise Delivery Documents to the Holder and the Company’s transfer agent for the Common Stock (the “Transfer Agent”). The Company shall deliver any objection to the Exercise Delivery Documents on or before the second Trading Day following the date on which the Company has received all of the Exercise Delivery Documents.  On or before the second Trading Day following the date on which the Company has received all of the Exercise Delivery Documents (the “Share Delivery Date”), the Company shall, (X) provided that the Transfer Agent is participating in The Depository Trust Company (“DTC”) Fast Automated Securities Transfer Program (the “FAST Program”) and so long as the certificates therefor are not required to bear a legend regarding restriction on transferability, upon the request of the Holder, credit such aggregate number of shares of Common Stock to which the Holder is entitled pursuant to such exercise to the Holder’s or its designee’s balance account with DTC through its Deposit Withdrawal Agent Commission system, or (Y), if the Transfer Agent is not participating in the FAST Program or if the certificates are required to bear a legend regarding restriction on transferability, issue and dispatch by overnight courier to the address as specified in the Exercise Notice, a certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of shares of Common Stock to which the Holder is entitled pursuant to such exercise.  Upon delivery of the Exercise Delivery Documents, the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date such Warrant Shares are credited to the Holder’s DTC account or the date of delivery of the certificates evidencing such Warrant Shares, as the case may be.  If this Warrant is submitted in connection with any exercise pursuant to this Section 1(a) and the number of Warrant Shares represented by this Warrant submitted for exercise is greater than the number of Warrant Shares being acquired upon an exercise, then the Company shall as soon as practicable and in no event later than three Trading Days after any such submission and at its own expense, issue a new Warrant (in accordance with Section 7(e)) representing the right to purchase the number of Warrant Shares purchasable immediately prior to such exercise under this Warrant, less the number of Warrant Shares with respect to which this Warrant has been and/or is exercised.  The Company shall pay any and all taxes and other expenses of the Company (including overnight delivery charges) that may be payable with respect to the issuance and delivery of Warrant Shares upon exercise of this Warrant; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the registration of any certificates for Warrant Shares or Warrants in a name other than that of the Holder or an affiliate thereof.  The Holder shall be responsible for all other tax liability that may arise as a result of holding or transferring this Warrant or receiving Warrant Shares upon exercise hereof.

 

(b)      Exercise Price.  For purposes of this Warrant, “Exercise Price” means $0.20, subject to adjustment as provided herein.

 

(c)      Company’s Failure to Timely Deliver Securities.  If the Company shall fail for any reason or for no reason to issue to the Holder within three (3) Business Days of the Exercise Date a certificate for the number of shares of Common Stock to which the Holder is entitled and register such shares of Common Stock on the Company’s share register or to credit the Holder’s balance account with DTC for such number of shares of Common Stock to which the Holder is entitled upon the Holder’s exercise of this Warrant, and if on or after such Trading Day the Holder purchases, or another Person purchasers on the Holder’s behalf or for the Holder’s account (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of shares of Common Stock issuable upon such exercise that the Holder anticipated receiving from the Company (a “Buy-In”), then the Company shall, within three (3) Business Days after the Holder’s written request and in the Holder’s discretion, either (i) pay cash to the Holder in an amount equal to the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased (the “Buy-In Price”), at which point the Company’s obligation to deliver such certificate (and to issue such Warrant Shares) shall terminate, or (ii) promptly honor its obligation to deliver to the Holder a certificate or certificates representing such Warrant Shares and pay cash to the Holder in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of shares of Common Stock, times (B) the Closing Bid Price on the date of exercise.

  

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(d)      Cashless Exercise.  Notwithstanding anything contained herein to the contrary, if at any time after the six-month anniversary of the Issuance Date a registration statement covering the Warrant Shares that are the subject of the Exercise Notice (the “Unavailable Warrant Shares”), or an exemption from registration, is not available for the resale of such Unavailable Warrant Shares, the Holder may, in its sole discretion, exercise this Warrant in whole or in part and, in lieu of making the cash payment otherwise contemplated to be made to the Company upon such exercise in payment of the Aggregate Exercise Price, elect instead to receive upon such exercise the “Net Number” of shares of Common Stock determined according to the following formula (a “Cashless Exercise”):

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

B

For purposes of the foregoing formula:

 

	
  

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

 

	
  

	
B= the arithmetic average of the Closing Sale Prices of the shares of Common Stock for the five (5) consecutive Trading Days ending on the date immediately preceding the date of the Exercise Notice.

 

	
  

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

(e)      Rule 144.  For purposes of Rule 144(d) promulgated under the Securities Act, as in effect on the date hereof, assuming the Holder is not an affiliate of the Company, it is intended that the Warrant Shares issued in a Cashless Exercise shall be deemed to have been acquired by the Holder, and the holding period for the Warrant Shares shall be deemed to have commenced, on the date this Warrant was originally issued pursuant to the Purchase Agreement.

 

(f)      Disputes.  In the case of a dispute as to the determination of the Exercise Price or the arithmetic calculation of the Warrant Shares, the Company shall promptly issue to the Holder the number of Warrant Shares that are not disputed.

 

(g)      Beneficial Ownership.  The Company shall not effect the exercise of this Warrant, and the Holder shall not have the right to exercise this Warrant, to the extent that after giving effect to such exercise, such Person (together with such Person’s affiliates) would beneficially own in excess of 4.99% (the “Maximum Percentage”) of the shares of Common Stock outstanding immediately after giving effect to such exercise.  For purposes of the foregoing sentence, the aggregate number of shares of Common Stock beneficially owned by such Person and its affiliates shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which the determination of such sentence is being made, but shall exclude shares of Common Stock which would be issuable upon (i) exercise of the remaining, unexercised portion of this Warrant beneficially owned by such Person and its affiliates and (ii) 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 stock 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 this Warrant, in determining the number of outstanding shares of Common Stock, the Holder may rely on the number of outstanding shares of Common Stock as reflected in the most recent of (1) the Company’s most recent Form 10-K, Form 10-Q, Current Report on Form 8-K or other public filing with the Securities and Exchange Commission, as the case may be, (2) a more recent public announcement by the Company or (3) any other notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding.  For any reason at any time, upon the written or oral request of the Holder, the Company shall within two (2) Business Days confirm to the Holder the number of shares of Common Stock then outstanding.  In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder and its affiliates since the date as of which such number of outstanding shares of Common Stock was reported.  By written notice to the Company, the Holder may from time to time increase or decrease the Maximum Percentage to any other percentage not in excess of 9.99% specified in such notice; provided that (i) any such increase will not be effective until the sixty-first (61st) day after such notice is delivered to the Company, and (ii) any such increase or decrease will apply only to the Holder.  The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 1(g) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended beneficial ownership limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation.

  

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2.      ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES.  The Exercise Price and the number of Warrant Shares shall be adjusted from time to time as follows:

 

(a)      Adjustment upon Issuance of shares of Common Stock. If and whenever on or after the Subscription Date, the Company issues or sells, or in accordance with this Section 2 is deemed to have issued or sold, any shares of Common Stock (including the issuance or sale of shares of Common Stock owned or held by or for the account of the Company, but excluding shares of Common Stock issued or deemed to have been issued by the Company in connection with any Excluded Securities (as defined below) (the “Additional Shares”) for a consideration per share (the “New Issuance Price”) less than a price (the “Applicable Price”) equal to the Exercise Price in effect immediately prior to such issue or sale or deemed issuance or sale (the foregoing a “Dilutive Issuance”), then immediately after such Dilutive Issuance, the Exercise Price then in effect shall be reduced to the lowest price per share at which any share of Common Stock was issued or sold or deemed to be issued or sold.

 

For purposes of determining the adjusted Exercise Price under this Section 2(a), the following shall be applicable:

 

(i) Issuance of Options. If the Company in any manner grants any Options and the lowest price per share for which one share of Common Stock is issuable upon the exercise of any such Option or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the granting or sale of such Option for such price per share. For purposes of this Section 2(a)(i), the “lowest price per share for which one share of Common Stock is issuable upon exercise of such Options or upon conversion, exercise or exchange of such Convertible Securities issuable upon exercise of any such Option” shall be equal to the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one share of Common Stock upon the granting or sale of the Option, upon exercise of the Option and upon conversion, exercise or exchange of any Convertible Security issuable upon exercise of such Option less any consideration paid or payable by the Company with respect to such one share of Common Stock upon the granting or sale of such Option, upon exercise of such Option and upon conversion exercise or exchange of any Convertible Security issuable upon exercise of such Option. No further adjustment of the Exercise Price or number of Warrant Shares shall be made upon the actual issuance of such shares of Common Stock or of such Convertible Securities upon the exercise of such Options or upon the actual issuance of such shares of Common Stock upon conversion, exercise or exchange of such Convertible Securities.

 

(ii) Issuance of Convertible Securities. If the Company in any manner issues or sells any Convertible Securities and the lowest price per share for which one share of Common Stock is issuable upon the conversion, exercise or exchange thereof is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the issuance or sale of such Convertible Securities for such price per share. For the purposes of this Section 2(a)(ii), the “lowest price per share for which one share of Common Stock is issuable upon the conversion, exercise or exchange thereof” shall be equal to the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to one share of Common Stock upon the issuance or sale of the Convertible Security and upon conversion, exercise or exchange of such Convertible Security less any consideration paid or payable by the Company with respect to such one share of Common Stock upon the issuance or sale of such Convertible Security and upon conversion, exercise or exchange of such Convertible Security. No further adjustment of the Exercise Price or number of Warrant Shares shall be made upon the actual issuance of such shares of Common Stock upon conversion, exercise or exchange of such Convertible Securities, and if any such issue or sale of such Convertible Securities is made upon exercise of any Options for which adjustment of this Warrant has been or is to be made pursuant to other provisions of this Section 2(a), no further adjustment of the Exercise Price or number of Warrant Shares shall be made by reason of such issue or sale.

 

 

  

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

 

(iv) Calculation of Consideration Received. In case any Option is issued in connection with the issue or sale of other securities of the Company, together comprising one integrated transaction, (x) the Options will be deemed to have been issued for the Option Value of such Options and (y) the other securities issued or sold in such integrated transaction shall be deemed to have been issued for the difference of (I) the aggregate consideration received by the Company less any consideration paid or payable by the Company pursuant to the terms of such other securities of the Company, less (II) the Option Value. If any shares of Common Stock, Options or Convertible Securities are issued or sold or deemed to have been issued or sold for cash, the consideration received therefor will be deemed to be the net amount received by the Company therefor. If any shares of Common Stock, Options or Convertible Securities are issued or sold for a consideration other than cash, the amount of such consideration received by the Company will be the fair value of such consideration, except where such consideration consists of securities, in which case the amount of consideration received by the Company will be the Closing Sale Price of such security on the date of receipt. If any shares of Common Stock, Options or Convertible Securities are issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving entity, the amount of consideration therefor will be deemed to be the fair value of such portion of the net assets and business of the non-surviving entity as is attributable to such shares of Common Stock, Options or Convertible Securities, as the case may be. The fair value of any consideration other than cash or securities will be determined jointly by the Company and the Required Holders. If such parties are unable to reach agreement within ten (10) days after the occurrence of an event requiring valuation (the “Valuation Event”), the fair value of such consideration will be determined within five (5) Trading Days after the tenth (10th) day following the Valuation Event by an independent, reputable appraiser jointly selected by the Company and the Required Holders. The determination of such appraiser shall be final and binding upon all parties absent manifest error and the fees and expenses of such appraiser shall be borne by the Company.

 

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

 

(b)      Voluntary Adjustment By Company. The Company may at any time during the term of this Warrant reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the Board of Directors of the Company.

 

(c)      Adjustment upon Subdivision or Combination of Common Stock.  If the Company at any time on or after the Subscription Date subdivides (by any stock split, stock dividend, recapitalization, reorganization, scheme, arrangement or otherwise) one or more classes of its outstanding shares of Common Stock into a greater number of shares, the Exercise Price in effect immediately prior to such subdivision will be proportionately reduced and the number of Warrant Shares will be proportionately increased.  If the Company at any time on or after the Subscription Date combines (by any stock split, stock dividend, recapitalization, reorganization, scheme, arrangement or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller number of shares, the Exercise Price in effect immediately prior to such combination will be proportionately increased and the number of Warrant Shares will be proportionately decreased.  Any adjustment under this Section 2(c) shall become effective at the close of business on the date the subdivision or combination becomes effective.

  

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(d)      Other Events.  If any event occurs of the type contemplated by the provisions of this Section 2 but not expressly provided for by such provisions (including, without limitation, the granting of stock appreciation rights or phantom stock rights), then the Company’s Board of Directors will make an appropriate adjustment in the Exercise Price and the number of Warrant Shares so as to protect the rights of the Holder; provided that no such adjustment pursuant to this Section 2(d) will increase the Exercise Price or decrease the number of Warrant Shares as otherwise determined pursuant to this Section 2.

 

3.      RIGHTS UPON DISTRIBUTION OF ASSETS.

 

(a)      If the Company, at any time while this Warrant is outstanding, shall distribute to all holders of Common Stock (and not to the Holders) evidences of its indebtedness or assets (including cash and cash dividends) or rights or warrants to subscribe for or purchase any security other than the Common Stock (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), then in each such case the Exercise Price shall be adjusted by multiplying the Exercise Price in effect immediately prior to the record date fixed for determination of stockholders entitled to receive such distribution by a fraction of which the denominator shall be the Weighted Average Price determined as of the record date mentioned above, and of which the numerator shall be such Weighted Average Price on such record date less the then per share fair market value at such record date of the portion of such assets or evidence of indebtedness so distributed applicable to one outstanding share of the Common Stock as determined by the Board of Directors in good faith.  In either case the adjustments shall be described in a statement provided to the Holder of the portion of assets or evidences of indebtedness so distributed or such subscription rights applicable to one share of Common Stock.  Such adjustment shall be made whenever any such distribution is made and shall become effective immediately after the record date mentioned above.

 

4.      PURCHASE RIGHTS; FUNDAMENTAL TRANSACTIONS.

 

(a)      Purchase Rights.   In addition to any adjustments pursuant to Section 2 above, if at any time the Company grants, issues or sells any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights.

 

 

 

  

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(b)      Fundamental Transactions.  The Company shall not enter into or be party to a Fundamental Transaction unless the Successor Entity assumes in writing (unless the Company is the Successor Entity) all of the obligations of the Company under this Warrant and the other Transaction Documents in accordance with the provisions of this Section (4)(b) pursuant to written agreements in form and substance reasonably satisfactory to the Required Holders and approved by the Required Holders prior to such Fundamental Transaction, including agreements to deliver to each holder of the Warrants in exchange for such Warrants a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant, including, without limitation, an adjusted exercise price equal to the value for the shares of Common Stock reflected by the terms of such Fundamental Transaction, and exercisable for a corresponding number of shares of capital stock equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and reasonably satisfactory to the Required Holders. Upon the occurrence of any Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Warrant referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Warrant with the same effect as if such Successor Entity had been named as the Company herein. Upon consummation of the Fundamental Transaction, the Successor Entity shall deliver to the Holder confirmation that there shall be issued upon exercise of this Warrant at any time after the consummation of the Fundamental Transaction, in lieu of the shares of Common Stock (or other securities, cash, assets or other property) issuable upon the exercise of the Warrant prior to such Fundamental Transaction, such shares of the publicly traded common stock or common shares (or its equivalent) of the Successor Entity (including its Parent Entity) which the Holder would have been entitled to receive upon the happening of such Fundamental Transaction had this Warrant been converted immediately prior to such Fundamental Transaction, as adjusted in accordance with the provisions of this Warrant. In addition to and not in substitution for any other rights hereunder, prior to the consummation of any Fundamental Transaction pursuant to which holders of shares of Common Stock are entitled to receive securities or other assets with respect to or in exchange for shares of Common Stock (a “Corporate Event”), the Company shall make appropriate provision to insure that the Holder will thereafter have the right to receive upon an exercise of this Warrant at any time after the consummation of the Corporate Event but prior to the Expiration Date, in lieu of shares of Common Stock (or other securities, cash, assets or other property) purchasable upon the exercise of this Warrant prior to such Corporate Event, such shares of stock, securities, cash, assets or any other property whatsoever (including warrants or other purchase or subscription rights) which the Holder would have been entitled to receive upon the happening of such Corporate Event had this Warrant been exercised immediately prior to such Corporate Event. Provision made pursuant to the preceding sentence shall be in a form and substance reasonably satisfactory to the Required Holders. The provisions of this Section 4(b) shall apply similarly and equally to successive Fundamental Transactions and Corporate Events and shall be applied without regard to any limitations on the exercise of this Warrant.

 

(c)      Black Scholes Value. Notwithstanding the foregoing and the provisions of Section 4(b) above, in the event of the consummation of a Fundamental Transaction that is (1) an all-cash transaction, (2) a “Rule 13e-3 transaction” as defined in Rule 13e-3 under the Exchange Act or (3) a Fundamental Transaction involving a person or entity not traded on an Eligible Market, at the request of the Holder delivered at any time commencing on the earliest to occur of (x) the public disclosure of the Fundamental Transaction or (y) the consummation of the Fundamental Transaction, through the date that is ninety (90) days after the public disclosure of the consummation of such Fundamental Transaction by the Company pursuant to a Current Report on Form 8-K filed with the SEC, the Company or the Successor Entity (as the case may be) shall purchase this Warrant from the Holder on the later of (i) the date of consummation of the Fundamental Transaction and (ii) the fifth Trading Day following the date of such request, in each case by paying to the Holder cash in an amount equal to the Black Scholes Value.

 

(d)      Applicability to Successive Transactions.   The provisions of this Section shall apply similarly and equally to successive Fundamental Transactions and Corporate Events and shall be applied without regard to any limitations on the exercise of this Warrant.

 

5.      NONCIRCUMVENTION.  The Company hereby covenants and agrees that the Company will not, by amendment of its Certificate of Incorporation, Bylaws or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, and will at all times in good faith comply with all the provisions of this Warrant and take all actions consistent with effectuating the purposes of this Warrant.  Without limiting the generality of the foregoing, the Company (i) shall not increase the par value of any shares of Common Stock receivable upon the exercise of this Warrant above the Exercise Price then in effect, (ii) from and after the Share Increase Date shall take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock upon the exercise of this Warrant, and (iii) from and after the Share Increase Date shall, so long as this Warrant is outstanding, take all action necessary to reserve and keep available out of its authorized and unissued shares of Common Stock, solely for the purpose of effecting the exercise of this Warrant, 100% of the number of shares of Common Stock issuable upon exercise of this Warrant then outstanding (without regard to any limitations on exercise).

  

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

 

7.      REISSUANCE OF WARRANTS.

 

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

 

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

 

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

 

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

 

8.      NOTICES.  Whenever notice is required to be given under this Warrant, unless otherwise provided herein, such notice shall be given in accordance with Section 9.4 of the Purchase Agreement.

 

9.      AMENDMENT AND WAIVER.  Except as otherwise provided herein, the provisions of this Warrant may be amended and the Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company has obtained the written consent of the Required Holders.  Any such amendment shall apply to all Warrants and be binding upon all registered holders of such Warrants.

 

10.      GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL.  This Warrant shall be governed by, and construed in accordance with, the internal laws of the State of Washington, without reference to the choice of law provisions thereof.  The Company and, by accepting this Warrant, the Holder, each irrevocably submits to the exclusive jurisdiction of the courts of the State of Washington located in King County and the United States District Court for the Western District of Washington for the purpose of any suit, action, proceeding or judgment relating to or arising out of this Warrant and the transactions contemplated hereby.  Service of process in connection with any such suit, action or proceeding may be served on each party hereto anywhere in the world by the same methods as are specified for the giving of notices under this Warrant.  The Company and, by accepting this Warrant, the Holder, each irrevocably consents to the jurisdiction of any such court in any such suit, action or proceeding and to the laying of venue in such court.  The Company and, by accepting this Warrant, the Holder, each irrevocably waives any objection to the laying of venue of any such suit, action or proceeding brought in such courts and irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.  EACH OF THE COMPANY AND, BY ITS ACCEPTANCE HEREOF, THE HOLDER HEREBY WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS WARRANT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.

  

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11.      CONSTRUCTION; HEADINGS.  The headings of this Warrant are for convenience of reference and shall not form part of, or affect the interpretation of, this Warrant.

 

12.      DISPUTE RESOLUTION.  In the case of a dispute as to the determination of the Exercise Price or the arithmetic calculation of the Warrant Shares, the Company shall submit the disputed determinations or arithmetic calculations via facsimile within two (2) Business Days of receipt of the Exercise Notice giving rise to such dispute, as the case may be, to the Holder.  If the Holder and the Company are unable to agree upon such determination or calculation of the Exercise Price or the Warrant Shares within three Business Days of such disputed determination or arithmetic calculation being submitted to the Holder, then the Company shall, within two (2) Business Days submit via facsimile (a) the disputed determination of the Exercise Price to an independent, reputable investment bank selected by the Company and approved by the Holder, which approval shall not be unreasonably withheld, or (b) the disputed arithmetic calculation of the Warrant Shares to the Company’s independent, outside accountant.  The Company shall cause the investment bank or the accountant, as the case may be, to perform the determinations or calculations and notify the Company and the Holder of the results no later than ten Business Days from the time it receives the disputed determinations or calculations.  The prevailing party in any dispute resolved pursuant to this Section 12 shall be entitled to the full amount of all reasonable expenses, including all costs and fees paid or incurred in good faith, in relation to the resolution of such dispute.  Such investment bank’s or accountant’s determination or calculation, as the case may be, shall be binding upon all parties absent demonstrable error.

 

13.      REMEDIES, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF.  The remedies provided in this Warrant shall be cumulative and in addition to all other remedies available under this Warrant, at law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the right of the Holder to pursue actual damages for any failure by the Company to comply with the terms of this Warrant.

 

14.      TRANSFER.  Subject to applicable laws, this Warrant may be offered for sale, sold, transferred or assigned without the consent of the Company

 

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

 

(a)      “Approved Stock Plan” means any employee benefit plan or other issuance, employment agreement or option grant or similar agreement which has been approved by the Board of Directors of the Company, pursuant to which the Company’s securities may be issued to any employee, consultant, officer or director for services provided to the Company.

 

(b)      “Black Scholes Value” means the value of the unexercised portion of this Warrant remaining on the date of the Holder’s request pursuant to Section 4(c), which value is calculated using the Black Scholes Option Pricing Model obtained from the “OV” function on Bloomberg utilizing (i) an underlying price per share equal to the greater of (1) the highest Closing Sale Price of the Common Stock during the period beginning on the Trading Day immediately preceding the earlier to occur of (x) the public disclosure of the applicable Fundamental Transaction or (y) the consummation of the applicable Fundamental Transaction and ending on the Trading Day of the consummation of the Fundamental Transaction and (2) the sum of the price per share being offered in cash in the applicable Fundamental Transaction (if any) plus the value of the non-cash consideration being offered in the applicable Fundamental Transaction (if any), (ii) a strike price equal to the Exercise Price in effect on the date of the Holder’s request pursuant to Section 4(c), (iii) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the greater of (1) the remaining term of this Warrant as of the date of the Holder’s request pursuant to Section 4(c) and (2) the remaining term of this Warrant as of the date of consummation of the applicable Fundamental Transaction or as of the date of the Holder’s request pursuant to Section 4(c) if such request is prior to the date of the consummation of the applicable Fundamental Transaction and (iv) an expected volatility equal to the greater of 100% and the 100 day volatility obtained from the HVT function on Bloomberg (determined utilizing a 365 day annualization factor) as of the Trading Day immediately following the public disclosure of the applicable Fundamental Transaction.

 

(c)      “Bloomberg” means Bloomberg Financial Markets.

  

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

 

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

 

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

 

(g)      “Conversion Shares” means the shares of Common Stock issuable upon conversion of the Convertible Notes.

 

(h)      “Convertible Notes” means up to $5,000,000 in aggregate principal amount of the Company’s 7% Convertible Promissory Notes due June 2017, in the form of Exhibit D to the Purchase Agreement.

 

(i)      “Convertible Securities” means any stock or securities (other than Options) directly or indirectly convertible into or exercisable or exchangeable for shares of Common Stock.

 

(j)      “Eligible Market” means the Principal Market, The New York Stock Exchange, Inc., The NYSE MKT, The NASDAQ Capital Market, The NASDAQ Global Market or The NASDAQ Global Select Market.

 

(k)      “Exercisability Date” means the Share Increase Date.

 

(l)      “Expiration Date” means the fifth anniversary of the Exercisability Date or, if such date falls on a day other than a Trading Day or on which trading does not take place on the Principal Market, or, if the Principal Market is not the principal trading market for the Common Stock, then on the principal securities exchange or securities market on which the Common Stock is then traded (a “Holiday”), the next date that is not a Holiday.

 

(m)           “Excluded Securities” means: (i) the Convertible Notes and the Conversion Shares, provided that the terms of the Convertible Notes are not amended after the Subscription Date to increase the number of shares of Common Stock issuable thereunder or to lower the conversion price thereof, (ii) capital stock, Options or Convertible Securities issued to directors, officers, employees or consultants of the Company in connection with their service as directors of the Company, their employment by the Company or their retention as consultants by the Company pursuant to an Approved Stock Plan, (iii) shares of Common Stock issued upon the conversion or exercise of Options or Convertible Securities that were issued and outstanding on the date immediately preceding the Subscription Date, provided such securities are not amended after the Subscription Date to increase the number of shares of Common Stock issuable thereunder or to lower the exercise or conversion price thereof, (iv) securities issued pursuant to the Purchase Agreement and securities issued upon the exercise or conversion of those securities, and (v) shares of Common Stock issued or issuable by reason of a dividend, stock split or other distribution on shares of Common Stock (but only to the extent that such a dividend, split or distribution results in an adjustment in the Warrant Price pursuant to the other provisions of this Warrant).

  

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(n)      “Fundamental Transaction” means that the Company shall, directly or indirectly, in one or more related transactions, (i) consolidate or merge with or into (whether or not the Company is thesurviving corporation) another Person (but excluding a migratory merger effected solely for the purpose of changing the jurisdiction of incorporation of the Company), or (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of the Company to another Person, or (iii) allow another Person to make a purchase, tender or exchange offer that is accepted by the holders of more than the 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the Person or Persons making or party to, or associated or affiliated with the Persons making or party to, such purchase, tender or exchange offer), or (iv) consummate a stock purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock purchase agreement or other business combination), (v) reorganize, recapitalize or reclassify its Common Stock, or (vi) any “person” or “group” (as these terms are used for purposes of Sections 13(d) and 14(d) of the Exchange Act) is or shall become the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 50% of the aggregate ordinary voting power represented by issued and outstanding Common Stock.

 

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

 

(p)      “Option Value” means the value of an Option based on the Black and Scholes Option Pricing model obtained from the “OV” function on Bloomberg determined as of the day prior to the public announcement of the applicable Option for pricing purposes and reflecting (i) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the remaining term of the applicable Option as of the applicable date of determination, (ii) an expected volatility equal to the greater of (a) 100% and (b) the 100 day volatility obtained from the HVT function on Bloomberg as of the day immediately following the public announcement of the issuance of the applicable Option, (iii) the underlying price per share used in such calculation shall be the highest Weighted Average Price of the Common Stock during the period beginning on the day prior to the execution of definitive documentation relating to the issuance of the applicable Option and the public announcement of such issuance and (iv) a 360 day annualization factor.

 

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

 

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

 

(s)      “Principal Market” means The OTCQB.

 

(t)      “Required Holders” means, as of any date, the holders of at least a majority of the Warrants outstanding as of such date.

 

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

 

(v)      “Trading Day” means any day on which the Common Stock are traded on the Principal Market, or, if the Principal Market is not the principal trading market for the Common Stock, then on the principal securities exchange or securities market on which the Common Stock are then traded; provided that “Trading Day” shall not include any day on which the Common Stock are scheduled to trade on such exchange or market for less than 4.5 hours or any day that the Common Stock are suspended from trading during the final hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing time of trading on such exchange or market, then during the hour ending at 4:00:00 p.m., New York time).

  

11

  

   (w)           “Weighted Average Price” means, for any security as of any date, the dollar volume-weighted average price for such security on the Principal Market during the period beginning at 9:30:01 a.m., New York time (or such other time as the Principal Market publicly announces is the official open of trading), and ending at 4:00:00 p.m., New York time (or such other time as the Principal Market publicly announces is the official close of trading), as reported by Bloomberg through its “Volume at Price” function or, if the foregoing does not apply, the dollar volume-weighted average price of such security in the over-the-counter market on the electronic bulletin board for such security during the period beginning at 9:30:01 a.m., New York time (or such other time as the Principal Market publicly announces is the official open of trading), and ending at 4:00:00 p.m., New York time (or such other time as the Principal Market publicly announces is the official close of trading), as reported by Bloomberg, or, if no dollar volume-weighted average price is reported for such security by Bloomberg for such hours, the average of the highest closing bid price and the lowest closing ask price of any of the market makers for such security as reported in the “pink sheets” by OTC Markets LLC. If the Weighted Average Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Weighted Average Price of such security on such date shall be the fair market value as mutually determined by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved pursuant to Section 12 with the term “Weighted Average Price” being substituted for the term “Exercise Price.” All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during the applicable calculation period..

 

[Signature Page Follows]

 

 

 

 

 

 

 

 

 

 

  

12

  

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

	
  

	
VISUALANT, INCORPORATED

 

By: /s/ Ronald P. Erickson

Name: Ronald P. Erickson

Title: President and Chief Executive Officer

 

 

 

 

 

 

 

 

  

13

  

ATTACHMENT A

EXERCISE NOTICE

TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS

WARRANT TO PURCHASE COMMON STOCK

VISUALANT, INCORPORATED

 

The undersigned holder hereby exercises the right to purchase _________________ of the shares of Common Stock (“Warrant Shares”) of Visualant, Incorporated, a Nevada corporation (the “Company”), evidenced by the attached Warrant to Purchase Common Stock (the “Warrant”).  Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Warrant.

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

	
  

	
____________

	
a “Cash Exercise” with respect to _________________ Warrant Shares; and/or

	
  

	
____________

	
a “Cashless Exercise” with respect to _______________ Warrant Shares.

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

3.  Delivery of Warrant Shares.  The Company shall deliver to the holder __________ Warrant Shares in accordance with the terms of the Warrant and, after delivery of such Warrant Shares, _____________ Warrant Shares remain subject to the Warrant.

Date: _______________ __, ______

 

_________________________________

   Name of Registered Holder

By:         ___________________________

Name:

Title:

 

 

 

 

 

 

 

 

 

 

  

A-1  

  

ATTACHMENT B

ASSIGNMENT FORM

 

VISUALANT, INCORPORATED

 

(To assign the foregoing Warrant, execute this form and supply required information.  Do not use this form to purchase shares.)

 

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

 

	
Name:

	___________________________________________
	  	
(Please Print)

	 	 
	
Address:

	___________________________________________
	  	
(Please Print)

	
Dated: _______________ __, ______

	  
	
Holder’s Signature: _____________________________

	  
	
Holder’s Address: ______________________________

	  

 

 

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

 

  

B-1  

  

EXHIBIT B

Revenue allocation

(I)      Definitions. For purposes of this Exhibit, capitalized terms used herein have the same meanings as the Agreement except as set forth below.

	
  

	
(a)

	
“Amounts” as generally used in this Exhibit means cash amounts and amounts that are not cash, which will be valued by IDMC and/or its Affiliates at their cash equivalent under customary valuation techniques.

 

	
  

	
(b)

	
“Portfolio Monetization” has the meaning set forth in Section (II) below.

 

	
  

	
(c)

	
“Revenue” means Amounts received and recognized by IDMC and or its Affiliates as revenue under generally accepted accounting principles from (a) licensing of Visualant IP and/or (b) damages awarded in litigation or other proceedings attributable to Visualant IP. “Revenue,” as used in this Exhibit, may refer to Revenue from a Portfolio Monetization or a monetization event involving solely Visualant IP.

 

	
  

	
(d)

	
“Revenue Allocation” has the meaning set forth in Section (II)(b) below.

 

(II)    Transactions Involving Multiple Patents. Visualant acknowledges and agrees that IDMC and/or its Affiliates may from time to time enter into transactions (or incur expenses) in respect of Visualant IP and other patents or patent applications (a “Portfolio Monetization”). The parties acknowledge and agree that, unless a Portfolio Monetization specifies a particular economic allocation for one or more patents or patents applications (including Visualant IP, if any), the allocation of Revenue will be determined as follows:

	
  

	
(a)

	
Categories. Each patent or patent application included in any transaction (including Visualant IP, if any) will be ranked by IDMC and/or its Affiliates as of the date of the applicable transaction to one of the following four categories:

 

	
  

	
(1)

	
Patents and patent applications actually asserted against the party transacting with IDMC and/or its Affiliates and discussed in detail during the discussions leading to the Revenue (e.g., patents and patent applications that are identified, analyzed and discussed in the assertion materials and negotiations);

 

	
  

	
(2)

	
Patents and patent applications specifically mentioned (but not discussed in detail) in the discussions leading to the Revenue (e.g., patents listed as one of the patents or patent applications that the party transacting with IDMC and/or its Affiliates may infringe or need to license);

 

	
  

	
(3)

	
Patents and patent applications in the same patent classification code as one or more of the patents and patent applications in the foregoing two categories (e.g., patents and patent applications not asserted or specifically mentioned but which, as evidenced by their class code, may have been infringed by the company transacting with IDMC and/or its affiliates);

 

	
  

	
(4)

	
Patents and patent applications otherwise included in the transaction.

 

	
  

	
(b)

	
Revenue Allocations. Revenue will be allocated among the four categories as follows (“Revenue Allocations”):

 

	
  

	
(1)

	
55% for category (1)

 

	
  

	
(2)

	
27.5% for category (2)

 

	
  

	
(3)

	
13.75% for category (3)

 

	
  

	
(4)

	
3.75% for category (4)

 

  

1

  

 

 

	
  

	
(III)

	
Adjustments to Revenue Allocations. Notwithstanding the foregoing Revenue Allocations, for any given Portfolio Monetization, in the event that the formula set forth above results in allocated per item Revenue in category (1) being less than the allocated per item Revenue in category (2), (3) or (4), or the allocated per item Revenue in category (2) being less than the allocated per item Revenue in category (3) or (4), or the allocated per item Revenue in category (3) being less than the allocated per item Revenue in category (4), then, in each such event, IDMC and/or its Affiliates will appropriately adjust the formula such that the allocated per item Revenue for each category is equal to or higher than the allocated per item Revenue for each higher numbered category (for example, the allocated per item Revenue in category (1) should be equal to or higher than allocated per item Revenue in categories, (2), (3) and (4), after the adjustment). Furthermore, in the event that any category has no patents or patent applications, then IDMC and/or its Affiliates will adjust the Revenue Allocations to allocate the null category’s Revenue Allocation pro rata (based on relative Revenue Allocations) among the other categories. For purposes of this paragraph, an “item” will be a patent or a patent application included in the given Portfolio Monetization.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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